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: JRH who wrote (18752)	11/4/1998 2:37:00 PM
From: JRH	Respond to of 77398

Dispatches from the Front: Cisco's Identity Crisis fnews.yahoo.com At Cramer Berkowitz we speak of stocks in terms of other stocks. Take Cisco (Nasdaq:CSCO - news) , which reports tonight, after the close. Is Cisco going to be IBM (NYSE:IBM - news) ? Meaning, is Cisco going to report a great number and then give cautionary guidance, so it's better to wait until after the quarter to buy more stock? Or is Cisco going to be Seagate (NYSE:SEG - news) , a hoped-for great quarter that turns out to be light in some form, and positive guidance doesn't help? Or is Cisco going to be Microsoft (Nasdaq:MSFT - news) , a great quarter, much better than expected (without the Justice Department kicker, of course) that takes the stock in a straight line to 68? First, you might ask, why should we care at all? Cisco is a great company; why can't it be Cisco, hold no matter what? This is a perfectly legitimate question, one that we ask ourselves everyday. But it is never one that we answer positively. Why? Because whether we like it or not, if Cisco changes guidance or says something negative, this stock is too expensive to do nothing. Think I am wrong? Let's go back to the bad old days, less than a month ago, when Cisco was in the high 40s. On a call by a Cowen analyst, this stock dropped nine points. All the call said was that perhaps this quarter may not be as strong as expected. Three years from now I hope you won't even see that blip on the chart, the stock will be so much higher. But hope doesn't buy you much on Wall Street. It can buy you the right to a real pasting. As I am a performance manager, I have no desire to take a pasting, whether it be because of Cisco or any other fine company. So, you say, you don't want to incur the capital gains. Well, how about if Cisco turns into PeopleSoft (Nasdaq:PSFT - news) , which has been cut in half, or Sybase (Nasdaq:SYBS - news) , which has been cut by more than two-thirds, or Informix (Nasdaq:IFMX - news) , which has almost disappeared. Or most of all Novell (Nasdaq:NOVL - news) , which used to trade at a premium to Cisco at the beginning of this decade. I can tell you that every one of those stocks at one time strode in the same pantheon as Cisco. They were bulletproof long-term holds where you thought you could elect to not listen to guidance or worry about downgrades. And you would have lost humongo amounts of money. So, what we try to do at my shop is game a stock by analogizing to another stock. I fear that Cisco will be like IBM, but I hope that Cisco will be like Microsoft. Our work says it will be the latter, but because the stock is at 63 and not 58 I fear it might be the former. Again, the analogy: Cisco feels to me like IBM at 143, perhaps headed down before it sees 149. The good news is that tomorrow Cisco will just be a paradigm for another stock's potential move. It will be just so much history.

To: JRH who wrote (18752)	11/4/1998 2:38:00 PM
From: JRH	Respond to of 77398

Silicon Valley: Cisco Earnings Should Roll On, but Stakes Are Higher Now fnews.yahoo.com SAN FRANCISCO -- Talk about pressure. Investors love Cisco (Nasdaq:CSCO - news) because the nation's leading networker consistently produces earnings that meet expectations as it chalks up quarter after quarter of strong growth. For the October quarter, Wall Street expects Cisco to earn 33 cents per share, compared with 26 cents a year earlier, as tabulated by a First Call survey of analysts' estimates. "I think it's a foregone conclusion, especially looking at the stock, that they're going to make the number," says assistant portfolio manager Jeff Parker with Eagle Asset Management, a longtime buyer of the stock. Cisco stock fell 34% in 10 days in late September and early October on fears that corporate spending on technology was slowing. Although the shares are up 45% since then, mutual fund managers are looking at Cisco with fresh caution. Especially if they feel that the stock is getting ahead of itself. After all, trading at 71 times earnings, Cisco's stock price is back in the stratosphere. But Cisco is likely to find that growing revenue at its accustomed clip of 30%-plus won't be easy. Cisco's wide circle of corporate customers seems unlikely to buy switches in the volume of the old days, given macroeconomic uncertainties and the trend of outsourcing network tasks to telecom carriers. Cisco is planning to sell large data switches to telecom carriers, helping them build Internet-based systems able to carry cheap phone calls. Cisco is throwing considerable engineering muscle into the effort, and carriers are interested. But this daring attack runs Cisco smack into Lucent (NYSE:LU - news) , an entrenched supplier spun off from AT&T (NYSE:T - news) two years ago. The Cisco Earnings Checklist What should investors look for? Is Cisco making progress in building Sprint's (NYSE:FON - news) new ION voice-data network? This is a showcase test for the networker, because it beat out Lucent for the job. This spring Sprint started testing Cisco MGX 8800 switches to run voice messages over asynchronous transfer mode, or ATM, systems. Analysts will watch closely to see if Cisco has any problems shipping these high-speed switches. Is Ascend (Nasdaq:ASND - news) still thwarting Cisco in the ATM and related frame-relay businesses? In its September quarter, Ascend's sales of these switches dipped from the prior quarter. Ascend blamed it on a delay in shipping software to one large Japanese company, but even excluding results from Japan, the company's growth was a bit slower than some expectations. Analysts will look for clues to how Cisco is faring in this market. Has Cisco stepped up its loans to customers, especially young carriers, to win their business? Ascend startled Wall Street last month by writing off an $8.7 million working capital loan made to five small privately held carriers. Ascend Chief Financial Officer Michael Ashby says the company was forced to make this offer for the first time in the third quarter because that is what Cisco and Lucent are doing. Ascend's stock took a hit because investors were surprised that it bankrolled customers to win business. Cisco is not above similar tactics. In September the small carrier CTC Communications (Nasdaq:CPTL - news) agreed to buy $25 million of Cisco product over three years. Cisco gave CTC a $25 million financing deal for the same time period. This time just meeting the number may not be enough.