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

To: Lizzie Tudor who wrote (74448)	11/8/2007 2:35:59 AM
From: Elroy	Read Replies (1) \| Respond to of 77397

I'm kind of surprised at the historical numbers for CSCO PE as well. I usually calculate a forward PE as today's share price divided by the next 4 quarters of earnings. So, even if the forecasts eventually rose, and the forward PE therefore declined, prior to that occurring it seems the CSCO PE should have been above 35x, but Factset says that's not the case. For GOOG, it shows a steady decline in forward PE from ~60x in 2004 tp ~28x last summer, and heading back up since then. That sounds about right. Anyway, 700x is pricey for any stock that is not going to become the dominant company in its industry over the next 10-20 years. The problem with these small high PE companies is that perhaps some of them will eventually grow into their valuation, but most won't. If you can pick the right one, you're OK, but if you accidentally pick the one that is going to turn into Cabletron or 3Com kiss your investment capital goodby.