Monday, May 12, 2003
Last week, Cisco's results and the Fed's latest report spurred investors'
interest. Cisco surged ahead of its earnings release, but ultimately left
market watchers unfulfilled. The computer-network giant exceeded Street
estimates by a penny; however, revenue fell and it projected that its fourth-
quarter sales would fall beneath analyst expectations. Henry Asher, president
of the Northstar Group, told Reuters News, "Their earnings grew because they
cut expenses, but at some point the only way you're going to really grow all
of these numbers is you have to have some top-line (sales) growth." Still,
Cisco's Chief Executive John Chambers commented that April's sales were
stronger than expected and that his bias regarding fourth-quarter sales was
toward growth. "Cisco is one of the first companies to give us a glimpse of
the post-war economy and given its size it's a pretty good barometer of at
least broad tech, and Cisco was seeing a post-war pickup," remarked Shawn
Campbell, a Northern Trust Corp. analyst, in a Reuters news story. However,
Cisco was not the sole focal point. After Tuesday's Federal Open Market
Committee meeting, Fed policy-makers warned of a potential "unwelcome
substantial fall in inflation" that could negatively impact the economy going
forward. "Cisco is one reason investors are looking to take profits . . .but
the market is under some pressure on the thought that we may cut rates at the
June FOMC meeting," said Patrick Boyle, head of financial trading at Credit
Suisse First Boston, to Dow Jones Newswires. Another earnings release
garnering unwanted attention was that of Electronic Data Systems. The
computer-services company said its second-quarter profit would miss forecasts
and it declined to provide a 2003 forecast, as it is conducting a strategic
review and plans to announce a turnaround plan in June. This week, investors
will have a range of industry-specific firms presenting quarterly reports,
including Computer Associates, Dell Computer and Intuit, that should provide a
broader outlook on the tech sector.
High-Tech Monday Update is provided courtesy of Thomson Financial. This
information is believed to be true and accurate; we take no responsibility for
inaccurate information and reserve the right to update our reports. For more
information, please visit our web site at http://www.thomsonfinancial.com.
SOURCE Thomson Financial Corporate Group
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