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

To: RetiredNow who wrote (62653)	1/8/2003 8:53:44 PM
From: Wyätt Gwyön	Read Replies (3) \| Respond to of 77400

you need to consider how much of the FCF is financing related (just like most of their retained earnings). also, you might consider what the possible effects of those billions of dollars of "written off" goods are having. personally, i think between Ebay and myself, i could be enormously "free cash flow positive" if i had billions in zero-cost inventory lying around. also, if they waste money buying in stock just to keep the share count from bloating too much, that doesn't sound like "free" cash flow to me, even though it is counted as such. just to simplify (and to get rid of that stupid cash which they are not doing anything good with), if they take their $21BB to market they can buy back around 1.5BB of their own shares. this will raise EPS by about 19%. that increases your $4.29 to $5.10, but we've taken away all the cash to do it. but you need to look at how their supposed "earnings" are affected by options--i believe even the "great" Chambers admitted their earnings would have been reduced by something like 80% if he had only publicly recognized options as an expense (the very options that made him filthy rich, unlike his publicity stunt of a salary). so if you look at it that way, then you need to reduce earnings by 80%. that lowers your $5.10 to $1.02. add in the stub of tangible book left over after they blow all their cash buying back less than 20% of their shares and you get to a little over $3. or the price of a cappuccino, as i've long maintained. of course, this all assumes your $4.29 DCF calc is OK; i.e., assumes your assumptions turn out to be true. which is unknowable in advance. even if i knew what your assumptions were. which i don't. this makes it double-unknowable.