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.

Pastimes : The Naked Truth - Big Kahuna a Myth -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (10418)	11/5/1998 10:51:00 AM
From: Cynic 2005	Read Replies (1) \| Respond to of 86076

You should listen to this guy John Cucumber (gee, I caught MB disease - I am calling people names! -g-) He is great at buttering! His catch phrase "usual" or "healthy paranoia." <<Sure, Cisco CEO John Chambers has his "healthy paranoia" thing going on conference calls, but flagged a few more potential problems. Note that Chambers wasn't a sourpuss, but he wasn't optimistic in Dell-like proportions. Here are some of Cisco's cautious statements and a bit of reading between the lines. Gross margins will decline over time. Cisco's margins for the quarter was 65.5 percent, compared to 65.7 percent in the fourth quarter. Controlling costs is always a concern for a company that acquires two companies a quarter. But falling margins shouldn't come as much of a surprise given the company's size and price competition at the low-end of the market. Local Access Network switching price cuts hurt gross margins. No worries. Asia could be a problem for several years. Asia is always a concern and Cisco's sales were flat in the quarter year-over-year. Cisco (financials) is a player in Asia for the long-term and has managed the financial crunch nicely. In fact, Cisco said it increased headcount in Asia to take advantage of companies that were scaling back. Asia's isn't a concern by itself, but... The rest of the world could be shaky. Cisco said sales from Europe could grow, but sales in the Americas could fall 10 percent. Europe and the Americas are crucial to Cisco since Asia has been a no-show. Cisco was cautious about the United Kingdom on concerns about increased interest rates and the U.S. economy is anything but a sure thing going forward. U.S. investment in information technology tracks gross domestic product and represents 40 percent of the economy. If the economy falters so does the networking giant. Cisco isn't the only company concerned about IT spending -- Intel and Microsoft voiced similar concerns. When Cisco said it is cautious about growth in the next 12 to 18 months, but growth will be strong for "healthy economies. The big question is how healthy will our currently healthy economy be. Service provider spending is unpredictable. An increasing amount of Cisco's business is coming from service providers because of broadband and cable orders. The second quarter will be crucial to Cisco's service provider business because it will be bidding on a host of contracts. In addition, orders from service providers are "lumpy," but that's a nice problem to have. Overall, Cisco's potential problems could put a crimp in the usual growth rate, but the company's ability to execute can shield it from everything but a broad economic downturn in big economies. Keep an eye on those economic indicators and implications for capital spending. TDAIN>>