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Cisco Systems (CSCO): FQ3 EPS of $0.51 beats by $0.02. Revenue of $12.2B beats by $0.02B. (PR)

Cisco Systems (CSCO): FQ3 EPS of $0.51 beats by $0.02. Revenue of $12.2B beats by $0.02B. (PR)
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  • ConservativeOutperformer
    , contributor
    Comments (625) | Send Message
     
    Doesn't take much for a nice move when the equity is priced like enormous margin declines are imminent..........

     

    'Valuing Cisco isn't an enormous math problem with lots of tricky DCF formulas. It's a simple process where you measure the staying power of the firm, its margins and competitive position relative to the competition and the input of a buffer for future poor acquisitions and adverse economic scenarios. My numbers have a normalized, conservative EPS figure of $1 on the shares and I assume roughly $30B in cash. That is a lower EPS figure than '09 AND either a large repatriation hit or $20+B in wasted foreign acquisitions...... If you back out the net cash on those assumptions, essentially you get a business with $3 in net cash. At $15, you are looking at a $12 business that will make $1 minimum in any economic scenario. If that dollar gets squandered on further dilutive actions the business probably isn't worth 12x (remember that is dilutive beyond the $20B already wasted). In order for this forecast to come to fruition the world has to fall apart AND Cisco has to become even worse at allocating capital.

     

    As I mentioned in my first post the AND part is where I think the market is wrong.'

     

    http://seekingalpha.co...
    15 May 2013, 05:35 PM Reply Like
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