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

To: RetiredNow who wrote (53339)	5/23/2001 10:01:49 AM
From: Ed Forrest	Read Replies (1) \| Respond to of 77400

Having said that, I still think you are caught up in irrational pessimism. You are letting yourself get too mired in your numbers. The only numbers that really count are the ones on the scoreboard. The market displays them throughout the trading day,their called the bid and ask. Cheers

To: RetiredNow who wrote (53339)	5/23/2001 12:00:23 PM
From: Stock Farmer	Read Replies (2) \| Respond to of 77400

"Arguing about God with an Athiest" Ok, you got me there. But our beliefs are not so fundamentally "religiously" polarized, are they? You are a rational creature, are you not? Can you not articulate why a maturing company in a cyclical business growing at 20%/year should sport a PE of 40? Is there any reason except "I really want this to come true?" Can you articulate how a company with revenues >50 Billion can achieve net profit margin >20%? When 15% (and falling) was good during the best boom period they had? You are suggesting Cisco will be better than Cisco. Can you articulate which pockets you expect to see stuffed with $50 B will joyfully empty them in Cisco's direction? You are suggesting IT capital will be several times more free flowing in '05 than it was in the most capital rich period of recent history. Of all things difficult to believe, indeed this last one is the most believable because of substitution effects. I expect in 5 years they could attract 50 B$ worth of revenue. I could see 50-60 B$ revenue as a good stretch objective, but because I like to bet on a lower risk side of the table, I would place my chips on 48 B$. See you in 5 years. I could see 15% profit margin as a stretch objective. But I would place my chips on 13%. Again, see you in 5 years. I could see a PE of 30 as a stretch objective. But I would place my chips on 18. Again see you in 5 years. My "not optimistic" stance would have the company earning 48 * .13 / 8.5 (B shares) * 18 = $14. An "acievable" stance is 55 * .15 / 8.5 * 25 = 24 An "optimistic" stance is 66 * .2 / 8.5 * 40 = 62 14-62 is quite a variance. Depending on how you weight the odds of these events, CSCO at $20 is a poor, good or excellent investment. See you in 5 years to know whose weightings are correct. But meanwhile we should debate the reasoning because that's what gets the whole thing out on the table. John.