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

To: faqsnlojiks who wrote (67189)	3/4/2005 3:53:51 PM
From: RetiredNow	Read Replies (1) \| Respond to of 77400

Why November? Here are my thoughts. June 15th is the FASB deadline for all U.S. companies to begin expensing stock options. Unless Chambers and the tech giants pull a miracle out of their hats (not outside the realm of possibility since Chambers is a known miracle worker), then that expense number will be 1/4 to 1/3 of Cisco's EPS for the quarter ended July '05. That may drag down the stock price a little, if it isn't already priced in. I think it will take a few months for Wall Street and the retail investors to digest the new reality of stock options expensing. So I believe this whole thing is going to keep the lid on Cisco's stock price until after this July. Then after July, you have the historically crappy Fall months of Sept and Oct. The whole market usually doesn't fair very well during those months. So I don't expect this year to be any different. But between Aug and Nov a little bit of magic happens. I bet Chambers will announce a curtailment of stock options dilution, because suddenly the thought of having a recurring charge like the one in July'05 will become very unpalatable for him to report to Wall Street. In addition, investors will start to realize the following: 1) The big expense for stock options is in the past. Going forward there won't be as much dilution. 2) Cisco continues to buyback $6 Billion of stock every year. This directly adds to EPS in a very big way. 3) Cisco continues to be a superbly managed company with tremendous margins and tremendous opportunities ahead of it like the current buildout of IP networks to replace circuit switched voice, VOIP, security, VOD, etc. 4) The normally bad months of Sept and Oct are over, and Nov through Jan are typically great months for the stock market. Add it all up and you have a stage set for a very nice Cisco stock price rally from Nov to Jan. I'm betting that Cisco ends this year at $24 and continues to move up nicely next year. From these levels, that's a 33%+ gain. Very nice indeed.