'Fast Money' Recap: Cisco's Questionable Dividend

The trading panel debated whether the dividend was a wise move.

Author:
David Tong
Publish date:
Sep 14, 2010 7:32 PM EDT

NEW YORK (

TheStreet

) -- The markets lost momentum Tuesday and ended mixed.

The

Dow Jones Industrial Average

fell 17.64, or 0.17%, to 10,526.49. The

S&P 500

lost 0.80, or 0.07%, to 1,121.10, while the

Nasdaq

rose 4.06, or 0.18%, to 2,289.77.

Tim Seymour said on

CNBC

's "Fast Money" show that

Cisco

undefined

move to provide a dividend to shareholders has been something that has been roundly talked about in the cash-rich tech sector. Whatever "you might think about it, it's share positive."

Joe Terranova interpreted the move as the end of the growth story for Cisco and put the company into the category of "old technology." He said the company is no longer in the same league as tech companies that are reporting 20% revenue growth and hitting new 52-week highs.

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 onTV
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Karen Finerman, however, called it a "tiny move in the right direction" of better capital allocation. She hoped others would follow suit.

Steve Cortes said he hoped

Microsoft

(MSFT) - Get Free Report

would use its cash to make a strategic acquisition.

Melissa Lee, said

Hewlett-Packard

(HP) - Get Free Report

was up on whispers that the company was close to naming a new CEO. Finerman speculated the candidate might come from the bench of IBM, despite disparaging remarks by its CEO Sam Palmisano about HP's acquisition of

3Par

(PAR) - Get Free Report

Lee said gold hit another new high and is up 15% in 2010. Cortes said he didn't like the trade, calling it overcrowded.

Brian Kelly took the opposite view. He said gold will rise because of investment demand from China, which is opening its markets to more gold trading. He said the price of gold will be spurred by global inflation, especially in China. Terranova called gold the only asset left to buy and hold.

Lee noted that there was profit taking in bank stocks in the aftermath of Basel III. Finerman said she listened to comments from

JPMorgan Chase

(JPM) - Get Free Report

CEO Jamie Dimon and

Bank of America

(BAC) - Get Free Report

CEO Brian Moynihan and came away feeling that Dimon instilled more confidence of the two.

She said she liked what Dimon had to say about seeking more clarity on the tax situation before deciding on a dividend.

Lee brought in David Lvy, of the Jerome Levy Foreasting Center, who dismissed the talk that earnings will continue to soar in the coming quarters. He called that a nonsensical notion in a slowing economy in the next six months. He told the panel not to make much of today's retail results, saying there is not a growth scenario in that sector. He also said the outlook for airlines is not good.

On the eve of the second anniversary of the blowup of Lehman Brothers, Gary Kaminsky said such a blowup could happen again if boards of directors don't act responsibly in the interests of shareholders.

In the play of day,

Peabody Energy

(BTU) - Get Free Report

Gregory Boyce talked about a longer bullish cycle for coal based on strong overseas demand, especially among Asian countries. But Cortes said his read from

Cliffs Natural Resources

(CLF) - Get Free Report

is for "reduced demand for coal going forward."

Lee brought in Lars Bjork, CEO of

QlikTech

(QLIK)

which has jumped 76% since its July IPO.

He said his company's strong growth reflects the demand for business intelligence software on a variety of platforms. He said there is a strong demand for software that can sift data on tools as easy to use as the iPad.

Is a flash crash inevitable? Scott Cohn,

CNBC

business reporter, said such a crash is bound to happen because high-frequency trading accounts for 70% of all trading in the U.S. He said the investors are at disadvantage in a fragmented, automated market where trades are handled in milliseconds.

He said the SEC is looking into complaints of quote stuffing in which high-frequency traders flood market with bogus trades to gain an advantage.

Jim Simons, founder of

Renaissance Technologies

, defended high-frequency trading. He said getting the jump on information is nothing new in investing, adding high frequency trading benefits investors by increasing liquidity and providing savings from faster, high-volume trading.

The panel returned to the issue of companies issuing debt to buy back stock and dividend. Finerman said it was smart for companies to borrow at low interest rates to buy back stock.

In the final trades, Cortes said to short crude. Seymour said to short

Freeport McMoRan

(FCX) - Get Free Report

. Kelly liked

SPDR Gold Trust ETF

(GLD) - Get Free Report

. Finerman liked

Best Buy

(BBY) - Get Free Report

. Terranova liked

Apple

(AAPL) - Get Free Report