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Cisco Systems, Inc. Message Board

  • ricky44 ricky44 Dec 31, 1997 12:01 PM Flag

    cisco

    Since Cisco split it has recovered some ground, but if the Tech stocks come out with negative earnings, won't cisco be killed and probably drop quite a bit since it is staying ahead of the pack right now. I never did lose much ground and is close to an all time. I like cisco for long term, and will keep mine, but if you're short on cisco, get out now. If a few big tech stocks report lower earnings, look for cisco to fall to mid 40's.

    Let's hope not and may hit 90 again by next Dec.

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    • Thanks for the confidence!

      I would like to point out some numbers about actual Internet market penetration:

      >http://www.nua.ie/surveys/how_many_online.html


      Their estimate, kept reasonably up-to-date, is based on
      various survey mechanisms. Their current estimation is
      roughly 90 million (89 million as of November 1997) worlwide
      Internet users, out of roughly 5.88 Billion people in the world:

      >http://www.census.gov/cgi-bin/ipc/popclockw


      This represents roughly only 1.5% of the total world population
      is currently on the Internet.

      Certain markets are a lot more saturated, others are developing, while a few are neutral or even retrograde. For a specific instance of the super-saturated, take the US, which has an population currently estimated at 268 Million:

      >http://www.census.gov/cgi-bin/popclock


      The US is estimated to have between 40-54 Million users of the
      Internet, or roughly 15%-20% market penetration. That's ten times or more the world average.

      Most people agree the US is leading the fray here. Today, it represents about half the current market, yet is only 4.5% of total world population.

      Compare this with China, which is 20-25% of world population, but has very few users actually interconnected on the Internet (est. at 150,000-200,000 individuals as per Nua).

      Japan is another very special case. A few years ago there were a lot of PCs, but LANs were not a requirement for use, nor
      even modems. Penetration of networked devices was low, even for business. Not everyone, but a great deal of people did standalone
      computing. Therefore Japan c. 1994 was, for networking, more like the US c. 1989. Desktop connectivity was the first priority. The Web
      was Cisco partnered closely with the leaders of that market, from NTT to NEC, etc., and I know we have a good leadership
      position there now.

      Now, out of a population of 126 Million:

      >http://www.stat.go.jp/19.htm


      Japan can claim 8.0-8.6 Million Internet users, a penetration rate of 6.3-6.8%. While this is significantly higher than the world average, you can see this is still about 30-45% of the US pentration.

      However, the Asian market is a different one today than it was in 1991-1996. For Cisco, or for anyone else, to make the same kind of inroads elsewhere in Asia today requires they look at the opportunities and risks in that market now.

      Suddenly, the demand for ramp-up around the world for this infrastructure is growing, but the market stability to support it
      is, for now, shaky. Yes, Cisco will gain by a large part of this roll-out, but other players will as well. For some of these
      players, winning the business of a market could cost them more than the market is worth (once regulations, tarriffs, monetary
      changes, and other business considerations are factored in). For many countries, the roll-out of Internet services cannot occur until
      the rollout of basic telephony infrastructure. For those countries, look at local loop and premises equipment companies to
      prosper prior to adoption of the "big iron".

      One of my favorites for local loop gear is Advanced Fiber Comm (AFCI), as well as Westell (WSTL) and DSC Commun (DIGI). The "traditional" PSTN companies, such as NT, Lucent, Siemens, Alcatel, and the "challengers" from data networking, such as Cisco, Ascend, Bay, 3Com, etc., are be thinking about the challenges inherent in building out services into these new markets. What works great here in the US in a super-saturated market needs to be rethought in the developing world.

      Cisco has a pretty good track record in this regard, servicing both leading and developing markets, but I think we're all being a little thoughtful of the market in general, and a little paranoid of each other, as Andy Grove suggests, to keep ourselves

    • i agree that cisco is internet king!
      as long as the IP packets use the present routing methods to get accross IP networks (internet), cisco is at a clear advantage.
      it is true that the switching winds are invading the corporate america but, from experience with several companies, when it comes to routing, the choice is allways cisco and to the present the need for routing still remains the same. Cisco is not cheap, but looking at features, performance, finantial status, market share, and overall industry knowledge, there is not one single company that even comes close.
      companies such as lucent, nortel, new bridge etc (IBMs of the telco industry) should worry as cisco brings in the dynamics that have swept on the enterprise side.

    • The main shortfall as far as technology is concerned is switching technology. Some ISP's use ATM switches on their backbones
      for the long haul (500 miles or more) and use routers at the edges. The theory is that ATM is more effecient than router based
      networks because packets don't have to be unwrapped and re-wrapped at every hop. Cisco is not stupid, they are well aware of this and
      other competing technologies. That is why they are now manufacturing routers that use ATM-like technology, with the reliability of
      routing.

      Remember that some Internet backbones use ATM and routers, and some use routers only, but they all use routers in one way or another.

      I am confident in Cisco's management, as well as the funding put into R&D. Complacency shouldn't be a problem.

    • I believe you are right on the money with your prediction for the continued growth of the internet. However, if you like
      Cisco for thier technology, you may be making a mistake. Many of the products now available in the ISP arena are far superior to
      Cisco in terms of performance, scalability, and ease of use. If these products gain any sort of marketshare (and cisco doesn't buy
      them) the existing Cisco products could easily become the glaring weak point in internet connectivity. Additionally, I recently
      read that the DEC (now Cabletron) actually owns 2/3 of the internet points of connectivity...not cisco. So you can build the
      internet w/o cisco.

      Buying cisco for business reasons makes sense, in the short and mid term, but beware, the technology curve and cisco's complacency could hurt the long term.

    • I expect Cisco's earnings growth to not keep up with investor's demand and it will tank. This stock is completely overvalued because every investment bank invested something in it and they don't want to admit the inevitable

 
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