Cisco Can't Escape Market Downdraft
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Cisco Systems delivered another strong quarter late Wednesday, but its shares couldn't escape the worst day for the stock market since August.
Cisco said its October quarter sales rose 17% to $9.55 billion, just ahead of $9.54 billion estimates, and adjusted earnings of 37 cents a share were a penny better than analysts expected. Cisco also reaffirmed current quarter sales growth estimates of 16%, but the company's results did little to quell a market awash in fears of a growing credit market crisis, as investors were hoping for even stronger results from Cisco.
CEO John Chambers said the company did see some "softness" in the U.S., particularly in the financial, automotive and retail sectors, but said that other areas are strong, particularly Europe.
Stock indexes fell nearly 3% during the day, as steep losses at Washington Mutual and GM fueled fears that the worst of the credit market crisis has yet to hit, and comments from Federal Reserve officials that the economy and financial markets remain healthy removed any hope that the Fed will come to the rescue with more rate cuts.
But not all stocks fell along with Cisco. Blue Nile soared 9% on its results, and BEA Systems was up on rumors that IBM could make a play for the company.
But breadth was overwhelmingly negative. Of the 25 most active Nasdaq stocks, only Research in Motion, Sun Microsystems and Cognizant gained on the day. Sun was up on a Sanford Bernstein upgrade.
Garmin tumbled 11% on a rival bid for Tele Atlas from TomTom, and Internap fell on its results. Yahoo continued to fall on worries about congressional difficulties over its relationship with Chinese authorities.
The Nasdaq plunged 75 to 2748, the S&P tumbled 44 to 1475, and the Dow plunged 360 to 13,300. Volume rose to 4.3 billion shares on the NYSE, and 2.59 billion on the Nasdaq. Decliners led by a 30-3 margin on the NYSE, and 24-6 on the Nasdaq. Downside volume was 93% on the NYSE, and 86% on the Nasdaq. New highs-new lows were 114-376 on the NYSE, and 89-400 on the Nasdaq.