Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Tulvio Durand who wrote (48000)	2/5/2001 3:47:09 PM
From: FESHBACH_DISCIPLE	Read Replies (1) \| Respond to of 77399

tulvio if earnings were 8 cents light the stock which they use as currency would have tanked. Secondly if economy was collapsing and the almighty cisco was accumulating components,should they not be punished for that goofup. VALUATION TOO HIGH.

To: Tulvio Durand who wrote (48000)	2/5/2001 3:48:07 PM
From: GVTucker	Read Replies (3) \| Respond to of 77399

Tulvio, you are right. In the long run, it doesn't benefit anyone to play around with the balance sheet just to manipulate earnings. The problem is that the market has demonstrated that it will pay a premium for a reliable stream of earnings. And for a lot of companies, particularly those in growing industries, it is rather easy to 'borrow' from future quarters when earnings haven't been quite as good. Earnings are a nice smooth line, Wall Street is happy, and the stock is relatively expensive, always. The problem arises when a company borrows from earnings, then doesn't have the bounce back the next quarter. They might try to borrow again, or they might just swallow the medicine and admit that things arent' perfect. When a company spends 2 or 3 quarters and continually tries to borrow from future earnings, that is where you see companies blow up. That is where LU blew up.