Wall Street punished networking giant Cisco for only beating expectations by a penny when it reported earnings yesterday. But Cisco's short-term problems doesn't mean investors should write off the stock. When you dig a little deeper,
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Cisco Systems (Nasdaq: CSCO) Stock: Earnings Don't Tell the Whole Story
you'll understand why Cisco is going to prove the naysayers wrong...
Don't Blame Wal-Mart (WMT) and Cisco (CSCO) Slumps On Emerging Markets
Cisco stock (Nasdaq: CSCO) plunged 7.17% today, and Wal-Mart (NYSE: WMT) stock 2.6%, after disappointing earnings reports drove investors to sell.
Cisco announced plans to cut 4,000 more jobs (5% of its global workforce); the sales forecast for the quarter came in surprisingly low.
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Microsoft, Intel and Cisco Follow Path Predicted in 'Leaders to Laggards' Series
Money Morning subscribers who read our Leaders to Laggards series on the flagging fortunes of Microsoft Corp. (Nasdaq: MSFT), Intel Corp. (Nasdaq: INTC) and Cisco Systems Inc. (Nasdaq: CSCO) weren't surprised by subsequent developments, since we told you exactly what to expect.
The Leaders to Laggards articles described how each company's failure to anticipate changes in their markets undermined their ability to grow revenue. Consequently, their stocks - which many investors rode to massive profits in the 1990s - have languished for the past decade.
Those tribulations have continued since the publication of our series. Microsoft and Cisco have struggled mightily, and as predicted, only Intel has managed to make headway.
Profits were up 2%, while revenue jumped 21% year-over-year. And gross margins edged up to 64% from 61% in the previous quarter.
Revenue from data centers, which provide the infrastructure for the cloud-computing trend that is now beginning to dominate mobile devices such as tablets and smartphones, was up 15.2% and accounted for nearly 20% of total sales.
Intel sees data centers as a major source of growth. The company expects sales to rise to $10 billion this year and to $20 billion within five years.
An even bigger surprise was the strength in the chipmaker's PC business, which accounted for 64% of Intel's revenue. Sales of the PC division rose 11% despite sluggish growth of about 2.5% in the overall PC market.
"We knew that there would be strength in the servers, but to see double-digit growth in their PC unit is great," Michael Shinnick, a money managerat Wasatch Advisors Inc.,told Bloomberg News.
The Leaders to Laggards articles described how each company's failure to anticipate changes in their markets undermined their ability to grow revenue. Consequently, their stocks - which many investors rode to massive profits in the 1990s - have languished for the past decade.
Those tribulations have continued since the publication of our series. Microsoft and Cisco have struggled mightily, and as predicted, only Intel has managed to make headway.
Why Intel Is Still a 'Buy'
Intel surprised Wall Street with better-than-expected earnings last week - its standout divisions pointing the way to the future growth that for years had eluded the company.Profits were up 2%, while revenue jumped 21% year-over-year. And gross margins edged up to 64% from 61% in the previous quarter.
Revenue from data centers, which provide the infrastructure for the cloud-computing trend that is now beginning to dominate mobile devices such as tablets and smartphones, was up 15.2% and accounted for nearly 20% of total sales.
Intel sees data centers as a major source of growth. The company expects sales to rise to $10 billion this year and to $20 billion within five years.
An even bigger surprise was the strength in the chipmaker's PC business, which accounted for 64% of Intel's revenue. Sales of the PC division rose 11% despite sluggish growth of about 2.5% in the overall PC market.
"We knew that there would be strength in the servers, but to see double-digit growth in their PC unit is great," Michael Shinnick, a money managerat Wasatch Advisors Inc.,told Bloomberg News.
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Will Other Tech Companies Follow Cisco's Lead by Paying Out Dividends?
When Cisco Systems Inc. (Nasdaq: CSCO) last week announced that it would institute the first dividend in company history, it raised hopes among investors that hi-tech companies would finally begin to loosen the strings on their hefty cash holdings.
But will other tech giants really follow suit and institute dividends of their own?
Cisco Chief Executive Officer John Chambers announced the payout last Tuesday, saying the networking giant would reward shareholders with a dividend likely to yield between 1% and 2%. The exact amount will be determined in the coming months while the company considers developments on the tax front and broader market conditions.
But will other tech giants really follow suit and institute dividends of their own?
Cisco Chief Executive Officer John Chambers announced the payout last Tuesday, saying the networking giant would reward shareholders with a dividend likely to yield between 1% and 2%. The exact amount will be determined in the coming months while the company considers developments on the tax front and broader market conditions.
HP, Dell Land In Pricey Bidding War as Tech Sector M&A Heats Up
A rare technology sector bidding war raged on late Tuesday as data storage company 3Par Inc. (NYSE: PAR) announced it would start merger talks with Hewlett-Packard Co. (NYSE: HPQ), pressuring rival Dell Inc. (Nasdaq: DELL) to make another bid to win the key growth opportunity into enterprise storage business.
In a Securities and Exchange Commission (SEC) filing late Tuesday, 3Par wrote that HP's $1.6 billion offer was "reasonably likely" to win support from its board. HP announced the $24 per share bid Monday, topping Dell's Aug. 16 offer of $1.15 billion, or $18 a share, by 33%.
The steep price increase comes at a time when tech companies are vying to acquire businesses that broaden their product offerings, and tech powerhouses are quickly snatching up quality companies.
In a Securities and Exchange Commission (SEC) filing late Tuesday, 3Par wrote that HP's $1.6 billion offer was "reasonably likely" to win support from its board. HP announced the $24 per share bid Monday, topping Dell's Aug. 16 offer of $1.15 billion, or $18 a share, by 33%.
The steep price increase comes at a time when tech companies are vying to acquire businesses that broaden their product offerings, and tech powerhouses are quickly snatching up quality companies.
Buy, Sell or Hold: Juniper Networks Inc. (NYSE: JNPR) Will Be the Next Company to Profit from the Broadband Boom
Given the lightening fast expansion that we are seeing in broadband market - something I mentioned last week in my recommendation of Cisco Systems Inc. (Nasdaq: CSCO), we are going to look at another strong beneficiary in the sector: Juniper Networks Inc. (NYSE: JNPR).
Juniper Networks beat estimates by a mile in its recent earnings report. It beat both on sales and margins expectations. However, some analysts have raised questions about the company's strategy. And I am one of them.
Let me explain.
Juniper Networks beat estimates by a mile in its recent earnings report. It beat both on sales and margins expectations. However, some analysts have raised questions about the company's strategy. And I am one of them.
Let me explain.
Profit From the Broadband Explosion With Cisco Systems Inc. (Nasdaq: CSCO)
Last Friday I unveiled my two most compelling stock ideas to the readers of my Money Map VIP trading service. They are the best ways to hop onto an exploding trend that I recently discovered and researched extensively - the exponential explosion in broadband traffic.
To learn more about this broadband explosion - and the two top stock picks I isolated from my research - check out this new report. It's a huge issue - with the potential to cause the kinds of network breakdowns and outright outages that could cost the economy billions of dollars and that could even cost people their lives.
In the course of my research, I discovered a third company that's perfectly positioned to benefit from this broadband paralysis. My conclusion: Cisco Systems Inc. (Nasdaq: CSCO) is going to see a lot of upside from this trend, too.
To learn more about this broadband explosion - and the two top stock picks I isolated from my research - check out this new report. It's a huge issue - with the potential to cause the kinds of network breakdowns and outright outages that could cost the economy billions of dollars and that could even cost people their lives.
In the course of my research, I discovered a third company that's perfectly positioned to benefit from this broadband paralysis. My conclusion: Cisco Systems Inc. (Nasdaq: CSCO) is going to see a lot of upside from this trend, too.
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From Staff Reports Cisco Systems Inc. (CSCO), the world's biggest maker of networking gear and the focus of a recent "Buy, Sell or Hold" feature in Money Morning, is not in any deal talks with any big companies, and apparently won't be a bidder for data storage giant EMC Corp. (EMC), Cisco Chief Executive John […]
Cisco Results Point to Continued Online Profit Opportunities
From Staff Reports Projections of continued strong global growth combined with fourth-quarter results that leapfrogged analyst estimates were enough to send the shares of networking giant Cisco Systems Inc. (Nasdaq: CSCO) up nearly 7% yesterday (Wednesday). "We're at the right time with the right products. And the economy, from my perspective, on a global basis […]
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