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

To: RetiredNow who wrote (58391)	3/11/2002 4:18:34 PM
From: RetiredNow	Read Replies (2) \| Respond to of 77400

Hi John et al, Cisco's 10-Q is out, so we can update our cash flows analysis. I'll post my thoughts after I read it. biz.yahoo.com

To: RetiredNow who wrote (58391)	3/11/2002 6:23:46 PM
From: hueyone	Read Replies (1) \| Respond to of 77400

Hello Mindmeld: If I am able to produce $5 of value this year for my company, and then due to technological advances I'm able to produce $10 of value next year, then my productivity has increased and my company becomes more profitable by doing more with less or doing much more with more. I guess I don't understand the old, "increasing productivity leading to permanently higher profits argument" which was widely cited during the bubble to support sky high PEs. I have trouble making the jump from the increasing productivity to the permanently increased profits. In my industry for example, my company as well as my competitors have all had access to similar, productivity -enhancing technological innovation. Although I believe everyone in my industry is considerably more productive than they were five or ten years ago, the industry on average is not any more profitable than it has been historically. If anything, the industry is less profitable, because more players came in to my industry to exploit the excess returns that were available in my industry when the industry was younger. Excess returns attract competition and competition pressures margins. There are so many factors that impact profitability besides productivity. I would suspect the gains in productivity per auto worker since 1990 have been absolutely enormous due to wonderful technological advancements in building cars---yet Ford stock is only up about 50% since 1990. Perhaps I am looking at this matter wrong, but in my opinion, increasing productivity does not necessarily lead to higher, sustained profits. Best, Huey