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

To: The Phoenix who wrote (12336)	2/7/1998 11:37:00 AM
From: Perry	Respond to of 77400

Some interesting reading from Smart Money. Since you must be a subscriber I have only posted pieces of the original article. The whole article is generally bullish with warnings of volatility and the possibility of prices reflecting the positive outlook. However, they had buy recommendations on CSCO, ASND among others... Perry <SECTOR BENCHMARKS OUTLOOK After a brutal spring, the second half looks better for this roller-coaster sector. Look for 30% average earnings growth in '97 and more consolidation. KEY COMPANIES Cisco Systems, 3Com, Ascend, Cabletron... HOW TO VALUE A classic momentum sector. For value, look for those companies with P/E's well below historical averages and growth rates. CATALYSTS FOR GROWTH The demand for fast connectivity across networks and the Internet. Enough said. DANGER SIGNS Several of these companies are counting on new products to boost second-half sales. Will the market embrace them? < Few sectors offer investors as much opportunity -- or as much treachery -- as networking. Investors in the group have gone from peak to valley to new highs in the course of 1997. During the networking sector's April lows, shares of industry leader Cisco Systems Inc. (CSCO) were off over 30% from 1996 year-end highs. At a recent 83, Cisco is now up over 10% from its 1996 high. It's not as strange as it looks. The only thing clear is that the factors contributing to the industry's torrid growth over the past few years show no signs of abating, while the uncertainty that roiled these stocks this spring has subsided. "As long as there is demand to move data and bytes at faster and faster speeds, this industry will grow," insists Noel Lindsay, an analyst with Deutsche Morgan Grenfell. It wasn't so cut and dry a couple of months ago, as issues of product transitions, industry consolidation, and the threat of competition from the likes of Intel Corp. (INTC) and Microsoft Corp. (MSFT) spooked investors. While some fears have diminished, the uncertainty that comes from product transitions is still the sector's chief problem. In the spring, demand was held in check by competing solutions for the same problems. Take the router business. Industry leader Cisco owns 60% of the worldwide market for these devices, which collect and distribute data across a network. But Ascend Communications Inc. (ASND) currently has a faster device that may be stealing sales. Cisco promises that its Gigabit Switched Router (due this fall) will be even faster. But until Cisco's claims can be proven, customers don't know how to react and many are delaying decisions. "All the executives that I've spoken with tell me that demand is still there," says Bear Stearns analyst Eric Blachno. "What's changed is that the evaluation period has gotten longer."> < If it can get its new products out the door, analysts expect Cisco will grow earnings at a 35% clip over the next year or so. And as 3Com and Ascend absorb their acquired assets, the strength of those combinations should become clear.> <Analysts expect a stronger second half in terms of industry performance as some of the product issues clarify and demand picks up. But the runup in the shares already reflects the renewed confidence in the networking industry's growth. Look for demand to come from the telcos -- witness the ascension of Ascend's stock price -- which want to increase the capacity of their twisted copper wire infrastructures.> < we believe Cisco -- a company that dominates one of the key industries of the present and future -- represents a fine long-term investment, we also warn that it will experience violent swings in value along the way. >