The following article is part of The Motley Fool's "Stock Madness 2005," a contest based loosely on the annual NCAA College Basketball Tournament, a.k.a. March Madness. From March 17 to April 5, our writers and analysts will engage in head-to-head competition with each other, advocating and arguing on behalf of 64 stocks we've selected as among the most interesting to Foolish investors. You, dear readers, are the fans and referees -- you'll read these exciting duels and then vote for the stock you think is the better investment... and should therefore move on to the next round of play. The company that survives six "games" will be our tournament champion, and its writer our most valuable "coach."

But, please, make no mistake -- "Stock Madness 2005" is a GAME!

Our writers are doing this for fun. They are enjoying the spirit of competition and the art of debate. They are delighting in the search for positives in the companies they've drawn... and negatives in the companies they're pitted against. They are NOT necessarily recommending these stocks as the ones they believe in above all others. As ever, YOU must decide whether the stocks we're writing about -- winners and losers -- are deserving of your investment dollars.

Apple Computer (NASDAQ:AAPL)
Cupertino, Calif.
52-week low-high: $12.75-$45.44
$33.4 billion market cap

This would have been a much better battle if I were up against food services company Sysco (NYSE:SYY) rather than networking giant Cisco. Then we could have played the fun game of pretending that my team was an apple instead of Apple, the computer company.

So we get to take on Cisco instead. We just have to be very quiet about it. Shhhhhhhhhh. We don't want to wake Cisco's inventory. It hasn't been disturbed in some time.

Back in 2001, Cisco had built and built and built, expecting the Internet growth-to-the-sky party to last forever. When management finally did have to admit that some of the gear in its warehouses was most likely doomed to stay there for some time, it presented shareholders with a bill. The bottom line was a writedown of $2.2 billion dollars worth of equipment. This was a bitter pill for shareholders to swallow, but there was a bit of a silver lining. Rest assured, the folks in charge of Cisco wouldn't let themselves get that far out in front of their headlights ever again.

So imagine our surprise last year when Cisco's inventory blasted above $1 billion. "No worry; things are picking up," management said. Shareholders nervously went along, hoping for the best. This faith, thus far, has proved to be misguided. In its quarter ended February, Cisco's inventory was even higher, at $1.25 billion. There are really only three ways to run off inventory in the absence of an increase in demand: Do another big bath writedown, produce less, or mark down prices. None of these, of course, are great for shareholders. And yet that's where Cisco is right now. If demand doesn't pick up (and I see exactly no reason why it should), margins and profits will drop.

Apple, on the other hand, can't produce its goods fast enough for demand. Last year the new mini iPod (especially the pink one) had backlogs running into the months. Ditto this year's hot property, the iPod Shuffle. iPod's inventories are minuscule by comparison.

The difference between these two companies is that Cisco's waiting for the rising tide to raise its boat, while Apple just keeps building new, better, cooler boats that don't need no steeenking tides.

Bill Mann owns no company mentioned in this article.

Cisco Systems (NASDAQ:CSCO)
San Jose, Calif.
52-week low-high: $17.13-$24.83
$116.55 billion market cap

By Tim Beyers (TMFMileHigh)

Let me get one thing straight: I'm a huge fan of Apple and its products. But not so much when it comes to the stock. That's because we've seen these kinds of highs with Apple's stock before, and each time it's caused trouble for investors.

Let's take a recent example. According to market researcher Value Line, Apple's 2002 average price-to-earnings ratio was 61.5. And during that year, Apple investors saw their shares decline more than 38%. Guess what? Yahoo! Finance pegs the Mac maker's trailing P/E ratio at 68.70. And now Value Line estimates Apple's shares over the three-to-five-year pull will decline between 5% and 40%. That's because the stock is priced for permanent perfection.

I know -- what about the iPod? There's no doubting it's the new digital icon. But so was the flat-panel iMac when it appeared with CEO Steve Jobs on the cover of Time. And you know when that happened? Jan. 14, 2002, the peak of the iMac hype cycle. Any thinking investor has to wonder whether history is about to repeat itself.

Now let's talk about Cisco. Its temporary problems have made a very interesting case for the stock. Indeed, Cisco's enterprise value-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio is 15.4. Divide that by its forward P/E of 17.9, and you've got a ratio of 0.86, which indicates the networking giant is trading for a discount to its intrinsic value. In other words: Unless Cisco CEO John Chambers begins drooling on the job, shareholders should enjoy above-average returns. Interestingly, Value Line agrees. It estimates Cisco investors will see returns between 35% and 90% over the three-to-five-year pull.

No doubt, Apple's products are insanely great. But that doesn't mean its stock isn't insanely overpriced. I humbly ask that you vote for Cisco.

Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this story at the time of publication, though he did write this story using his G4 PowerBook. You can find out what is in Tim's portfolio by checking out his profile here.

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