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

To: Stock Farmer who wrote (61442)	9/26/2002 2:33:59 PM
From: RetiredNow	Read Replies (1) \| Respond to of 77400

To back up what John said about us coming up with a fair value of around $8 using what he called optimistic assumptions, here are some of those assumptions we made: * rev growth of 15% in 2003 * rev growth of 20% in 2004 * rev growth of 25% in 2005 * rev growth of 20% in 2006 * rev growth of 15% in 2007 * rev growth of 10% in 2008 * rev growth of 5% in 2009-2032 * 5% discount rate If you jack up the discount rate to something more reasonable, like 10%, then the price comes to $5.81. Those projections may very well turn out to be optimistic, considering that 2003 is shaping up to be a flat year and no real recovery is in sight. BTW, Warren Buffett uses discounted cash flows to value the companies he buys as well. Can't argue with Buffett when it comes to successful investing. :)

To: Stock Farmer who wrote (61442)	9/26/2002 3:16:09 PM
From: Lizzie Tudor	Read Replies (2) \| Respond to of 77400

The logic implies that Cisco's current price does not include an expectation that business will recover, thus when the business does recover this unexpected event will result in a higher stock price. The problem is that Cisco's stock price includes a whole heck of a lot of recovery in its business. In other words, there's not a lot of room for risk in there. I'm not sure there should be much risk in there given that cisco grew revenues at 12% y/y as of the Aug qtr. By all accounts this is the worst tech recession in 30 yrs and cisco's business is the worst of the worst and they still grew by 12% on the top line. What more can you say. L