Jeff, I'm sure you made your claims in a spirit of good faith too. But good faith and accuracy are different beasts.
On some things, you are right. For example, I erred in being absolute in my reference: "via a curious twist ...", which should have been more precisely worded "e.g. via a curious twist...".
My excuse: it's common. Like saying "the people elected the president", when in fact it was merely an arguably representative subset of the people.
Then there is this: >>facts are important<<. Yes. On this we agree 100%
Most of my post was in reference to some very detailed forensics I posted earlier this year. But if you like, we can go there again. You asked >>I challenge you to post the data online to support your claims<< Have done so, will do so again.
Let's be very specific and source the facts.
>>I have reviewed the balance sheet data<< Perhaps you have.
>>Here is a link to the Cisco balance sheet which will give you a start in the right direction as you do your research.<< Well, that had me chuckling. And no doubt raised a few silent snickers from a few of the longer term inhabitants of this thread.
If this is the data you have reviewed: moneycentral.msn.com then of course we would be no closer to the truth.
Because moneycentral is doing us a service that we do not want by giving only this summary:
Annual Balance Sheet (Values in Millions) 7/2002 7/2000 7/1999 7/1998 7/1997
Shareholder's Equity
Preferred Stock Equity 0.0 0.0 0.0 0.0 0.0
Common Stock Equity
27,120.0 26,497.0 11,678.0 7,106.6 4,289.6
--------------------------------------------------------------------------------
Total Equity 27,120.0 26,497.0 11,678.0 7,106.6 4,289.6
If this is your view of >>a start in the right direction as you do your research<< on such a delicate subject as to the sources of capital that the firm enjoys, then it is certainly where our opinions begin to diverge.
I personally recommend people start in the right direction by reviewing the company's filings with the SEC. Directly, and in more detail than sound-bite summaries. For example, the SEC filed balance sheet will further subdivide the equity of common shareholders down into three sub-components which in no particular order are generally categorizeable as:
(a) earnings attributable to operations (called retained earnings)
(b) interest and other non-business income (called "other comprehensive income")
(c) shareholder loans (called "Additional paid in capital")
These three lines are key. For they represent the historical disposition of SOURCES of capital as it relates to shareholders. In reverse (but important) order: what they've loaned the company, what the company's earned from any excess non-working capital, and what the company's earned from its working capital.
True, figuring this all out takes a bit of knowledge and more detective work than point-and-click, I admit. It's even necessary to open up the 10-K and go rooting around inside and try to make sense of what has been professionally obfuscated. But once we go that far, then there are notes and tables and all kinds of other useful information too. That take us even farther.
For example, if one wants to know where these shareholder loans came from, one must go to one of the accompanying other notes and tables. And so on. It's all there. It's just a matter of knowing where to look and what it means. But we won't find this stuff merely by looking in the light under the pro-forma press release public consumption lamp-post.
Let's go there. There are many links to SEC database, but immediately available on SI you can try siliconinvestor.com instead. Then find the link 10-K Annual Report 9/24/2001 293 (I can't paste the link directly, curse those smart pages!!!) and then click on the link "Balance Sheet" about 2/3 of the way down (after Ex 14 and in between Table 20 and Table 24) to get the following
>snip<
Shareholders' equity:
Preferred stock, no par value: 5 shares authorized;
none issued and outstanding -- --
Common stock and additional paid-in capital, $0.001 par value:
20,000 shares authorized; 7,324 and 7,138 shares issued
and outstanding at July 28, 2001 and July 29, 2000, respectively 20,051 14,609
Retained earnings 7,344 8,358
Accumulated other comprehensive income (loss) (275) 3,530
-----------------------------------------------------------------------------------------
Total shareholders' equity 27,120 26,497
Now, you might still disagree that the 20.051 Billion to which I referred isn't a loan because is somehow tied in with operations. In actual fact you are almost right. But what couples loans from the First Bank of Mostly Clueless to ongoing operations is one of the most masterful sleight of hand tricks that the financial world has come up with, and one the tech genre has embraced fully. Cisco is not alone. They are just (comparatively) very clear about it. Qualcomm's 10-K (for example) is somewhat more opaque. All IMHO of course.
But as clear as they are,
following the money around seems to me very much like that street game with a little pea under the three walnut shells. Only in this case the pea is the money source and the shells are income statement, cash flow and balance sheet. In both games, the players are much better at it than the punters.
If you stare at the financials for long enough, you might see the same trick I do. Or maybe spots in front of your eyes. It had that effect on me too at first. But the biggest hint is: follow the money. Where did it come from, and where does it go.
20.053 Billions came from the pocket of shareholders; many of whom even appear steadfastly intent on arguing that this just isn't so.
And that is a fact.
John |
