Darwinian Economy

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Intel Corporation to Invest $7 Billion in U.S. Manufacturing Facilities
Tuesday, 10 Feb 2009 09:00am EST
Intel Corporation announced that it would spend $7 billion over the next two years to build advanced manufacturing facilities in the United States.

Cisco Systems, Inc. Prices $4 Billion Of Senior Unsecured Notes

Monday, 9 Feb 2009 05:57pm EST
Cisco Systems, Inc. announced the pricing of two series of senior unsecured notes for an aggregate principal amount of $4 billion.

While much of the economy is sputtering to maintain the credit that they have, tech giants Intel and Cisco are charging ahead. The rich get richer.

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By the way, Blackberry maker RIMM just took up subscriber estimates.

Edit: They are pricing aggressively to get there. Numbers are coming down.

The Abyss

A little unauthorized quote from a Wall Street Tech Research Sales desk this morning:

"One thing that is painfully clear now -- upcoming December quarter results for Tech companies will be frightening. Most had assumed this, but the magnitude of the guide downs from bellwethers CSCO and from QCOM last night (each of whom had October vs. September quarter ends, therefore provided one more month of data) showed massive deceleration in the month of October. While the current month of November could easily get worse, the sobering forecasts we have just heard are actually GOOD things, and hopefully investors can use these opportunities to model out recession-like scenarios for all of their Tech coverage universe. Resetting the bar is a critical first step to establishing a floor in these stocks."

This is a big concept. Cisco and Qualcomm are very important companies. October was much worse than expected. November could be worse than October. Stocks can't bottom until buyers are focused on something other than trough earnings. In my opinion investors don't look past the trough until they understand how deep the trough is.

Down is bad but part of the process.

Cisco and Sell Side Analysts

"Inevitably, stocks are more effective predictors of analyst behavior than the
analysts are of stock behavior. At times, it seems that Wall Street analysts are in the “multiple maintenance” business. When stock prices go up, estimates follow. When stock prices go down, estimates follow too."

I know I'm quoting someone with the above but I can't remember who it is.

Merrill Lynch today upgrades Cisco to buy citing overblown investor concerns round both growth prospects and margins.

I like this call. The stock is at $21, down from $33 last September and at its lowest level since mid-2006. Sure, global growth has slowed. Cisco remains a winner.

The futures are up but BofA numbers are just hitting the tape now.

long mer