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

To: VegasMan who wrote (62273)	11/6/2002 5:23:06 PM
From: RMP	Read Replies (1) \| Respond to of 77400

Any comments on guidance??? If the outlook is positive we can expect some more upside. Otherwise, we may give back some unless the markets have decided to ignore it.

To: VegasMan who wrote (62273)	11/6/2002 6:05:48 PM
From: Stock Farmer	Read Replies (2) \| Respond to of 77400

CSCO bought back 1.1B in stock during Q1. Good fact. What does it mean? Need to compare this to how much cash flow they generated in Q1 and the effect on shares outstanding. Answers (for those who don't like to do homework) are 1,077 M$ buyback to 1,067 M$ OCF. To achieve reduction in outstanding shares from 7,301 to 7,249. Note that if we assume that any issuing of shares is not a cost to the company, then they paid about $20.71 per share to do the buyback. We know they didn't pay this much: nobody could be that incompetent; the price didn't get there in the quarter. So we ditch the false hypothesis. If we assume shares are worth about $13 then we have to assume there was a further [Edit: 1077 M - ($13x52 M) = ] 401 M$ worth of shares issued that represents a cost to the business paid for by offsetting equity financing. They reported 41 M$ worth of consideration received for these shares, so that leaves 360 M$ worth of cost of doing business that doesn't show up in the income statement (but is still a cost). When we subtract this additional cost from the reported 618 M$ of GAAP profit, the actual profit of the business this quarter works out to about 258 M$ or about $0.036 per share, nudging the annualized PE into three digits. Makes upside potential at this price rather hard to contemplate. John