Shares closed at $1.94 on Thursday and the 52-week trading range is $1.39 to $6.63.  There is almost 90 minutes left of pre-market trading and we already have close to 4 million shares traded in the pre-market and the stock is surging by almost 15% to $2.23. 

After many disappointments, this one feels like it came a bit out of the blue when you consider the woes of Europe and that it is now based in Europe when so many other tech and communications outfits have been reporting bad numbers.

JON C. OGG

Dividend investors will be happy as the $0.06 dividend is now a $0.08 dividend after the firm raised the payout today.

Cisco trades at an implied 11.4-times current year earnings estimates, and maybe even a tad less if you factor in the wasted billions used for share buybacks.

We were worried about margin contraction despite the lower SG&A costs as Cisco tries to win more business against competition.  That just did not come about: gross margin rose to 61.3% from 60.2% and the cost of sales rose by more than 7%.  Cisco had given a forecast of 61.5% to 62.0% for the quarter.

Guidance will come in the conference call.  If John Chambers is going to disappoint, it sure did not sound like it when he was speaking with Maria Bartoromo on CNBC.  For the quarter we are already in, the estimates are $0.45 EPS and $11.46 billion in revenues.  For the July year-end, the estimates are $1.77 EPS and $45.83 billion in revenues.

Cisco shares closed up 1.1% at $20.43 and the after-hours reaction has shares up 2.6% at $20.96.  Its 52-week trading range is $13.30 to $22.15.

JON C. OGG

Lower compensation and SG&A may offset discounting in bundled product offerings as Cisco is seeking more and more of an enterprise’s total technology budget.  Our fear is long-term lower margin compression after years and years of being technology’s envy in gross margin.

Cisco is down ahead of earnings but still just above this $20.00 mark against a 52-week trading range of $13.30 to $22.15.  Analysts have a consensus target of $21.66, but we just saw one target on Tuesday morning from Credit Suisse at $26.00.

As far as expectations… Thomson Reuters has consensus estimates of $0.43 EPS and $11.23 billion in sales.  For the quarter we are already in, the estimates are $0.45 EPS and $11.46 billion in revenues.  For the July year-end, the estimates are $1.77 EPS and $45.83 billion in revenues.

Cisco trades at an implied 11.4-times current year earnings estimates, and maybe even a tad less if you factor in the wasted billions used for share buybacks.

Chart analysis is not worth much here today in all honesty.  Cisco is at a post-reorganization high and back over $20.00.  The 50-day moving average is $18.92 if there is another blow-up, but here are the shorter moving averages… 5-day at $20.08, 10-day at $19.88, and the 20-day is at $19.71.

Options traders appear to only be pricing in a move of up to $0.60 or even a tad less using the monthly options which expire in a week and a half. For whatever this is worth, options traders are much more heavily involved in at-month Call options over Put options with at least a 2.5:1 ratio if you combine weekly and monthly trading volumes.

Cisco has pledged to raise its quarterly dividend of $0.06 ‘in time.’  It has now had four consecutive payments of that rate of $0.06 per share per quarter and that yield comes to only about 1.2% for new investors.  Longer-term, that dividend needs to go over 2% if it wants to entice income-oriented investors.  It is possible that we will get a dividend hike.  If not this quarter, we expect one soon.

JON C. OGG

And speaking of turnarounds, this is the second full report after the restructuring efforts have taken effect for Cisco.  It is a leaner company and operating costs (at least compensation in SG&A) should be lower now.  The problem is that Cisco has been wanting to win back much business and to lock out other competitors as it goes after every penny spend of the network (now including datacenters too).  Translation: we just expect longer-term margin compression.

In this last leg of the rally, Cisco is back above $20.00 against a 52-week trading range of $13.30 to $22.15.  Thomson Reuters has consensus estimates of $0.43 EPS and $11.23 billion in sales.  For the quarter we are already in, the estimates are $0.45 EPS and $11.46 billion in revenues.  For the July year-end, the estimates are $1.77 EPS and $45.83 billion in revenues.  In short, Cisco trades at an implied 11.4-times current year earnings estimates.

Cisco unfortunately wastes more money than it should buying back stock and that price level on the buyback plan is probably still just slightly above breakeven.  Analysts have a consensus target of $21.66, but we just saw one target on Tuesday morning from Credit Suisse at $26.00.  Chart and options trading analysis will be made in much more detail on Wednesday ahead of the report.

One last note… Cisco has pledged to raise its quarterly dividend of $0.06 ‘in time.’  It has now had four payments of that rate of $0.06 per share per quarter and that yield comes to only about 1.2% for new investors.  Longer-term, that dividend needs to go over 2% if it wants to entice income-oriented investors.  It is possible that we will get a dividend hike.  If not this quarter, we expect one soon.

JON C. OGG

The firm calls its positioned for double-digit earnings growth that is unparalleled in its ability to solve customer problems with its deep industry expertise, broad set of offerings, and global presence.  The $230 target is based solely on a 13.5x multiple on its 2013 earnings estimate of$17.00 in earnings per share (versus $16.42 EPS consensus from Thomson Reuters).

It noted, “We believe the company deserves to trade at a modest premium given its relative predictability and stability, and EPS growth profile of 10%-15%. We believe IBM’s goal of $20.00 in EPS in 2015 is achievable. In our view, the beauty of the IBM story is that double-digit EPS growth is not dependent on the top line, but rather a growing mix of higher-margin software (23% of revenue) through organic means and acquisitions.”

Additional notes are as follows:

• IBM is Arguably the Model Enterprise Company.
• Strategic Advisor of Choice.
• Broad International Exposure.

After closing down 0.4% at $192.82, the 52-week range is $151.71 to $194.90.  IBM’s market value is $223.6 billion and the consensus price target is only $199.33.  Stern Agee’s price target is 15% higher than the rest of Wall Street and it also appears to be the new “street-high” price target if Thomson Reuters is accurate.

This call matters to the DJIA because IBM is the largest component by far as the DJIA index is price-weighted rather than market cap-weighted.  If Stern Agee is correct, IBM’s implied upside is about 19.3%.

JON C. OGG

The company’s board of directors has noted, “Our hearts go out to his wife, Dalynn, his children and his family during this tragic time. Steve’s passion and energy left an indelible mark on Micron, the Idaho community and the technology industry at large. The company expects to provide additional information later today.”

Micron shares were halted ahead of today’s news.

The company just announced the retirement of COO Mark Durcan less than two weeks ago.

JON C. OGG

• Feb 01 traded 125,300 shares and closed at $14.59
• Jan 31 traded 58,300 shares and closed at $14.25
• Jan 30 traded 33,400 shares and closed at $14.28
• Jan 27 traded 16,200 shares and closed at $14.20
• Jan 26 traded 400 shares and closed at $13.50
• Jan 25 traded 1,300 shares and closed at $13.59

We said it before and we will say it again… This ETF owns no shares of Facebook as of yet.  It will have to after the Facebook IPO but it does not now.  Interpublic Group of Companies, Inc. (NYSE: IPG) owns shares but barely rose today.  Affiliates of Goldman Sachs Group Inc. (NYSE: GS) own shares, and Microsoft Corporation (NASDAQ: MSFT) owns shares.  The social media company only has a halo-effect around the theme of social media.

Facebook is and was one of our Top 17 IPOs For 2012, but so was Twitter, Living Social and Yelp.

LinkedIn Corporation (NYSE: LNKD) closed up 6.4% at $76.98 solely on being a rival and Zynga Inc. (NASDAQ: ZNGA) rose 16% to $12.39 due to its being north of 10% of Facebook’s revenues.

What is so funny is that even FriendFinder Networks Inc. (NASDAQ: FFN), the adult-themed social networking site and one of the worst IPOs of modern time, rose solely because of the social media halo.  That gain was 16% to $1.33 against a 52-week range (actually under a year) of $0.51 to $10.01.

The one business development company which does own Facebook shares is GSV Capital Corporation (NASDAQ: GSVC).  Its shares have risen since the impending filing was telegraphed last Friday and the stock rose by over 7% to $18.51 today.

This is called the Halo-effect if there ever was one.

Facebook’s full IPO details are here.

JON C. OGG

Next quarter guidance is $0.91 to $0.97 EPS on $4.6 to $5.0 billion in revenues, while the consensus estimates are $0.89 EPS and $4.49 billion in sales.  For fiscal year 2012, Qualcomm is offering guidance of $3.55 to $3.75 EPS on sales of $18.7 to $19.7 billion; estimates are $3.59 EPS and $18.48 billion in sales. The company sees 146 to 154 million MSM units shipped in the current quarter.

The company ended its latest quarter with a cash arsenal of $22 billion or so if you include the cash equivalents and short-term investments.

Shares closed up 1.25% at $59.56 and the 52-week range is $45.98 to $59.84 and shares are trading up around $62.00 after a near-4% gain in the after-hours. 

Keep in mind that the market cap hit $100 billion today and that will drive the market well over the $100 billion mark if its holds up after the conference call.  Beating earnings estimates and raising guidance is welcomed.

JON C. OGG

Our take is that Mark Zuckerberg has been holding out to achieve a $100 billion market valuation for the IPO.  Even if Facebook does not deliver on its IPO paperwork next week, the IPO is coming soon.  The company is going to have to disclose its financials sooner or later due to its large base of shareholders.

GSV Capital Corporation (NASDAQ: GSVC) already owns shares of Facebook and its share have popped by 3% to $15.60 on this news.  As a reminder, Microsoft Corporation (NASDAQ: MSFT) invested in this and now should have exponential implied valuation gains on what sounded silly at the time.

Don’t forget about iShares KLD 400 Social Index Fund (NYSE: DSI).  It will end up being a holder as well and this should increase the trading volume of that ETF whether it is up or down in share prices.

Facebook is ONE OF OUR TOP 17 IPOs FOR 2012

Until an SEC filing hits the tape, we are treating this as a rumor.  One of many rumors.  Supposedly the Facebook IPO will create over 1,000 new millionaires.

JON C. OGG

More important is the note on a dividend by Canaccord: “We anticipate another year of record cash generation. With Apple expected to cross $100B in cash during the March quarter, we believe this milestone might push Apple to announce a dividend.”

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Another even larger analyst target upgrade was over at Morgan Keegan.  That firm took a $513 price target all the way up to $650 as well. We have seen a new $515 price target from Morgan Stanley as well.  Citigroup took its price target to $600 from $500…

Before the earnings report we had a consensus price target of almost $515 and that is now going to be much higher after this week.  The current figure shows a consensus above $516 but that is because so many of the fresh target price upgrades remain undercounted.

JON C. OGG