'Fast Money' Recap: Cisco's Questionable Dividend
NEW YORK (
) -- 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
's
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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 Microsoft Corporation Report
would use its cash to make a strategic acquisition.
Melissa Lee, said
Hewlett-Packard
(HP) - Get Helmerich & Payne, Inc. 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
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.
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
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CEO Jamie Dimon and
Bank of America
(BAC) - Get Bank of America Corp 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 Peabody Energy Corporation 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 Cleveland-Cliffs Inc 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
, 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 Freeport-McMoRan, Inc. Report
. Kelly liked
SPDR Gold Trust ETF
(GLD) - Get SPDR Gold Shares Report
. Finerman liked
Best Buy
(BBY) - Get Best Buy Co., Inc. Report
. Terranova liked
Apple
(AAPL) - Get Apple Inc. Report
through the holiday season.
--Written by David Tong in San Francisco.
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