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Cisco Continues to Outpace the Market


IT watches the tech giant with bated breath.

Minyan Morning Memo

One to watch: Cisco Systems
(CSCO) reports fiscal fourth quarter earnings after the close. As the world's largest maker of networking equipment and a member of the Dow it is an excellent gauge of overall IT spending. The company's core switches and routers have been a road to riches for investors in '09; thus far this year its shares, recently upgraded by both Robert Baird and Credit Suisse, are outpacing even the torrid tech heavy Nasdaq.

Cisco stock has however lately lagged select peers as its core business matures. Hence a push into growth areas such as TelePresence and the server market, which will bring it into competition with former collaborator Hewlett Packard (HPQ) whose onetime CEO Carly Fiorina once sat on Cisco's board. Silicon Valley's constantly shifting corporate allegiances certainly makes for strange bedfellows.

What just happened: Equities rose modestly with the Dow gaining for a fourth successive session, as companies from Kraft Foods (KFT) to Whole Foods (WFMI) posted higher profits. Macy's (M) may own "the world's largest store" but that didn't stop its stock sliding almost 3%. And anyone who says sex sells may want to reconsider after Playboy (PLA) posted an $8.7 million loss under new CEO Scott Flanders. Much more of this and he'll be as popular as namesake Ned Flanders.

What's happening: Asia ended lower as fears festered of too far, too fast. Europe is trading up, led by a leap in Lloyds (LLOY) -- seems reporting $22 billion in bad debt works wonders with your share price. Here at home equities opened down. "Cash for clunkers" looks like its on the road to renewal amid cloak and dagger meetings in Congress, under the hood manoeuvrings which will doubtless delight Transportation Secretary Ray LaHood. And tonight noted finance guru Joan Rivers provides relief for those in oceans of debt by revealing how the rich got that way.

What will happen: In economics, at 7:00 AM Eastern we got Christmas in July when outplacement firm Challenger Gray & Christmas released job loss data for last month. Unfortunately Santa wasn't so festive as layoffs rose 31%. At 8:15 AM ADP's employment index showed a July private-sector drop of 317,000, another data point which doesn't bode well for Friday's key payroll report. On a brighter note, figures released this morning revealed mortgage applications rose a seasonally adjusted 4.4% last week. 10:00 AM sees July's ISM non-manufacturing report, with weekly oil inventories out a half hour later. We'll be learning about earnings from Adidas (ADSN), AetnaHealth (AET), Allstate (ALL), Ambac (ABK) , Baker Hughes (BHI), Devon Energy (DVN), Lumber Liquidators (LL), Marsh & McLennan (MMC), Murphy Oil (MUR), PG&E Corp (PCG), News Corp (NWSA), Polo Ralph Lauren (RL), Procter & Gamble (PG), Prudential Financial (PRU) and XTO Energy (XTO).

Happenstance: Even as the U.S. housing market shows signs of perking up, across the pond an erstwhile real estate agent recently decided to switch to a witch. Which may not be a bad idea considering it comes with an annual salary of over $80,000.
No positions in stocks mentioned.
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