posted 03-28-2000 08:45 AM         

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...and finally yesterday, Cisco finished the day as the world's most valuable company. The top three are now:
Cisco - $555.4 billion
Microsoft - $541.6 billion
General Electric - $520.5 billion
(source: USA Today)

I realize that once MSFT gets past this whole settlement and antitrust problem, they will have more time to focus public perception on the company and future rather than the legal problems, but Cisco won't go away. This could be Ali-Frazier all over again.

posted 03-23-2000 06:32 PM         

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In brief:

Cisco Systems, the world's biggest maker of equipment that powers the internet, briefly topped software behemoth Microsoft as the world's most valuable company.

posted 03-23-2000 06:23 PM         

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> I've never understood or agreed with the argument that says by the time a split occurs, it doesn't really matter, since any price movement has already been factored in. <
I would encourage you to back-test your opposing theory with historical data. If you find that stocks (or some identifiable subset of them) move up the day after they split significantly more often than they move down the day after they split, then you've found a way to make some easy money.

> After Cisco split last night, there is already a 5 point increase (10 point pre-split) on volume of 40 million. Why? Because now that it is more affordable, more people can get their target amount of shares. <
I wish the cause and effect were that straightforward: stock splits -> price moves up. The reason that a stock price often moves up when a split is first announced is not that more people can get their target amount of shares as you said, but that many beginning investors wrongly feel that a share of stock at 50 is somehow cheaper than a share of stock at 100 which represents twice as much ownership, and so they wait for the stock to split before buying... but astute investors see this coming and buy in anticipation of it. Stocks do often move up on the _announcement_ of a planned split (which is an unpredictable event), but foreseen events (such as the exact date on which a stock will split) are very difficult to make money from. I'm not saying that stocks never move up right after they split; I'm saying that consistently profiting from this technique is not as obvious as today's Cisco action made it seem.

posted 03-23-2000 12:54 PM         

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I've never understood or agreed with the argument that says by the time a split occurs, it doesn't really matter, since any price movement has already been factored in. And splits, by definition, don't make your shares more or less valuable.

However, after Cisco split last night, there is already a 5 point increase (10 point pre-split) on volume of 40 million. Why? Because now that it is more affordable, more people can get their target amount of shares. And with this increased demand, the price increases. So it seems there is still value to be unlocked post-split, huh?

posted 03-22-2000 01:52 PM         

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For those having trouble keeping tabs, here is a nice acquisition summary I found for the big three:

Nortel Buys
-- CoreTek, an optical components manufacturer for $1.43 billion in stock March 21.
-- Xros, a photonics switching manufacturer for $3.25 billion in stock March 14.
-- Qtera, a manufacturer of long reach optical networking systems for $3.25 billion in stock December 15.

Lucent Buys
-- Ignitus Communications, a manufacturer of optical components at the network edge, March 14. Terms not disclosed.
-- Ortel, an optoelectric components manufacturer for $2.95 billion in stock February 7. Through the deal, Lucent gained a valuable minority interest in privately held Tellium, a well-regarded manufacturer of optical switching products.
-- SpecTran, a manufacturer of specialty optical fibers and products for $64 million in cash July 15.

Cisco Buys
-- Pirelli Optical, the optical systems business of the Milan, Italy-based company for $2.15 billion in stock December 20.
-- Internet Engineering Group, an optical networking software maker for $25 million December 17.
-- Cerent Corp., a manufacturer of optical networking hardware for $6.9 billion in stock August 26.
-- Monterey Networks, an optical transport networking equipment company for $500 million in stock August 26.
-- StratumOne Communications, a manufacturer of semiconductor products for high speed, wide area networks for $435 million in stock June 29.

posted 03-10-2000 02:01 PM         

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Plus, Cisco knows better than any other company how to integrate acquisitions. That may be why Amazon doesn't - they don't have the integration expertise. I read the same article you read, and here's the excerpt I liked:

"Cisco has a SWAT team of people responsible for integrating the operations of the companies that it acquires into its own operations. It assimilates companies into its operations in a way that's similar to the Borg on Star Trek. You could easily say that Cisco has written the book on how to pull off successful acquisitions."

posted 03-10-2000 10:38 AM         

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A lot of people have wondered why Cisco doesn't set up a venture capital fund like Amazon and Intel have done successfully. Instead, Cisco just buys companies outright. Here's an explanation I saw on the Fool:

"Why not have a venture capital fund like Amazon rather than buy companies outright? However, Cisco's business is much different than Amazon's. It aims to provide end-to-end networking solutions to its customers. By acquiring companies outright, Cisco is better able to integrate the acquired products into its own operations. Plus, Cisco runs its business so efficiently that in the long run it will be most successful by bringing the whole operation in-house."

Although you would think that Amazon would be able to integrate their investments easily as well, since their goal is to become a one-stop shopping area for all needs. So I don't quite see the difference.

posted 03-07-2000 04:36 PM         

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I could easily Cisco justifying a larger market cap than Microsoft. And I basically believe these are the only two companies that can justify a cap at these levels to begin with. The reason for Cisco being #1 in my mind is the positioning of the company for the future. Cisco (very much like Intel) is in a great position to take advantage of any technology and communication trend over the next 10-20 years. Yet Microsoft, in my eyes, seems to live more for the present, or if not the present, then for present technology and trends (ie the desktop operating system). Sure both of these companies have management that can change any of these variables in their favor, but in the current situation, I would value Cisco ahead of Microsoft.

But you know what? It will be harder to find better technology blue chip investments anywhere else. It's kind of like having to choose between one pot of gold and another - either one is good enough for me.

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