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: Ed Forrest who wrote (49912)	3/13/2001 7:42:23 AM
From: Curtis E. Bemis	Read Replies (2) \| Respond to of 77400

UBS Warburg on CSCOs 10Q filed last night-- Not bad- ________________________________________________________________________ CSCO: A QUICK READ OF THE 10Q Summary: Cisco filed their 10Q for the January quarter last night. The document did not appear to provide any additional information regarding guidance for the current April quarter or fiscal year with the exception that operating expenses are likely to increase. The latest cost cutting measures, however, make us feel that operating expenses will be kept in check. The 10Q also provided some additional information regarding the impact to gross margins from inventory reserves, cumulative exposure to vendor financing loans and the cumulative amount of inventory financing. The analysis suggests a conservative assessment of these items. The impact of inventory provisions was higher than we thought, the amount of vendor financing exposure was less than we thought, and the amount of inventory financing was in line with our views. Highlights: The 10Q states that both R&D and S&M expenses are likely to rise in absolute dollars in the future. We are not modeling these to increase in the next two quarters, but rather to decrease given the workforce reductions and other cost cutting measures (e.g. travel restrictions, etc) that Cisco has enacted during the April quarter. A rise in absolute expenses would be a surprise to us. Provisions for inventory were $195M in the January quarter, which represented a negative hit to gross margin of 3.2% (reported gross margin including this provision was 61.8%). This compares to inventory provisions of $143M in the October 2000 quarter, which represented a 2.1% hit to gross margin. Thus, as we mentioned in our note yesterday, the increasing level of inventories is negatively impacting gross margin. As a comparison, the impact of inventory provisions in the first half of fiscal 2000 was 1.9%. Outstanding structured loans, net of reserves, was only $186M. In our note yesterday, we mentioned that outstanding structured loans was closer to $735M, this does not account for reserves. Thus, the actual risk to Cisco on structured loans is only $186M, which is less than we had thought and a relatively small amount. Inventory financing was $645M, up from only $25M at the end of July 2000. Inventory financing likely represents inventory that Cisco has negotiated with contract manufacturers to keep for Cisco. While the increase from July is significant, it is not surprising to us given the financial statements of EMS companies like Solectron and Flextronics. The high level of inventory financing has also probably impacted gross margin for Cisco.

To: Ed Forrest who wrote (49912)	3/14/2001 12:52:02 PM
From: Mephisto	Respond to of 77400

Dear Ed, Cool! But I need to compare this information with what I know about and it ain't much. My husband has T1 connection at work. I believe this is copper so how will that compare with CSCO's new thingy. Thanks! "LRE is an innovative broadband access and delivery service technology for scalable deployment of high-speed Ethernet services on existing voice grade copper wire -- enabling enterprises, building operators and service providers to quickly and easily deploy high speed data services. By using LRE, customers can eliminate the need for costly infrastructure upgrades by using existing telephone wire." ``In general, businesses pay more for office space that offer high-speed access and likewise, and a business traveller will prefer to stay in a hotel that has broadband access rather than using a dial-up connection or slow-speed network,'' said Frankie Sum, Managing Director, Cisco Systems (HK) Ltd. ``The amplified capacity of an optically enabled Cisco network allows New World Telephone to offer richer, more complex and higher-value applications to customers at a fraction of the time and cost.'' Capable of handling the simultaneous delivery of voice, video and data services at 5-15 Megabits per second (Mbps), LRE utilizes existing telephone wire at distances of up to 4,000 feet. This enables carriers to utilize the benefits of Ethernet infrastructures where they previously could not due to distance limitations or older wiring. LRE is also compatible with asymmetric digital subscriber lines (ADSL), allowing service providers to deploy LRE to buildings where broadband access already exists. As Cisco LRE uses pre-existing wiring, from the view of infrastructure modifications and cost, high-speed Internet access and other communication services can be deployed more quickly into older buildings than before.