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

To: RetiredNow who wrote (57719)	2/20/2002 9:46:01 AM
From: kvkkc1	Read Replies (3) \| Respond to of 77400

Unless there is a 180 degree turnaround, there aren't many places for CSCO's employees to go. Not too much hiring going on in the telecom business. The 300K consulting salary mentioned is a big red and white target whenever cost cutting measures are implemented. CSCO employees ought to be thankful they have jobs given their dismal performance over the last two years. If I were Chambers, I'd axe anyone whining about salary in a heartbeat. And he can also quit handing out options like candy and demand performance for the pay they receive, the old American way of doing business.

To: RetiredNow who wrote (57719)	2/20/2002 10:09:17 AM
From: Stock Farmer	Read Replies (1) \| Respond to of 77400

Mindmeld, please read closer. You seem to have read only the first paragraph. But if you'd like, we can do it your way. As to the estimated payroll, SG&A is hardly the only place to find payroll. I've seen R&D done by robots, but only in the science fiction magazines. So you are likely low. Let's not take my word for it ('cause you're the accountant and know where costs are booked), let's triangulate using other measures. Back almost a year ago, the work force reduction charge was 397 M$ for 6 months severance (salary & benefits) on 6000 employees or 200 M$/quarter. Boost that across all most recently reported 38,000 employees makes 1,400 M$ per quarter. Ok, salary is probably 70% of Salary & Benefits to give us about a round billion per quarter. So you'd ask for a salary boost of 30% or about 300 Millions per quarter or 1.2 Billions per year. Versus my wet finger stock equivalent guess of 1.0 Billions per year (just to compare methods). Stock option tax benefit at most recent rate is a paltry 142 M$ gets us to a scientifically calculated 1.34 Billions, versus my wet fingered 1.5 Billions. The remaining conclusions are still within the realm of reason. Cisco's earnings are in the range of 2.7 Billions annually (GAAP), even if we close our eyes to drawing down of deferred revenue and a not-unlimited pile of not-worthless inventory. 1.7 Billions in earnings instead of 2.7 Billions in earnings. If we open our eyes, this number goes down by about 800 M$/year, easy. Based on inventory alone. Won't sink the company, but with eyes partially wide open to the effects, let's say we allow a V-shaped growth rate of 50% and a 2003 PE of 50 starting at 0.9 B$/y earnings. That would give us a price of... $8 Generously. I think that was my point really. The company's actual profitability ex options (assuming they are a necessary expense) doesn't support the current stock price. So why would we pay more for a stock if we are expected to foot the bill rather than the company?