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

To: t2 who wrote (65980)	8/11/2004 10:58:48 AM
From: larry	Respond to of 77400

QQQ is no longer a great short since it's no longer an index of tech issues. I do believe that tech will suffer in the next leg down, but believe that financial stocks will suffer much more because they have reaped in too much benefits from free cash from Greendaddy and the game is about over. When companies like GM generates a significant portion of earnings from loans/mortgage, you know that the game is about to be end. I haven't shorted anything in this downturn outright. Did purchase some puts on AMZN and AMAT last month and have closed all positions recently. However, I do feel that both issues have some serious room to go down in the fall though. The business in Boston area is slow with the exception of the housing market, which is going like crazy. Several of my friends who recently lost jobs have all commented that the hirings have all halted since the end of June. Good luck.

To: t2 who wrote (65980)	8/11/2004 11:10:26 AM
From: Elroy	Read Replies (2) \| Respond to of 77400

Well, if you ignore the share price movement and just look at the numbers, Cisco's results weren't that bad. A couple of points: Good stuff: 1- They increased revenues 5% sequentially in a 13 week July quarter versus a 14 week April quarter. If Cisco's biz is as linear as they claim, the "normalized" sequential revenue growth was closer to 12%. That's damn good for sequential growth. 2- Product book to bill was 1.0x. Orders in July Q (13 weeks) increased over orders in April Q (14 weeks). These numbers by themselves indicate a strong outlook. 3- Business was described as linear. Bad stuff: 1- Inventories went up faster than Costs of Goods Sold, even though they were expected to decline. Yup this may be bad, but its not actually that bad for CSCO since, as I said in my earlier post, CSCO's risk of inventory obsolescence is among the lowest in tech. They will either keep inventory at these higher levels because that is what makes the most sense in satisfying demand quickly, or they will burn them off in future quarters. Basically, CSCO is telling investors to get used to having Cisco carry more inventory on their books. That's not the end of the world. 2- Gudiance of flat to up 2% sequential revenues was weak. This is bad qualitatively, and does not jive with the good stuff in point #2 above. CSCO's explanation is that that's the current mood (oil above $45, no job growth, interest rates going up). Fair enough. But all it takes for bad point #2 to go away is for them to deliver a surprising 3% sequential growth in October, which is well within normal seasonality, and it wouldn't surprise me at all (CSCO always beats the high end of their own guidance, right??). If you as me, the good stuff (which is mainly numbers) outweighs the bad stuff (which is half qualitative "wobbly guidance"). I think it is a good buy down here (relative to other large cap tech names). Elroy