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

To: Elroy who wrote (67098)	2/17/2005 8:01:37 AM
From: Amy J	Read Replies (2) \| Respond to of 77400

Elroy, yes, Cisco doesn't have the high volume leverage in cost structure that the semiconductor business has such as Intel. In the past, when Intel turns around, its stock can unexpectedly turn on a dime due to the leverage high volume gives it. Cisco doesn't seem to have this same type of leverage as Intel's manufacturing. This makes writing cov calls on intc riskier (due to the potential to change on a dime) than csco but sometimes more profitable, I think. But how do you predict the direction of the economy? If you believe Greenspan he thinks the economy is stronger (which it appears to be), but if you believe SIA they apparently think semis are slowing a tad. Tend to have the same opinion as Mindmeld (about a spark that could alight things) but more with Intc due to its manufacturing leverage. Right now, am favoring writing cc's on csco than intc holdings in case intc moves quickly because I tend to believe Greenspan's report about the economy being reasonably strong and how Asia continues to be okay. Why do you and I think we'll have a semi rally but SIA isn't talking about one? Believe Csco should be valued at $24 right now, assuming a 5 year 15% annual growth rate. Cisco has taken an unusual beating by WS and I don't know why. I think Csco is undervalued. Also, Intel stumbled last year and it showed up in the stock, but the reverse of that is they've cleaned up and haven't had any major stumbles since, so believe that should show up in the stock. Regards, Amy J

To: Elroy who wrote (67098)	2/17/2005 9:49:35 AM
From: JakeStraw	Read Replies (1) \| Respond to of 77400

Isn't OVTI facing increased competition, and a SEC investigation? Haven't they also had four different CFOs in two years??

To: Elroy who wrote (67098)	2/17/2005 8:52:21 PM
From: RetiredNow	Respond to of 77400

I know Cisco. Have been an investor on and off since 1996. It's the only stock I own. :) The thing you are forgetting is that stock prices move on earnings growth as well as revenue growth. So while you are correct in saying the revenue growth prospects resemble that of a mature company, the earnings growth prospects are very bright indeed. Buybacks coupled with reduced ongoing dilution will keep bottomline growth going at the 20% rate for the next 3-5 years. Bottomline growth will be ignited once options expensing starts in June. I believe Cisco will cut back on options giveaways and/or increase the vesting period. Both of those actions will reduce ongoing dilution. That combined with continued buybacks at the rate of $1.5B per quarter and you've got 20% per year bottom line growth. Wall Street hasn't figured that into their equations yet, but when they do in the second half of this year, you will see EPS forecasts going up, and with it Cisco's forward PE multiple and its stock price. I admit I'm looking into my crystal ball a bit here, but sometimes I have a sense for these things. I remember I was the first to call the coming of the big bath quarter for Cisco 6 months before Cisco announced their big write off of inventory. That wasn't a lucky guess. That was years of CPA experience putting two and two together. That's what I'm doing here. This time around, the evidence is telling me Cisco is about to change their compensation to curtail options and/or increase the vesting period. They may even move to restricted stock like Microsoft did. Why do I think this? Chambers has been very vocal about how expensing will force him to change company stock options plans. In addition, every other company faced with expensing dramatically reduced their dilution by a variety of mechanisms. This is about to happen with Cisco too. Once it does, maybe we get a blip downward in the stock price, but then when/if mgmt announces changes in their options plan, watch the earnings and stock price explode upwards. JMHO.