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

To: Eric who wrote (55942)	10/15/2001 3:05:06 PM
From: Bicycle	Read Replies (1) \| Respond to of 77400

CSCO's PE averaged 40.3 for Jan 1992 to Dec 1993. Bye4Now, FD.

To: Eric who wrote (55942)	10/15/2001 3:19:55 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 77400

Hi Eric - great comment, distinction between growth and value. But the question I come back to is that the only way to really get money out of CSCO (the shares) is by selling them to someone. Or perhaps to collateralize the position. I think folks who purchase Cisco here on in will get most of their original money back. But they may not get a great return, even in the long run. Back in early 90's or so when the internet was in its infancy, Cisco had the brightest of futures to look forward to. By '95 they had managed to earn and retain about a billion dollars with maybe 5% of the planetary internet built out. If they were to continue on at that rate they'd accrete about 20 B$ in present value retained earnings at buildout-complete. And maybe have doubled that with some sort of wave-two technology... Which at the time was justification for their market cap of 30 B$ back then. Five years later they have accreted a total of 8 Billion dollars of retained earnings from internet buildout (I count the other 20 B$ as a gigantic off-balance-sheet shareholder loan). Which corresponds to about 40% internet buildout at '95 rates. So they're pretty much still on the path that made them worth $30 B. Except that along the way, managing the share price became more important than managing the business. Not just for Cisco, but for the whole new economy. And now Cisco sports a 4x market cap. The same value proposition about making money with IP and the internet holds. Cisco still commands roughly the same position now as they did then. Nothing is really new under the sun. And the likelihood of them accreting that 20 B$ is getting stronger and stronger. Just over a longer and longer time. But I don't see the Internet as only 6% built out. Which is what a market cap of 120 B$ and lifetime retained earnings from the internet at 8 B$ really means. So I wouldn't be biased to purchase here, even at $14. I'd want to see what happens when the dust settles. John

To: Eric who wrote (55942)	10/15/2001 8:24:55 PM
From: larry	Read Replies (2) \| Respond to of 77400

Eric, I like your serious approach toward CSCO's valuation. However, the major difference between our opinion is the I growth rate that CSCO can resume in the next 10 years. I will say that CSCO will be lucky if it can grow top line by 15% within the next 10 years which, with decent margins, might prove that CSCO is worth to be a 200 billion company by then. But then the stock price will be around 30 bucks, which is not even more than a double. I believe that this is actually a better case scenario. Unless that the whole market goes nuts again, or CSCO somehow grows top and bottom line at a rate around 30% for the next 10 years, your target should prove to be well off. The probability of those things happen will probably follow a Poisson distribution, which equals a small chance, or rare event probability distribution. I think that John has given us nice explanation as to why CSCO is not a great long term buy at current level in his string of postings. I also believe that 99% of the pundits out there underestimated the word 'bubble demand'. The Fed's rate cut and government's stimulus package won't change the fact that the IT consuming has far gone ahead of the curve and it will take years to catch up. And that's my simple reason that the economy will stick in a stagnant stage for a while before it takes up, no matter how you try to stimulate it. good luck, larry