Cisco's Q1 Explained

5:45 PM -- So, why did Cisco's stock go down after its first-quarter earnings announcement? (See Investors Frown on Cisco Q1.)

CEO John Chambers got to talk about that at the company's shareholder meeting today -- in fact, it was the first question in the Q&A session.

Chambers seemed to agree that some investors were disappointed when Cisco didn't have any good-news surprises in its report. Them's the breaks, kids: "There's no way I was going to forecast above guidance, everyone knows that," Chambers told today's audience.

On top of that, Chambers said Cisco's earnings arrived on a disastrous day for Wall Street, with oil prices hitting an all-time high, the dollar approaching a record low, and U.S. banks claiming billions in losses. I haven't date-checked all those items, but I do recall seeing stocks across the board going down.

"We thought the stock would go up," Chambers said.

Not every question was so probing. One investor asked for an update on Cisco Field, the upcoming Oakland A's ballpark. Unfortunately, the project is in that 12- to 18-month city/county review period where there's not much to say (well, maybe a little).

— Craig Matsumoto, West Coast Editor, Light Reading

Scott Raynovich 12/5/2012 | 2:58:46 PM
re: Cisco's Q1 Explained Okay, Chambers is Mr. Sunshine. Who cashes in a gazillion $ in stock options every year. So why would anybody rely on his opinion of Cisco's stock.

"I thought the stock would go up."

LOL. C'mon man. I mean, of course he would.

The markets are a fickle thing. But bond markets are even smarter. The long bond dipped below 4.20% today -- lowest since 2003. You would think it's sniffing out some economic weakness.

And as some great market traders have said: "It's not the news itself, it's the market's reaction to the news that counts."

That's why they call the market a discounting mechanism.
Scott Raynovich 12/5/2012 | 2:58:41 PM
re: Cisco's Q1 Explained Yes, a soft landing after Trillions in $$$ of leveraged mortgage securities get repriced -- to the downside. Indeed we will see! Fingers crossed!

I see Cisco announced an increased stock buyback today. That's bold of them. But if they have so much cash, why not just start paying a dividend?
Pete Baldwin 12/5/2012 | 2:58:41 PM
re: Cisco's Q1 Explained Well, sure, everything's sunny and happy with Chambers. Especially these days, with Cisco's numbers doing so well.

Interesting about the bond markets. And Cisco does say it saw weakness in IT spending. Chambers of course is predicting a "soft landing" for the U.S. economy out of all this. We'll see.
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