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

To: Yaacov who wrote (45809)	1/3/2001 10:19:05 AM
From: Stock Farmer	Read Replies (1) \| Respond to of 77400

Yaacov - yes it looks to me like CSCO can hit proforma numbers. The risk of their customers bunkering down however can not be understated. However, I think this will hit next quarter (this one's already done for all intents and purposes - it gets REPORTED in Feb). But let me add some caveats. First, and most important, Proforma is whatever management wants to report. Remember that and remember it very well. Second, within the discretion management can use to apply pro-forma results, there are enough standard variables to affect earnings plus or minus a few pennies without misrepresenting the health of the business. Third, there have recently been signs of stress in inventory, receivables & payables. I am keen to see whether it continues or not. Because these numbers are very difficult to manipulate without building up a bow-wave of reserves somewhere else in the books they are your best guide-post. Fourth, recall that CSCO spices up the mix with numerous purchases. So they are constantly restating prior years (as though the thing had happened two years ago). These kinds of things can do mysterious things to the books and it generally takes me about a week to unravel the results. Fifth, one of the items that affects earnings is the degree of ammortization - depreciation of assets and goodwill and so on. This is now in the "not insiginificant" range for CSCO. With all of these factors at their disposal, if CSCO doesn't meet their pro-forma guidance then they are in trouble. John.