Cisco, RIM Follow-Ups

Apparently, someone at the Motley Fool agrees Cisco (CSCO) is cheap at these prices (~$17):

http://www.fool.com/investing/value/2011/04/26/does-cisco-systems-deserve-a-spot-in-your-portfoli.aspx

Not that having others agree with us should mean anything – confirmation bias is hugely detrimental to successful investing and must be guarded against at all times. At times, investors must have enough courage of their convictions to take the other side of a trade even with another well-respected investor (see Berkowitz vs. Einhorn re: JOE).  But in this case, I obviously happen to agree with the Fool, as evidenced by my CSCO buy.

In a follow-up to my recent watchlist additions, Research In Motion (RIMM) is taking a pounding this morning due to lowered guidance. While I thought the stock was too pricey for serious consideration based simply on free cash flow analysis, I also mentioned competitive concerns as a reason to discount any growth projections for RIM as well which has now been borne out. Readers can read the Bloomberg report here:

http://www.bloomberg.com/news/2011-04-29/rim-plunges-as-analysts-see-lost-credibility-with-forecast-cut.html

Even with its current drop, I still view the shares as unattractive. However, I had to chuckle when reading this section of the article:

“This further damages already low credibility, making them the ‘poster boy’ for a show-me story from here,” Mike Abramsky, an analyst at RBC Capital Markets in Toronto, said in a research note. He slashed his price estimate for RIM stock to $55 from $90 and his rating to “sector perform” from “top pick.”

This analyst talks about damaged “low credibility”, yet he is the one who thought the company was worth 40% more yesterday than today. How can a huge company suddenly be worth 40% less on the basis of one earnings warning?  Looks like RIM isn’t the only one with damaged credibility.

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