Cisco, rides high-tech connectivity wave: Cisco Systems has the enviable position of being a world leader in an accelerating market

In the highly volatile world of hightech stocks, only a handful will pass the fundamental test of value. Even the mighty Microsoft is trading at an earnings multiple of 45. Conventional financial yardsticks do not always apply to technology stocks.

Technology stocks trade on future prospects and market momentum. One major technology stock that has momentum on its side is Cisco Systems Inc., the world's leading supplier of enterprise networking solutions, LANs and WANs. The company now has a 45% share in the highend switching market. It's share price has doubled in the past year. The gross margin is over 65%.

Why Cisco?

1. Accelerating revenue growth. Cisco's revenue growth has been accelerating over the past four quarters, from 14%-to-19%. Its year-over-year

                            Cisco Systems Inc.



NASDAQ symbol:      CSCO
Recent price:   US$79.32
52 week - high  US$80.00
         - low  US$44.75

revenue growth surpassed 73% in the January quarter.

2. Leader in a growing market. Cisco controls more than 70% of the SNA to LAN connectivity. This market has been growing at a breakneck speed of 30% a year.

3. Cisco is a big player in the switching business. The switch market grew by more than 150% in 1996. This represents some $3 billion. Cisco produces ATM (asynchronous transfer mode) switches that will be in considerable demand by network managers.

4. There is an enormous potential outside North America. Networking is not confined to North America. Its scope is international. Yet many countries are just beginning to join the technological revolution. This provides opportunities for expansion for years to come. International sales of Cisco Systems accounts for 50% of its total revenue.

Its dominance in the communications field and its potential for expansion make Cisco Systems one of the best technology stocks to own at the moment.

This stock can easily move up to the US$85 range in the months to come. But watch out. Technology stocks have a tendency to swing wildly. If you are interested in technology stocks, Cisco is one of the stocks you may want to consider for your portfolio.