Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Bob Davis who wrote (18469)	10/28/1998 8:53:00 AM
From: jach	Read Replies (1) \| Respond to of 77400

Bob, good information, interesting and logical reasoning.

To: Bob Davis who wrote (18469)	10/28/1998 11:42:00 AM
From: The Phoenix	Read Replies (1) \| Respond to of 77400

Bob, THanks for the trip through history. A couple of points. First it should be no surprise that revenue growth as a percentage has slowed. As the numbers get bigger the percentages will shrink. In dollars however revenue continues to accelerate. In fact CSCO now grows revenues at more than $2B annually, more revenue than most (if not all) of CSCO's traditional datacom competitors generate for their entire fiscal years. Second error in your analysis. And, this is information provided by many analysts as the basis for continued accumulation - that is, growth prospects. With convergence CSCO is poised to grow to a $20B company by FY 01 - perhaps even more. Valuations are no-doubt based, in part, on future expecations, not past performance (even though CSCO's past performance has been excellent). Analysts see CSCO doing even better going forward as networks (data, voice, cable, etc.) move to packet based environments - and who is the king of packet based networks. That's right - CSCO. So, sure, as this company grows, percentage growth rates will decline. THis is math 101. But make no mistake, CSCO is the dominant player in a market that is poised to explode with data/voice convergence, internet access at increasing speeds, video on demand, etc. etc... and we're only scratching the surface here in the U.S., we havn't even begun overseas...and when those markets come back (where CSCO is investing now), you'll be wishing you owned this pup. OG

To: Bob Davis who wrote (18469)	10/28/1998 11:48:00 AM
From: Reginald Middleton	Read Replies (1) \| Respond to of 77400

I briefly read through your analysis, and it appears as if you are basing your analysis on unreconciled earnings, which is analogous to building a structure on a weak foundation. MSFT earnings, for instance, are subject to significant deferrals, reserves, and mispriced contingent liabilities. Dell and Cisco, happen to use the similar methods. In order to use capitalized earnings to ascertain a credible present value for a company, you must first ascertain what those earnings actually are, the sustainability of those earnings, and any changes in equity capital equivalents that have not been reported in the financial statements. In order to accomplish that, you may have to use considerably more complex reconciliation tools/approaches than it appears you have applied. The pure valuation portion is as simple as DCF or NPV, but you need to ensure that you are discounting the proper numbers to begin with. Keeping your intrinsic value idealogy in mind, I invite you to read the Case Against Earnings at rcmfinancial.com Afterwards, I welcome you to debate the relative merits of the respective approaches to "realistic" valuation.