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

To: Jacob Snyder who wrote (49453)	2/27/2001 5:13:44 PM
From: TechTrader42	Respond to of 77400

biz.yahoo.com Whitney Tilson writes: "I don't think the six stocks noted above are cheap, though at first glance they might appear to be trading at an average future P/E of only 30x, versus 74x last October. (I posted details on each company on the Fool's discussion boards). What a bargain, right? Not really. "First, 30x isn't exactly cheap, though perhaps it might be reasonable for such high-quality companies. But I don't think they're really trading at this multiple because, as I've noted in previous columns, companies like these that issue a blizzard of stock options to employees have compensation expenses that are understated -- which overstates margins and profits. For example, according to estimates in Cisco's 10-K, net income last year would have been 42% lower than reported had the cost of options appeared as compensation. Reducing Cisco's $0.81 EPS estimate by 42% yields $0.47, suggesting that Cisco is not trading at 32x future earnings -- but 55x."