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

To: Eric who wrote (53065)	5/16/2001 11:01:16 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 77400

Hi Eric - I think you are right that comm's is playing a big and bigger role. "Tech" has gone from just over 5% to just over 8% of GDP I think I recall, in only a few years, and the majority of that is due to the growth of network coms. But I don't think we're going to see continued explosive growth. Looks to me like we will enter a consolidation phase where the consumer sees increased provision of service, but not necessarily as a consequence of increased production. Which may hit the suppliers much harder than anyone thinks. Only following this phase will we see growth return, and then more likely at the kind of "healthy" 15-20% rates that communications have enjoyed for years. Tops. I'm not saying the Internet is dead. I'm saying that we have crossed beyond the inflection point of hyper-growth and will experience slower growth as a consequence. Companies like CSCO and NT and so on will survive. Indeed thrive and prosper. But they risk losing cachet as hyper-growth-stocks, which is built into their price. $0.03 x 4 = $0.12 ... x 2 x 2 x 2 = $0.96 which is where CSCO will be if it grows earnings at 30% per year about 8 years from now, when it might be settling in to deserve a PE of 20 or so. Yet we are priced there already. So you are paying quite a hope premium. I am not saying that CSCO will never earn a buck a share. I just think that by the time they do, odds are that other investments of that same money will be earning more. So far, it appears that the majority of people with money in their pockets don't think similarly. OK by me. I've been known to be in the minority before, and it has generally been quite profitable. John.