Can Cisco Save Tech? - Fast Money Recap (8/1/08)

Recap of CNBC's Fast Money, Friday August 1.

 

Heavy Losses: General Motors (GM)

The DOW closed lower on Friday after General Motors reported hefty losses and new data showed U.S. employers cut jobs for the seventh straight month. General Motors posted a 15.5 billion dollar loss on Friday; making the second quarter one of the worst quarters in the company’s nearly 100 year history. Melissa Lee replaced Ratigan on Fast Money Friday. She began by discussing General Motors and said this stock is a pretty big disaster which isn't a big surprise. Karen Finerman said, “They just have products nobody wants right now.” “No one here,” counters Tim Seymour, but overseas it's another story. Joe Terranova said, “The key to GM is the global auto story,” and that pretty much all of the bad news is already priced into the stock. Guy Adami added, “It’s time for a new CEO. All GM is right now is a trading instrument, and I'm waiting till it bottoms out to buy it.”

Oil Future: Exxon Mobil (XOM), Tesoro (TSO)

The traders then commented on the fact that oil ended at $125.10 and Adami said this “$25 sell-off is what I'm looking at,” but is this a time to get in? “Exxon Mobil is probably a buy on valuation,” he added. Macke added that “oil is trading like something that's trend line is broken.” “I am concerned about the refiners. Tesoro finds new reasons to make 52-week lows almost every day.” Weighing in on the subject, Terranova said, “The only reason oil was up was because of the talk with Iran and I think it's going lower, demand destruction is kicking in.” “Economics across the globe suggest there’s real demand destruction,” says Tim Seymour. I expect the overall trend in oil to be lower.

Worst May Be Over: Merrill Lynch (MER), Ambac (ABK), Lehman (LEH)

Switching gears to Merrill Lynch, Finerman said she believes “the worst may be over.” Now that Merrill has taken the lead, she added that Ambac and Lehman will probably follow. “I would not be surprised to see a big asset sale from Lehman,” she added. Adami said that Merrill “is a buy. It's held up well over the last couple of days.” Terranova believes that “the fact that Merrill got 22 cents on the dollar after Thain came out and told them they don't need to raise capital is astounding.”

US Steel (X): Adami said, “This stock spiked; the numbers were ridiculous, but the stock has sold off on good numbers and that's telling you something.”

David Healy of Burnham Securities: General Motors (GM)

David Healy then joined the show to discuss General Motors and said “the stock has a 15 billion dollar loss and it's hard to value.” He added that “the stock is trading like a warrant because there's no way to value it.” It's going to get worse before its gets better. The stock looks attractive as speculation, but you are going to have to take some significant risk. “If you don't have the stomach for the downside risk, then don't play.” But he believes it will survive and learn how to make some money on small cars. It has enough cash and borrowing power on hand for the rest of the year. “If they have another year like this, though, they will have to go to the capital markets to raise some money,” Healy added.

Jeff Evenson of Sanford Bernstein Cisco: (CSCO)

Jeff Evenson stated that he is “expecting an in line quarter” for Cisco. The stock is undervalued right now and “there is a chance EPS could go up next year. I think this is a hard question as to whether this will lift technology, though.” “I think Cisco is undervalued right now. And I think revenue estimates are on the conservative side given where the economy is right now. I’ve given it an 'Outperform' rating.” And the million dollar question, will Cisco lift the overall tech sector? “That’s a hard question to answer,” replies Evenson. “I think CEO John Chambers will keep his comments focused on Cisco’s performance and outlook.” Finerman says this “stock is cheap on an absolute basis, and I kind of like it.”

Thee-year Low: Boeing (BA)

Boeing hit a three-year low this week Macke stated that "I am so short hope I can't even stand it. They can't make a flight, and it's a classic example of a value trap." Finerman said that “the stock is defiantly interesting, but it has traded down on fear.” Its backlog of orders has been building even though oil is up and this is a premier name for its price. “The average PE has been 23x. Now it's about 10x and it is possibly very attractive at this valuation.” There are a lot of bad things already priced into this stock.

Surge: Boyd Gaming (BYD)

CEO of Boyd Gaming, Pete Smith, joined the traders, commenting on their 20% surge in price this week. The company suspended a large Vegas project and Smith said that “our expectation is to get better terms, and in the next three to four quarters, we can access the markets.” This is simply a change in timing. “We are well distributed geographically and have a strong core business,” Smith added. Adami said that “the fact the stock rallied because they are not building something is not good; now you are only buying this for a trade.” Terranova added that the "valuation is meaningless at this point and it's tough to buy in here."

Final Trade – Your First Move for Monday August 4.

Jeff Mackeis recommended selling the Financials (XLF).

Karen Finerman’s likes going long Transocean (RIG).

Tim Seymour says go long Embraer (ERJ).

Guy Adami says tough luck.

 

Seeking Alpha is not affiliated with CNBC, or Fast Money

 

Comments

[MarvinMBA:]

Some obvious winners and losers. One stock not mentions that will be leading the future in energy. transportation. finance and entertainment has been overlooked by these experts. General Electric...a name that has been around forever is constantly reinventing itself for tomorrows world. Fantastic opportunity in my opinion right now but do your own research and if you listen to me without your own DD you are a big dummy. You might have another opinion...Marvin MBA

2008 Aug 03 01:53 AM