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VIDEOTicker Shock: Cisco Slips; Burger King Not Well Done
Thursday's top stories and stocks with potential to move.
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Asian markets were a bit of a mixed bag with the Hang Seng ending up just a smidge under 1% and the Nikkei closing down a little more than 1%. Meanwhile, European stocks were slightly lower this morning, and here in the US we're currently trading lower.
Here's what I’m seeing this morning:
Cisco Systems (CSCO):
Boy, I remember when this one was a must-own. The well-known networking-equipment company disseminated its second-quarter results after the close yesterday.
At first blush, things looked pretty good. Earnings, excluding items, came in at $0.32, which was $0.02 north of expectations. Meanwhile, sales came in at about $9.1 billion, which was a tidbit better than the $9 billion the Street had been looking for.
Unfortunately, there’s a little more to the story.
Per a CNBC article, “Chambers projected a 15% to 20% percent drop in revenue in the current quarter. That would put revenue at $7.8 billion to $8.3 billion, below the average estimate of $8.7 billion projected by analysts.”
And there you have it folks. Not good - and the stock could take a hit as a result. I did see a bright point in the release that nobody seems to be talking about: “During the second quarter of fiscal 2009, Cisco repurchased 37 million shares of common stock at an average price of $16.40 per share for an aggregate purchase price of $600 million.”
I don’t think the company would have been spending its money on stock unless it thought the shares were a decent value.
Pulte Homes (PHM):
Still waiting for the housing market to bounce back in a big way? Keep waiting.Check out the Michigan-based homebuilder’s fourth-quarter release. I wasn’t even focused on the earnings, rather hoping to get a feel as to whether the general home biz was perking up or not.
Three lines stand out to me:
1. “Net new home orders for the fourth quarter were 1,763 homes, a decline of 61% from the prior year fourth quarter.”
2. “Pulte Homes' ending backlog as of December 31, 2008 was valued at $631 million (2,174 homes), compared with a value of $2.5 billion (7,890 homes) at the end of last year's fourth quarter.”
3. " 'The homebuilding operating environment took yet another step down during the fourth quarter of 2008,' said Richard J. Dugas, Jr., President and CEO of Pulte Homes.”
My guess is the other big names in this space are seeing the same things. Not surprisingly, I'm on the sidelines.
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