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Anticipating Cisco's Bold Statement


Will the company "forever change the Internet and its impact on consumers, businesses and governments"?

Asian stocks ended mixed. The Hang Seng rose 0.05%, while the Nikkei fell 0.17%. Meanwhile, European stocks were in negative territory early this morning. And here in the US, we're currently trading lower.

Here's what I'm seeing this morning:

Cisco (CSCO):
According to the press release: "Cisco will host a live media, blogger and industry analyst webcast Tuesday, March 9, at 8:00 a.m. (PST) to make a significant announcement that will forever change the Internet and its impact on consumers, businesses and governments."

That's a pretty bold statement.

While I think there certainly could be a trade here based on all the excitement, I'd be reluctant to chase the stock too much. Note that the shares have already had a nice little run since the beginning of March and are up from the sub-$23 level in early February.

By the way, per CNBC: "Sources say it's most likely the company will show tools that will allow companies such as Comcast (CMCSA) and AT&T (T) to create their own high-speed networks."

That would be great, but if that's the case, I'd sure like to hear what that could mean in terms of dollars and cents over the next few years.

Texas Instruments (TXN):
The company was out with an updated first-quarter outlook after the bell last night.

The chipmaker is looking for $0.48 to $0.52 in the period as opposed to the $0.44 to $0.52 guidance it offered up previously.

Some thoughts:

1. Raising the lower end of the outlook isn't all that impressive. After all, the Street is at $0.49. On the other hand, the company has had a knack for edging out expectations every quarter for the past year, and I have a hunch it may clear the bar once again.

2. Overall, Texas Instruments is a company with excellent potential in the next year or two and over the longer haul. As I write this, it trades at just 12.2 times this year's estimate, which is $2.03 a share. (Note that the estimate has been rising lately, which I like to see.) I think that's a sweet deal, and that a sell-off today would be an opportunity.

3. The caveat here is that the company better not stumble. Investors have gotten used to the upside surprises.

Yum Brands (YUM):
Justin Sharon points out this morning in Upgrades & Downgrades: Hungering for Yum Brands that UBS upped its rating on the fast-food giant to Buy.

My take:

1. I'm a giant fan of this company and have been for a pretty long time now because I think its Pizza Hut, KFC, and Taco Bell chains still have the ability to show some sizable grow in the US and abroad. That said, even though the company has been performing well in terms of earnings and has a great name, McDonald's (MCD) remains my favorite in this space. It's been turning in solid bottom-line earnings, too, and as I pointed out in this column yesterday, it turned in some savory February comps results. Over the long run, I think it will continue to perform exceptionally well thanks to its tasty food, superb marketing, and good locations around the country.

2. That said, there's upside potential in Yum, and the upgrade could give the shares a goose in the days ahead.

Cheesecake Factory (CAKE):
MKM Partners downgraded the stock to Neutral.

The shares have been on a roll because the company has been making dough -- it's beaten expectations the last several quarters. But I have to agree with MKM's move. While I do think there's longer-term promise here, I expect there to be big challenges in the dining space in the short run because of the ever-nervous consumer and the still-sketchy economy. I should also mention that at nearly 20.7 times this year's estimate, the stock hardly scratches me where I itch.

Have a great day!
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