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TheStreet Open House

Cisco's Doldrums: Weekly Tech Recap

NEW YORK ( TheStreet) -- The tech sector fell 4% this week, thanks in large part to Cisco (CSCO), who, despite beating first-quarter earnings and sales estimates, gave a dour outlook Wednesday after the bell.

Cisco's adjusted profit rose to 42 cents a share from 36 cents a share last year, above analysts' estimates of 40 cents. First-quarter revenue soared 19% from last year to $10.75 billion, slightly edging analysts' expectations of $10.74 billion.

But it was Cisco's low outlook and comments about down sales that saw the firm's stock plummet more than 13% shortly after results came out in after-hours trading, hitting $21.15 before dropping to $20.50 at market open Thursday. The plunge was the company's worst post-earnings drop since 1994.

Cisco




Cisco projects fiscal second-quarter revenue of between $10.1 billion and $10.3 billion; analysts expect revenue of $11.08 billion.

Calderoni, speaking to TheStreet via live video feed, said Cisco isn't worried, but reiterated the two areas where sales were low: government business and the firm's U.S. cable business.

Cisco shares, down 16.77% for the week, closed down 37 cents, or 1.80%, at $20.15 on Friday.


Although not as high profile as Cisco, managed hosting specialist Rackspace (RAX) was also on deck this week, putting out strong third-quarter results on Monday.

One of TheStreet's top Web stocks, Rackspace brought in revenue of $199.7 million, up 23% from the same period last year, and comfortably above analysts' forecast of $197.56 million. Excluding items, Rackspace earned 9 cents a share, up from 6 cents a share in the prior year's quarter, and in line with Wall Street's estimate.

Rackspace, which competes with AT&T (T), also bolstered its customer list, which grew from 108,023 at the end of the second quarter to 118,732. Despite strong results, the company's stock closed down 76 cents, or 2.65%, to close at $27.89 on Friday.


Chipmaker Intel (INTC) also had a big week, announcing plans to hike its quarterly dividend on Friday. Citing strong demand for its products, Intel plans to raise its quarterly dividend by 15% to 18 cents. Investors responded positively to the news, despite the broader selloff in tech stocks, and Intel's shares closed up 32 cents, or 1.51%, at $21.53 on Friday.


Video game publisher Activision Blizzard (ATVI) saw its latest title, Call of Duty: Black Ops smash sector sales records this week. 5.6 million copies -- or $360 million worth -- were sold on the day of the game's launch, besting the record set by the game's predecessor the year before.

(By the way, that sales number beat out the movies, too -- the most successful movie launch was Harry Potter and the Half-Blood Prince, which earned $394 million its opening weekend.)

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