Cisco Earnings Spur Market Rally

123jump.com Staff
08 Feb, 2006
New York City

Early trading is dominated by earnings report from Cisco, PepsiCo and McDonald''s same-store sales results. Market is awaiting weekly petroleum report in less than an hour. General Motors stock decline another 3% at the opening. Oil trades lower in Europe. Pfizer decides to spin-off consumer product divison representing 8% of total revenue. Japan closed 3% lower in Asia. Mexico and Brazil are trading higher at the opening. Market in Europe are trading mixed with Franfurt down a fraction.

Market Update

After rough patch of few trading days market seems to be in the rebound mood. A fresh batch of earnings suggests that market may be able to sustain a weak rally at least for today.

Woes at General Motors are expected to dominate the early hours of trading. Yesterday’s cut in dividend and management salaries and retirement benefits are certainly steps in the right direction but are not likely to help the company at least in the near future. Market fears that more significant cuts from labor and management may be necessary and that too very soon. Apart from cost cutting, General Motors still does not have turnaround plan to protect and grow its market share in North America.

General Motors ((GM)) shares decline 3% in the early trading.


Earnings News

On the earnings from Cisco reported earnings of 22 cents vs. 21 cents a year ago. Net revenue declined on rise in sales of 9.3%. Cisco is the most active stock on Nasdaq up 5% at the opening.

PepsiCo reported fourth quarter profit of 65 cents vs. 58 cents a year ago on revenue growth of 15% to $10.1 billion. For the full year 20005 the company profit fell to $2.39 from $2.44 per share on revenue growth of $32.56 billion from $29.3 billion.


Corporate News

Nortel Networks Corp. stated that it has reached preliminary settlement with two shareholders class-action lawsuits. The total settlement worth $2.74 billion has terms involving stock, cash and future contributions. The company will pay app. $570 million cash and issue 14.5% of new equity and contribute 50% of any proceeds received from future collections from lawsuits against former executives.

Pfizer plans to spin-off its consumer products division representing 8% of its total sales or revenue of $3.88 billion. The stock is trading 3% higher at the opening.