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

To: GVTucker who wrote (53240)	5/21/2001 10:20:39 AM
From: Stock Farmer	Respond to of 77398

GV - good point. How would we factor in the level of dependability? What might we see as a prudent multiple? Or should we take an expectation value approach instead? I dislike these simple ratios because they are expectation values with implicit parameters and it is very hard to pick them apart. I'd rather have the DCF model in front of me, but in the case of Cisco, because of the option thing that acts as feedback into the price, it's not an easy model to construct. John

To: GVTucker who wrote (53240)	5/21/2001 10:27:46 AM
From: John Malloy	Respond to of 77398

GVT, Here is a price forecast for Cisco based on growth slowly recovering, though not to previous levels, peaking in 3.5 years, then gradually slowing again. My forecast is for growth of equity/share starting at zero now, reaching 10 %/yr. in one year, 21%/yr in two years, peaking at 30%/yr.(below the 47%/yr. in early 2000), then slowing to 26%/yr in five years. The price/book ratio will recover as growth recovers, from 5.1 now to 6.5 in one year, 7.8 in two years,peaking at 8.2, well below the 19 of a year ago, and slipping to 7.9 in five years. The stock price that corresponds to those forecasts is $19 now, $24 in one year, $35 in two years, and $81 in five years. John Malloy