To: Uncle Frank who wrote (47278 ) 9/29/2001 11:55:02 PM From: Wyätt Gwyön Respond to hi uf,The link notes the accelerating revenue growth trend. The issue of how long growth can accelerate aside, for clues as to CSCO the stock's weakness, you might also want to check out the trends in: My point would be that if you just look at those numbers without looking at anything else, you are not getting a very clear picture of the story. On the most basic level, for example, you would need to divide the rev-growth rate by the increase in share count. Share count increased over 8% in the past year, so logically, you would need to divide the growth rate by 1.08 to see what the growth is on a comparable basis. That is just one nitpicking little thing, of course. But a lot of nits can lead to a different picture. For example, you can look at their declining margins. It's great to have more revenues, but what if earnings don't keep up? , I have an interest in Cisco not as a short or long play, but as a bellwether for tech and also for Cisco's stock-centric way of evolving its business. I believe this is a rather new trend in the business universe (compared to, say, a debt-centric cash flow model), which has thus far developed in a pretty favorable secular environment. While Cisco is perhaps the co. best known for this practice, the trend has obviously caught on elsewhere (e.g., JDSU and its Pacman model). How the model will withstand more hostile business conditions remains to be seen. I guess my skepticism relates to the fact that Cisco is already a huge company and is priced pretty much to perfection. I just don't see how the market will cut them more slack. This wouldn't matter if their share price weren't so central to their strategy, but it is. If the stagnation on the earnings front starts to gain more attention, the share price could suffer. This would not only be bad for shareholders; it would also be bad for Cisco's strategy I still believe if a stock can go up quickly, it can come down even quicker, so protecting profits is important. if a stock quintuples in the space of a few months or a year, there is nothing to stop it from falling 60% from its 52-week high. I see no reason to let outsized gains slip away, and I would never want a profitable trade to turn into a loss. In addition to outright selling of equity, I have found covered calls to be helpful in reducing basis. But if a stock really plummets, covered calls will not save you so it is important to be able to pull the plug sometimes I cannot believe that somebody can be considered a fundamentalist if they do not look at accounting issues. You, too, are operating in a very short time frame. A decade, two decades, is very small in the frame of history and the markets. I appreciate your example, but I am also trying to consider examples from like the Pleistocene age of markets. In other words, I consider 1999 to be just an exaggerated version of the whole 90s in terms of broader investing history. Just as there won't be another 1999 anytime soon, there won't be another 1990s.
