Cisco Hints at a Bottom
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Cisco Systems (NASDAQ: CSCO) gave the tech sector some good news late Wednesday, hinting that the IT spending environment may have finally turned the corner.
After the market close, Cisco reported better than expected quarterly results for its fiscal fourth quarter, but more important was CEO John Chambers' accompanying statement.
"We saw a number of positive signs this quarter in the economy and in our business, especially comparing our sequential quarter-over-quarter order trends," said Chambers. "If we continue to see these positive order trends for the next one to two quarters, we believe there is a good chance we will look back and see that the tipping point occurred in our business in Q4."
Cisco's sales were down 17.6 percent from the year-ago quarter to $8.54 billion, but that was about $35 million better than the Thomson Reuters consensus forecast. The company's pro forma earnings of 31 cents a share were 2 cents better than expected.
Chambers said on the conference call that he expects a year-over-year sales decline this quarter of 15 to 17 percent, potentially better than the 17 percent drop that analysts are looking for.
Cisco shares fell 3 percent in after-hours trading following a 1 percent decline ahead of the report, as investors appeared to be looking for a stronger outlook.
The broader market fell ahead of Cisco's earnings report, as persistently high unemployment and a weaker than expected service sector report weighed on stocks.
BMC (NYSE: BMC), BigBand Networks (NASDAQ: BBND) and Tekelec (NASDAQ: TKLC) fell on their quarterly results, while Orbitz (NYSE: OWW) surged on an unexpected profit.
On2 (AMEX: ONT) soared on news that Google (NASDAQ: GOOG) will buy the company.
Yahoo (NASDAQ: YHOO) edged higher as details emerged of its search deal with Microsoft (NASDAQ: MSFT).
Akamai (NASDAQ: AKAM) gained 8 percent on insider buying.
The Nasdaq lost 18 to 1993, the S&P 500 slipped 3 to 1002, and the Dow fell 39 to 9280. Volume rose to 7.24 billion shares on the NYSE, and 2.41 billion on the Nasdaq. Decliners led by a 20-17 margin on the NYSE, and 17-10 on the Nasdaq. Upside volume was 71% on the NYSE, and 33% on the Nasdaq. New highs-new lows were 152-54 on the NYSE, and 66-13 on the Nasdaq.