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Strategies & Market Trends : Don't Drink the Kool-Aid Kids -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (553)	5/8/2001 2:42:10 PM
From: Stoctrash	Read Replies (1) \| Respond to of 1063

No doubt about the tough trading john.....we had all this great news or reactions to "news" and we still never touched 50 QQQ. On the other side we've bounced off 44 a few times. I think it is best to just wait and see...CSCO tonight is a crap shoot at best....could jump 3 or tank 4 tomorrow...just don't know. some more spin on the problems: observer.com "That artificial fattening of margins is what this write-down malarkey is all about. It is a ploy that Mr. Chambers surely hopes will get Cisco’s stock price—which has fallen by 77 percent in the last year—heading up again. To the question “Which is more valuable so far as Cisco is concerned, its routers or its stock price?”, the evidence thus suggests an obvious answer: “The stock price—in a heartbeat.” As of the company’s latest financials, for the period ending Jan. 27, Cisco looks O.K. The balance sheet showed nearly $4 billion of cash, no debt and $29.5 billion of equity. But maybe as much as $3.4 billion of that equity is now going to be wiped out from the restructuring charges and the inventory write-down. And another $4.7 billion is in the form of essentially worthless goodwill, which should also be lined out. Finally, there’s also a disturbingly large line-item entry on the balance sheet for $12 billion worth of investments that aren’t clearly enumerated and could in fact consist significantly of failing dot-com start-ups and other junk deals that were all the rage at companies like Cisco when the Internet was hot. In a worst-case scenario, the company’s actual book value may thus consist of not much more than its cash, receivables, and its desks, chairs and other property—which is to say, maybe not much more than $1.25 per share, or $9 billion. For a decade, Cisco could do no wrong. From 1990 until last spring, the company’s stock price soared more than 94,000 percent in value, making millionaires of anyone who stuck with the stock through the recession of 1991 and into the Internet boom years of the late 1990’s. But in little more than a year, Cisco’s stockholders have now become stuckholders, with nearly a third of their gains having been wiped out, even as the company’s growth rate has stagnated, and its bottom line in the third quarter after the write-down will slip into the red. Finally, they now face the ultimate indignity of a management preoccupied with bookkeeping tricks like inventory write-offs—intent, it would seem, upon masking their own mistakes while giving the company’s financials the fake tint of health. Not the sort of conditions to make an investor want to stick around for the next 10 years. You can reach me by e-mail at cbyron@optonline.net.