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

To: jach who wrote (22437)	2/11/1999 3:20:00 PM
From: michael modeme	Read Replies (1) \| Respond to of 77397

First of all, CSCO's P/E based on the last 4 quarters is around 80. It used to be more than 60, then droped down to 60. With the ramping-up of the internet, CSCO was given a higher premium. As the market cap of CSCO increased, so did it's average P/E (typical of stocks). There are many DOW industrial stocks with P/E's many times higher than their growth rates. Remember that if P/E ratios stay the same, then the stock grows as fast as the earnings do. A year from now, if CSCO doesn't change it's P/E it'll be at around $145 per share, whereas if other stocks don't change their P/E ratios they will grow as fast as their earnings -- perhaps 5% for most DOW indust. stocks (for example), so a $100 stock will be worth $105. Which one would you rather own? The point: P/E ratios don't increase linearly with growth rates, they increase faster because of the effect I've just detailed. cheers

To: jach who wrote (22437)	2/12/1999 10:17:00 AM
From: jach	Read Replies (2) \| Respond to of 77397

CSCO at current PE of 120+ can potentially come down substantially as it's PE is about 50 more than its historical PE of about 70. CSCO mkt cap is more than IBM, and CSCO mkt cap is more than (GM+FORED+CAT) combined. This may not be a bad time to consider re-evaluating the stock as it's possible that one may not see 100+ for some time again. imo.

To: jach who wrote (22437)	2/12/1999 6:46:00 PM
From: FuzzFace	Respond to of 77397

CSCO's multiple expansion happened for the same reason as the rest of big cap tech multiple expansion - expectations of lower interest rates. Now that interest rate direction has reversed, so has big cap tech. The question is, what happens next. I agree with you that it doesn't look good short term, but I also agree with the bulls, that CSCO is a great stock, fair weather or foul. So I am looking for a lower entry point than today's close, hopefully around 80, but I think it unreasonable to expect a great stock like CSCO to be cut in half. 80 is close enough.