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

To: Brian Malloy who wrote (24629)	4/25/1999 2:34:00 PM
From: jach	Read Replies (1) \| Respond to of 77397

Simple value question, if you happened to have 185B$ to spare and was told to buy one company with the money which company will you buy to own; IBM or CSCO today ? (assuming one can buy at current mkt cap).

To: Brian Malloy who wrote (24629)	4/26/1999 4:26:00 PM
From: mauser96	Respond to of 77397

According to Stern Stewart company IBM actually has a negative return on capital. IBM capital cost 12.8%, return on capital 10.5%,. CSCO has a capital cost of 14.3%, return on capital 50.9%. NO comparison! Stern Stewart has a non GAAP way of figuring capital costs - they do not consider equity capital free. If you want more info,see Fortune magazine 11/9/98 issue, and several books on the subject. The easiest to read is "EVA" by Al Ehrbar. In the long run you are very likely to make money buying companies with high return on capital as long as you don't pay too much for them. Even better is a company where the difference between capital costs and capital returns appear to be growing.(EMC??)