Mish's Global Economic Analysis11/11/10
Cisco was hit in afterhours trading on Wednesday following a rare revenue warning. Futures are down but dip-buying strength has been so insane lately that one must wonder if there will be any follow through.
Regardless of what the stock does, the huge warning may portend the end of the ramp in capital spending on technology by corporations. If so, what's left of the recovery (if anything) is all on the backs of consumers.
While pondering that grim setup, please consider Cisco Forecasts Fall Short of Estimates; Shares Slide
Cisco Systems Inc., the largest maker of computer networking equipment, forecast sales and profit for this quarter that fell short of analysts’ estimates, sending the shares down as much as 15 percent in late trading.
“There’s no reason to think that that’s going to reverse quickly,” said the San Francisco-based analyst, who still advises buying the stock. “This is kind of a deteriorating situation.”
The company is seeking other ways to reward investors. Cisco said in September it will initiate its first dividend, starting in the fiscal year that began last month. The size and timing of the payout will depend on tax laws and repatriation policy, because much of Cisco’s cash is abroad.
Tax Laws
Chambers, 61, has said that he wants to bring at least $30 billion in cash back to the U.S. and that tax laws make it too expensive to do so. He’s called for a tax repatriation break, saying Cisco will increase its U.S. headcount by 10 percent if a favorable law is passed. Spare Me The Whine
I am not a fan of corporate taxes. However, I am less of a fan of allowing giant corporations send jobs and cash overseas, then beg for a repatriating holiday, lather-rinse-and-repeat. Complete Article
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