Cisco Stands Alone

 | Nov 14, 2012 | 7:03 AM EST
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Can Cisco (CSCO) matter? Can Cisco play any more role of taking us higher than Home Depot (HD) did? Or Kors (KORS)? Or Dick's (DKS)? Can it lift the market after days of morass and quagmire even as those high-profile retail plays with good numbers couldn't move us? 

Welcome to the world of pin inaction. As Cisco traded up last night I kept checking out all the usual tech subjects to see who was moving up in a correlative fashion. It was rather amazing. The only stock I saw people taking was Broadcom (BRCM) and that's because, somehow, even as Broadcom's main business, some 50%, is smartphone, people view it as a cable box company and Cisco makes cable boxes. So Broadcom, which had been brought down when it should have traded up when its true analogue Qualcomm (QCOM) reported its terrific numbers, is now going to get its due. I suspect the shorts, who had been leaning on this one betting Cisco would have a subpar number, will now have to scramble and cover.

But there was no other pin action in tech that I could see. Microsoft (MSFT), which had been going down already looked to have another teeny downdraft off of some more personnel changes. Intel (INTC) had no lift. That stock's at a 52-week-low. It didn't impact Apple (AAPL) and even though Cisco reiterated its bullishness about the Internet I didn't see any Google (GOOG) buying. Facebook's (FB) caught up in the secondary, although I am inclined to buy that stock here because it has the growth that everyone else seems to sorely lack. .

I could argue that EMC (EMC) should go up as Cisco called them out as a good partner, but they didn't call them out as a partner who was killing it with them. The business that drove this quarter was largely telco and that doesn't include EMC, although EMC storage from burgeoning big data did get mentioned positively. 

But there was a takeaway that can be acted on. CEO John Chambers took aim at Hewlett-Packard (HPQ), Huawei and Juniper (JNPR) and pretty much said that he had crushed them this quarter. He mentioned that 18 months ago everyone thought they these three were "eating (Cisco's) lunch." Now he said they are all losing share to his company. "We're beating them all."

To me, that means that you have to sell Juniper ahead of its quarter and you can continue to short Hewlett-Packard as that company is getting killed in personal computers, in printers and in consulting (IBM, (IBM) Accenture (ACN) and SAP (SAP)) and truly has no leg to stand on or, at this point, raison d'etre.

While Cisco clearly had a good quarter, certainly better than what I was expecting, what has made the stock reaction so strong is the comments made by five firms, JP Morgan, Opco, Wells Fargo, Wedbush and Jefferies, all of which said negative things about the environment and the guidance they expected Cisco to give. Frankly, I figured all five couldn't have been wrong. But they were. Totally and completely wrong and in a way they, not Cisco, will provide the biggest lift to the stock today.

So, it makes sense that no other stock follows it. Cisco did well despite the economic backdrop and because other companies in its industry faltered. The way to play the strength in Cisco? I would say Cisco, but this stock gets all its moves in a very limited period of time and to me, it just made this quarter's move already.

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