HiddenLevers'  Instablog

Send Message
HiddenLevers lets investors chart economic indicators against stocks, generate trading ideas based on economic parameters, and understand how big picture scenarios will impact their investments. The team is comprised of Wall Street trading floor veterans, economic experts, and successful Black... More
My company:
My blog:
Hiddenlevers Blog
  • With a new year, comes new opportunities  0 comments
    Dec 17, 2010 1:59 PM | about stocks: ORCL, CSCO

    Oracle beat the Street, while Cisco under achieved. But why?  I examined both Oracle (ORCL) and Cisco (CSCO) and found that they both bore strong correlations to IT spending and the S&P 500 (Both levers are currently trending up for the year). What irked me was why Oracle was performing above and beyond expectations, while Cisco was floundering. I found that the difference between the two tech giants was in their client base. Cisco is much more exposed to the US public sector than Oracle. 20% of Cisco’s revenue was derived from state and local governments which are trimming budgets bare.

    Good for ORCL, bump in the road for CSCO - bit.ly/eBSXdq

    Where Cisco once stumbled, could gradually become an opportunity. IT spending is expected to start trending higher in 2011. I personally believe these estimates are a little conservative, but I agree with view that growth in IT spending will be driven by cost cutting measures by both the public and private sector. Companies and governments recognize that maintaining their own IT services has just become far too expensive. Opting to the services of cloud computing mercenaries is simply cheaper. This trend in cutting cost also moves across the board to other services such as video conferencing which is far cheaper than travel costs and allows companies to expand into new markets just as effectively. Go figure: teleconferencing is a pillar in Cisco’s business strategy. With this in mind CSCO should start to catch up to ORCL in 2011.

    HiddenLevers can help you find stocks based on where you think IT spending growth is headed, or from dozens of other economic trends. Our macro profiles also let you know which economic levers are relevant for your stocks. Try it free for 30 days.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Stocks: ORCL, CSCO
Back To HiddenLevers' Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.