Online video has already exploded between video sharing sites like YouTube and all the premium content that media companies are putting online. Cisco (NADSAQ: CSCO) says it will explode again. According toThe Wall Street Journal, the firm "is projecting a sixfold jump in Internet traffic between 2007 and 2012."
Not likely. YouTube and its peers are still growing, but not as fast as they were over a year ago when video online was more of a novelty. Media companies have not figured out a way to make a lot of money from putting their programming online. That may mean that they will do less and less of it.
Perhaps the most important reason the use of online video will slow is that carriers, both phone companies and cable firms, want to cut back the amount of bandwidth their customers can use or charge the heavy users. The operations claim services like file sharing are clogging their "pipes" with too much traffic. They need to either cut that down, or make a profit on it.
Cisco may want to check its numbers.
Douglas A. McIntyre is an editor at 247wallst.com.
The Pediatric Ethics Subcommittee of the Pediatric Advisory Committee will meet at 8:30 am to discuss the application of 21 CFR 50.52 (Clinical investigations involving greater than minimal risk but presenting the prospect of direct benefit to individual subjects) to FDA-regulated research. The discussion will be illustrated with hypothetical case examples of research involving HIV vaccines in adolescents and controlled trials of inhaled corticosteroids in children with asthma.
The Pediatric Ethics Subcommittee will meet at 8:00 am to discuss the application of 21 CFR 50.52 to FDA-regulated research illustrated with a hypothetical case example of research using stem cells for treating periventricular white matter injury in children.
Cisco Systems (NASDAQ: CSCO) to hold conference call at 11:00 am to discuss business video innovation.
Robert Baird says: "Good execution in challenging environment after the market close tonight. CSCO is recently down 2 cents to $26.32.
CSCO call option volume of 59,006 contracts compares to put volume of 88,669 contracts. CSCO May 25 straddle is priced at $1.11, below a level of $1.97 just prior to last night's EPS. CSCO June option implied volatility of 28 is below a level of 35 from yesterday and below its 26-week average of 33 according to Track Data, suggesting decreasing price movement.
Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
A newly published report by Standard & Poor's said that the performance of organizations such as Federal National Mortgage Association (NYSE: FNM), or Fannie Mae, and Federal Home Loan Mortgage Corporation (NYSE: FRE), or Freddie Mac, could directly affect the U.S. economy and the country's credit rating, especially if they have to be rescued by the government, according to the Wall Street Journal's "Credit Markets" column.
Seagate Technology LLC (NYSE: STX), a hard drive maker, filed a patent infringement suit in San Francisco against STEC Inc (NASDAQ: STEC) over four patents related to technology used to store data on computer chips, the Wall Street Journal reported.
The Financial Times reported that Citigroup Incorporated (NYSE: C) is allowing private equity groups such as Apollo, The Blackstone Group LP (NYSE: BX) and TPG that are bidding for up to $12B of its leveraged loans to 'cherry-pick' from a wide range of assets with different credit ratings and prices.
MOST NOTEWORTHY: Cisco Systems, NYSE Euronext, Nasdaq and Cognicase were today's noteworthy initiations:
Friedman Billings believes Cisco Systems (NASDAQ: CSCO) is well-positioned to take advantage of "Business 2.0" applications and to gain share in a slower economic environment. The firm initiated shares with an Outperform rating and $31 target.
NYSE Euronext (NYSE: NYX) and Nasdaq (NASDAQ: NDAQ) were assumed with a Neutral rating and $72 target and $44 target, respectively, at UBS. The firm cited increasing competition and moderating volumes.
Deutsche Bank believes Cognicase (COGI) is one of the few carriers offering high-capacity commercial Internet access to enterprise customers at a discount to nearly all of its competitors. Shares were initiated with a Buy rating and $23 target.
OTHER INITIATIONS:
China Housing (OTCBB: CHLN) was initiated at Merriman with a Buy rating.
Goldman started Juniper (NASDAQ: JNPR) with a Market Perform rating and $27 target.
Suntrust initiated hhgregg (NYSE: HGG) with a Buy rating and $16 target.
Cisco Systems, Inc. (NASDAQ: CSCO) stock is falling after an analyst at UBS downgraded the stock to "neutral" from "buy," citing slowing demand. The analyst added that softness in European markets has compounded weaknesses caused by the slowing US economy. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on CSCO.
After hitting a one-year high of $34.24 in November, the stock hit a one-year low of $21.77 in February. This morning, CSCO opened at $24.09. So far today the stock has hit a low of $24.01 and a high of $24.40. As of 12:05, CSCO is trading at $24.30, down 0.66 (-2.6%). The chart for CSCO looks neutral and improving, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bearish hedged play on this stock, I would consider a May bear-call credit spread above the $27 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 11.7% return in six weeks as long as CSCO is below $27 at May expiration. Cicso would have to rise by more than 10% before we would start to lose money. Learn more about this type of trade here.
CSCO hasn't been above $27 since January and has shown resistance around $26 recently. This trade could be risky if the company's earnings (due out on 5/6) are a positive surprise, but even if that happens, this position could be protected by resistance CSCO might find at its 200-day moving average, which is currently around $28 and falling. Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in CSCO.
MOST NOTEWORTHY: Cisco Systems, Kirby and First Fed Financial were today's noteworthy downgrades:
UBS downgraded Cisco (NASDAQ: CSCO) to Neutral from Buy after channel checks indicated orders are slowing, which gives them concern over the July quarter.
Stephens cut Kirby (NYSE: KEX) to Equal Weight from Overweight as they believe a good 2008 is already priced into shares and that the liquid barge industry cycle may be nearing a top.
First Fed Financial (NYSE: FED) was lowered to Neutral from Outperform at Credit Suisse, citing credit quality deterioration.
OTHER DOWNGRADES:
JP Morgan removed HB Fuller (NYSE: FUL) from its Focus List.
RBC Capital downgraded SourceFire (NASDAQ: FIRE) to Sector Perform from Outperform.
MOST NOTEWORTHY: Cott Corp, Hartford Financial, Allstate and Valero Energy were today's noteworthy upgrades:
Lehman upgraded Cott Corp (NYSE: COT) to Equal Weight from Underweight citing recent management changes, a focus on CSD business, and new product discipline.
Bernstein believes the entire non-life insurance group is oversold and that it is time to buy; the firm upgraded Hartford Financial (NYSE: HIG) and Allstate (NYSE: ALL) to Outperform from Market Perform.
Valero Energy (NYSE: VLO) was raised to Buy from Hold at Deutsche Bank on valuation with the stock trading at a -30% discount to NAV while the asset market for U.S. refineries is strong.
OTHER UPGRADES:
Goldman added Cisco (NASDAQ: CSCO) to its Conviction Buy List.
As Mel Brooks once said, "It's good to be the king." I often fantasize being a politician just for what it's worth after leaving office. We learned this week that Al Gore is now at least a centi-millionaire -- yes, he's worth over $100 million. That's a lot of global warming tacos.
An interesting exclusive article on Bloomberg.com is titled, "Pfizer, Exxon Find U.S. Justices as Shareholders May Cost Them." The premise of the article is that Supreme Court Justices' ownership of stocks occasionally requires them to side-step rulings, like this week's deadlock that allowed lawsuits over Pfizer's Rezulin diabetes drug. U.S. Chief Justice John Roberts owns the stock and needed to sit on the sidelines.
The same article cited Mark Herrmann, a product-liability lawyer at Jones Day in Chicago, as saying, "If you're on the industry side, it kills you that Roberts recused himself. That's your fifth vote.''
Bloomberg cites stocks either currently held or sold from in Chief Justice Roberts portfolio. They are:
Cisco Systems Inc. (NASDAQ: CSCO) qualifies as one of the largest tech bellwether stocks in the world. When it does good quarter to quarter, the entire market reacts. Sometimes, the reaction seems more like confusion over plain English spoken by company CEO John Chambers. Not this time, though.
When Chambers told attendees of a Morgan Stanley conference this week that he was comfortable with Cisco's existing guidance this year (and forward), many tech stocks headed up on his words alone.
Not only did Cisco's shares regain losses from earlier in the day yesterday, but the the Morgan Stanley Technology Index closed at 528.03, up from an earlier 517.30. IBM Corp. (NYSE: IBM) and Hewlett-Packard Co. (NYSE: HPQ) also saw advances as the trading day closed on Tuesday. Cisco reiterated its long-term growth prospects of 12% to 17%, plus fiscal Q3 revenue growth of 10% (plus or minus 1%) -- and those kind of figures apparently just weren't good enough for some traders who generally expect the impossible in many cases.
Chambers said that Cisco will navigate through "bumps" in the U.S. economy that may last two or three more quarters, but will also remain aggressive in acquisitions. Additionally, the world's largest computer networking company will continue to add jobs, with Chambers adding "we plan to be aggressive during the slowdown ... it's a chance to gain market share." No misinterpreting his words there.
Most people won't believe that HPQ is zero-sum, which in many ways it is. We will see another rally in tech a la the rally after Cisco (NASDAQ: CSCO) (Cramer's Take) blew up and then didn't blow up, because HPQ is very bellwether-ish.
I think this market was looking for a catalyst -- beyond spiking commodity prices -- and it might have caught it in this HPQ number.
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