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.

Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: jayhawk969 who wrote (37765)	4/1/2001 10:18:23 PM
From: TWICK	Respond to of 50167

Thanks for that link. A great read indeed. Same problems can be argued with CSCO, and many other major tech companies that went on major funding and buying sprees. A section of an article worth reading. With Cisco, what's the real, underlying growth of the business? Cisco went on a massive spree buying companies, taking their sales, and writing off the excessive purchase prices. What's wrong with buying potentially profitable companies? Nothing, and Cisco did a great job targeting the technologies that it didn't have expertise in. That's fine. What's not fine is paying $6 billion for a tiny company and writing off all the costs. You might say Cisco purchased its R&D off the shelf and said there was no ongoing cost for this. To me, it says that reported earnings are higher than they perhaps should be. Meanwhile, Juniper Networks (JNPR) has come out of the blue and taken 30% of the router market away from Cisco. I've argued that there is tremendous oversupply of networking infrastructure. This is certainly true of voice and data in telecommunications. That's why pricing by the service providers -- WorldCom (WCOM) , AT&T (T), Sprint (FON) -- has collapsed. They're killing each other in a price war for voice business. Similar price cuts have come in data networking. Nobody is making money. If you have an oversupply, you won't have 30% growth in the underlying infrastructure. It may become zero. kiplinger.com My take on the above article is... Before any of these companies think of buying each other out to limit the competition and pricing wars, they'll need to first clean up their own financial mess they created. That's going to take time and can be just as dificult for the Networkers as we are seeing with T and WCOM. Look at LU failed Agere IPO. In the meantime, the Junipers, and Redback are going to be nibbling and trying steal more market share. Twick