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

To: Lizzie Tudor who wrote (61743)	10/8/2002 10:38:22 PM
From: Ed Forrest	Read Replies (3) \| Respond to of 77400

Anyway what does it matter where the 20 billion came from at this point, the fact is they have it- there is no more options dilution coming for a while and your argument is quite valid looking at margins. Lizzie Careful Lizzie talk like that will disqualify from entry into the Foul Weather Friends of Cisco club. :) I’ve dubbed that bunch the FWFOC because they only seem to find their way here whenever Cisco is, yet again, in the midst of “The Perfect Storm” If, and it could happen again, Cisco were to uptick 2 days consecutively then their off to some other disaster site where they will gleefully espouse their views that the market will continue its downward spiral forever, if not longer.:) They are indeed, if nothing else, predictable. Ed

To: Lizzie Tudor who wrote (61743)	10/8/2002 11:47:51 PM
From: Elroy	Read Replies (1) \| Respond to of 77400

your argument is quite valid looking at margins. Well, I agree with you. My point is valid. Glad we finished that discussion quick! Show me any other company with over 20% operating margins and no debt that is trading anywhere close to 1.5x revenues. I'll buy it.... Elroy

To: Lizzie Tudor who wrote (61743)	10/9/2002 12:19:56 AM
From: Stock Farmer	Read Replies (2) \| Respond to of 77400

Lizzie, you are not giving enough weight to the facts. Firstly you were dead wrong about this: His implication is that the 20billion that cisco has in the bank came from options exercises which were a dilution to the shareholders. The problem is there is no way to prove or disprove it... No, he suggested that the 20 B$ they have in the bank was not a product of a great business, but an artifact of a great pyramid scheme. Of which stock options are a big component, but not the whole thing. Which is easy to prove, just by peeking in the 10-K. Cisco reports that of their accumulated 28.656 B$ worth of assets, 20.950 B$ came from equity financing. You wrote cisco certainly collects cash from options but it also generates a TON of cash from operations and then made some stellar investments in the 90s too... They issued more than a billion shares at average price more than $35. Then proceeded to turn that whole lot into 28 Billion dollars of assets. Inclusive of those stellar investments, the total that the business contributed was 7.706 Billions. It doesn't take gorilla power. A monkey could do that Lizzie. A monkey. Give me $35, I'll give you $28. And if you want I'll even report $8 of that as "after tax profit" and the rest as owing to your generosity. I'll do that for you as many times as you wish. Billions of times if you want. As far as Anyway what does it matter where the 20 billion came from at this point, the fact is they have it- there is no more options dilution coming for a while and your argument is quite valid looking at margins. I agree here in part. The part about the fact is that they have it. It matters where it came from only in so far as we want to figure out where things are likely to go from here. A horse might have won the last race by a nose, but that doesn't mean that amputating it at the neck won't affect the outcome of the next race. The point here for folks who don't like long-winded posts is that if it weren't for laundering shareholder contributions, Cisco wouldn't have been profitable at all. Now that this environment is intolerant of these conditions, how profitable will it be? Take a look in the 10-K. The signs are already starting to show. Check the revenue for FY 2000. Check the margins (gross and net). Check the revenue for FY 2002. Incredible... they are the same within 0.1%. But the margins are different. ask WHY. The business is changing shape. It is taking more effort to earn the same revenue, and the company is still riding the tail-winds of acquisitions not yet 3 years old. We have yet to see how well the company can grow revenues without aggressively dilutive acquisitions. And 20 B$ in cash only buys 13 B$ in revenues with Ciscoesque margins and Ciscoesque P/S ratios. Although I wouldn't be surprised in this climate to see that happen over the next 18 months or so. But heck, if Cisco does buy 13 B$ in revenues then it will hit the 31 B$ mark in revenues and be worth about $8.50 per share based on its earnings using 5% risk free rate of return and 0% equity premium. For pretty close to a zero percent return on investment from here. Zero percent over the next 12-18 months doesn't sound very attractive to me. Personally. From a strategic perspective you'd probably do much better putting your money in Cisco kibble. John