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

To: The Phoenix who wrote (46065)	1/5/2001 1:02:20 PM
From: Eric	Read Replies (1) \| Respond to of 77400

They need to buy utilities. That's where the money is ! <gg>

To: The Phoenix who wrote (46065)	1/6/2001 10:39:25 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 77400

Yet, the accountants on the thread choose to ignore this. That is why CSCO is not a choice of most bean counters You do make a strong case for ignorance, but I believe there are some holes in it... CSCO has doubled revenues in two years.... yet there is no net benefit to operating income.... why? Because they are turning these funds back into the company to generate new technologies and cultivate new markets. You are setting a trap for yourself--it is the same trap that led people to write books about DOW 36,000 or DOW 40,000. This line of thinking envisions an endless stream of compounding profits and discounts them back to the present with little risk premium, so as to justify a high net present value. The problem is, the strategy assumes the enterprise will be able to deliver all those profits back to investors, either in the form of dividends or share buybacks. The reality is that where outsized profit opportunities exist, capital seeks to gain those profits. Therefore, a company such as Cisco must continually strive to remain competitive through acquisitions and R&D expenditures. These expenditures are an inherent part of the business and must be considered in deriving a reasonable NPV. You seem to think that CSCO would be immensely cash-flow positive on an operating basis right now, except for the fact that it is nobly plowing these profits back into future ventures. In fact, it HAS to do this in order to remain competitive. At the same time, it is exploding its share count in making new acquisitions and to retain employees. (Barron's stated just today that CSCO has masked $18.2 billion in costs over the past two fiscal years.) This will make it harder to grow per-share cash flow (more shares). So I think it is not unreasonable to ask, if one is a prospective long-term investor and not a trader (who can perhaps ignore such things): With CSCO now at $36 a share, with some 7.5 billion shares outstanding, with the sharecount growing 8% over the past year, and with the sharecount likely to continue growing significantly into the future, how long will it take before CSCO can deliver attractive dividends or share buybacks with free cash, so as to be an attractive investment compared with 5% or so on bonds?