RealTime IT News

Cisco Sends Nets, Techs Sprawling

A rare earnings miss and warning from bellwether Cisco Systems sent technology and Internet stocks sharply lower on Wednesday.

The ISDEX http://www.wsrn.com/apps/ISDEX/ fell 18 to 366, and the Nasdaq dropped 96 to 2568. The S&P 500 lost 14 to 1337, and the Dow declined 19 to 10,937. Volume rose to 470 million shares on the NYSE, and 846 million on the Nasdaq. Advancers led by a few issues on the NYSE, but decliners led 23 to 11 on the Nasdaq. For earnings reports, visit our earnings calendar at http://www.wsrn.com/apps/earnings/internet.xpl and reported earnings at http://www.wsrn.com/apps/earnings/ireported.xpl. For after hours quotes and news, visit our after hours trading site at http://www.afterhourstrading.com.

Cisco plunged 5 1/4 to 30 1/2 after missing estimates by a penny with 18 cent earnings. Analysts had already reduced estimates to 19 cents a share after two stealth warnings from the company last month. Cisco's revenues came in $450 million lower than expected at $6.75 billion, and the company's gross margins also missed estimates. Cisco also warned that the next two quarters will see zero to negative revenue growth, well below estimates. Juniper fell 9 7/9 to 92 5/16, Redback lost 3 7/16 to 39 1/4, and Sycamore dropped 3 1/2 to 23 1/2.

Broadcom , a Cisco supplier, lost 12 7/16 to 80 1/16 after making cautious comments at a Bank of America Securities conference.

Aether Systems fell 5 1/8 to 38 1/2 despite beating revenue and loss estimates, but gross margins came in lower than expected.

CNET , down 3/4 to 15 1/8, matched estimates but warned that future results will be much lower than expected. Agency.com , off 3/4 to 3 1/8, beat estimates, but also warned.

EarthWeb , up 3/4 to 6 3/8, beat estimates. MicroStrategy dropped 3 5/8 to 13 5/16 after beating estimates, but top company officials announced plans to sell shares.

Viant lost 5/32 to 3 31/32 after missing estimates. Ashford.com , off 3/32 to 21/32, issued an earnings warning.

InfoSpace rose 15/16 to 4 19/32 after the company announced a conference call for February 12 to discuss plans to return to profitability.

Some technical comments on the market: Note: We are now including charts in the technical market commentary. If you can't get the charts via the e-mail newsletter version, try this link: http://www.afterhourstrading.com/column.html

The Nasdaq and Nasdaq 100 broke down out of their rising channels today (first and second charts). The Nasdaq also fell back below its September downtrend line - http://cache.wsrn.com/images/AHT/compx0207log.gif - which we will link to because the break is too small to show up in a smaller chart. While the downtrend line was pierced (the gray line), the black line may provide stronger support around 2500-2550. But the Nasdaqs have clearly broken down, and there isn't much in the way of support between here and Nasdaq 2300, where the Fed first cut rates a month ago. We may need to look to the S&P 500 for support.

The S&P 500 may well provide critical support for the market. The lower rising channel boundary around 1325 could provide a cushion for the market.