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

To: RetiredNow who wrote (51165)	4/6/2001 10:54:05 AM
From: Stock Farmer	Read Replies (1) \| Respond to of 77398

I just see it like the company reports it to the SEC. Cash flow. In the cash flow statement. Oh yes, they're making money and lots of it. But, that's only one side of the books. On the other side they are spending money. Also lots of it. In the end, it doesn't matter how much I earn if my wife spends all and then some. Net of all actions CSCO was CASH FLOW NEGATIVE in 2Q 2001 by 240 M$. Check it out. That's how much their cash position changed. Their asset portfolio increased by 201 M$ - depending on how it is valued. Let's take it a step farther. Let's trend the business. Start with "robust healthy market" - Aug, Sept, Oct. Cash flow positive by 1,304 M$ or about 430 M$/month. Lots of blabber on the board about Chambers daily grasp of the total financials. No heads up that anything was amis until January. Vigorously opposite actually in mid Dec when the defense of $50 failed. So we can assume chambers was seeing this kind of run rate right up until Jan. Let's give him 2 full months of noslow business, and 1 month of slowed business, to net out at cash flow negative 240 M$. Or: -240M = 2/3(1300) + 1/3(X) where X is quarterly cash flow in slowed environment. Solve for X you get X= -3,320 M$... that's a lot. Play around with when the impact hit and you can change this number by a lot! But be careful, you don't want to assume Chambers keeps secrets from the market. Numbers like this explain the basis behind some rather drastic cost saving activities going on in industry. Anyways, I am estimating we see CSCO combined cash and securities position decline by at least 3 B$ in Q3 from about 16 B$ to about 13 B$. We'll know soon enough. If it's worse than this, you will see this horseman slip to single digits. John. P.S. It was the thread's "friend" feshbach who first predicted a huge charge was coming.