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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (27333)	4/10/1998 7:58:00 PM
From: GuyNixon	Respond to of 132070

MB: Agree with most of your analysis. My view for a stock which would collapse during a downturn is Cisco. The company is so new that it has yet to weather a real downturn in economy since it went public. It is now valued at 67 billion dollars; bigger than GM. Trouble is, Cisco is fundamentally a capital equipment firm with high margin products. They are still taking shares from most rivals, but... the company just can't deliver higher than industry growth rates forever by taking share from far smaller competitors. Especially, if the products are coming to increasing price pressure. In fact, the firm's annual revenue growth has already quitely came down to 25% and it's still valued at 35X PE. In any less happy times, capital spending will dry up. Employees with sweet stock options will not be happy. Of course, I am sure they will reprice those option then. Guy