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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (39152)	8/9/2000 8:50:17 AM
From: JDN	Respond to of 77397

Dear John: I am surprised I havent read any posts about CSCO's future leasing plans. I got the impression from the CC they plan to drive this up significantly in the future. I was thinking as Chambers spoke that they are thinking that this significant reoccuring, stable profit source would take a lot of risk out of the stock. ie they make money when they sell it to you and make money again when you pay it off. Sort of like double dealing. haha. JDN

To: Road Walker who wrote (39152)	8/9/2000 9:12:18 AM
From: GVTucker	Respond to of 77397

John, RE: As far as being compensated, anyone who bought before November of last year has been compensated very very well. Anyone who bought before November of last year paid half (or less) the price that purchasers of CSCO today will for the same dollar of earnings. That is why they have been compensated well.

To: Road Walker who wrote (39152)	8/9/2000 6:03:27 PM
From: Skeeter Bug	Respond to of 77397

rule 1: past returns do no necessarily prdeict future results. rule 2: don't forget rule #1.

To: Road Walker who wrote (39152)	8/9/2000 6:03:37 PM
From: Skeeter Bug	Read Replies (1) \| Respond to of 77397

rule 1: past returns do no necessarily predict future results. rule 2: don't forget rule #1.

To: Road Walker who wrote (39152)	8/9/2000 7:35:52 PM
From: Ryan Hess	Read Replies (1) \| Respond to of 77397

A good portion of the compensation in Cisco has been the result of PE expansion. The stock over the last five years has vastly outperformed the business. While the resolution is bad, you can view the chart in the URL below for verification. bigcharts.com

To: Road Walker who wrote (39152)	8/9/2000 9:43:39 PM
From: sea_biscuit	Respond to of 77397

Over the last 5 years, Cisco's earnings have increased about 6-fold or so, whereas the price has increased about 30-fold or so. That means, the P/E multiple of the stock has kept on expanding. So unless you predicate that the P/E multiple will keep on expanding into the future, you shouldn't be buying this stock. It is as simple as that. As for me, I suspect that at some point, not only will the P/E expansion stop, but it will actually get reversed and will start contracting. Now, if I knew exactly when that will happen, I could make a lot of money through options or shorting. But since I don't, the best thing for me to do is to simply stay away from the stock.