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

To: Ibexx who wrote (58443)	3/12/2002 2:58:06 PM
From: JakeStraw	Read Replies (2) \| Respond to of 77400

Hmmm...I wonder if Cisco has/had any control over their off balance sheet entity(ies?)...

To: Ibexx who wrote (58443)	3/12/2002 3:51:16 PM
From: Mick Mørmøny	Read Replies (1) \| Respond to of 77400

The Andiamo financing arrangement, probably "represents one of the last hurrahs of the startup climate that was around in 2000 and started to come apart in 2001," said A.A. LaFountain, an analyst at Needham & Co. "Going forward, a situation like this would be a lot less likely." Still, Cisco is probably being cautious, and the size of the Andiamo investment suggests it "thinks it's found something it can lever" he said. Focusing on the accounting for this modest investment "is taking our eye off the ball," LaFountain said. The real issue is how Cisco meets the challenge of growing an $18 billion company at the rapid clip investors expect. "You can't justify the stock price unless they get to $50 billion" in next four to five years. "They've got to pursue everything," from internal growth to acquisitions to partnerships," he said. "There's no way you can grow a company of this size by limiting your options." Cisco spokeswoman Terry Anderson said the company has used "spinin" arrangements, like the Andiamo one, "as an entrepreneurial approach to product innovation." And Cisco takes on less risk because the young company has to achieve a certain set of milestones before it's acquired, she said. Even if Cisco pays maximum prices for the four spinins discussed in the filing, a total of $3 billion, its cash position will remain strong, said UBS Warburg analyst Nikos Theodosopoulos in a research note. Cisco has about $21 billion in cash and short term investments and is generating $1 billion to $1.5 billion a quarter. Andiamo's allstock purchase price will be determined by a multiple of the revenue Andiamo generates, but will reach no higher than $2.5 billion. Merrill Lynch's Wilson said in a note that Andiamo's switch product will be available around the fourth quarter of this year. If it occurs, the acquisition will close by July 2004. Acquired immediately and at top dollar, the deals would dilute earnings per share by a maximum of 2.3%, said Hasan Imam, an analyst at Thomas Weisel Partners, in a note. (MORE) DOW JONES NEWS 031202 03:46 PM