Tomorrow’s Trade

The results from Cisco (CSCO) are coming, will they validate the strength in the sector?  CSCO is the worlds largest maker of computer networking hardware.  The firm seemed set to weather the economic storm until early November when forecasts were slashed and the outlook has since dropped futher with estimates cut.  Long term there are analysts that are bullish but they see troubles short term.  Great things can not be expected from this quarter.  A smaller competitor, Juniper Networks (JNPR) reported disappointing numbers recently also.

The latest struggling company that blew a chance for a buy out was Sandisk (SNDK) with both Yahoo (YHOO) and Take Two Interactive (TTWO) hardly far behind.  Finerman feels the companies overplayed their hands and the traders seemed to be baffled.  SDK was trading at about $8, TTWO around $6 and YHOO about $12.  The offers:

COMPANY    SUITOR          OFFER        DATE

SDK      Samsung          $26/share   9/16/2008
YHOO       Microsoft          $31/share   2/2/2008
TTWO   Electronic Arts  $25/share    2/25/2008

Questions

Adrian asked which of the big banks do you want to get involved in?  Finerman and Adami both replied with JP Morgan (JPM) but Najarian thinks preferred shares of Wells Fagro (WFC) along with Citigroup (C) and JPM.  Macke wouldn’t go near any of them.

Zach asked if the party is over for Amazon.com (AMZN)? Najarian thinks the stock is a little tired after the run.

Pops & Drops

Pops: UPS (UPS) +6%, Harley Davidson (HOG) +16%, Proshares Ultrashort Lehman 20+ YrETF (TBT) +5%, CME Group (CME) +2%, Emerson Electric (EMR) +2%, Northrop Grunman (NOC) +4%, Avon Products (AVP) +9% and Tyco International (TYC) +19%.

Drops: Motorola (MOT) -11%, MGM Mirage (MGM) -15%, Qualcomm (QCOM) -3% and Capital One Financial (COF) -11%.

Wells Fargo

Corporate retreats and federal bailout money do not mix and this is what CNBCs Scott Cohn came on to report in breaking news as Wells Fargo (WFC) announced that they were reconsidering whether to hold a corporate junket in Las Vegas.  The New York Attorney General inquired whether tax payer money was used to pay for the trip.  This trip usually includes extravagant extras like wine tastings, private concerts, helicopter rides to say the least.  This year the trip is set to kick off despite the $25 billion bailout.

Analyze This

Fewer companies are willing to give revenue guidance so how can analyst prove investors with insights that are well informed?  Not offering guidance any longer are Intel (INTC), Verizon (VZ), Kodak (EK), Starbucks (SBUX), Microsoft (MSFT) and Sun (JAVA) just to name a few.  The number of companies not offering has gone up by 30%.  There are two things that they try to do well adn you have to macro call according to Sandler O’Neill analyst Jaffrey Harte.  Then you have to look at as many data points as you can from quarter to quarter.

Final Trade

Macke – trim calls on Electronic Arts (ERTS)

Adami – long L-3 Communications (LLL)

Finerman – long Oil Service HLDRS (OIH)

Najarian – Cisco (CSCO) is a buy around $15