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

To: jach who wrote (23719)	3/17/1999 8:57:00 PM
From: bgg	Read Replies (1) \| Respond to of 77398

Couldn't help but to respond: "The way I see it there are three key mkt segments: 1. Core switch-routers. Juniper and the likes have great products and because of these competition profits and margins will drop." For all of Juniper's noise, their marketshare is a tiny, tiny blip on the screen. Cisco's core router business is showing growth. Cisco's overall margins have held steady at 65% for quite a while. So what if they drop to, say, 64 or 63%? Do you think that will kill the stock if they keep showing 30-40% growth? "2. Enterprise LAN switches. Foundry, Extreme, Alteon (startups) already have snatched a good chunk out of traditional CSCO turf (AOL and Yhoo putting startups' switches). Not to mention LU, NT and the European large telecom companies getting into this segment in a big way. Again, too mnay companies into it will definitely drop margins." The notion that these start-ups have snatched a "good chunk" is pure BS. Cisco owns close to 50% of this market, even with 3Com being so strong at the low-end. The Foundrys and Extremes are barely showing share. And by the way, for all of the noise about layer 3 switching, and how this will kill Cisco, Dell'Oro shows Cisco leading in this category. Prices will fall, but that doesn't necessarily mean margins will all accordingly. Cisco is a master at low-cost manufacturing, and they don't sit still in this regard. Look how much Ethernet switching prices have dropped already! Cisco's margins have not dropped with the price drops. "3. WAN ATM Swicthes. Here CSCO is behind ASND (GX550) and FORE (ASX4000). Revenue will suffer." Still a very close game. You can just as easily say that ASND and FORE are suffering because Cisco is close behind. Lame point.