Rich, you know it's easy for companies to manipulate earnings to meet targets. Look deeper at Cisco Systems'
Sure, reported net earnings per diluted share skyrocketed 40%. Operating cash flow (a truer measure of corporate health), however, gained an anemic 8.5%. Slower than revenue growth, which indicates that those new dollars were tougher to earn. That's no picture of strength. Oil giant ExxonMobil
At the same time, management forecasts 10-12% revenue growth for this fiscal year. That's a deceleration from last year's 12.5%. While 10-12% is not bad, it's just another indication of Cisco's status as a maturing, cyclical company.
Also, while Cisco's cash hoard is nice, cash is a dangerous and expensive asset to hold. It's dangerous because it needs to be deployed intelligently in order to be useful. Poorly deployed cash directly costs shareholders money -- reference Cisco's own $9 billion equity lost from its options and buyback program.
Cash is expensive because, currently, cash earns just over 3% in an ING
Likewise, I trust Warren Buffett, but Berkshire Hathaway's
Bottom line: There are more shareholder-friendly companies trading at more attractive valuations elsewhere, so my money is staying away from Cisco.
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