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

To: elmatador who wrote (54707)	8/25/2001 9:05:30 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 77400

csco priced its new employee option grants at $16.01, and the stock makes a big jump following comments from the ceo. what an amazing coincidence! interactive.wsj.com The problem with Cisco and some other leading tech companies, including Intel, EMC and Texas Instruments, is that their stock prices may already discount a meaningful recovery in revenues and profits. Cisco's profits are now running at an annual rate of 10-15 cents a share, meaning its stock is finding support at over 100 times trough earnings and at a hefty nine times annual sales -- hardly fire-sale levels. "Cisco's business should be bottoming because its earnings are back where they were in 1996," noted one Wall Street strategist Friday. Moreover, when Cisco had similar profits in 1996, its stock was trading around 6 and its growth outlook then was better than it is now. Cisco, meanwhile, trades for a fairly generous 36 times projected calendar 2003 profits of 50 cents a share. Tech bulls argue that once the business does turn up, major stocks will surge regardless of valuations. They dismiss the notion that the price/earnings ratio of their favorites should be penalized because of the profit volatility. True cyclicals like aluminum and chemical companies merit low P/Es on peak profits because of their economic sensitivity; but the tech sector has been deemed immune from such effects.