A Positive Indication
Tech stocks got hammered on the opening, following news
that networking giant Cisco
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decline in its 11 years as a publicly traded company. The Nasdaq 100
futures
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limit-down levels on the Chicago Mercantile Exchange.
But big-cap techs are recovering from early losses with
the Nasdaq 100
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highs of the session. Technology’s capacity to digest the negative and
foreboding news from Cisco is an indication of strength. One of the
characteristics of a bull market is the ability to come back from — and rally
— on
bad news.
The Nasdaq is down 18.25 at 2180.56, the Dow is up 2 at
10,886, and the S&P 500 is down 2.97 at 1258.21.
Cisco beat reduced earnings expectations by a penny,
handing in earnings of three cents a share. The company also took charges on
over $2 billion in inventory write-downs and costs associated with cutting 8,500
workers.
What is surprising is that the company at the heart of
the networking revolution, a company with superior financial and information
resources, was surprised by the quick downturn in its business. CEO John
Chambers highlighted this point saying, “We underestimated
how quickly the valley could occur.”
A Cisco statistic regarding a decline in orders is
telling. One year ago, Cisco had 3,000 new telecom customers placing orders for
its routers and networking gear. Today, the number of entrepreneurial telecom
startups has dropped to 150, a decline of 75%.
General Electric
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in the top end of expectations for 2001, working to keep the Dow in positive
territory for much of the morning. GE is up .10 at 49.58. Basics Alcoa
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and Du Pont
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Gold and silver
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the oil index
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laggards.
Highlighting persistent strength this year among
retailers, Land’s End
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earnings expectations.
BioChem
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all-time high and is consolidating at that level in a Slim Jim pattern. This
biotech is merging with U.K.-based Shire Pharma
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on word that 2.27 shares of Shire will be issued for each share of BioChem.