Following stellar earnings from technology bellwethers like Intel and Microsoft, many investors were looking for a blowout quarter from Cisco (NASDAQ: CSCO) as well. Thus far, investors have to be incredibly disappointed as Cisco is trading at $21.79, off $1.34 from its closing price today. For the quarter, Cisco reported $0.43 in EPS beating the estimated $0.42, and revenues of $10.84 billion compared to Street estimates of $10.9 billion.
The GDP data indicated a strong increase in business investments on enterprise equipment and software, and Intel and Microsoft both benefited nicely from that uptick. Additionally, the strong earnings from both companies set the bar high for the remainder of the technology sector, particularly for Cisco, the dominant player in networking equipment and software.
Cisco’s positioning in networking provides important perspective into the state of the build-out of technology infrastructure. CEO John Chambers, known for providing keen insight on the outlook for both Cisco and the tech sector, thus far in the company’s conference call sounds less than enthused by the near-term outlook. Chambers’ outlook does not bode well for trading in Cisco and the tech sector tomorrow as the market looks to recover from today’s brutal sell-off.
In today’s trading, Cisco gapped down below its recent uptrend line and proceeded to decline yet further. The stock had just broken through recent resistance at $24 two trading days ago, and this new down move seems to have trapped the recent breakout buyers. Wait to see if Cisco can either put in a higher low, or hold recent support at $21 before trying this from the long side. For now investors need to remain patient and await a better entry.
Disclosure: No position.