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 (48119)	2/6/2001 1:22:32 PM
From: Stock Farmer	Read Replies (2) \| Respond to of 77400

Hi TD - We are agreed. I am not suspicious about "how" CSCO will make their earnings. As far as I am concerned, I expect CSCO will experience periods of both positive and negative earnings growth. It certainly has resources sufficient to weather a long storm. And storms are natural in the life of the firm. In all fairness, you should note I keep trying to say that Cisco Systems Inc looks like a great company. A phreakin' phenomenal booming, growing, business. The future's so bright you gotta wear shades. But my perspective is not as an employee. Or a marvelling fan. It is as an investor. I make a clear separation between the prospects of a company for growth and the return on capital I can reasonably expect from this company versus the universe of alternatives also available to me. Right now, I could invest my capital in CSCO (the stock) and attempt to harness a proportional fraction of the economic value unleashed by the internet into CSCO's coffers - which theoretically will be my right as a shareholder. Unfortunately, it appears to me that the price I must pay to enjoy this benefit is greater than what I must pay to enjoy similar benefit elsewhere. That does not imply there isn't great benefit to be had. There is. It is to say that the opportunity cost is great as well, and is increasingly higher than the great benefit. It is getting easier to spot superior risk-weighted opportunities for capital growth (it is still hard, mind you, and I'm not claiming clairvoyance: Laidlaw is amongst the stocks I thought would do well three years ago...). That's all. Cisco Systems Inc is a rapidly growing company with great prospects for future growth. However, its equity is currently priced as though a decade or so of 30% real growth in earnings and revenue is in the bag. I'm not comfortable predicting this quarters' revenues with certainty, let alone the next 40. I suspect I am amongst the majority at the moment. Which should cause any rational individual at least brief pause in the rush to invest more money at these prices. In closing, let me also acknowledge that many of the true longs have heard words like this before in the past, many times. If they had listened to words like this back then(see the thread header for example) they might not have enjoyed such a nice ride to wealth. So I understand a certain economic darwinism must temper their ears. The question one must always ask is "is it different this time"? John.