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Cisco Communicates Great News for Second Quarter


And there's talk of the company hiring a few thousand people.

Look at it this way: It's almost Friday.

Asian stocks took a bit of a hit overnight. The Hang Seng and the Nikkei were off 1.84% and 0.46%, respectively. European stocks were in the red early this morning, too. And here in the US, we're currently trading lower.

Here's what I'm focused on this morning:

Cisco (CSCO):
After the bell last night, the California-based company was out with its second-quarter -- and it was a beauty. It put up a hefty $0.40, excluding items, which was a nickel north of expectations. It pummeled on the revenue line, too.

Some thoughts:

1. I've been a bull on Cisco for a while now, and I'm still excited about it. It had a great quarter, and that will have a lot of people talking this morning. To boot, note this line in the release regarding repurchases: "During the second quarter of fiscal 2010, Cisco repurchased 63 million shares of common stock at an average price of $23.96 per share for an aggregate purchase price of $1.5 billion." That's a good sign that it thinks the stock is a good value.

2. There's lots of talk about how it expects to hire a few thousand people, which isn't something a company generally does unless it's pretty confident about the future.

3. While I think the shares trade higher on the heels of this news and I see a potential trade here, I'm cautious because I think this market has further to fall, and that tech is vulnerable.

For my last take on the company, see In Tech, Cisco Best Equipped to Weather Storm.

The company was out with its fourth-quarter numbers.

In short, it put up $2.24 a share, but the company points out in the release: "an after-tax severance charge of $0.19 per diluted share." Note that the estimate I'm seeing is for $2.46 a share. Whatever the case, as I sit here before the open, it looks like the shares are going to get a bit of a slap on the wrist in early trading.

My two cents:

1. I mentioned the company in this column yesterday and am breathing a sigh of relief that I decided not to belly up. That said, a sharp sell-off in today's session could cause me to change my tune. We shall see.

Ideally, something in the low to mid $220s might perk my interest. (Hold the email, Mastercard bulls -- I'm not saying it actually goes there.)

3. A little insider buying would make me feel much more comfortable with this story.

Akamai Technologies (AKAM):
Justin Sharon points out in his article this morning that the Massachusetts-based company was upgraded by Raymond James to Outperform.

My thoughts:

1. While Akamai's fourth-quarter results were solid (it beat by $0.03, excluding items), I'm thinking that some people were hoping for a bit more. With the bar set fairly high and this market looking a bit weak just prior to the opening bell, I'm not pondering jumping in headlong. However, a 10% sell-off from here could get me a little more interested.

2. For what it's worth, last year insiders were buyers in the mid teens.

Panera Bread (PNRA):
SunTrust lopped its rating to Neutral.

It's a great company, but in my opinion, it's just too pricey now at right around 22 times the 2010 estimate. When it comes to the food business, McDonald's (MCD) scratches me where I itch and there's a lot more short- and long-term potential upside.

Have a great day!

Todd Harrison and 30 more top traders share their thoughts on these stocks and more in real-time on Buzz & Banter. Take a FREE 14 day trial today to have a pro trading desk on your desktop. Learn more.
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No positions in stocks mentioned.

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