SeaWorld's Not Splashing, Cisco's Lookin' Sharp, and U.S. and EU Econ Data Weren't Hot Last Week

The four things you need to know on May 17.

May 17, 2014 at 7:00PM
Thank you for the spring weather, Mother Nature. Now that it finally feels as if there's very little chance that blizzards will hit New York City, you can finally relax and check out what sent stocks to record highs last week -- before they fell later on.
 
1. Stock market winner ...
Sometimes all you have to do is beat expectations. That was the situation for the world's biggest IT brand, Cisco Systems (NASDAQ:CSCO), which reported quarterly earnings on Thursday that sent the stock surging -- the company's $11.5 billion in revenues last quarter represented a 5.5% drop from the previous one but were still a healthy $200 million higher than the lowly $11.3 billion Wall Street expected.

So why has Cisco been struggling? Two notable reasons. First, competition in the IT space for communications equipment that allows for your awkward office conference calls keeps increasing from the likes of Microsoft, Amazon.com, and Google. Second, Cisco suffered throughout 2013 after Edward Snowden revealed the extent of U.S. government spying, which made foreign governments skeptical to buy the Cisco products that authorities might have been using for peeping.

The takeaway is that Cisco has a lot on its plate still. CEO John Chambers made it clear just a few months ago that he would be stepping down within two to four years to make room for "the next generation of leaders," but he didn't reveal any notable successor gossip in the earnings report.

But he did emphasize the major products that the company is currently working on through partnerships. Cisco anticipates leading the industry in creating a cloud for "the Internet of things." Plus, the company is working with IT big boys such as AT&T, Intel, and General Electric to create an "Industrial Internet Consortium" that will make access to lucrative Big Data a heckuva lot easier.

2. ... And stock market loser
Remember when you enjoyed hitting up SeaWorld (NYSE:SEAS) for spring break as a kid? Well, the company's shareholders didn't share that sentiment last week. SeaWorld, the owner of fellow theme-park peers Busch Gardens and Water Country, was speared with a $49 million loss to start off the first quarter of the year.

Keep in mind that SeaWorld has been swimming in the publicly traded waters for a short amount of time -- the company was privately owned by Blackstone, a private equity firm, and didn't splash into the IPO scene until last year. But it wasn't "first year as a public company" struggles or management challenges that hurt the stock -- it was simply some not-so-hot-looking attendance numbers and trends.

They say that all press is good press -- but there are some exceptions. Case in point: BlackFish. The documentary chronicles the gritty underworld of SeaWorld's killer whale captivity techniques and revealed some disturbing details of the death of some animal trainers. While SeaWorld's CEO believes the film didn't have an impact on visitors and he instead chose to highlight the company's nearly completed contract to introduce SeaWorld to the Middle East, Wall Street begged to differ.
 
The takeaway is that unlike U.S. retailers, which almost completely blamed the winter weather for the poor quarter, SeaWorld chose to blame the schedule instead. A later Easter than usual resulted in some awkward spring-break timing that the company claims drove its 13% quarterly drop in attendance. Given competitor Disney's ever-increasing quarterly attendance, investors weren't sold on SeaWorld's excuse.

3. U.S. econ data was bad ...
Econ data may not be that fun, but it wasn't very pretty, either, last week. U.S. retail sales rose only 0.1% in April as consumers struggled to recover from the tough winter. According to the Reuters/University of Michigan Consumer Sentiment Poll, confidence in the economy dipped in May as Americans get increasingly concerned about the slow growth of wages. And after the biggest back-to-back monthly gains since 2010, industrial production surprisingly dropped 0.6%.

4. ... But European econ data was tres bad
Apparently the French aren't eating as many economy-boosting croissants as they used to, because the European Union reported disappointing 0.2% overall gross domestic product growth over the first three months of 2014, compared with the 0.4% expected. Germany led the way with 0.8% GDP growth, France's GDP was flat, and Italy's GDP declined 0.5% over the first quarter. Now investors are pouring themselves a nice chardonnay as the European Central Bank vows to keep interest rates super low to encourage economic borrowing and growth.

As originally published on MarketSnacks.com

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MarketSnacks has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Cisco Systems, Google (A and C shares), Intel, and Walt Disney and owns shares of Amazon.com, General Electric, Google (A and C shares), Intel, Microsoft, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

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