Daily Archives: February 2, 2008

Cisco Systems Game Plan Ahead Of Earnings (CSCO, JNPR)

After the close on this coming Wednesday, we’ll get to see earnings out of perhaps one of the most important tech companies: Cisco Systems, Inc. (NASDAQ:CSCO).  The estimates from First Call for the networking giant are $0.38 EPS on $9.8 billion in revenues.  Estimates for the following quarter are $0.40 EPS on revenues of $10.2 Billion and fiscal July 2008 estimates are $1.59 EPS on $40.36 billion in revenues.

Analysts have an average price target upwards of $34.00 per share, despite the massive slide we have seen in this stock since its last earnings.  Cisco’s last post-earnings stock trading  was hampered by weak financial services spending because of the malaise in the sector, and there was a small footnote brought up that some may interpret as a peaking out (in the growth rates, not total) from what have been the top emerging markets.

If Friday’s closing prices were to stay static and not counting any extra time value erosion, it appears that options traders are pricing in a move of up to $1.00 in either direction.  We caution that the stock and this number may be drastically different by the time next Wednesday’s close gets here.

This chart has been ugly since its last earnings and it has slid lower since December 31 as well.  The only good news is that the stock has only had one close below $23.50 in this last down cycle and it bounced sharply off of intraday lows just under $22.50.

While we’d expect yet another great discussion of how Cisco’s TELEPRESENCE is changing the world and that the Internet growth is still in the greatest opportunity for growth, we’d expect investors to be looking for any clues as to how it is holding up domestically in the enterprise market (including financials) and how those emerging markets are buying their wares.  If the company has been buying back stock aggressively, it hasn’t helped.

After Juniper Networks (NASDAQ: JNPR) gave strong comments, it is hard to fathom that Cisco would be faltering.  We’ll know on Wednesday afternoon.  It has also sold off so much more than most would have guessed 90 days ago that we’d expect Wall Street to have priced in at least a little more caution from John Chambers. 

Cisco’s 52-week trading range is $22.30 to $34.24, so the Friday close up almost 2% to $24.94 is what the bulls will be hoping for the worst to be behind it.  With a current fiscal year P/E ratio of 15.7, we are scratching our heads wondering how low the stock has to go before every fund manager in the world decides they have to double up on their positions.  Cisco is still a growth stock, it has the GARP characteristics (growth at reasonable price), and it is now looking like one serious value stock if it continues to make its numbers.

Jon C. Ogg
February 2, 2008

Posted on: February 2, 2008 – 10:16 am in Earnings, Technology Companies, ,

Can Yum! Brands Continue Its Earnings Surge? (YUM, MCD)

On Monday, we’ll get to see earnings out of Yum! Brands Inc. (NYSE:YUM).  The estimates from First Call for the fast food franchise giant are $0.42 EPS on $3.14 billion in revenues.  Estimates for next quarter are $0.42 EPS and its fiscal 2008 estimates are $1.87 EPS on $10.65 billion in revenues.

As this owns KFC, Pizza Hut, Taco Bell, and more, this one is sort of a defensive stock among restaurant stocks.  It has also been doing so well overseas, particularly growing in China, that the company has been able to weather the U.S. storms.  We even named this as one of our own "go-to defensive stocks for 2008" with a value eye when investors want to look for safer investing in an unsafe investing climate.  When we printed that list we liked this one even more than the value and growth of McDonalds (NYSE: MCD), and we think it actually has a better growth story as well.  This is also one of the key window dressing stocks used when fund managers need to show their positions.

Analysts have an average price target of almost $41.00, although we did just see a downgrade from "buy to hold" out of Deutsche Bank this week due to valuation premium to the market.  If Friday’s closing prices are any indicator and if the earnings were coming out immediately, it appears that options traders would be pricing in a move of up to $1.30 to $1.40 in either direction.

Yum! Brands’ 52-week trading range is $27.50 to $40.60.

Jon C. Ogg
February 2, 2008

Posted on: February 2, 2008 – 10:04 am in Earnings, Food, , , ,

Synchronoss Technologies Earnings Expectations (SNCR)

On Monday, we’ll get to see earnings out of Synchronoss Technologies, Inc. (NASDAQ:SNCR). The estimates from First Call for the transaction management software developer are $0.20 EPS on $35.65 million in revenues.  Estimates for fiscal 2008 are $0.91 EPS on $166.16 million in revenues.

Analysts still have an average price target north of $42.00 despite a huge sell-off in the stock in January.  If Friday’s closing prices are any indicator and if the earnings were coming out immediately, it appears that options traders would be pricing in a move of up to $2.00 or more in either direction.

We’d note that Goldman Sachs just recently raised this one to its beloved Conviction Buy List, and they have been a good predicting tool for earnings strength of late.  We’d also note that Jim Cramer has been positive on this one after he interviewed the CEO.

Synchronoss Technologies’ 52-week trading range is $14.64 to $48.03, so this one has been chopped down quite a bit even after a huge gain on Friday.

Jon C. Ogg
February 2, 2008

Posted on: February 2, 2008 – 10:00 am in Earnings, Software,

Trying to Interpret News Corp.’s Earnings Data (NWS, RTRSY, TOC)

On Monday afternoon, we’ll get to see earnings out of NEWS CORP (NYSE:NWS). The estimates from First Call for Rupert Murdoch’s now even larger media empire appear to be $0.27 EPS on $8.24 Billion in revenues.  But we would urge caution in really using any numbers for this quarter and perhaps the next two quarters.  This is the first report to have the amalgamated News & Dow Jones Empire and that deal only closed in the final days of the fourth quarter.

We don’t even have any hopes of any formal guidance and we’d only expect a partial report on all the properties that Murdoch & Co. want to keep or get rid of.  How would you like the job of calculating all those numbers from all the units?

As this will be very difficult to interpret, we’d look at Reuters (NASDAQ: RTRSY) and Thomson (NYSE: TOC) if there is a big price change in News Corp.’s stock as those companies are also in a game changing merger that will make each one hard to evaluate.

NEWS CORP’s 52-week trading range is $17.84 to $25.78, so Friday’s near-3% gain to $19.41 leaves plenty of room for this stock to trade in either direction.

Jon C. Ogg
February 2, 2008

Posted on: February 2, 2008 – 9:58 am in Earnings, Media, , ,

Sohu.com Earnings May Guide Chinese Web Stocks (SOHU, BIDU, NTES)

On Monday evening, we’ll get to see earnings out of Sohu.com Inc. (NASDAQ: SOHU). The estimates from First Call for the Chinese online search and advertising company $55.42 million in revenues.  Estimates for fiscal 2008 appear to be $1.55 EPS on $272.55 million in revenues.

As a reminder, the company just raised guidance back in December to $0.36 to $0.38 non-GAAP EPS on revenues of $55.5 to $57.5 million, with its non-advertising revenues at $24.5 to $25.5 million.  This is also after the company stock did so well after its last earnings.

Analysts have an average price target upwards of $62. If Friday’s closing prices are any indicator and if the earnings were coming out immediately, it appears that options traders would be pricing in a move of up to $4.00 in either direction. We are a bit cautious in using that as a firm number because of the activity in web stocks on Friday.  You can bet that Baidu.com (NASDAQ: BIDU) and Netease (NASDAQ: NTES) will be watching this earnings report closely.

As Sohu is a Chinese Internet stock, this one was up big on Friday after the announcement of the largest merger of the Internet as far as total reach.

Sohu.com’s 52-week trading range is $20.94 to $64.83.

Jon C. Ogg
February 2, 2008

Posted on: February 2, 2008 – 9:53 am in ADR, China, Earnings, Internet, , ,

An Earnings Look Ahead On Rambus (RMBS)

On Monday after the close, we’ll get to see earnings out of Rambus Inc. (NASDAQ: RMBS). The estimates from First Call for the royalty chip company are -$0.10 EPS on $40 million in revenues, although we caution this is very thinly covered .  Estimates for fiscal 2008 are $0.25 EPS on $240.5 million in revenues.

It appears that analysts have an average price target of $28.  If Friday’s closing prices are any indicator and if the earnings were coming out immediately, it appears that options traders would be pricing in a move of up to $1.25 to $1.40 in either direction.

If you have been following Rambus, you’ll probably remember that it recently escaped the options probe mostly unscathed.  There was also the recent departure of its chief legal officer that many had noted was responsible for many of the design wins that had allowed it to keep its royalties.

Rambus’ 52-week trading range is $12.05 to $23.95.

Jon C. Ogg
February 2, 2008

Posted on: February 2, 2008 – 9:52 am in Earnings, Semiconductor, ,

Archer-Daniels-Midland Set For Earnings (ADM, VSE, PEIX, AVR)

On Monday, we’ll get to see earnings out of Archer-Daniels-Midland Co. (NYSE:ADM). The estimates from First Call for the agriculture giant are $0.74 EPS on $12.65 Billion in revenues.  Estimates for fiscal June 2008 are $2.70 EPS on $52.27 billion in revenues.

Analysts have an average price target of $47. If Friday’s closing prices are any indicator and if the earnings were coming out immediately, it appears that options traders would be pricing in a move of up to $2.00 in either direction.

We’ve covered this one before, although we were skeptical of any buyout rumor.  We still are, although a buyer would have done well in the stock. As a $29 Billion company and one of the larger beneficiaries of ethanol, we’d be watching some of the other ethanol stocks like Andersons Inc (NASDAQ: ANDE), Aventine Renewable Energy, Inc. (NYSE: AVR), Cosan Limited (NYSE:CZZ), BioFuel Energy Corp. (NASDAQ: BIOF), Pacific Ethanol (NASDAQ: PEIX), US BioEnergy Corporation (NASDAQ:USBE), VeraSun Energy Corp (NYSE: VSE), and others.

Archer-Daniels-Midland’s 52-week trading range is $31.28 to $47.33.

Jon C. Ogg
February 2, 2008

Posted on: February 2, 2008 – 9:50 am in Agriculture, Alternative Energy, Earnings, Food, , , ,

GM’s (GM) Excellent Adventure

Robert Nardelli, Home Deport (HD) exile and current CEO of Chrysler, may be wishing he stayed in retirement. His new company lead the decline in domestic car sales in January. Chrysler sales fell 12% to 137,392.

The only company which had a good month was the largest one, GM. Its sales moved up 2.6%. Some of the company’s fuel-efficient cars sold especially well, lead by the new Malibu and Cobalt.

The huge bleed in US car sales did not end because GM had a good month. On an annualized basis cars are selling the rate of 15.3 million, which would be a disaster if its continues through the year. It could take $25 billion in vehicle sales out of the American market in 2008.

Pick-up truck sales, profitable to all of the car companies, continued to fall. Sales of hybrids continued to surge.

Douglas A. McIntyre

Posted on: February 2, 2008 – 8:35 am in Autos, ,

This week on Stockhouse January 28 – February 1

Wednesday marked another big day for stock markets, in theory, as the US Federal Reserve announced another .5% cut in the Fed Funds rate, bringing the level down to 3%. Markets didn’t pay much heed and closed lower on the day, though gains for the week were up sharply from January’s overall perilous descent. Friday brought another tug-of-war trading day as news of a decline in payroll numbers fought tooth-and-nail with news of Microsoft’s bid for Yahoo in an effort to take control of market direction.

Read More »

Posted on: February 2, 2008 – 8:19 am in Uncategorized