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

To: Dragonfly who wrote (24619)	4/25/1999 9:43:00 AM
From: jeff f	Read Replies (1) \| Respond to of 77397

some additional info to share STOCK UPDATE Cisco's Buying Spree April 26, 1999 CISCO SYSTEMS CISCO IS BUYING big again. And that means the competition between Internet-focused networking companies and conventional phone-equipment companies is about to get even fiercer than it already is. When Cisco Systems (CSCO) committed $2 billion to buy telephone-software maker Geotel (GEOC) last week, the deal signaled that Cisco wants phone companies to start building networks on Internet protocol, or IP, much more quickly than those companies seem inclined to do. The purchase gives important hints about how badly Cisco wants to equip big public phone networks and what it may do next to reach that goal. Geotel's software helps efficiently disperse voice calls, automatically shortening a caller's time on hold. Such "call-center" abilities matter to Cisco's strategy, says U.S. Bancorp Piper Jaffray analyst Ted Jackson, because they lend themselves to mass applications of "converged" networks that treat all communications as digital packets over a single network. Jackson, who rated Geotel a Strong Buy before last week's announcement, says Cisco could integrate this signal dispersion into a basic networking nut, the router, and "use something like a Web address or email address" to distribute multimedia communications around the network. Cisco didn't return our phone calls seeking comment on its plans, but its press release touted Geotel's attractiveness to "service provider environments" and potential to help Cisco "advance in providing voice applications over Internet-based networks." Tellingly, the release also calls the purchase "the fifth phase of Cisco's five-phase strategy" to create an Internet-based infrastructure for all communication. Cisco and others still have a long way to go before phone calls over the Internet are as reliable as conventional systems built by suppliers like Lucent Technologies (LU), which are now moving aggressively into Cisco's domain of digital-processing gear. "Efficient scale is the technology that nobody has," says David Dines, a researcher with Boston's Aberdeen Group. Cisco obviously intends on getting there, but is betting with its purchase of Geotel and other firms that there is more than one way to convert the telcos to its cause. "The thing that's going to drive convergence is being able to offer carriers a lot of applications they don't currently have," Jackson argues. In many ways, what Cisco is trying to do is maintain its growth by expanding the uses of the Internet. "You can't justify Cisco's valuation assuming it sells mostly to businesses," says Sutro analyst Patrick Houghton. "The telco market has the potential to make Cisco a $20 billion-a-year revenue company." Dines sees Geotel as part of a full quiver that Cisco can deploy in different circumstances to make inroads into its rivals' markets. "Buying companies is part of their research and development strategy," says Dines. "I see them making multiple bets." To win, Cisco must race to achieve reliability and win relationships with carriers along the way. A bellwether for Cisco's efforts is its role as strategic partner in Sprint's (FON) ION network, which blends Internet protocols with a guaranteed standard called ATM. Sprint's ION marketing chief Mike Grubbs says the network will eventually showcase the value of Cisco's Internet savvy. "The services our customers want are going to be IP-based, so we have to have an IP-intelligent network," he says. "There are good reasons why we selected Cisco." So far, ION has set up gear in 27 of 100 targeted metropolitan areas, according to Grubbs, but it hasn't had the kinds of sales that would inspire other phone companies to rush out and embrace Cisco's Internet-focused standard for their broad public networks. Cisco has to hope that Grubbs' expectations of Internet protocol ascendancy come true sooner rather than later. Ascend, now part of Lucent, leads the market in ATM for wide networks. Ultimately, Cisco can only increase sales to carriers as fast as carriers decide they need to make new network purchases. "To the extent that you have service providers that are forward-looking, that is going to drive growth," says Warburg Dillon Read analyst Scott Heritage. When Cisco and Lucent reach interoperability between their separate Internet-protocol telephone standards later this year, carriers could show more interest. In the meantime, Cisco needs to use Geotel and its other recent acquisitions to entice carriers one application at a time. Like sports fans discussing a baseball manager's options, analysts offer several prescriptions. Houghton says the firm would be smart to buy Tellabs (TLAB), a maker of equipment that helps carriers convert circuit-based signals into digital ones. But Tellabs' equipment wouldn't be necessary in the completely digital network Cisco keeps invoking, and Houghton recognizes that Cisco probably has no appetite for such a large purchase. Alternatively, it could buy Fore Systems (FORE), the leader in selling ATM to businesses. Jackson sees investments in enhanced software startups. Others say it's more likely that the firm will aim for a maker of fast switches, such as the still-private Avici. Whatever it does, Cisco will race to keep up with its stock price. Its integration of the Geotel team and its agreements over the next several months will reveal much about the pace at which its latest sales prospects will let it run. -- By Alec Appelbaum Copyright © 1999 Dow Jones & Company, Inc. All Rights Reserved. for what it is worth jeffmf

To: Dragonfly who wrote (24619)	4/25/1999 12:08:00 PM
From: jach	Read Replies (5) \| Respond to of 77397

Much bigger gorillas coming into the forest. CSCO compared to IBM is ridiculously overpriced: - IBM revenue LAST QTR alone was 20B$, that is almost twice of what CSCO revenue for the WHOLE last year - IBM earnings of LAST QTR is about the same as what CSCO earnings for the WHOLE last year - IBM mkt cap is THE SAME as CSCO Simple logic said CSCO is way overpriced. PE multiple is too high. all imo. ----------------------- IBM Software Eliminates Need For Policy Servers (04/20/99, 3:01 p.m. ET) By Brian Riggs, InformationWeek IBM is developing network software that can both interpret application-priority policies and enforce them, which should letcompanies do away with stand-alone policy servers. Common Policy Engine runs on IBM's 2210 Nways Multiprotocol Router, 2212 Access Utility, and 2216 Nways Multiaccess Connector. It combines LDAP client support with the ability to enforce policies that prioritize applications over VPNs, as well as networks based on Differentiated Service and Integrated Services. IBM, based in Armonk, N.Y., said it estimates eliminating the need for policy servers can save companies with 1,000 network devices more than $2 million annually in hardware and support costs. Common Policy Engine is expected to ship in June and will be available as a free upgrade to IBM networking equipment.

To: Dragonfly who wrote (24619)	4/25/1999 12:28:00 PM
From: LindyBill	Respond to of 77397

That being said, it isn't overpriced because the growth we will see in the next 3 years (ok, lets say 6 to CYA) will be astronomical. From your mouth to a "certain posters" ear! Unfortunately, it will probably cause a "spate" of negative posts from him. I know that Chambers, Gates, and the rest of the CEO's of high growth Tech companies hate rapid run-ups in their stock price. I plays havoc with their stock option plans. I still think that we will see 160 by year end. There is just too much business out there for Cisco to keep it from happening.

To: Dragonfly who wrote (24619)	4/25/1999 12:43:00 PM
From: RetiredNow	Read Replies (1) \| Respond to of 77397

Dragonfly, I agree with some of what you say. However, you are wrong about Cisco margins. Their margins are around 65% and have been for a helluva long time. So if Microsoft's really are only 50% then Cisco's margins are even better than Microsoft's. If you don't believe me about he margins, check Cisco's 10K.