Why Cisco Will Move the Dow Tomorrow

The Dow has recovered from its worst levels in recent weeks, but Cisco was the only stock not to rise yesterday. Find out why Cisco's report could move the market on Thursday.

Feb 12, 2014 at 12:30PM

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The Dow Jones Industrials (DJINDICES:^DJI) have kept investors on their toes lately, with multiple triple-digit moves in both directions over the past several weeks that have led many to fear the end of the bull market. Although earnings season is largely over, Cisco Systems (NASDAQ:CSCO) will weigh in with its quarterly report later today. What the networking giant says about its future prospects could provide the answer to one more key question about the Dow's ability to continue its five-year bull-market run.

Cisco will release its earnings report after the market closes this afternoon, with investors expecting to see results shortly after 4 p.m. EST. The company will follow up the release with a conference call scheduled to begin at 4:30 p.m. EST.

Cisco has a lot at stake in this afternoon's report, as the company has struggled lately to keep its revenue levels up. Cisco warned in November that it would likely see a massive sales decline of between 8% and 10% for the fiscal second quarter being reported today, and investors are bracing for a similar drop in earnings per share that could once again raise questions about the tech company's growth trajectory. Cisco is far from the only company in the industry that is facing revenue pressure, as stagnant sales have been a hallmark of the latest quarterly results both within and outside the tech sector. IBM (NYSE:IBM), for instance, disappointed shareholders with its falling revenue, even though it managed to boost earnings per share from year-ago levels.


Yet the thing about Cisco that is sometimes refreshing -- and sometimes frustrating -- is that CEO John Chambers is never afraid to tell it like he sees it. Even when he expects future problems, Chambers isn't one to sugarcoat bad news. Moreover, even though Cisco has a tendency to manage outside expectations and find ways to come out with technical earnings beats by a penny or two per share, the company doesn't do such a good job that the results are a foregone conclusion. That makes it possible for astute investors to gain some insight both from what Cisco says about its business and the state of the broader industry, as well as from what the company doesn't say.

Any new information that Cisco gives about the state of the tech industry in 2014 could have an impact on technology stocks both inside the Dow and beyond. That in turn could move markets, especially if the news is contrary to some of the more benign signs we've seen pointing toward a stronger economic recovery in the future.

Tech stocks aren't the only high-growth stocks out there
Find stocks outside technology that produce big growth? Many said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Cisco Systems. The Motley Fool owns shares of International Business Machines. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers