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Steve and Others,

TMFMycroft and I said virtually the same thing to the question which CaptTBone asked originally. It was:

"With that amount of cash coming in, they (Cisco) should be able to weather out the storm until the economy and the techs start coming back from the dead...right?"

Unfortunatly, this is a compaound question whichneeds to be broken into 2 parts.

Part 1: Is Cisco healthy from a cash flow point of view and can it stay solvent through the tech bust?

Short Answer from TMF Mycroft and myself - YES!. Cisco (the company) is a vital and cash rich company which has the assets, products, customers, and management to be a viabl, healthy business for the forseeable future.

You answered the second more complex part of the question.

Part 2: Will CSCO shares continue to go down as it weathers the storm and the techs start coming back from the dead?

Whitney Tilson believes so. If you read my post in this thread, I do too. For the same reason.

These two answers to the single question are NOT opposed to each other. Cisco (the company) can do a great job of executing, be profitable, and we all can still lose our shirts on the stock CSCO.

Having been in tech since 1974, I believe Tech is in a "Sea Change" (also referred to as "Secular" instead of "cyclical" period). This is NOT (as Mr. Chambers stated back last Fall) a 6 month cycle which will improve in the second half. We will see tough times for tech for a long time. I personally feel this market could be worse for tech than 1989 and could rival the "post Apollo" aerospace bust of the early 70's.

At least in 1989, we mostly were seeing a tough technology cycle change where the majority of leaders in the prior generation could not keep up the the next genertion (DEC, WANG, IBM, DG, etc.). All of the highflying minicomputer vendors of the early '80's fell by the wayside. But even then there were some bright spots in tech (CSCO for one, 3COM, Microsoft, Intel, NOVELL, GATEWAY, DELL, etc.). This is the "Innovators Dilemma" type of problem.

Now we have an issue which is caused NOT by the rate of change of technology, but by the underlying economics of that change. The change of course is the Internet. The issue is not keeping up with the technology cycle, but figuring out how to pay for it!


As an E-Business, how DO you really make money on the Internet?

How do the Telcos figure out how to supplant "pay by the minute" telephony with "pay by the bit" or some other mechanism which makes ubiquitous broadband access feasible to all busineses and homes?

I believe that this issue is embedded in the history of the Internet itself. From the first time I got on the Arpanet in 1977 until around 1991 or 92, it was impossible (i.e. contractually discouraged) to use the Internet for overtly commercial purposes. As a network manager, I was incensed when I got my first commercial SPAM via email in 1993! We got that damn SPAMMer disconnected by our ISP!

The Internet was (and is) so strongly steeped in a tradition of egalitarianism and the fundamental premise that it was "FREE" access mechanism that we are still figuring out how to take this "Academic and Research" technology and make it pay for itself.

THIS WILL CHANGE! Cisco will be worth a lot to Cisco investors "when the techs start coming back from the dead". I am certain that Cisco will be a leader 10 years from now (just as Boeing still is a leader in aerosace and GE is in Jet Engines). BUT, I think all of us will have to redefine our concept of LTBH.


P.S. My definition of LTBH for my portfolio is Tax-Free municipal bonds to live on for the next 5 years.
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