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

To: Eric who wrote (51628)	4/17/2001 11:54:52 AM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 77397

They still stated 30 to 50% growth going forward...for the long haul.... 3 to 5 year forecast and I still see that remaining intact well, let's take their current guidance: 30% down this Q and assume 10% down next Q. well, if they then grow 30% from there, in two years they will be 6.47% above where they were last Q. so in this scenario, they will have achieved less than 3% CAGR starting from last Q, but they can say they grew 30% CAGR from Q4 01. nice job! that is why i question why they keep trumpeting the 30-50% stuff. WHAT DOES IT MEAN. if they mean 30-50% CAGR from Q1 01, WHAT IS THEIR BASIS FOR SAYING IT, AND WHY SHOULD WE BELIEVE THEM.

To: Eric who wrote (51628)	4/17/2001 3:27:20 PM
From: Stock Farmer	Read Replies (2) \| Respond to of 77397

Hi Eric - thank's for the playback. I have reconciled the 2.5 B$ inventory charge. It's not just components though, it's work in progress and finished goods too. It probably won't all go on the scrap heap, in which case the company would be paying for gross margins out of shareholder equity. Recall I was positioning healthy inventory at about 4% of annual sales. Let's say 2001 should hit somewhere around 24 B$, then they should have about 1.0 B$ inventory. Let's assume during Q3 they had production capacity geared to hit 100% of Q2 revenue by end of Q3, but hit only 70% of revenue. That leaves 30% of the output of the machine left over. That unused production becomes "inventory" and is added to the pile left from previous quarters. Which was 2.5 B$ deep. Gross margin 55%, maximum unused capacity should be 55% of revenue shortfall, or 14% of Q2 revenue of 6.2 B$ = 1.1 B$ So if they do nothing, they end up with inventory of 3.6 B$ Write off 2.5 B$ and you have 1.1 B$ left over. A reasonable inventory level to work from. We'll know soon enough. John.