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

To: John Malloy who wrote (52172)	4/26/2001 2:56:49 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 77400

John - we disagree, and we agree. No DCF model would give CSCO's business an economic value of $75 in 2000 dollars looking forwards from Jan 1 2000. I challenge you to construct one that passes the sniff test. 75 * 7.5 B = 0.6 T$ of accumulated cash in present dollars, or maybe a total of 2-4 T$ in revenue. From a company making 1% of that in year zero? And what is the total in year N? Yah right. No, no DCF model that would stand a sniff test would predict CSCO at 75/share even at the peak of the go-go mania. I didn't bail from tech because the models said "viable economics here"!!! Where we agree is that the proper model is the cash-in-the-pocket estimation. The trick then is to figure out what joe futureguy is going to pay for the stock, and more important WHY (because otherwise you can wish yourself just about any price you like). DCF is one model that gives a why today, and a why tomorrow. So it is useful that way. There are other models too. John.