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

To: Kirk © who wrote (66608)	11/27/2004 9:19:59 AM
From: RetiredNow	Read Replies (1) \| Respond to of 77397

Kirk, you say you are an engineer, but I used to be a CPA and have a Master's in Accounting and your analysis is dead on. So don't apologize for what you posted. If all of you want, check out John Shannon's posts from many moons ago. He explained it best. However, the net net is exactly what Kirk posted as well. Cisco's profits go to insiders and the buybacks help them cover the tracks. The only positive I see is that their buybacks of the last 2 years have actually been more than what they've given out in options. So there's a little upside to investors. It is well known that Chinese companies are putting the big squeeze on manufacturing company's margins and that includes Cisco. Revenues are also hard to grow, which also makes it hard to grow EPS. One way to improve EPS fairly reliably is to buyback as many shares as you need to hit your EPS forecasts. With as much cash on Cisco's books as they have, this is an excellent way for them to meet estimates. But you have to look at B/S and I/S effects to see the full picture. Decreasing book value is never irrelevant, contrary to pop-culture neo-financial analysis methods. So as I've said before, Cisco is not really a worthwhile investment to shareholders until they stop issuing stock options. That is, unless VOIP and their other advanced technologies can help them double their revenues in the next 5 years. Then you might be looking at a doubling of the stock price as well. Not bad for such a big company. :)