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

To: Stock Farmer who wrote (47963)	2/5/2001 1:58:35 PM
From: The Phoenix	Read Replies (1) \| Respond to of 77400

John, The component shortage problem was well publicized last year. The demand equation has changed in the last 6 - 8 months so this issue has gone away and inventories should come back into line. As for FD's argument regarding inventory increases as a positive effect on earnings I think there is an underlying assumption he's making on COGS. I believe he assumes that Cisco calculates COGS in the aggregate but I suspect that Cisco calculates COGS on a per product basis and what's left is inventory. Therefore any increase in inventory would not have any direct effect on COGS. FD's is attempting to make a case that cisco's margins are in part due to a building of inventory and that is simply hogwash. We shall see. This is a fundamental problem when folks that don't understand a business attempt to apply traditional accounting methods - without understand how a company allocates costs, or cultivates markets. OG