CSCO

**dchamber** Fri Feb 03, 2006 5:16 pm

CSCO
CSCO
Cisco burned me in 1999 when I was a speculator – and idiot. I bought it when the P/E was over 200 and I’ve been waiting for a chance to redeem myself. I’ve been hesitant to return to tech stocks but it seems that is where a lot of bargains are.

The stock price has been wild but earnings have been increasing since 1995 expected for a small drops in 2001 & 2002. Analysts predict earnings growth of 14.5% which is reasonable given then 24% annual rate Cisco has given over the last 10 years.

The P/E is at 21, which is lower than their 10 year average (35); lower than the industry average (26), the same as the average P/E in 2005, and only 1995 had a lower average P/E (20.7).

ROE has average 24% each year.
The current ration is 2.1.
Book value has stayed the same for the last 5 years.

They are financially stable but the flat book value worries. The P/E is also a little higher than like but it seem OK compared to CSCO historical levels and the industry.

With a 14.5% growth rate we can estimate a 10 year price target of $115-$120. Buying at the current price of $18 would give you a 20% gain.

I’m on the fence here. The book value and P/E scare me, but the rest seems stable and this P/E is near the bottom. Any opinions? Are the earnings stable enough to predict?

**blast_investor** Fri Feb 03, 2006 5:32 pm

I do not like CSCO.

This quality of this stock's earning is pretty poor. Majority of this company's earning goes into compensating management or employees option through shares buy back. Shareholders do not get that much real "earning".

One simple way to detect this is just look at its book value, its book value has been going down year over year over past 3 years while it has been very "profitable" during same time.

Cisco managements are some of the strongest of opponent to "option expense accounting" reform. To me, this indicates intentions of its management to continue to mislead investors by hiding large option expenses.

Just compare CSCO to INTC, Intel is much better and more profitable company at lower valuation. Intel book value has been up year over year and its PE is lower than CSCO as well. I do not believe CSCO deserves higher valuation than Intel.

**dchamber** Fri Feb 03, 2006 6:02 pm

Thanks for the CSCO input. I was concerned about the book value and you explained why it's like that. I agree with your assessment.

Intel is on my list and the numbers seem to work out a little better than CISCOs. I just don't understand Intel has well as the software companies and networking companies. I’m a software developer and understand the technology but I don’t understand the business of these chip manufactures. The competition seems fierce and I can't tell you the difference between Intel and AMD.

**yhan** Sat Feb 04, 2006 1:58 am

If you know that recently CSCO decided to get into Personal Entertainment industry, you probably ask questions such as " is there no growth opportunities in Cisco's traidtional business? ". True, China manufacturers make cheaper routers.

CSCO purchased Linksys a few years ago and now it launched its personal DVD/Entertainment systems. However, there are so many competitors in this field. Sony, Samsung. Can CSCO success? I am not that positive.

By the way, I feel that CSCO and Oracle are the same, they do not treat shareholders well. Every week, these CEOs/CFOs dump millions of shares in the market. so why do we buy when these rich CEOs/CFOs dump their shares?