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

To: Dave who wrote (51443)	4/16/2001 11:12:29 AM
From: Stock Farmer	Read Replies (2) \| Respond to of 77398

Hi Dave - Yes OCF is key. But I don't think you are right about inventory adjustment causing improved cash flow. Let's look at Q2. Basicly by growing inventory 1.6 B$ they DECREASED COGS by 1.6 B$. So Net Income was overstated (with respect to actual cash into the business) by 1.6 B$. This is recognized in the statement of cash flows by the entry of -1.6 B$ under "adjustments to net income" Everything in the "adjustments" column of cash flow could just have easily been an opposite adjustment to earnings, had the company decided to do things that way. The two statements must be read together. This is why there was such a stink earlier about CSCO's inventory levels going up so fast. If you back out an inventory increase in Q2, they would have reported a net loss. The other numbers worth watching in OCF is the tax benefit for stock option exercise and AR. John.