Tag Archives: stocks

Cisco’s Steady Q2 Helps, But Enterprise IT Sector Still Jittery

Behind the scenes, Cisco Systems ( CSCO ) did what it was supposed to do last quarter, and did it a little more profitably: It provided reliable networking gear and helped others compute and communicate faster, even as formerly highflying enterprise technology stocks crashed. After Wednesday’s close, Cisco posted fiscal Q2 earnings and sales that beat analyst expectations, as did its earnings and sales outlook for the current quarter. The company’s CEO, however, acknowledged that things have been a bit dicey. While the first 10 weeks of the second quarter, through Dec. 31, were “very much in line with what we expected … (in) those last three weeks (through Jan. 23), we saw customers just pause a bit … to see what’s going on,” Cisco CEO Chuck Robbins said on the company’s earnings conference call with analysts. “The (data center) campus refresh activities, we saw customer say, ‘Hey, our infrastructure is working. Let’s hold on that (purchase) before we see which way we’re willing to go.’ ” Added CFO Kelly Kramer: “Our guidance is prudent. We expanded our range to three (percentage) points of range rather than two, because we see things as more volatile.” For the period ended Jan. 23, Cisco said per-share earnings minus items rose 7.5% from the year-earlier quarter to 57 cents minus items, while revenue slipped 1% to $11.8 billion. Excluding year-earlier performance from the television set-top box business Cisco recently sold, revenue rose 2% . Analysts polled by Thomson Reuters had expected 54 cents and $11.75 billion. A year before, Cisco’s EPS ex items had risen 13% to 53 cents, and sales grew 7% to $11.94 billion. Cisco completed the sale of its set-top box unit to Technicolor on Nov. 20, for $600 million. Excluding that business, Cisco had guided Q2 adjusted EPS to 53-55 cents, on revenue of flat-to-2% growth. For fiscal Q3, Cisco guided to EPS ex items of 54 cents to 56 cents and to a year-over-year revenue rise of 1% to 4%. Analysts had modeled 54 cents and a 0.8% decline. Cisco is the No. 1 maker of the seldom-seen but increasingly used, lightning-fast switches, routers and other networking gear behind most telecom and Internet service providers, helping to run many data centers for many Internet cloud-based operations. Cisco stock, which rose 9% in after-hours trading Wednesday after its earnings release, was up more than 9% in early trading in the stock market today , near 24.50, despite another tough start to the market overall amid global economic worries. In Wednesday’s regular session, shares fell 0.6% to 22.51, 25% off an eight-year high of 30.31, set last March. Smaller rival Juniper Networks ( JNPR ) was up nearly 1% in early trading Thursday. Cisco’s latest results helped the outlook for information technology stocks, which crashed last week after data analytics software maker  Tableau Software ( DATA ) and social media firm LinkedIn ( LNKD ) gave disappointing guidance. As global fears of a slowing economy rose, so did worries of slower IT spending. Analytics firm Splunk ( SPLK ), security vendor  Palo Alto Networks ( PANW ) and cloud software leader Salesforce.com ( CRM ) were among stocks that fell hard last week, though the latter two have recovered somewhat this week. All three stocks, however, were down in early trading Thursday, as was Tableau. Cisco: Challenging Macroenvironment “We delivered a strong Q2 and are managing the business extremely well in a challenging macro environment,” Robbins said in the company’s earnings release. “We’re managing the company on two fronts. We’re focused on continued strong execution in the near term, while investing in the innovation to lead our customers into the future.” As with the sale of its set-top box business, Cisco has been shedding slow-growth lines of business while making acquisitions in faster-growing arenas. Last week, Cisco announced its agreement to acquire Jasper Technologies, which delivers a cloud-based Internet of Things (Iot) service platform, for $1.4 billion.  The deal is expected to close this fiscal quarter. The company last quarter also completed the purchases of Portcullis, a digital security operation; Lancope, a security analytics firm; ParStream, another analytics specialist;  and 1 Mainstream, an on-demand streaming-content company. And on the call, Cisco executives said they recently completed the acquisition of Acano to help accelerate Cisco’s collaboration strategy to deliver video more broadly. In November, Cisco entered a “strategic partnership” with Ericsson ( ERIC ) which both companies say will improve their sales by the second half of this fiscal year. Robbins told analysts that Cisco and Ericsson “have begun to close transactions together. I would not translate that to any of the numbers we put out today. … We’re at the handful stage right now, but we see that accelerating.” “We delivered a strong Q2, and are managing the business extremely well in a challenging macro environment,” Cisco CEO Chuck Robbins said in the earnings release. “We’re managing the company on two fronts. We’re focused on continued strong execution in the near term while investing in the innovation to lead our customers into the future.”  

CyberArk, FireEye Q4 Sales Expected To Brake; But Stocks Rebound

CyberArk Software ( CYBR ) and FireEye ( FEYE ) stocks lent themselves to a security recovery Wednesday, both climbing ahead of their late-Thursday quarterly earnings reports after a four-day downtrend pounded IBD’s Computer Software-Security industry group. The 26-company group rose 1.7% Wednesday after hitting a one-year low on Tuesday, with shares of Qualys ( QLYS ),  Imperva ( IMPV ) and Proofpoint ( PFPT ) leading the way, up 15.2%, 6.3% and 5.6%, respectively. CyberArk stock rose 2.3%, while FireEye stock jumped 3.7%. Still, the Computer Software-Security group ranks a mere 176 out of 197 groups tracked by IBD. But CyberArk and FireEye are expected to report sales, for Q4, that will have decelerated for their third- and sixth-consecutive quarters, respectively. CyberArk EPS Seen Falling For Q4, the consensus of 15 analysts polled by Thomson Reuters sees CyberArk reporting $43.9 million in sales and 20 cents earnings per share ex items, up 21% and down 5%, respectively. It would be the first time in six quarters that CyberArk’s earnings have fallen year over year. Three months ago, CyberArk guided to $43 million to $44 million in sales and 18-20 cents EPS minus items. CyberArk is expected to report a 49% year-over-year jump to $153.3 million in sales for the year. EPS is seen climbing 53% vs. 2014 to 81 cents. CyberArk previously guided to $152.3 million to $153.3 million in sales and 80-82 cents EPS minus items. Will FireEye’s Billings Recover? FireEye is expected to report $185.3 million in Q4 sales and a per-share loss ex items of 37 cents. On a year-over-year basis, sales would grow 30% and losses would shrink by a penny. In November, FireEye guided to $182 million to $190 million in sales, 36-38 cents per-share losses minus items and $240 million to $260 million in billings, which for the latter would be up 18% at the midpoint. For 2015, the consensus of 34 analysts polled by Thomson Reuters expects FireEye to report $623.4 million in sales, up 46%. Losses per share ex items of $1.62 are expected to lessen from $1.97 in 2014. The company previously guided to $620 million to $628 million in sales and losses per share ex items of $1.61 to $1.63. Billings guidance for $780 million to $800 million would be up 34% at the midpoint.

Firearms Stocks: On Track For Gains Or A Pullback?

Sometimes a niche product within an industry group can call for separate attention. That is probably the case with the three small arms weapons makers in the Security/Safety industry group. The other companies don’t deal in firearms. The security group is down about 11% so far this year vs. a 9% loss in the S&P 500 and a 13% decline in the Nasdaq. However, Sturm Ruger ( RGR ) is up 6% and Smith & Wesson ( SWHC ) is almost flat. Electrical weapons maker Taser ( TASR ) is down 9% year to date. Let’s look at the three stocks. Sturm Ruger has a Composite Rating of 91, putting it in the top 9 percentile of the stocks in IBD’s database. The Street expects full-year 2015 earnings growth to come in at 58% when the company reports later this month. Revenue is expected to slip 1.6%. For 2016, analysts expect earnings to grow 19% on a revenue gain of about 9%. Quarterly after-tax margin dropped to 9.9% in the third quarter. The median after-tax margin since mid-2011 is about 14%. Ruger’s chart shows that its last good breakout was in September 2013, which led to a gain of about 40%. More recent breakouts didn’t yield much. The best was a 12% gain out of a breakout from a flat base in July. The stock has retaken its 50-day and 200-day lines and is about 6% off its high. Smith & Wesson has a Composite Rating of 98. In fiscal 2016 ending in April, the Street expects the company to grow earnings 40% on a 19% sales gain, but the following year only 10% EPS growth on 6% revenue growth. Like Ruger, after-tax margin was 9.9% in its most recent quarter. Smith & Wesson’s margins vary quite a bit — from as high as 26% to as little as 2.5%. Smith & Wesson’s chart shows that the stock has spent most of its time since 2002 trading below 15 a share. This raises concerns that the strength in firearms sales is baked into the price, leaving the stock vulnerable to a pullback. Management has expressed an interest in making an acquisition in the outdoor sporting goods area. While that might sound like a good marriage, Smith & Wesson has a spotty history in acquisitions. The company admitted in its 2014 10-k report that, “We have limited acquisition experience.” The acquisition of Thompson Center Arms in January 2007 and Universal Safety Response in July 2009 led to substantial write-downs. Taser International is in sad shape chartwise. The stock is 56% off a high dating to June. The Street expects a 16% drop in full-year 2015 EPS when the company reports later this month. Revenue is expected to grow 17%. After-tax margin dropped to 3% in Q3. Taser’s chart shows plenty of good gains in its history, but the current consolidation is deep and ugly.