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

To: RetiredNow who wrote (52517)	5/8/2001 5:44:28 PM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 77397

but mindmeld, i thought you were looking forward to them doing just that (adding back inventory profits) as a way for the stock to go up. remember what you said??? Message 15703793 To:Mucho Maas who wrote (52003) From: mindmeld Sunday, Apr 22, 2001 1:41 PM View Replies (1) \| Respond to of 52517 I agree with you completely about what Cisco will do. They will more than likely use inventory that was written off and then they will get a margin boost. It's perfectly legal and is allowed for under GAAP. I also agree with you that if we are looking for "truth" and appropriate accounting, we would wish they wouldn't play these games. But the bottom line is they are doing it this way and the bottom line is that it will benefit their margins and income down the road. All you have to do is realize it and you can profit as the stock moves up.

To: RetiredNow who wrote (52517)	5/8/2001 5:50:13 PM
From: Ed Forrest	Read Replies (2) \| Respond to of 77397

MM Ever notice that every earnings reporting season it seems that somebody forgets to look the doors at the local asylum. This thread must be a magnet for a good number of those on the loose "head cases". :) Cheers

To: RetiredNow who wrote (52517)	5/8/2001 6:27:37 PM
From: Stock Farmer	Read Replies (2) \| Respond to of 77397

Yes, I did like that bit about keeping inventory reuse effects clear in future pro-forma reports. Remember I remarked that it was my expectation they would do so. Some comments on the numbers: This is quick, not a lot of time to digest... Statement of Operations: (Pro-forma) Revenue declined 4% YoY and 30% sequentially. (all further numbers as % of sales) Pro-forma adjustments grew from 7% to 62% of revenue. Gross margin has fallen from 65% to 50%. Variable expenses have risen from 38% to 53% Operating margin fell from 26% to 2% Essentially 103% of CSCOs' $0.03/sh came from interest and other income. The core business barely paid for itself and the banking business baled them out. This is AFTER the repairs included in the restructuring and inventory charges. In other words, the cost structure of the current business supports a revenue stream increased by 50%. Or, until revenues increase by 50%, this is a far less profitable company than it ever was. It does not deserve valuations based on traditional ratios to Sales (PEG or PE). Big management challenge will be to keep cost structure intact even from this after-layoff cost structure while growing revenue! Balance Sheet Analysis: Current assets increased by 1 B$, primarily cash on hand with remaining current assets shifting slightly. However, 1 B$ increased cash came at expense of 4 B$ reduction in investments (30%), offset by a stunning increase in "Other Assets" of 2 B$, Goodwill and Property by 1B$ each. Net effect: Book value of the company has increased marginally (3%), all attributable to goodwill, with lower quality assets gaining increasing dominance. This is not a bullish report folks. Summary: Even after restructuring, CSCO is about 50% too big for itself against its own traditional metrics pegged against revenue, and the security backing the paper is deteriorating. Reserving further comments for the time being. John.