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

To: Jerome who wrote (55889)	10/10/2001 9:38:22 AM
From: Stock Farmer	Read Replies (1) \| Respond to of 77400

Jerome - >>when CSCO gets to six, we should be in the 10th year of a 20 year depression<< Be careful what you wish for :( Seriously though, there's another way to think about CSCO (the stock). For every dollar that Cisco has earned, Cisco shareholders have contributed three. That's very much like my son's lemonade stand. He's happy to have made five bucks, after I've spent a total of fifteen on the enterprise. But take away this self-margining and every $16 a shareholder sees is really worth about $4. Or you could look at it from the "it's worth what I'm going to get back" scenario. Frankly, despite the awesom pile of cash, if one peeks inside the balance sheet, Cisco can't scrape together $2.00 per share in dividends. Partly because the pile isn't really as big as it looks, and partly because of the number of folks lined up for their fair share. Earnings in the pennies aren't going to come to much any time soon. And pro-forma dividends will need considerable marketing before they catch on, I think. So if you look at the company from a fundamental perspective, well $6.00 doesn't seem that parsimonious. Or you could look at it from the "it's worth what I'm going to sell it to another sucker for" scenario. With seven billion shares the supply of suckers who don't have it is diminishing. Particularly as awareness of the $16 for $4 trick is spreading widely. Last one out loses. This isn't to say Cisco is a bad business. It's a great business. With tremendous economic value generation. Unfortunately that has to be divided amongst a tremendous pile of shares. There were many people on this board who thought Cisco didn't deserve $70 and yet the market awarded it that price. There are people on this board who think Cisco doesn't deserve $6... the market could easily award it that price too. At the beginning of the year I didn't think the market would give ground to below $15 this year... So far a lot of us have been proven wrong. John.