'Fast Money' Recap: Cisco's Fall
NEW YORK (
) --
Cisco
(CSCO) - Get Report
's shares took huge drop in after-hours trading on a disappointing earnings report and guidance.
For the day, the
Dow Jones Industrial Average
rose 10.29, or 0.09%, to 11, 357.04 and the
S&P 500
moved up 5.35, or 0.44%, to 1,218.75. The
Nasdaq
jumped 15.80, or 0.62%, to 2,578.78.
Melissa Lee, the moderator of
CNBC
's "Fast Money" TV, said Cisco fell in afterhours by as much as 13%, its biggest post-earnings drop since 1994.
Guy Adami was worried about the inventory build in the earnings report, while Tim Seymour noted that Cisco's margins were light.
For a breakout of some stocks from a recent "Fast Money" TV show, check out Dan Fitzpatrick's "3 Stocks I Saw on TV."
3 Stocks I Saw on TV |
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Lee said Cisco was seeing a slowdown in orders in the U.S.
Adami was concerned about the impact of Cisco's earnings on companies downstream like
Juniper Networks
(JNPR) - Get Report
. He said the stock could get hit Thursday.
Jon Fortt,
CNBC
tech correspondent, who was listening to Cisco's conference call, said the company's cable player and public sector businesses were off sharply.
The most damaging information came in the guidance. Fortt said revenue for the second fiscal quarter was for $10.1 billion to $10.3 billion versus analysts' expectations of $11.08 billion. Lee said the $1 billion miss was huge. The revenue forecast for fiscal 2011 was also below expectations.
Shifting to the markets, Lee said the panel was of a divided opinion on the impact of QE2. Kelly said the reinflation trade is working with minor corrections.
Seymour was worried about the Treasury markets, saying today's 30-year auction was worst than expected. He said people were starting to worry about the steady stream of announcements of government bond purchases.
Adami said some stocks like
Ford
(F) - Get Report
was up 3.5% on a "lousy tape." Seymour said he wasn't buying Ford and looking instead to automakers in Europe.
Karen Finerman said the market has surged 15% since Bernanke's speech at Jackson Hole. "It's been gigantic."
In a segment on insider moves, Lee noted the five stocks with the most active insider buying. They were
Vmware
(VMW) - Get Report
,
American Semi
(AMSC) - Get Report
,
Con Ed
(ED) - Get Report
,
Texas Instruments
(TXI)
and
Everest Reinsurance
(RE) - Get Report
.
The five stocks with the most active insider sales were
Salesforce.com
(CRM) - Get Report
,
(GOOG) - Get Report
,
Oracle
(ORCL) - Get Report
,
Netflix
(NFLX) - Get Report
and
Imax
(IMAX) - Get Report
.
The panelists had mixed opinions about the lists. Finerman said buying usually means the insiders believe the stock is heading higher, while Seymour dismissed the importance of list, calling it irrelevant. She also said it was logical for some investors to take some profits off the table for stocks like Netflix which have surged.
Lee said commodities closed mostly lower today. She spoke with Roger Neshem, a farmer who said he was going to use the windfall from the higher prices from his crops to upgrade farm equipment. He said he expects prices to rise on farm equipment and land values.
Shifting to the energy space, Stephen Weiss touted
Foster Wheeler
(FWLT)
as a good energy infrastructure play because it closely correlates with the price of crude.
Lee brought in David Bank, an analyst with RBC Capital Banks, to talk about
Viacom
(VIA.B)
and its successful "Jersey Shore" show. He said said the company needs to move from that show to lifting its entire schedule.
Taking the other side of the QE2 debate, Zachary Karabell argued that commodities inflation doesn't always translate to price hikes in goods. He said the rise of the middle class in China is inherently deflationary and is more important to the global price structure of goods than money. Finally he argued the proliferation of information technology is driving costs and prices down.
Seymour took the other side of the argument, saying the rise in food and energy prices in emerging markets is reducing consumer buying power. Finerman said gasoline is a good, and it's heading higher.
In the final trades, Adami said to sell
Freeport McMoRan
(FCX) - Get Report
. Finerman liked
Cisco
(CSCO) - Get Report
below $21.
--Written by David Tong in San Francisco.
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