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

To: JRI who wrote (40287)	10/2/2000 12:51:16 PM
From: LLCF	Respond to of 77400

CSCO in the FT: The will to believe runs deep in the great bull stock market, and in no stock do the bulls believe more devoutly than in Cisco Systems. Cisco, with a price tag of $389bn, is one of the stupendous wealth spinners of the past decade. Indeed, the networking company is so self-evidently stupendous that few have paused to notice the deterioration in its business results. Thus, although in recent years (from the 1996 fiscal year-end to only a few weeks ago), Cisco's p/e ratio quadrupled, to 160 from 40, its return on equity fell heavily, to 10 per cent from 32 per cent. Over the same span, the company's operating margins halved to 17 per cent from 34 per cent. And over the past four fiscal quarters, the percentage of Cisco's income attributed to non-operating sources has more than doubled, to 40 per cent or so from about 15 per cent. As this is the information age, Cisco's results are universally and freely disseminated. However, as this is also a credulous age, the data go unread. Investors prefer to absorb their Cisco news from Cisco's press releases. Not only are these documents easy to read, but also they are consistently flattering to corporate results. Thus, according to a study conducted by my colleague Robert Tracy, the press-release version of Cisco's earnings showed growth some 23 per cent higher over the two years 1999-2000 than the version sanctioned by generally accepted accounting principles, which Cisco also reports. DAK