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

To: Jacob Snyder who wrote (63871)	5/7/2003 10:59:56 AM
From: hueyone	Read Replies (1) \| Respond to of 77400

All their other numbers can't get much prettier. I suspect Cisco's reported gross margins are getting close to as good as they can get. online.wsj.com Snip from WSJ article: Cisco is posting higher profit despite lower sales because the company has greatly reduced costs. Gross margin, or profits before operating expenses, rose to a record 71%, from 64% in the year-earlier period. Cisco has been boosting gross margin by streamlining manufacturing, buying bigger quantities of fewer components, for example. Operating expenses fell 8% from a year earlier. Regards, Huey

To: Jacob Snyder who wrote (63871)	5/7/2003 12:00:47 PM
From: RetiredNow	Read Replies (1) \| Respond to of 77400

Hi Jacob, all the bad news, except for one thing. The FASB is trying hard to expense stock options. If they get their way, Cisco's EPS number will drop by half or more. That's significant. So keep an eye on that one. I'm not much of one to short, but I too believe fair value is lower than where we are at today given the zero growth prospects in the near future.

To: Jacob Snyder who wrote (63871)	5/7/2003 12:04:01 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 77400

Hi Jacob, Been reviewing the financials as reported in the 8-K. Firstly, free cash flow remains strong, and impressive on the surface. On a classical basis, (earnings + depreciation - capex) for the 9 months ending April, it comes in at about 3.1 B$, not including non-cash capex which still appears to be significant. How significant? Cisco depreciated about 1.1 B$ worth of goodwill and purchased intangible assets in the last 9 months, yet the total outstanding increased to 4,364 M$ from 4,362 M$. It's pretty clear that non-cash purchases of kibble are providing a boost of 50% or so to free cash flow. This is still a major strategy of the company and a sleight of hand that many people do not yet fully appreciate. However it is not easily hidden. During the same period the company also spent 4.5 B$ buying back stock. Shares outstanding decreased by 244 M shares for an effective cost to the company of $18.44 per share. The rate of dilution represents a $3 premium, or about 1/5, putting a dollar cost to dilution of 1/5 x 4.5 = 0.9 B$ in the last 9 months. A bit more than a third of earnings in the same period. Another metric to watch is shareholder equity, which has dropped from 28.7 B$ to 27.6 B$, a decline of 1.1 B$ on an absolute basis. Shareholder equity per share of $3.91 is $0.01/sh lower than the $3.92 from 9 months ago. So despite impressive free cash flow capability of the core business approaching 1B/quarter, it's still being fueled by equity financing to a large degree and the company is still spinning shareholder wealth in reverse. This does not include the full impact of wealth transfer from shareholders to insiders as a consequence of stock options, which is no longer as dominant in the business model equation as it once was. Gross margins are impressive. Very impressive and I had not anticipated that they would remain so strong. I remain concerned about the price on a valuation basis, however I also sense a general upward bias to market sentiment and expect to see the general upwards drift continue for some time. As bad as things are, I suspect we are in a capital-trap where excess wages continue to flow into the market, seeking the best of a host of bad deals. And there are many worse deals out there (from a shareholder perspective). John

To: Jacob Snyder who wrote (63871)	5/7/2003 12:34:05 PM
From: faqsnlojiks	Read Replies (1) \| Respond to of 77400

<<<There was a long discussion on this thread a while ago, about the valuation of CSCO, and the overall conclusion was that the stock is fairly valued somewhere in the $5-10 area. >>> Hi Jacob. If I recall, this valuation estimate was made prior to share buybacks and the acquisition of Linksys (which I feel will make a significant impact). I would really like to see another valuation after next quarters numbers (which should include Linksys data).

To: Jacob Snyder who wrote (63871)	5/8/2003 3:52:59 AM
From: Paul V.	Respond to of 77400

Jacob, from the DW technical indicators Dorsey Wright has CSCO with a Vertial top pf $22 and AMAT with a Vertial top of $21. Both have broken douple tops and of the five DW indicators they have five out of five of the DW positive indicators. NAIC reinforcing the ValuelineHAS AMAT with a high of $30-45. The bull shaped curve average is only at the 54.95 percentile of the 40 sectors the DW monitors. Only insurance, finance, gas utilities, banks and saving and loans are above the 64 percentile with only the insurance at 64%. The rest are overbought. There are no sectors lower than 34%. COMPUTER sector (CSCO) is at 42%, Telecommunication (QCOM) at 46% and Semiconductors (AMAT) at 54%. All market indicators (short and long) are positive. However, the short indicators of ten week MA, Option bull percentages and high/lows are getting over bought with the long term iindicator, 30 week MA, However, I am weighting for a pullback prior to buying, probably sometime between earnings. Paul