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

To: The Phoenix who wrote (47505)	1/30/2001 10:42:44 AM
From: Kenneth E. Phillipps	Read Replies (1) \| Respond to of 77400

Nortel has integrated the Alteon 780 switch with its Passport 8600 Layer 3 switch. Article in Network World suggests this "puts pressure on Cisco to integrate its Arrow Point Web technology with the Catalyst 6500 LAN switch." nwfusion.com

To: The Phoenix who wrote (47505)	1/30/2001 10:43:00 AM
From: Jorj X Mckie	Respond to of 77400

I missed a lot of posts yesterday so didn't see your other discussions...(I am traveling and on an ultra slow link...(but I have a great view of the Carribean from my room<g>)). CSCO prides itself on capitalizing on adversity, the current economic situation is no exception. On another thread, I made the following prediction: -It will become obvious that many of the earnings warnings seen in Q4 2000 were companies lower expectations so that they would provide upside surprises. For many companies, Q4 2000 will be seen as a way to cleanse the books. Message 15101679 I still believe this. (although I also predicted that CSCO wouldn't miss in the same post...DOH! (though it hasn't happened yet)). Still, I think that Chamber's decision to show vulnerability at this time was ill advised (if it could be avoided). Certainly I wouldn't recommend exaggerating the situation on the positive side, but the one thing that is now in jeopardy is the perception that CSCO is a safer place to put your money (on the tech side) and that you can take whatever Chamber's says to the bank. I suspect that CSCO's earnings announcement and forward guidance will focus on the business and opportunities in Asia-Pac and Europe...and that this will be what is credited for keeping CSCO above water. I think that CSCO could have achieved the same competitive benefit by showing strength, so I am not sure if this can be counted as part of the strategy.

To: The Phoenix who wrote (47505)	1/30/2001 10:45:45 AM
From: Wyätt Gwyön	Read Replies (3) \| Respond to of 77400

It is ironic that people think Cisco is somehow advantaged at a time when its stock price is tanking. Certainly, Cisco is a much stronger ship than its smaller IT supplier brethren, and should be better at weathering a poor economic environment. But that's just survivorship--it doesn't have anything to do with increasing profitability. From what I see, much of CSCO's business plan revolves around its stock--using it for M&A and to pay employees in lieu of full cash compensation. IMHO, this makes Cisco's reported profit results appear better than they actually are, because they do not have to expense R&D (they acquire instead) and because they do not expense option compensation (but instead are ironically rewarded with cash infusions from exercising employees and government tax credits--the greatest source of the vaunted cash-flow growth cited by the hopeful but poorly informed longs). This two-pronged strategy is dependent on a strong stock price. I believe this stock-dependency of Cisco's business plan will be a downward drag on the stock in a weak IT-capex environment (much as it had a lifting effect on the way up during the bubble's expansionary phase). And Cisco may be forced to resort to making greater cash outlays for R&D/M&A as well as employee compensation. This will put pressure on profits, bringing attention to the high multiple this company trades at. In a cascade effect, this could result in further multiple compression, forcing the company to rely even more on cash outlays, and thereby further lowering profits in a vicious cycle. All the above just my humble opinion.