Posts Tagged ‘Cisco’

HOW GOVERNMENT AUSTERITY CRUSHED CISCO’S EARNINGS

HOW GOVERNMENT AUSTERITY CRUSHED CISCO’S EARNINGS

Courtesy of The Pragmatic Capitalist 

Pile of squashed tins on kitchen counter

This is a VERY interesting development in the corporate earnings environment.  From a Stifel Nicolaus report on Cisco this morning:

**Cisco’sKeyTakeaways. (1) Cisco reporting notable weaknessinthe Public/Gov’t vertical, in which the company cited weakness particularly in the U.S. with a rapid change (deceleration) in State/Local Gov’t spending dynamics. Total public vertical accounted for ~22% of Cisco’s total product orders; total global orders up only 6% yr/yr vs. +23% yr/yr in the prior quarter.  Within this, Cisco did report that it saw mid-teens/stable growth in the U.S. Federal vertical.

This quarter’s weakness was largely the result of declines in state & local government spending.  This highlights the budget woes occurring in many municipalities. In many ways this is eerily similar to what’s occurring across Europe as their states (or countries) on the periphery experience continued economic malaise. Meredith Whitney has previously predicted that the muni bond crisis is being entirely overlooked:

“The level of complacency around this issue is alarming. Most assume, as last week’s Buttonwood panel did, that the federal government will simply come to the rescue of the states without appreciating the immensity of the cumulative state-budget gaps. I expect multiple municipal defaults to trigger indiscriminate selling, which will prompt a federal response. Solutions attempted in piecemeal fashion, as we’ve seen thus far, would amount to constantly putting out recurring fires.

Rather than waiting for more federal intervention, states need to make their own hard decisions and not kick the can down the road. How will taxpayers from fiscally conservative states like Texas or Nebraska feel about bailing out threadbare Illinois or California? Let’s hope we never have to find out.”

Perhaps even more interesting in recent days is the action in the muni market, which has been priced for perfection:

[click on chart to enlarge]


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Meaty With a Chance of Cloud Calls

Meaty With a Chance of Cloud Calls

Courtesy of Joshua M Brown, The Reformed Broker 

And the winner is…Cloud!  The tech industry sub-sector with perhaps this year’s meatiest move is undoubtedly cloud computing.  Names like Riverbed ($RVBD), Akamai ($AKAM) and 3Par ($PAR) have all been putting up insane numbers this year, performance-wise.

My awakening to the group’s potential back in January came courtesy of a kickass cover story in Barron’s (Sky’s The Limit)- ever since then the cloud computing stocks mentioned (and some that were omitted) have been nothing but fire – in a market that is unchanged year-to-date.

Here’s a peek at the majesty that is Cloud Stock-age thus far in the Twentyten:

Regular readers know that I’ve been hammering away at the cloud theme all year, even hoping for the advent of a Cloud Computing ETF at one point this past spring, albeit in a tongue-in-cheek sort of way (we still haven’t gotten one).

What’s next for the group?

* I have a hard time believing that Cisco has much interest in trailing behind Riverbed in market share for very much longer.  Riverbed’s Steelhead product suite speeds up transmission of applications and data from the cloud to the end user, this is a corporate IT Holy Grail as it allows for the efficient decentralization that global entities need.  I could see Cisco or one of its rivals making a move for this name as this would give them the number one offering in this crucial space instantly.

* Akamai’s global "private web" video serving solution will probably continue to be the delivery method of choice as Web TV becomes a reality and online streaming continues to be monetized.  The wake up call for me on Akamai was when I learned that it was their technology that was the backbone for NBC’s serving of Winter Olympics video to everyone’s mobile devices.

* The bidding war over 3Par (between Dell and H-P) kinda gilds Rackspace’s ($RAX) lilly a bit when you think about it.  Rackspace took over an abandoned shopping mall in downtown San Antonio and built an amazingly scaled-up cloud hosting center.  Their fanatical reputation for customer service to their cloud hosted customers is the heart of their story, however – anyone can build a server farm.

* Microsoft’s CEO Ballmer said a few months ago that he was "betting…
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Consumer Spending Slumps Even With Back-to-School Underway

Consumer Spending Slumps Even With Back-to-School Underway; Cisco, IBM Sales Suggest Corporate Spending Slowdown

Courtesy of Mish

A new Gallup Poll shows Spending Slumps Even With Back-to-School Underway

Americans’ self-reported spending in stores, restaurants, gas stations, and online averaged $62 per day during the week ending Aug. 8. Early August consumer spending trends trail 2009 and will need to surge to match last year’s anemic back-to-school results.

Gallup’s weekly spending measure for the first week of August shows no improvement over that of the last week in July or that of the same week a year ago. In turn, this suggests that back-to-school sales are unlikely to substantially exceed last year’s depressed levels. In fact, this week’s comparable of a year ago was a big spending week, making for challenging sales comparables for many retailers this year.

Corporate Spending Slowdown

Bloomberg reports Cisco, IBM Sales May Signal Slowdown in U.S. Corporate Spending

Weaker-than-forecast sales at Cisco Systems Inc. and International Business Machines Corp. may signal a slowdown in the corporate spending that has led the U.S. recovery.

“It’s been business investment, particularly technology, that’s been in the driver’s seat,” said Stuart Hoffman, chief economist at PNC Financial Services in Pittsburgh. Should equipment spending slow significantly, “unless something else picks up the pace, it means the outlook for the economy is going to be that much dimmer.”

Corporate investment is among the few remaining sources of economic growth as the effects of government stimulus measures wane and unemployment remains stuck near a 26-year high. Economists this week cut their forecasts for the second half of the year as the more than 8 million jobs lost during the recession hamstring consumer spending.

San Jose, California-based Cisco yesterday said revenue in the current quarter will be $10.64 billion to $10.83 billion, compared with a $10.95 billion median estimate in a Bloomberg survey. The stock fell as much as 12 percent in intraday Nasdaq trading today

IBM, the world’s biggest computer-services company, last month reported revenue that missed analysts’ estimates, citing a decline in services-contract signings. Signings fell 12 percent to $12.3 billion, the second straight quarterly drop in contracts for services, which make up more than half of IBM’s total revenue.

GDP is increasingly likely to be negative at least one quarter in the second half yet few economists even discuss the possibility.

Mike "Mish" Shedlock


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Cisco’s New Router: Trouble for Hollywood

Cisco’s New Router: Trouble for Hollywood

By Erik Heinrich, courtesy of TIME 

TIME, Cisco's new routerCisco’s CRS-3 router made a bit of a splash when it was announced on March 9, but the power of this new device hasn’t yet sunk in. Consider: The CRS-3, a network routing system, is able to stream every film ever made, from Hollywood to Bombay, in under four minutes. That’s right — the whole universe of films digested in less time than it takes to boil an egg. That may sound like good news for consumers, but it could be the business equivalent of an earthquake for the likes of Universal Studios and Paramount Pictures.

Most people are familiar with routers, or desktop boxes used to provide connectivity between PCs, laptops and printers in a home or small office. These are tiny geckos compared with theT. rexes used by telcos such as Verizon and AT&T to distribute data among computer networks and provide Internet connectivity to millions of homes and wireless subscribers. 

As it turns out, these megarouters sitting inside data centers of major telcos and cablecos are among the biggest bottlenecks of the Internet, because as bandwidth speed to end users has shot up in recent years, router technology has not kept up, resulting in traffic jams that can slow or freeze downloads.

Cisco’s superrouter is expected to turn what is now the equivalent of a country road into an eight-late superhighway for Internet data traffic, including 3-D video, university lectures and feature films such as Harry Potter and the Half-Blood Prince and The Twilight Saga: New Moon. "Video is the big driver behind all this," says analyst Akshay Sharma of technology-research company Gartner Inc., noting that voice and texting will soon be overtaken by richer multimedia content and applications.

While it’s already possible to stream a feature film in real time, in the best-case scenario it takes about two hours to download to a personal film archive, at home or on a mobile device, for repeat viewing. With the predictable slowdowns and interruptions now so common, the process can eat up four hours or more of computer time — to say nothing of time lost managing the process.

But routers are not the only cause of bottlenecks, and Cisco is not alone in working to maximize the Internet’s full potential. Google is also concerned about the speed limitations imposed by wires that run to the home. Last…
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The CISCO Hype Machine

The CISCO Hype Machine

Cisco CRS-3Courtesy of Karl Denninger at The Market Ticker 

This is simply unbelievable.

Cisco CRS-3, powered by Cisco QuantumFlow Array – a chipset architecture engineered in multiple dimensions of scale, services, and savings.

That’s the announcement.  It was the cause of all the hype.  A "new dimension" that works within their existing CRS framework. 

Basically, a faster version of the CRS-1.

CISCO claimed in his hype that:

The San Jose, Calif.-based Cisco had sent out invitations to analysts and the media for a "significant announcement" that it says "will forever change the Internet and its impact on consumers, businesses and governments."

Oh Jesus.

You’d think there was some new technology.  Something that nobody had seen before.  Something revolutionary.

You would be dead wrong.

Now don’t get me wrong – more speed is good, of course.  More capacity is good.  More density – an increasing problem for various network folks, is never a bad thing, although there’s no such thing as a free lunch – more capacity in a smaller space comes with higher power requirements and heat loading, which in turn invalidates assumptions made by carriers, ISPs and others on the adequacy of power and cooling systems in their machine rooms – sometimes with extremely expensive consequences.

But "forever change the Internet and its impact on consumers, businesses and governments"?

HORSECRAP!

This reminds me of the hype when the CISCO 7xxx carrier series routes were introduced in the 1990s.  These were "going to change the Internet forever" too.

But that was a forced upgrade CISCO was able to capitalize on due to their near-monopoly position in the core routing space at the time.

What was only known to people who understood the Internet at the time (myself included) was that the reason that device garnered instant acceptance and huge order flow was that the Internet’s routing table was exceeding the storage capacity of the CISCO AGS+ which was, at that point, mostly at the core of the network.  Carrier routers were literally crashing as a consequence of running out of memory, and the architecture of the AGS+, which was roughly-based on the VME backplane architecture and the Motorola 68xxx processor
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Oh No… You Heard It Here First (Lucent Gastric Reflux)

Oh No… You Heard It Here First (Lucent Gastric Reflux)

Courtesy of Karl Denninger at The Market Ticker

Cisco Chairman And CEO John Chambers Gives Keynote At RSA Conference

Oh please tell me this is BS:

NEW YORK (TheStreet) — When Cisco last took the stage in November, CEO John Chambers predicted an uplift in business. He didn’t mention at the time that the company would offer to lend a hand in the form of zero-percent financing.

Taking a page from the automakers’ playbook circa 2002, Cisco introduced three-year, interest-free financing for its small and mid-sized business customers last week. The cheap loans are sure to help juice sales to cash-strapped customers far and wide.

Uh, no.  That’s not the playbook of automakers circa 2002.

LucentIt is the playbook of Lucent circa 1997.

Need I remind anyone how that story ended?

Lucent "sold" a metric boatload of hardware on capital financing at essentially zero interest terms to Winstar Communications – the firm that bought my Internet company – along with many others.

Winstar (and others) ultimately defaulted, unable to make their business goals turn into actual long-term cash flow.

Lawsuits flew and ultimately Winstar folded, all but destroying Lucent in the process, as they were stuck with an unbelievable amount of financed hardware that was not only generating no cash flow but which had depreciated (as all computer and network equipment does) to an insane degree the moment it was put into service.

Lucent – one of the most-storied technological companies ever to exist in the United States, the spun-off parent of Bell Labs that had years ago invented the transistor and slung us into the digital age and which held a solid majority of all telephone switch business in the United States, was later essentially forced to merge with Alcatel to avoid bankruptcy.

This is Ponzi-style financing and John Chambers knows better, having survived the 2000 tech crash in no small part because he didn’t do the same thing that Lucent did and thus didn’t get hammered by the defaults when the bust came.

The market has paid exactly zero attention to this "contribution" to CISCO’s sales, and it won’t in the immediate future either.  You can count on it.  I’m willing to bet there will not be one mainstream analyst who will point this out tomorrow morning in a research report and…
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Zero Hedge

These 9 Charts Explain The Global Economic Slowdown (And Why Central Banks Can't Fix It)

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by John Mauldin via MauldinEconomics.com,

GDP growth has only two basic components: growth in productivity and growth in the workforce size. That’s it. There are two and only two ways you can grow an economy: increase the (working-age) population or productivity.

There is no magic fairy dust you can sprinkle on an economy to make it grow. To inc...



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Chart School

April New Jobs Worse Than Forecast at 160K

Courtesy of Doug Short's Advisor Perspectives.

Here are the lead paragraphs from the Employment Situation Summary released this morning by the Bureau of Labor Statistics:

Total nonfarm payroll employment increased by 160,000 in April, and the unemployment rate was unchanged at 5.0 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, health care, and financial activities. Job losses continued in mining.

Today's report of 160K new nonfarm jobs in April was lower than the Investing.com forecast of 202K. March's nonfarm payrolls was revised downward by 7K. The unemployment rate was unchanged...



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Kimble Charting Solutions

Crude Oil testing resistance, fear index testing support, says Joe

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

Once Crude Oil started turning weak in 2014/2015, many stock markets around the world have struggled to move much higher.

Crude Oil hit support in February of this year and has rallied almost 50% off the lows and stocks have followed to the upside.

Joe Friday Just The Facts;  What Crude Oil does at resistance above, could have a large impact on stocks going forward, as Crude is testing resistance and its fear index is testing support.

...

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Phil's Favorites

EU Approves Deal With Turkey (Then All Hell Breaks Loose)

Courtesy of Mish.

On May 4, Brussels gave its approval to visa-free travel for Turks. That approval still needs to be ratified by a weighted average of ministers as well as the European parliament.

Just a few hours after the Brussels green light, Turkish president Recep Tayyip Erdogan sacked Ahmet Davutoglu, the prime minister who negotiated the deal with German chancellor Angela Merkel.

In between, Renzi and Merkel held a love fest with an extremely skeptical France on the sidelines.

Final result: Uncertain but is Merkel pulling her hair out as her scheme is set to collapse.

My, how things change in a day.

EU Set to Approve Deal With Turkey

Flashback May 4: ...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Oil Patch Bankruptcies Hit $34.3 Billion (Value Walk)

The number of oil patch bankruptcies continues to rise, and the number of companies filing for creditor protection is accelerating, that’s according to according to law firm Haynes and Boone LP’s May Oil Patch Bankruptcy Monitor.

Oil Price Drop Vanquishes Cutting-Edge Projects (Wall Street Journal)

The wo...



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ValueWalk

Donald Trump - How the Ghost of Watergate Haunts This Election

By Jacob Wolinsky. Originally published at ValueWalk.

Donald Trump – How the Ghost of Watergate Haunts This Election

There is a line of reasoning in political circles that says Barack Obama created the phenomenon of Donald Trump.

I aver that Donald Trump is a creation of the post-Watergate media. Collectively we have made running for office so abso...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Digital Currencies

"I Can Only Say I'm Sorry" - Self-Professed Bitcoin "Creator" Can't Provide Proof, Backs Out

Courtesy of ZeroHedge. View original post here.

Two years after Newsweek wrote an inaugural article upon returning to print in which it "unmasked" bitcoin creator Satoshi Nakamoto and which turned out be a hoax (the author "found" Nakamoto using a white pages search), earlier this week the world was fixated on the story of another self-professed bitcoin "creator", this time Australian entrepreneuer Craig Wright, who &quo...



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Biotech

Cantor Says Relypsa's Veltassa Metrics Look Favorable

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Courtesy of Benzinga.

Relypsa Inc (NASDAQ: RLYP) shares have plummeted 51 percent year-to-date, under pressure from debt-financing related concerns. Cantor Fitzgerald’s Mara Goldstein reiterated a Buy rating for the company, while reducing the price target from $42 to $41. The analyst believes the 1Q16 results would be “a stabilizing force for the shares.”

Positive Data Points For Veltassa Launch

Veltassa metrics look favorable so far, including a low payer rejecti...



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OpTrader

Swing trading portfolio - week of May 2nd, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Mapping The Market

About that debate last night

Although we try to stay focused on finding and managing promising trade ideas, the comments in the comment section sometimes take a political turn (for access, try PSW — click here!). So today, Jean Luc writes,

The GOP debate last night was just unreal – are these people running to be president of the US or to lead a college fraternity! Comparing tool size? The only guy that looks semi-sane is Kasich. The other guys are just like 3 jackals right now. 

And something else – if Trump is the candidate, that little Romney speech yesterday is probably already being made into a commercial. And all these little snippets from the debate will also make some nice ads! If you are a conservative, you have to be scared now. 

Phil writes back,

I was expecting them to start throwing poop at each other &n...



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News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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