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To: Mang Cheng who wrote (9622)	11/4/1997 2:26:00 PM
From: Jacob Snyder	Read Replies (3) \| Respond to of 45548

Comparing networkers: I currently have a modest long position in Cisco only. I began studying the industry in April 1996. At the time, there were 4 main companies (CSCO, BAY, COMS, CS) forming a cosy oligopoly. Barriers to entry were (and are) high. Three of them were at a PE of around 20, and the biggest company, CSCO, was at a PE of 30. At the time I didn't invest in any of them, for two reasons: I didn't feel like I understood the industry well enough; I only invest when I'm sure I know what moves the stocks. The second reason was that the industry had already had a good run, and I like to buy companies that are the best in the world at what they do, but are currently out of favor. By April 1997 I was ready to buy. The industry had been strongly in favor, and then strongly out of favor, in the intervening year. Interestingly, over that year Cisco was the only one of the 4 to hold its price. It had gone from 48 to 48. Bay (32 to 16), COMS (40 to 30), and CS (34 to 31), were all down. The PE ratios were all about the same as they'd been a year earlier, except for Bay, which was losing money. At the time, I made the decision that Cisco was the safest place to put my money, and the best value, in spite of the fact, or perhaps because, their PE was the highest in the group. Essentially, I turned the rules of Value Investing on their head. It has worked very well. I bought at 48, and it's now at 85. I'm posting this on this thread because the Cisco thread is full of chearleaders on amphetamines. I'm looking for an objective and critical response to the following questions: 1. is Cisco becoming the Intel of networkers? 2. Do any companies outside the oligopoly have a chance of getting in? I'm thinking of Lucent, mainly. 3. Is 35% a realistic growth rate for the industry? When will the slowdown in this unsustainable rate happen? In-other-words, when is it time to jump ship? Thanks in advance.