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

To: RetiredNow who wrote (67934)	5/20/2005 7:59:08 AM
From: RetiredNow	Respond to of 77400

Cisco Router Sales Momentum To Continue In 2005 05.19.05, 4:45 PM ET Standard & Poor's Equity Research reiterated a "strong buy" on Cisco Systems (nasdaq: CSCO - news - people ) after data from independent research firm Dell'Oro showed Cisco gained share in the high- and low-end routing segments and maintained share in the mid-range segment. S&P Equity Research said, "With the company recently reporting April quarter router sales up 8% sequentially from the January quarter, the market share gains are not a surprise to us. We believe that router sales benefited from strong demand for the new ISR product line, which integrates security and voice over IP applications." S&P Equity Research said it expects Cisco's router sales momentum to continue throughout 2005, aided by Cisco's integrated solution approach.

To: RetiredNow who wrote (67934)	5/20/2005 8:11:49 AM
From: rkral	Read Replies (1) \| Respond to of 77400

mindmeld, re "But I'd argue that this is true, but since 2001, the cash Cisco is generating is 95%+ coming from operations, not from options exercises. " A very significant reason for that is you, like Cisco and many other companies, are counting "stock option income tax benefits" as part of cash flow from operations (CFFO). But I'd argue that it is quite disingenuous to count the tax benefit as part of CFFO on the cash flow statement ... and then to count it as part of common stock and paid-in capital (CS&APIC) on the stockholders' equity statement. CS&APIC implies that the cash is from a financing activity ... not an operations activity. With that POV, the cash Cisco is generating is more like 75+% from operations. And that's before expensing options on the income statement. Ron

To: RetiredNow who wrote (67934)	5/20/2005 7:47:05 PM
From: pfalk	Read Replies (1) \| Respond to of 77400

Mindmeld said: That's interesting, but I'm not sure I agree. A company will do whatever it takes to increase the stock price...... Mindmeld, It's just me cynically pointing out that management chose one of all those legal ways of spending the money, that coincidentally happens to benefit them personally the most. If they spend 12.5 B$ on stock buyback they will enrich the shareholders by reducing the number of outstanding shares by 10% thus increasing the value of all shares by approx. 10% This will result in further dilution (because more options will be in the money). This will reduce the 10% increase to something less, depending on the number of options that now become "over water", thus reducing the likely increase of shareprice from 10% to something less, say 8.5%. The difference goes into the pockets of the holders of Stock optionns. If on the other hand they spent the 12.5 B$ on a one time dividend, then all that money would go to the existing shareholders, which would (probably) not result in a share price hike, thus no increase in "options in the money". BUT all the existing shareholders would still see the value of their shares plus dividends increase by 10 %. (I chose 12.5 B$ because that is exactly 10% of current market value, just to make the math simple) My point is exactly that the management is VERY smart at Cisco, but that shareholders aren't necessarily the primary benefitiaries of this. This is what I mean when I say that ESO's are a "tax" on shareholders future increases in share price. P.