The Wall Street Expectations Game

Wednesday was a day for three-letter ticker symbols on Wall Street.

Shares of Cisco Systems , which trade on the Nasdaq under the symbol “CSCO,” fell 6.6% after the company reported sales that were slightly below estimates and warned that January quarter revenues may also come in below forecasts.

Computer Sciences , which trades on the NYSE under the letters “CSC,” surged 7% after the company beat estimates and reaffirmed guidance.

The difference between how the two stocks fared is partly in the Wall Street expectations game — CSC beat expectations, while CSCO disappointed — but it likely also has to do with valuation.

CSC trades at 17 times earnings, 0.6 times sales, 1.6 times book and 11 times free cash flow, while CSCO trades at 28 times earnings, 6 times sales, 5 times book and 21 times free cash flow — in short, Wall Street has higher expectations for CSCO.

And that pretty much sums up what moves stocks on Wall Street: valuation and expectations. On both fronts, CSC was the winner today.

Stocks slipped Wednesday on Cisco’s results and the Federal Reserve’s fourth interest rate increase this year.

The Nasdaq lost 8 to 2034, the S&P 500 slipped 1 to 1162, and the Dow was down 1 to 10,385. Volume rose to 1.51 billion shares on the NYSE, and 1.86 billion on the Nasdaq. Advancers led 19-13 on the NYSE, and 16-14 on the Nasdaq. Upside volume was 57% on the NYSE, and 36% on the Nasdaq. New highs-new lows were 278-13 on the NYSE, and 192-40 on the Nasdaq.

After the close, Oracle said PeopleSoft has rejected its latest offer, which will expire on Nov. 19 unless a majority of PSFT shares are tendered.

During the day, Google slipped on competition from Microsoft .

Dell lost ground ahead of its earnings report due out after the close on Thursday.

Intel slipped after doubling its dividend.

Bluefly plunged 24% on its results.

Applied Digital jumped 11% on a deal with Henry Schein .

Autobytel lost 9% after delaying its 10-Q filing.

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