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

To: Wyätt Gwyön who wrote (51971)	4/21/2001 2:48:36 PM
From: stomper	Respond to of 77397

Do you know of any instances of "write-ons" that have been done before?TIA. -dave

To: Wyätt Gwyön who wrote (51971)	4/21/2001 2:54:00 PM
From: Stock Farmer	Read Replies (2) \| Respond to of 77397

Mucho - I'm going to step in here on the side of Cisco. First, this 2.5 B$ is certainly a huge cookie jar, and there are a lot of hands could dip in. So better to under commit and over deliver. Second, I would rather that the inventory gets used to boost margins rather than to boost the heavy metal content of yet another tract of the planet. So if the opportunity does arise, why wouldn't the company use it? Better that than spending more shareholder dollars to buy different identical components, don't you think? Third, the management has an obligation to tell the truth, and so far what they said does add up. Perhaps at ye 2000 they initiated forward supply contracts assuming 50% sequential revenue growth and tight supply. But then overlay actual revenues. Back extrapolate COGS, work ratios... not unreasonable that they end up with trainloads of components piling up on the floors. I worked the math, and you can make it come out. Blame management for excessive confidence... but not dishonesty. My only criteria is this. If the company uses the components, it will be disingenuous if such use is not given as much visibility as the boost to gross margins it would represent. If it shows up as an obscure footnote in the 10K... well, you will have a strong case. But if it shows up as a "charge" against pro-forma results well, then you will see for yourself an honest management team. John.

To: Wyätt Gwyön who wrote (51971)	4/21/2001 4:17:33 PM
From: RetiredNow	Read Replies (2) \| Respond to of 77397

Well, I would categorize all of your questions as purely rhetorical, because you know the answers as well as I do. But those questions are irrelevant, because who cares about those answers. What we all really want to know is how will this affect earnings going forward? The answer to that is it can only be beneficial. If they use some of that inventory, then all their numbers benefit. If they don't, well, it was written off, so it won't hurt them down the line. The move was legal and brilliant and will generate a hailstorm of disapproval from accountants, but the bottom line is that it can only help Cisco going forward, which means that it will help the stock. So here's another question for you? Do you want to profit from that knowledge or not?