Cisco (CSCO) Case Study; The Lord of Dark Matter


Next the statesmen will invent cheap lies, putting the blame upon the nation that is attacked (Syria), and every man will be glad of those conscience-soothing falsities, and will diligently study them, and refuse to examine any refutation of them; and thus he will by and by convince himself that the war is just, and will thank God for the better sleep he enjoys after this process of grotesque self-deception.” –Mark Twain

“When the rich make war, it is the poor that die.”–Jean-Paul Sartre

Case Study of Cisco:

CSCO Chart

Case Study on Cisco Third Quarterly Earnings  (includes 2012 for comparison purposes).  Instructions and questions in the document.

CSCO_VL   (for reference) CSCO March 2013 Qtr Report

Please explain what you see.

The Lord of Dark Matter

Fleckenstein:  “Probably anyone who listens to your wonderful interviews already understands that money printing can’t solve anything … Most recently the housing bubble led to the collapse in 2008/2009, and now we’ve got QE of biblical proportions being foisted upon us by the Fed, BOJ (Bank of Japan), Swiss National Bank, and probably the BOE (Bank of England) soon, etc.

The irony of it all is that 5 years into zero rates, and America alone (with) $5 or $6 trillion of deficit spending, the economy is still crummy.  No one ever says, ‘Why is that?’  Well, the reason is because money printing doesn’t work.”

….Everybody and his brother is bearish.  I get sent two articles a day about some knucklehead who’s bearish on gold.  Well, you know what?  They are all bearish for the same two reasons:  The chart looks bad, and the price is wrong.  Like they know what the price (should be).  How do any of us know what the price is supposed to be?  It’s just a price.

Click the link below to hear the twelve-minute interview:


Serial Bubbles:


P.S. I have been a bit swamped with work, so I will post next week. Be well and BE CAREFUL!



5 responses to “Cisco (CSCO) Case Study; The Lord of Dark Matter

  1. Not sure if its just seasonal, but days sales outstanding went from 31 to 37. If not seasonal it’s a near 20% increase. I don’t see those figures for 2011. If that was 30 or lower I would guess it indicates channel stuffing or customers demanding more credit (as more competition from Cisco competitors or going to lower credit quality customers)

  2. Goodwill increased for no clear reason. Will look at it more later.

  3. For a sales growth of 5% the accounts receivables jumped by 13% and the inventory reduced by 12%. Also the provisions for doubtful receivables increased by 9% during the same period. DSO went from 31 to 37 and the composition of inventories for the period is also worrisome. Raw material reduced by 36% meaning there will be a slow down in revenues going forward. The distributor inventories has also jumped by 8% compared to revenue growth of 5%.

  4. A question on the business quality of CSCO: I can understand MSFT’s moats (API and file format lock-in) and Dell’s past moats (efficiency). But I can’t figure out CSCO’s moats or CHKP’s moats. I don’t understand the moats of thse networking and security equipment makers. They must have done something right to generate supersize ROEs…


  5. Perhaps CSCO has some slight customer captivity combined with some economies of scale. The way to check that is to see how stable and high their market share is. Sort of like Intel. I don’t know about Checkpoint.

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