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

To: jach who wrote (23659)	3/14/1999 10:27:00 PM
From: Jim Lamb	Read Replies (4) \| Respond to of 77400

News flash here,looks like CSCO may be left out of a big deal. Sunday March 14, 9:34 pm Eastern Time Microsoft, Intel to unveil telecom alliance - FT LONDON, March 15 (Reuters) - Microsoft (Nasdaq:MSFT - news) and Intel (Nasdaq:INTC - news) are expected to announce a joint attack on the fast-growing telecommunications equipment business on Monday, the Financial Times reported. The newspaper said in its Monday edition that the two companies will unveil an alliance with hardware producers Hewlett-Packard (NYSE:HWP - news) and Northern Telecom Ltd. (Toronto:NTL.TO - news), also known as Nortel Networks. If successful, the alliance could open up a huge market for Microsoft's Windows NT operating system and Intel's Pentium microprocessor, the report said. The venture is seen as possibly advancing the introduction of corporate networks combining voice, data and video signals on the same infrastructure, the report said. The plan is for Canadian-based Nortel to build routers, switches and servers for corporate networks running Microsoft NT software and handling both data and voice communications. Nortel initiated the new four-way alliance, the article said. The move is seen as a departure from usual practice in the the telecoms equipment market where competitors such as Cisco Systems (Nasdaq:CSCO - news) and Lucent Technologies (NYSE:LU - news) produce both the hardware and software needed for their equipment. The venture could give Nortel the opportunity to get in on the ground floor of a growing market, even if it runs the risk of undermining its profitable voice telecoms business lines. Other telecoms equipment suppliers could eventually be brought into the alliance if it proves successful, and it is understood that the new range will be marketed by Hewlett-Packard under its brand name, the report said. --------------------------------------------------------------------------------

To: jach who wrote (23659)	3/15/1999 9:24:00 AM
From: John Stichnoth	Read Replies (1) \| Respond to of 77400

I haven't done a full-blown analysis of either LU or NT. I have tried to keep up with CSCO, and consider it a core holding that I will not sell, because they are at the center of the "paradigm shift" (I hate that phrase!-)). I've owned it for a couple of years now. I will say that any comparison based on sales is almost irrelevant to the investment decision here. LU and NT revenues are still largely driven by legacy technologies. I will note that Value Line estimates results of the three companies to grow as follows 1998 to 2003: (Per Share) Revenues Cash Flow EPS CSCO +166% +162% +165% LU +60% +100% +102% NT +87% +88% +115% A premium is now deserved for position in the IP markets. They are the driving force in growth, and CSCO is a purer play in this arena. Also, the market has apparently decided--and held constant to this view for as long as I've watched CSCO--that you can take a 5 to 7 year time horizon with CSCO. The market has not decided that with either LU or NT. Whether you should for LU is an interesting question; their history isn't that long as an independent company, so it's hard, but it's worth further investigation. Based on NT's missteps over the years, I don't think you can look out 5 years. Their earnings were barely breakeven in 1993, and only last year got back up to 1992 levels. There was apparently a special charge last year. Can you tell us what that was for? I will repeat: No one buys any of these companies for the dividend. They are there for historical reasons (because they were being paid when the companies were not growth companies). In fact, given the potential growth of their markets, I can argue that the dividend is a negative, because they are a waste of the companies' resources, and sap their ability to invest in growth. So, at this point, I'm perfectly happy to sit here with my CSCO shares, confident that they will help fund my retirement home in Florida. Your assertions have gotten me to do some analysis I would not otherwise have done, and reaffirmed the quality of the CSCO investment in my eyes. Best, JS