U.S. Indexes Decline; Weak Earnings at Cisco and Pepsi

Bikram Pandey
10 Feb, 2011
New York City

U.S. stocks traded lower after Cisco Systems reported lower earnings on a rise in sales. U.S. jobless claims at the end of last week fell by 36,000 to 383,000. Foreclosure filings in January declined 17%, fourth monthly decline in a row.

[R]9:45 AM New York – U.S. stocks traded lower after Cisco Systems reported lower earnings on a rise in sales. U.S. jobless claims at the end of last week fell by 36,000 to 383,000. Foreclosure filings in January declined 17%, fourth monthly decline in a row.[/R]

U.S. stocks in early trading edged lower after weaker than expected earnings from Cisco and cautious outlook from Pepsi. Asian markets and emerging markets were lower today as capital continued to flow out and move to developed markets.

Seasonally adjusted weekly jobless claims decreased 36,000 to 383,000 from the revised previous week claims of 419,000. The preliminary insured unemployment rate in the week ending January 29 unchanged from the prior week''s unrevised rate of 3.1%.

Earnings Movers

Rio Tinto Plc said it extended its offer period to acquire Riversdale Mining by another fourteen days to March 4.

Net earnings for the year ending in December soared 194% to $14.32 billion from $4.87 billion a year ago. The global miner also increased full year dividend 20% to $1.08 per share of which final dividend is 63 cents.

The company also announced the $5 billion stock buyback program and also said it lowered its debt to $4.3 billion at the end of the year from $18.9 billion.

The strong operations and profits were driven by a sharp increase in production and prices in iron ore operations. Iron Ore group generated net profit of $10.2 billion, 147% higher than a year ago and Pilbara region mines production soared to 224 million tons.

Cisco Systems, Inc. ((CSCO)), the Internet protocol based networking gear provider reported second quarter net sales rose 6% to $10.4 billion from $9.8 billion a prior year. Net income for the quarter declined 17.9% to $1.5 billion or 27 cents per diluted share compared to $1.9 billion or 32 cents per diluted share a year ago.

Investors are worried that corporate spending on technology is not increasing and government spending is still shrinking.

MetLife, Inc. ((MET)), the insurance and financial service provider reported fourth quarter revenue increased to $12.84 billion from $12.34 billion a prior year. Net income in the quarter declined 82% to $51 million or 5 cents per diluted share compared to $289 million or 35 cents per share a year ago.

Revenue for the full year 2010 increased to $52.72 billion from $41.06 billion a year ago. For the full year, the company''s net income was $2.67 billion or $3.00 per diluted share from $2.37 billion or $2.89 per share in the prior year.

The Allstate Corporation ((ALL), the holding company said fourth quarter revenue edged up 0.4% to $8.09 billion from $8.06 billion a prior year. Net income in the quarter declined 42.9% to $296 million or 55 cents per diluted share compared to $518 million or 96 cents per share a year ago.

Revenue for the full year 2010 fell 1.9% to $31.4 billion from $32.0 billion a year ago. For the full year, the company''s net income increased 8.7% to $928 million or $1.71 per diluted share from $854 million or $1.58 per share in the prior year.

Whole Foods Market, Inc. ((WFMI)), the natural and organic food supermarket operator reported first quarter revenue increased 14% to $3.0 billion from $2.6 billion a prior year. Comparable and identical store sales increased 9.1%. Net income in the quarter increased to $88.7 million or 51 cents per diluted share compared to $49.7 million or 32 cents per share a year ago.

PepsiCo Inc ((PEP)) said fourth quarter net declined 4.8% to $1.37 billion and earnings per share were 85 cents compared to $1.43 billion and 90 cents a share. Sales in the quarter rose 37% to $18.2 billion.

The salty snacks and sugary soft drinks maker estimated net income in 2011 of as much as $4.46 a share.