Cisco & Other Comm Equipment Manufacturers
Jim,
<< I've only been replying to your (others) comments to FUD/FUDD that your started in the first place. >>
I did that.
I think we have beaten the FUD/FUDD thing to death,however, and its time to move on.
I'll put myself down as the head beater, since I made too numerous posts on this subject.
FUD exists. Hype exists. Bottom line for us is technology adoption and future earnings growth in the face of either reality.
Meantime, the gorilla Cisco reported yesterday, and I think that's the last of the Comm Equipment manufacturers to report, so I've updated some tracking tables on the sector below.
In my own personal tech equities portfolio, during the last few weeks Cisco (+18.8% CYTD) moved ahead of Qualcomm (-11.6% CYTD) as my number one portfolio hold. Mr. Market Giveth, and Mr. Market Taketh Away.
* Cisco is solid number 1 in TTM net margin percentage, with Qualcomm #2, and Nokia #3.
* Cisco has also moved up to the number 3 slot in TTM Revenue Rankings.
* In 2002 Nokia was the 4th most profitable IT company in the world ($3.32 B) and Cisco was 9th ($1.89 B).
* Cisco Cash flows from operations were $1.26 billion for the third quarter of fiscal 2003, compared with $1.59 billion for the third quarter of fiscal 2002, and compared with $1.36 billion for the second quarter of fiscal 2003.
* Cash and cash equivalents and total investments were $20.3 billion at the end of the third quarter of fiscal 2003, compared with $21.5 billion at the end of fiscal year 2002, and compared with $21.2 billion at the end of the second quarter of fiscal 2003.
* During the third quarter of fiscal 2003, Cisco repurchased $2.0 billion of common stock. The total amount of stock repurchases for the first nine months of fiscal 2003 was $4.5 billion.
I have tacked on some comparative valuation metrics for the 3 market cap leaders from 2 sources following the tables below.
Ranking the Comm Equipment Manufacturers
I. Communications Equipment Manufacturers by TTM Revenue:
.
Through yesterdays earnings ...
.
CQ1 2002 4/25/03 TTM 4/25/03 M. Cap
TTM TTM Market Net TTM Rank
Rev Rank Revenue Cap 000 Margin P/E Q1 2003
.
1. Nokia $34,021 $82,929 11.9% 20.7x 2
2. Motorola $26,541 $18,872 (7.0)% NM 4
3. Cisco $19,005 $113,079 17.7% 34.4x 1
4. Alcatel $18,907 $11,202 (27.9)% NM 6
5. Ericsson $18,323 $15,878 (13.0)% NM 5
6. Nortel $10,047 $11,203 (28.7)% NM 7
7. Lucent $9,704 $8,916 NM NM 8
8. Avaya $4,519 $1,853 (15.9)% NM -
9. L-3 Comm $4,403 $4,318 5.3% 18.6x 9
10. QUALCOMM $3,785 $25,348 13.8% 51.1x 3
Y. Juniper $582 $4,625 (12.0)% NM -
Z. InterDigital $88 $1,266 2.9% 699.7x -
·
II. Communications Equipment Manufacturers by CY2002 Revenue:
CY 2002 2/7/03 2/7/03 M Cap
TTM TTM Market Net TTM Rank
Rev Rank Revenue Cap 000 Margin P/E CY2002
.
1. Nokia $32,488 $64,956 11.4% 32.1x 2
2. Motorola $26,679 $17,741 (9.3)% NM 4
3. Ericsson $19,792 $12,140 (8.5)% NM 5
4. Alcatel $20,725 $8,522 (26.2)% NM 7
5. Cisco $19,209 $92,843 16.2% 30.5x 1
6. Lucent $10,817 $5,916 NM NM 8
7. Nortel $10,560 $9,087 (33.9)% NM 6
8. L-3 Comm $4,011 $3,921 5.3% 18.5x 9
9. QUALCOMM $3,438 $28,590 13.4% 63.9x 3
Z. InterDigital $69 $630 (18.8)% NM -
.
III. Historical Revenue Ranking Reshuffle
.
How High Market Cap Comm Equipment Manufacturers
Top Line Revenue Sales (USD) Has Changed in 3 Years
.
Actual Actual TTM C2002 End
2000 2001 2002 End Revenue
Revenue Revenue Revenue Rank*
.
1. Motorola $37,580 $30,004 $26,541 2
2. Lucent $33,813 $21,294 $9,704 7
3. Nortel $30,275 $17,511 $10,047 6
4. Alcatel $29,580 $22,597 $18,266 4
5. Ericsson $29,026 $22,117 $20,308 3
6. Nokia $28,517 $27,801 $32,868 1
7. Cisco $18,928 $22,293 $19,209 5
8. Corning $7,273 $6,272 $3,071 10
X. QUALCOMM $3,197 $2,680 $3,785 9
Y. L-3 Comm $1,910 $2,347 $4,011 8
Z. InterDigital $57 $53 $69 -
.
* These are Calendar Year comparisoms for 2002
and Fisal Year comparisoms for 2000 and 2001
.
Notable Exclusions from above for lack of complete wireless data
are Siemens, Toshiba, Samsung, LGE, NEC, Fujitsu, Hitachi, et al.
.
All numbers calculated on GAAP or Reported IAS (not Pro forma)
.
Source: Multex Fundamentals / ProVestor Plus Company Reports
.
Some Comparative Valuation Multiples
·
Calculated by Multex CSCO NOK QCOM
·
Price to Cash Flow (TTM) 22.6x 19.4x 32.0x
Price to Free Cash Flow (TTM) 26.4x 17.4x 22.2x
Price to Sales (TTM) 6.1x 2.4x 7.0x
Price to Book (MRQ) 4.1x 5.2x 3.7x
Price to Tangible Book (MRQ) 4.8x 6.0x 3.9x
Dividend Yield NA 1.5% 0.6%
·
Calculated by First Call
·
Forward PE 25.6x 19.7x 24.6x
2003 PE 26.9x 20.1x 24.1x
2004 PE 24.8x 17.8x 18.4x
First Call Beta 2.2 2.0 2.2
First Call PEG 1.79 1.83 1.21
###
>> Cisco Offers Hopes, but Investors Worried
Wed May 7, 2003
Ben Klayman
Reuters
Cisco Systems Inc., a technology bellwether, provided tantalizing clues that the information technology market is improving, but investors were disappointed by the company's flat sales outlook for the current quarter, analysts said on Wednesday.
The company, the No. 1 maker of equipment that directs Internet traffic, late Tuesday reported its second-best-ever net profit in its fiscal third quarter, above analysts' expectations. However, investors were frustrated with Chief Executive John Chambers' forecast that current-quarter sales would likely not rise from third quarter's $4.62 billion.
Shares of Cisco were off 36 cents, or 2.3 percent, at $15.54 on Wednesday morning on the Nasdaq in heavy trade. The American Stock Exchange Network index .NWX and the Nasdaq composite .IXIC were both trading down.
Still, analysts said the San Jose, California-based company gave hints that companies are beginning to spend more heavily again,
"While flat revenue guidance for (the fourth quarter) was slightly below what we expected, Chambers' professed 'bias to the upside' on guidance was encouraging," J.P. Morgan analyst Ehud Gelblum said in a research note on Wednesday.
Cisco's wide base of customers in corporate America makes it a key benchmark for the health of U.S. corporations. It derives about 80 percent of its sales from corporate customers and the rest from the ailing telecommunications sector.
Chambers on Tuesday said while February and March sales were below what Cisco had hoped, April was stronger than expected. He also said, when pressed by analysts, that his bias regarding sales in the fourth quarter was toward growth rather than decline.
He also said he was "cautiously optimistic" about outside factors, although he warned that it was too early to say the April strength is a sustainable trend.
Prudential Securities analyst Inder Singh said in a research note that the forecast was conservative, and there is no incentive for Cisco to raise the bar at this point.
He said the results would not change anyone's thesis as Cisco provided enough ammunition for the pessimists to say things are still not rosy and enough positive signs that the market is improving.
Singh pointed to a stronger April from Cisco rival Avaya Inc. AV.N , which also said it was seeing more and larger requests for proposals from companies than it had seen before.
Chambers, in a telephone interview late Tuesday after the company's results were announced, pointed out that Cisco had provided forecasts of flat to down revenue the past two quarters and now it was just flat. He also said previously he had been pessimistic about outside factors.
"What we tried to do is play it right down the middle of the fairway and tell people, 'Here are the positives and here are the concerns'," he told Reuters.
For those who read Chambers' "body language" like those who follow Federal Reserve Chairman Alan Greenspan, there was enough there to take hope.
"While shares have risen recently, outlook and tone may be viewed as more encouraging," Lehman Brothers analyst Tim Luke said in a research note. <<
- Eric - |
