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

To: Tom D who wrote (40886)	10/15/2000 11:30:33 PM
From: RetiredNow	Read Replies (2) \| Respond to of 77398

I understand that long term, losing market share is a bad thing. But let me throw this hypothetical at you. Let's say the market totals $100 and Cisco owns 80% of it and Juniper 20%. That means that Cisco just got $80 this year and Juniper $20, right? Let's say that the market grows 30% to $130 the following year, and Cisco lost market share and only got 75% of the total, with Juniper snagging the rest. That means that Cisco just got $97.5 and Juniper $32.5. That represents a revenue growth of 21.75% for Cisco and 62.5% for Juniper. So the bottom line is that Cisco is still making a shitload of money. Not only do they have time to catch up, but this is one product category out of an entire line of end to end solutions. Now I'm not saying Cisco losing market share is a good thing, but it's also not time to consider selling the stock just yet either. They are executing in almost every direction and occasionally they play catch up. They will do just fine over the next 5 years, despite what all the crazies think. Wait until the fundamentals change before you sell is my advice. So as you can see the bottom line

To: Tom D who wrote (40886)	10/16/2000 1:59:40 AM
From: Ed Forrest	Respond to of 77398

Tom you have articulated your concerns well.Let me be the first to welcome you to the thread. Cheers Ed

To: Tom D who wrote (40886)	10/16/2000 11:11:43 AM
From: The Phoenix	Read Replies (2) \| Respond to of 77398

Tom D, CSCO has exceeded expectations. JNPR has also. My concern is that one of these companies is probably overvalued. When one projects into the future, does each company deserve its current valuation? If there was going to be an additional 5 to 8 point shift in market share this quarter, I'd be inclined to sell half my CSCO. There are two issues you need to deal with. One is the reality of each comapany's (JNPR and CSCO) value relative to total available markets and two, market perceptions. wrt to market value relative to total available markets.. JNPR makes high end routers and recently announced some edge routers. These two markets together total around $6B. If you include mid-range, low-end, and SOHO you're probably around $12-$13B or so. So, if JNPR had products to address all these markets (which they don't) and had 100% market share (which they won't) they would be valued about about 10 times the annual market size today! So, if you're asking if JNPR is overvalued..... the answer is certainly! As for CSCO the total available market includes not just routers, but switching, VoIP, DSL, Cable, optics, content delivery, VPN's, wireless, etc.. the list is quite long and I am going to guess that the total available market is larger than CSCO's current cap. Does this mean CSCO isn't overvauled? I think the answer is that it is certainly less overvalued than JNPR if in fact it is overvalued at all. Another way to look at this is using Jorj's numbers. If JNPR is valued at $70B and is addressing 25% of about 7% of CSCO's revenues then CSCO - to be equally overvalued would have a cap of $1.4T...about $200/share. (Please feel free to check my math on this.) As for the second issue - market perception... the perception is that CSCO doesn't give market share to anyone. A couple of percentage points loss in what is perceived by many to be CSCO's core buinsess is viewed as more than just collateral damage. But as you can see the impact on CSCO's overall business is probably not as severe as many writers would like everyone to believe. I think perception misses the above points. Anyone buying JNPR at these levels I think has got a lot of cajones.... especially if those same people think that CSCO is overvalued.