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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (75113)	4/17/2001 10:33:28 AM
From: Arik T.G.	Read Replies (1) \| Respond to of 99985

Haim, Message 15635639 Taking it from there: CSCO had a cashflow from operations of $2.9B in '98, $4.3B in '99 and $6.1B in '00. I believe that the trend of earnings growth for CSCO's business is 25-30% (including JNPR chewing on the cream). I guess that the '99 figure is also a bit overstated because the buying frenzy of 2000 was already evident in 1999 Q4. So the LT trend numbers are $4.0B for '99, $5.2B for '00, $6.5B for '01 and $8.1B for '02. So there is around $1.2B of excess, which will be taken off '01 and '02 trend (making '01 cashflow around 5.6 and '02 number around $7.8B). This is quite optimistic view nowadays, but as I said my view is that the telecom equipment biz is still a growth sector. I give CSCO a multiplier of 15 on its '01 cashflow (equal to a p/e of around 25) and get a company valuation of $84B or $11.5 a share as a good place to buy. ATG