Market briefing---Lane (medium)
Cisco--- Su (fast)
NYSE---Deb (fast)
>> welcome to “world financial report”. we are glad you joined us. i’m lane bajardi in new york. cisco systems, world’s largest maker of equipment to direct internet traffic says it’s quarterly net income rose 27%. the company out with fiscal fourth quarter and full year earnings after the bell says cost cutting measures offset declining sales and revenue. shares fell% in the regular session, as you see here, ahead of that report. they are falling as much as 5% in extended trading. what’s this about? su keenan is here with the latest details. su.
>> it’s a good question, lane, because cisco systems cut expenses and expanded into other businesses to manage that profit increase. you see the shares down 5% in extended hours. analysts and investors well aware that this cost cutting offset the third straight consecutive quarter in which sales of its core products, routers and switches to corporate clients fell. turnover of inventory slowed suggesting to at least one analyst the company is taking longer to move goods off its shelves. now, the decline in sales again suggests there snow momentum for the next quarter, says an p analyst at kribc world markets who rates the company a sector perform and predicts the stock will move lower by the end of the year. cisco reporting fourth quarter earnings, excluding items at 15 cents a share, on sales of $4.7 billion. the earnings number is in line with the consensus estimate of surveyed by thompson financial who expected sales of $4.66 billion t company earned 14 cents a share in the same period a year ago. c.e.o. john chambers said on the conference call which began at the bottom of the hour that fourth quarter book to bill was slightly above one. that’s a ratio of current orders to future orders. the cisco c.e.o. says the total u.s. orders are, “a little better.” with c.e.o. john chambers leading the company for the last nine years, cisco has grown into the world’s 12th largest company with a market value of about $134 billion. they have 68% of the switching market and sells 85% of the world’s routers. revenue from both represents 2/3 of the company’s sales and it is falling. among the analysts most bullish on cisco, s.g. cowan up graded the stock to outperform saying the company’s nonbusiness segments are helping it become a growth company again. cisco has moved into new markets including data storage, wireless and broadband products and recently acquired links sis which makes networking equipment for homes and small businesses. analysts say cisco business’s should bounce back as its customers’ revenue and profit accelerates.
>> now that we have a debt picture improving, the companies are starting to spend once again specifically in the data networking part of the business.
>> cisco shares have gained 45% year to date. they were down 2% in today’s regular session, again falling as much as 5% in extended trading. that performance year to date does outperform the nasdaq and the s&p 500. but, lane, we will continue to monitor the conference call and have more for you at the top of the hour.
>> we’ll see you then. su keenan. now, prudential financial says second quarter profit rose 34% as this company made more from annuities and investment losses fell t nation’s third biggest life insurer reported net income of $127 million or 25 cents a share, compared with 19 cents a year ago. excluding certain items, earnings per share came in at 67 it is, and by that scale it beat wall street estimates of 60 cents. chief executive art ryan has been shedding less profitable businesses such as car and home insurance to focus on lifes and annuities. in the regular session, shares of prudential financial down three cents. in the extended trading it’s on the move up 2 1/4 percent up 78 cents at $35.40.july brought record growth in services. the institute for supply management’s nonmanufacturing index shot up 4.5 points to 65.1%. the sharpest increase and the best showing since the group of purchasing and supply executives began keeping track seven years ago. readings above 50 signal expansion. 14 of the 17 industry groups that are in this gauge reported growth including agriculture, retailing, construction and finance. only one group, health services showed contraction. two reported no change. treasuries tumbled partly due to this report and also after a $24 billion sale of three-year notes failed to spark investor interest. the auction is part of $60 billion in u.s. treasuries that the government is selling this week. stocks fell pushing the broad s&p 500 index to its lowest close since may 30th. the semiconductor tech hardware and telecom services stocks were the weakest groups in the s&p. running down the numbers for you we’ve got the dow jones industrial average lower by 149 points to 9,036. s&p down 17, the nasdaq lower by 40. big board volume, 1.3 billion shares, lower than the six-month average. you see declines outpacing advancers by a two to one margin. on the nasdaq 1.7 billion shares changed hands, two to one in favor of the losers. the wilshire 5000 do you 1 2/3% at 9,306, the broadest measure of the market. currency-wise the dollar fell against the japanese yen on concern job losses in the u.s. may curb an economic recovery. the record expansion in the service sector did not translate into gain for equities, as we ran down the numbers for you. deborah kostroun is at the big board with trader and investor comments on today’s market action. deb.
>> well, in fact, lane, we did see quite a bit of a selloff in that last hour of trading. james thorn helps manage $24 billion at m&t bancorp. talking about the market going down, though we had an i.s.m. number that was good. but he said we should be prepared for this because the market is going through a normal pause. he was surprised when it went up 26% for march 11 low to june 17th. he said that really signalled some irrational exuberance, on the upside we have seen the s&p 500 decline 3.7% since that time. he says one of the things many people are doing, they are sitting with some really good cash positions, though in today’s session, we did see a major sell yompt one of the areas that we did see selling off is an area that performed quite well from the low from march 11th. that was in the semiconductors. in fact, semiconductors, the biggest drag on the s&p 500, you can see some of the numbers right in front of you. telecom. this was the biggest leader in the market yesterday. also another drag in the s&p 500. also tech hardware really right behind the semiconductors to be some of the worst performers. in addition the i.s.m. number really showed an expansion, even in the financials, the banking industry, however really didn’t translate into too many gains for the financials. also retail getting hit as costco cutting its profit outlook for the fourth quarter and for the full year. in addition to retail, we did see household products, obviously like gillette’s second quarter profit―or net income jumped 15%. sales rising, however, gillette end ad little lower. it was trading a little higher, but at that late day selloff we did see quite a bit of the market in the red. back to you in the studio.
>> deborah kostroun at the big board. gasoline futures rose about 3% to a four-month high, these gains coming on speculation that summer travel and refinery shutdowns are sapping inventories already below normal. price of crude in new york rose 1% to $32.22 a barrel. the explosion of a car bomb outside ain donee shan hotel raised concern of increased attacks in oil producing nations. gold futures gained to $351 an ounce. investors are not impressed by gillette’s second quarter results, though they were better than expected. let’s see how the stock ended the day. gillette shares down a half percent, 16 cents. if we could take a look now at gillette’s net income which was up 15% from the same period last year and four cents better than the 29 cents a share analysts expected. revenue was 11% higher. that is thanks partly to the weak dollar. that helped sales overseas. analysts expected a 5% improvement for gillette. with expectations of an improving economy and rising interest rates, which will do better in this market? small or large-caps?
