<BREAKFAST WITH THE FOOL>
Thursday, November 5, 1998
"Goodness is the only investment that never fails." -- Henry David Thoreau
Cisco Delivers Again
The tally now stands at 35. Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %> delivered solid revenue and earnings growth for the 35th straight quarter as the company reported after the close yesterday fiscal first quarter earnings of $0.34 a share (excluding $127 million in write-offs of purchased in-process R&D), a 31% increase over the year-earlier period and a penny more than expected. Pro forma earnings totaled $559 million, up 34%. Revenues for the quarter reached $2.59 billion, a 38% rise from $1.87 billion a year ago, with sales to the telecommunications market increasing 50%.
The San Jose, Calif.-based computer networking equipment company saw a slight increase in gross margins, to 65.5% from 65.1%. However, operating and net margins both fell, with operating margins down more than 2.5 percentage points to 29.7% from 32.3% and net margins down less than one percentage point to 21.6% from 22.3%. In the face of stiff competition, the company lowered prices by 15% to 20% on some of its computer switches for corporate networks.
CEO John Chambers said in an interview with Bloomberg that sales in Asia were "relatively flat" and the region "will continue to be a challenge for the next several years," though the company has dug in its heels for the long-term by tripling its number of Asian employees. In contrast, European sales jumped 60% year-over-year, driven by strong numbers in Germany, bringing the percentage of revenues derived from Europe to 29% versus 55% from the U.S.
News to Go
Greenspan speaks again. All eyes will be on all-powerful Federal Reserve Chairman Alan Greenspan (FED: GMAN) today when he addresses the annual meeting of the Securities Industry Association around midday Eastern time. Wall Street will be looking for a hint of whether the Fed will lower interest rates again later this month.
Data access and storage appliances maker Network Appliance <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NTAP)") else Response.Write("(Nasdaq: NTAP)") end if %> scored a coup yesterday by signing an agreement with Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>, through which the PC maker and direct seller will resell Network Appliance's networked file servers ("filers").
Union leaders at Federal Express, a unit of FDX Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FDX)") else Response.Write("(NYSE: FDX)") end if %>, plan to start mailing strike ballots to rank-and-file members today, though no strike is imminent, The Wall Street Journal reported, citing "people familiar with the situation." The mail-in vote, which would authorize union officials to call a strike at the express delivery company, is expected to take a month.
October Retail Same-Store Sales:
Consolidated Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CNS)") else Response.Write("(NYSE: CNS)") end if %> -- down 5%
Dollar General <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DG)") else Response.Write("(NYSE: DG)") end if %> -- up 4.2%
J.C. Penney Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JCP)") else Response.Write("(NYSE: JCP)") end if %> -- down 2.8%
Kmart <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KM)") else Response.Write("(NYSE: KM)") end if %> -- up 4.2%
Lowe's Cos. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LOW)") else Response.Write("(NYSE: LOW)") end if %> -- up 5%
Musicland <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MLG)") else Response.Write("(NYSE: MLG)") end if %> -- up 6.5%
Pier 1 Imports <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PIR)") else Response.Write("(NYSE: PIR)") end if %> -- up 5%
Sharper Image <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SHRP)") else Response.Write("(Nasdaq: SHRP)") end if %> -- down 3%
Sunglass Hut <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RAYS)") else Response.Write("(Nasdaq: RAYS)") end if %> -- down 3.6%
Talbots <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TLB)") else Response.Write("(NYSE: TLB)") end if %> -- up 26.3%
Wal-Mart <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WMT)") else Response.Write("(NYSE: WMT)") end if %> -- up 7.7%
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Yi-Hsin Chang (TMF Puck), Writer
Jennifer Silber (TMF Amused), Editor
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