I was going to go with some variant of my "Stocks closed generally mournful and reflective." schtick but Chambers' message is a bit more serious than that. This is what Tech Trader Daily was referring to in the post below.
From Calculated Risk:
A few excerpts from the Cisco Conference call (ht Brian):
“... there are some challenges that are contributing to an unusual amount of conservatism and even caution. In short, we see the same opportunities and challenges that you are reading about in regards to the market, those challenges ranging from GDP growth and future GDP projections continuing to flow in the US, job creation challenges, and concerns coming out of Europe just to mention a few. We are seeing a large number of mixed signals in both the market and from our customers' expectations, and we think the words unusual uncertainty are an accurate description of what is occurring. The Federal Reserve's comments yesterday that the pace and output of the recovery has slowed in recent months and that the recovery is likely to be more modest in the near term then has been anticipated just a few months ago, are comments that most of our large customers that I have talked with recently would agree with. Also, the same customers would agree with few exceptions that they still expect a very gradual return to more normal economic conditions.”...MORE
From The Market Ticker:
CISCO: Anyone Remember LUCENT?
Uh, yeah.
From the conference call: "Days Sales Outstanding surge from 27 to 41 days."
Oh really Mr. Chambers?
Anyone remember these tickers?
Let's go to the "front" of the line:
The book cooking continues. CISCO comes out with "great" earnings but hidden in there is the fact that they're writing their own financing - and holding it off-book. Banks are still carrying HELOCs behind underwater firsts at or near PAR, even when the first is non-performing. Those loans have a literal zero recovery value. What could possibly go wrong with hiding asset quality (or lack thereof) off balance sheet where nobody can see it? Nobody remembers Lucent? Enron? It wasn't THAT long ago. Will it get CISCO or these banks? I have no clue but this much I do know - nobody ever hides good news, they sing from the rafters. You judge what's going on here.Now add to this deterioration in customer pays and tell me what is coming. Anyone remember Lucent and Winstar (which bought my company, incidentally, then blew sky high over, in no small part, their inability to pay Lucent.)
Winstar, if you recall, was the largest corporate bankruptcy in American history - until MCI blew up, that is.
But the story wasn't Winstar blowing up. It was that Lucent was nearly bankrupted with all their "vendor held" financing, and ultimately was forced into a merger, with essentially all of their shareholder value destroyed.
All because they got cute with vendor financing in order to keep the Ponzi Scheme of "indefinite growth" going - and thought that the economy would continue to "be ok" or even "improve."
They were wrong, and got destroyed....MORE
