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Company

Ticker

Percentage

Shares Traded

Current Price

Sirius XM Radio

SIRI

Fell 0.9%

50,332,600

$2.12

Cisco Systems

CSCO

Fell 3.7%

78,515,500

$15.69

Level 3 Communication

LVLT

Fell 2.7%

42,981,300

$2.17

Research In Motion

RIMM

Fell 6.1%

22,363,800

$25.71

Oracle Corp

ORCL

Fell 4.5%

42,468,300

$30.71

Dell Corp

DELL

Fell 3.9%

23,621,300

$16.45

Microsoft Corp

MSFT

Fell 2.7%

70,386,200

$27.33

Intel Corp

INTC

Fell 1.6%

57,960,900

$22.53

Cisco Systems

Cisco was upgraded this morning by Goldman Sachs. The firm believes that Cisco is at the beginning of an upward estimate revision cycle and expects sales growth to bottom in the fourth quarter. It has raised the company’s price target to $21.

Cisco is preparing to announce its Q4 and full year 2011earnings in a couple of weeks (August 10). Since reaching a bottom of $14.78 on June 16, which prompted my request of Chambers’ resignation, the stock is up 11% and closed Wednesday at $15.69. Cisco’s challenge continues to be its perception. Over the past several months, investors have sold off portions of their holdings as a way to minimize exposure in the stock while they try to assess what is going on within the company. If the company can wisely reinvest its capital to create more innovative ways to compete, I feel investors, patient or not, will be handsomely rewarded. Because at the current level that the stock is trading, I see an opportunity for those who are looking for value and are willing to be patient to realize some significant gains.

It is tough to not value Cisco, a company with such strong fundamental standing. The stock price neither reflects its market share status nor fundamentals. If we look deep into the numbers, we can see a company that trades at attractive valuation multiples. It stands solidly with a market cap of $87 billion as well as 58 billion in EV and trades at a modest forward P/E of 9. How can a company with $43 billion in cash not be considered, especially one that has amassed almost $10 billion in free cash flow each year? One can argue that there is no other company that has been able to leverage its balance sheet better than Cisco.

Level 3 Communications

Level 3 investors were a bit disappointed after learning the company reported a loss of $181 million, or 11 cents a share. This was compared to only a loss of $169 million, or 10 cents a share, in the year-ago period. As indicated in the chart above, Level 3 recorded revenue of $932 million, an impressive figure which was 2.6% higher than the same period last year. On a continuing basis, excluding a charge of $23 million on debt extinguishment and $14 million in Global Crossing (GLBC) costs, the net loss was 9 cents a share.

Several analysts that cover the company were expecting a loss of 9 cents a share, on revenue of $936.8 million. So investors did not take too kindly to the figures. But there were many highlights from which to cheer.

  • Continued Core Network Services Revenue Growth
  • Consolidated Revenue of $932 million
  • Continued Core Network Services revenue growth; 2% sequentially and 6% year-over-year
  • Consolidated Adjusted EBITDA increased to $226 million, or $234 million excluding costs associated with the Global Crossing transaction
  • Global Crossing transaction expected to close before the end of the year

Level 3 CEO James Crowe was quoted as saying:

“Our track record around execution in the business, combined with our continued focus on the customer experience, has proven to be successful in winning new business, contributing to positive revenue growth. We are pleased with the progress we have made in growing Core Network Service revenue over the last year."

I have no choice but to agree. But also these stellar results continue to affirm my belief that Level 3 is positioning itself well as a very attractive acquisition candidate.

Research In Motion

RIM continues to be the “falling knife” of the market. The company lost another 6% in value on Wednesday after receiving a series of downgrades, most notably from UBS. The ratings firm cut its estimate on RIM and reduced its price target from $41 to $30, a price that I consider very generous.

As much as I have proclaimed the demise of RIM, I can say with some degree of certainty that the company is not going away anytime soon. I mean, seriously, with $2 billion in cash that can buy any company a significant amount of time. The direction of the company should be a major concern for every RIM shareholder, even those with "glass half-full" outlooks. It is clear at this point that RIM should now only be touched with surgical gloves. Upon reporting a drop in earnings for the first fiscal quarter, the company then slashed its full-year earnings forecast, signaling continued weakness in BlackBerry phones.

Oracle

What is wrong with Oracle? This is the question many investors are asking these days. The database giant disappointed investors when it reported its Q4 earnings. The focus was on the company’s less than inspiring hardware revenue. The stock has taken somewhat of a beating since the report but I can’t help but to consider this an overreaction. It seems investors are punishing the software giant because of its under-performing sales in hardware.

To date, after its recent report, Oracle has shown that it continues to be the exception and not the rule to the idea that a “mature company” can no longer be a “growth company.” “Maturity” by many standards is what Oracle has, but it continues to show that this is not the enemy of “growth.” I think investors would be better served to look at Oracle in the broader sense and from the standpoint of the entire trajectory over the past decade. Investors would be pleased to find that there is nothing wrong with the company.

Being a dominant tech player is at the top of every Oracle mission. So far this year it has not disappointed. At $31 per share, the stock remains incredibly cheap. Though the 10% drop since April has been a slight disappointment, I continue to have confidence that the stock will reach $40 by the end of the year.

Microsoft

Microsoft fans can thank me later. On June 21 I called for the removal of Steve Ballmer, since then the stock has responded with a 15% increase. I’m willing to admit that it might have been a slight coincidence, but companies hear things such as Microsoft needs new leadership, and it needs to either realize or admit what it already knows -- that CEO Steve Ballmer’s reign has lasted too long. In spite of all of its failures, I remain puzzled at the fact that Ballmer and the Microsoft board of directors haven’t come under greater fire for a lack of product focus, underestimating the competition, and for several misguided strategies that have led to Microsoft falling so far behind in the mobile computing race. This failure is a direct consequence of Microsoft inserting Ballmer, who many consider a great manager but just not the sort of visionary that the company needs as CEO. In many circles, he has been labeled the “accountant that Bill Gates appointed CEO.”

Let’s just say that Ballmer can stay as long as the stock remains in its current trajectory.

Sirius XM

Sirius has seen its stock drop from a recent high of $2.35 to yesterday’s close of $2.12 for a 9% reduction in value. Investors continue to get uncomfortable about what typically should be an earnings run. We are all aware of the debt crisis that our country is in and to some extent that has caused investors to get on the sidelines until this situation clears up. I encourage those who are discouraged to stay the course and maintain perspective. But I pointed out on Wednesday that the stock is in the midst of a sneaky game of “Cat and Mouse."

As the game of cat and mouse continues to be played, there are now three days left toward the earnings announcement. I still believe that a new 52 week high is around the corner. Sirius expects to generate approximately $3 billion in revenue and $715 million in adjusted EBITDA for fiscal year 2011, while projecting free cash flow to now approach $350 million. From an operations standpoint, it is also projecting to add another 1.4 million net subscribers by the end of the year and to experience full-year conversion and self-paid churn rates, similar to that of 2010.

With five months left in the year, is anyone ready to say that Sirius will not get at least two or three new 52-week highs before the year is over? The only question is when? Again, it’s about maintaining perspective.

Intel Corporation

While I believe Intel remains highly valued, I see the company eventually succumbing to the newcomers in its field, particularly those that entered the smart phone and tablet processing space such as ARM Holdings (ARMH) which are attacking Intel by taking a different route. ARMH is focusing on producing power-efficient processors for use the mobile devices, especially those produced by Apple (AAPL), whose own processors used in the iPad and iPhone are based on ARMH's licensed designs. This is in lieu of trying to beat an established giant producing processors largely for personal computers. I think this strategy is brilliant.

It is worth noting that Microsoft has chosen ARMH processors for use in its next Windows operating system. ARMH's license-based business model means that the company can avoid the overhead costs of production and sink more money into research and development. With computing becoming an increasingly mobile activity, lightweight processors that save power and still pack a punch will become even more important, and ARMH's customer-pleasing design flexibility should enable it to compete with Intel in the future. Intel needs to put its resources toward R&D to mirror what ARMH has established. If it is unable to duplicate this early success, it won't be long until Intel (as you correctly say) is mentioned in the same breath as Cisco, RIMM and even MSFT.

Dell Corporation

Dell has been the “quietest” strong performer in the market over the past six months that nobody is talking about. The stock has risen a remarkable 22% during that span. This is in the face of a perceived sluggishness in PC sales. I think the stock remains incredibly cheap at current levels and trades at a modest P/E of 8. Like Cisco, I feel this will be a $20 stock by year’s end and it presents tremendous premium potential for value investors who are looking for an established company with a tremendous growth potential that offers minimal downside risk.

Source: Why Were These Top 8 Tech Stocks So Heavily Traded?