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Vol 2, No. 6 June 2001 Reprint in Basic Email Format

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*ACTIONABLE INVESTOR NEWSLETTER

Welcome to the Electronic-Boardroom TMVI® Newsletter!

This E-zine is published monthly and distributed to paid annual subscribers ($1200) or Electronic-Boardroom TMVI® Club members.(Annual membership fee of $6,000 includes Newsletter, Oxford UK Briefing, Garment2go™, free governance breakfasts /lunches and topical reports, custom research for 4 hours.) Our policy is never to sell, rent or otherwise break the trust of having your email address. Thanks for your subscription and warmest regards.

http://www.electronic-boardroom.com/ebcatalog.html

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IN THIS ISSUE:

EDITOR’S REMARKS:June Klein, CEO

Technology & Marketing Ventures, Inc. jklein@tmv.com

FEATURE: Cisco Makes the TMVI® Grade

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EDITOR’S REMARKS

One of our subscribers sent an email regarding dealing with the reality of unsold technology stocks in his IRA.

Q “I have an IRA with 87% of the investments in tech stocks which are currently underwater. I agree with your previous assessment that firms like Microsoft, Oracle, Citrix, APC and Corning will probably come back and are worth holding on to. I also agreed with your previous high ratings on Citigroup, Merrill and IBM but those stocks are in my non-IRA account. I have 6 years before I can withdraw money from the IRA without penalty. What should I do?”

A You might consider balancing out your IRA portfolio with the Kemper-Dremen High Return Equity Value Fund, Class B. It has only 9% tech stocks with rest $1billion stocks in what was recently called undervalued market sectors, 5star Morningstar rating, 2000 return=41%, 5year return=16%, proven portfolio manager. There are no in or out fees, if you hold for 5 years.

Subscribers: Questions sent to jklein@tmv.com will be published anonymously in each monthly issue.

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FEATURE: CISCO – ELECTRONIC-BOARDROOM TMVI® RATING

The unique TMVI® rating system employs a ranking in 4 categories. Each technology company reviewed by the Electronic-Boardroom TMVI® Newsletter is questioned, analyzed and judged in terms of:

TECHNOLOGY — Is the company on the right path to develop or sustain superior information technologies?

MARKETING — Does the company have a realistic marketing strategy to exploit the superior technology?

VENTURES — Has the company chosen the right partners and made effective use of alliances to enhance its products, services and operations?

INC — Does the company have a corporate structure that is nimble and flexible enough to respond quickly to changes in the marketplace?

IN CISCO’S CASE, THE ANSWER TO EACH QUESTION IS YES

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CISCO MAKES THE TMVI® GRADE AGAIN.

CURRENTLY: Re-bought at 14 and is on the rise up to 26.

FUTURE PLANS: Hold for 2½ -3 years to maximize long-term value.

TECHNOLOGY

The Cisco 1750 Modular Access Router was awarded the Network Computing 2001 Well-Connected Award for Enterprise VPN Solutions at the 2001 Network World-Interop trade show. We agree that this network computing award represents a well-deserved salute to Cisco for providing branch offices with the very best the computer networking industry has to offer.

Cisco is a web-centric firm that uses the web for more than just a distribution channel. “Web-centricity” is the only way to lower costs, sell services and create competitive advantage. Cisco and financial services firms understand the required systems integration, but many firms want to reap the benefits without extending the necessary sophistication, time and costs.

MARKETING

An example of Cisco’s Worldwide Channels Program is their webcast on blended e-learning solutions. Through case studies and Q&As, the viewer sees how Cisco is reducing costs, increasing productivity, and maximizing the effectiveness of its partners’ e-learning experience. Resellers are supported with field marketing strategies that leverage other equipment vendor initiatives. This enables resellers to increase their sales and helps end-user customers to focus on meeting their business goals.

Cisco has equipment in 85% of the Fortune 500. Sales to telecom companies make up about 40% of Cisco’s revenues. Approximately half of their sales come from new telcos, many with weak management, illogical plans and dwindling cash. The drop in demand relates to the 70% of the excess inventory, telecom gear and parts, which were written-down. Unlike the dot bombs on the “NASyech,” old-world phone companies are likely to survive the current downturn. In the telecom market, Cisco has the means to acquire a mature player and become a dominant force. However, the cultures and strategies clash.

A key for Cisco profit is behind-the-scenes, growth driver applications with a lot of Cisco gear in the LAN and hosting backend. The application must cut across worldwide markets and be digestible today. I plan to contact John Chambers on our secure, collaborative workspace designed for board of director productivity with related workspaces for inter-company transactions.

VENTURES

Cisco is a master in creating infrastructure ventures. May 2001, Cisco, EMC, and Oracle announced the latest in a series of solution blueprints for high-availability e-business infrastructures across databases, application platforms, storage, and networks. This means selling opportunities for Cisco 7000 routers, Catalyst 6000 switches, LocalDirector, Distributed Director, Cache Engines, CSS11000, and the PIX Firewall. The Cisco AVVID Partner Program is a solutions interoperability program developed to deliver comprehensive security solutions for Cisco networks. Opensystems.com supports the SAFE Network Security Blueprint from Cisco. A Cisco-EDS-Dow Chemical venture is creating a global voice over internet system.

Watch the Cisco deals as investment buys. For example, SonicWall Inc.’s stock jumped 13% on news the Internet security software company signed a manufacturing pact with Cisco Systems Inc., a deal that will boost the company’s security socket layer business.

INC

Cisco has gone from the world’s biggest market cap of $550 billion, surpassing Microsoft and General Electric, to $115 billion. However, it is still head and shoulders above its rivals. Further, Cisco has $17 billion in cash and investments and its balance sheet is debt free.

Cisco’s two-year financial performance, ranges from the quarter’s gross margin of 6.9% to last year’s 64.5%. Perhaps, taking a $2.5 billion inventory write-down in a predictably weak quarter may result in future quarters looking better. The result of a quick drop in demand from new telcos could be very nice margins if products can be sold using inventory with zero cost. This suggests that an accurate profile of Cisco’s financial characteristics going forward would be more of a middle ground.

I worked with John Chambers at Wang and IBM and have a lot of confidence in him and his financially savvy board. Like myself, anyone who has lived through 30 years of global technology and financial services knows how to handle the inevitable extreme highs and lows of these markets. Nevertheless, the audit committee should hire an independent Electronic-Boardroom TMVI® consultant to thoroughly research SEC past reactions to inventory write-offs and explore changes to accounting practices that would be more consistent with the nature of advanced technology growth firms.

I bet on John in January 1998 when 100 shares of the unknown Cisco were worth $6,500. Only the lack of market readiness led me to sell in September 2000 when 100 shares were worth $39,000. A few of my colleagues felt we should stay in as Cisco went higher. I said to you then, we make money being a bear or a bull, but not a pig… it’s enough. For me, it is time to come back in and stay another 2 1/2 years.

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Disclaimer. All info is from sources believed to be reliable. The information contained herein is not guaranteed by the Company to be accurate, and should not be considered to be all-inclusive. The companies discussed have not approved any of the statements made. The discussions of companies and mutual funds contain forward-looking statements that involve risks and uncertainties. A company’s or fund’s actual results could differ materially from those described in any forward-looking statements or announcements discussed within. The material in Electronic-Boardroom TMVI(r) Newsletter is for information purposes only and should not be construed as an offer or solicitation of an offer to buy or sell the securities. The Company is not a licensed broker, broker dealer, market maker, investment banker, investment advisor, analyst or underwriter. Please consult a broker or financial planner before purchasing or selling any securities viewed in our newsletter. The Company has not been compensated by any of the companies listed herein, or by their affiliates, agents, officers or employees for the preparation and distribution of any materials in the Newsletter. The Company and/or its affiliates, officers, directors and employees may buy, sell or have a position in the securities discussed and may profit in the event the shares of the companies discussed in the Newsletter rise in value.

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