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

To: The Phoenix who wrote (42165)	11/3/2000 4:32:29 PM
From: Wyätt Gwyön	Respond to of 77400

Are you suggesting that CSCO moves income from operations into the "Other Income" column Heck no. Operations income is the high-quality stuff. In an ideal world, almost all the income would come from operations. That's what the multiple should be paid on. In a less than ideal world, companies pad operations income with investment income (e.g., QCOM's just reported .25 EPS included a nickel of investment income). Income from investments (e.g., interest income) does not reflect operations and does not deserve a high multiple. (After all, if you want 5.8% interest off of Treasurys, you don't need Cisco's CFO to do it for you. And if you want a mutual fund, you can go to Vanguard or Fidelity; why go to Intel?) Where I believe the flexibility exists is that Cisco has an investment portfoliio with a number of unrealized gains, in which it can elect to take capital gains from quarter to quarter. Those gains show up in "Other income". This is not to say that companies shouldn't take advantage of investment opportunities that come their way. Probably, Cisco has many great opportunities and it is to their credit to take them while the getting's good. The problem is that if such income ends up becoming a large part of total income, it kind of skews the company's story as an operating entity. And after all, investments can go down. Just look at AMZN's portfolio of dot.bombs.