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: Zoltan! who wrote (22190)	2/8/1999 9:33:00 AM
From: jach	Read Replies (2) \| Respond to of 77397

<IBM that is overpriced since it has been shrinking itself for well over a decade. IBM's halcyon days are well past.> Wrong! do you have any clue as to what IBM does and the type of their products? More than 75% of all business (especially banking transactions, that will be 85%) depends on IBM systems. Shrinking itself, where've you been, IBM revenue is 20 Billion last qtr. CSCO is around 2B$. CSCO is way overpriced compared to IBM revenue and earnings. No way CSCO should command more mkt valuation than IBM. That's why CSCO is likely to come down. 120 PE for CSCO is way way too much. Historically CSCO traded at around 60-70 PE, and that translates to around 60-70$ per share. IMO, anyone interesting in getting in should consider these facts.

To: Zoltan! who wrote (22190)	2/8/1999 7:23:00 PM
From: Hector	Read Replies (3) \| Respond to of 77397

CSCO happens to be a wonderful company. However, in order to invest in it or DELL, or many of these other highly valued companies at these levels you have to assume that P/E expansions will continue indefinitely. For me, it seems that a stock that has appreciated 300% in the last 12 months, primarily through an expansion of its P/E is due for a rest. I agree with Jach that CSCO will revert to its historical PE, (also known as "reversion to the mean" in statistics) which means it will fall at least 50% or it will still be at this price a couple of years from now. You may want to look at a history of blue chips like JNJ, MRK and others in the last secular bear market of 1973-74. If you believe bear markets have disappeared, the best case scenario is no price increase for a couple of years. The most likely, IMO, is a decrease of 50-70%. BTW, if CSCO goes through its 50 day moving average, 95, for at least a few days, the institutions will start dumping it and at that point the decline will start feeding upon itself. You're right. Stock prices reflect recent market performance, also known as "momentum". Unfortunately, prices usually go to extremes in both directions. They've had their extremes on the upside. I expect the downside to be just as extreme.