Cisco Systems will try to snap tech stocks out of their doldrums when the networking giant releases quarterly results late Tuesday.
The Dow has staged a powerful rally in the last month to move within 140 points of its all-time high, but the Nasdaq has been range-bound for the last two months, and the big-cap Nasdaq 100 has fared even worse, peaking in early January as the rest of the market gained ground.
Weakness in computer shares has had much to do with the tech sector’s underperformance — a point underscored in late trading Monday when Dell warned that results for its April quarter will be below Wall Street’s expectations. Dell cited “pricing decisions in the second half of the quarter that the company expects will accelerate revenue growth in the future.” Dell shares fell 5% in after-hours trading to hover near a 52-week low.
Analysts expected Dell to earn 38 cents a share on sales of $14.52 billion, but Dell said it expects to report earnings of 33 cents a share on sales of $14.2 billion when it formally reports results next week.
Cisco has been a large-cap standout, however, its shares up 27% so far this year on strong order growth.
Analysts will be looking for more of the same from Cisco Tuesday night. They expect earnings of 25 cents a share on a 16% jump in sales to $7.17 billion, according to Thomson Financial.
The quarter will also include partial results from Cisco’s acquisition of Scientific-Atlanta, which closed in February.
Merrill Lynch said last week that Cisco’s order flow may have weakened in recent weeks, so investors will be keeping a close eye on the company’s July quarter guidance. Analysts are looking for $7.87 billion for July quarter sales.
Stocks treaded water Monday ahead of Cisco’s results and the Federal Reserve’s decision on interest rates due out Wednesday afternoon.
The Nasdaq gained 2 to 2345, the S&P 500 lost 1 to 1324, and the Dow added 6 to 11,584. Volume declined to 2.15 billion shares on the NYSE, and 1.78 billion on the Nasdaq. Advancers led 16-15 on the NYSE, while decliners led 16-14 on the Nasdaq. Upside volume was 53% on the NYSE, and 47% on the Nasdaq. New highs-new lows were 292-69 on the NYSE, and 237-42 on the Nasdaq.
Intel gained 3% on a Caris & Co. upgrade.
SGI plunged after filing for bankruptcy.
