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No. of Recommendations: 1
CSCO (cisco) is way down, and might be a true bargain. Unfortunately I still cringe at the term tech-stock.

Looking at the earnings side over the last ten years at the Cisco number look pretty good.

One thing puzzles me though. They seem to be reporting good positive EPS numbers, each year, but yet the value of Equity on their balance sheet is going down over the last few years. Four possible explanations come to mind.

1. They are reducing Equity by paying a large dividend.

2. They are reducing Equity by buying back a lot of shares.

3. They are manipulating their accounting to appear to have a positive and growing EPS while actually losing shareholder value.

4. Something else that I just don't understand.

It is not number 1 as they don't pay a dividend.
It might be number 2 as the share count has reduced a bit over the last few years.
If it is 3 or 4, I can't trust management until I somehow get enlightened. So at the moment, I would not buy unless I can satisfy myself that explanation number 2 ties in with the reduction in Equity.

Please bear in mind, that my due dilligence of Cisco took me all of about ten minutes so I may be missing a lot.


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