Dreadful News + Dreadful Expectations = Flat/Up Market

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December was strong with year-over-year growth in terms of orders in the high teens. But January’s growth was less than we expected with order growth rates of approximately 10%.


Therefore our revenue guidance for Q3 fiscal year 2008 including our usual caveats as discussed earlier and in our financial reports is for revenue growth of approximately 10% year over year.

– Cisco CEO John Chambers, in Cisco’s conference call yesterday

A weak forecast from Cisco (CSCO) and weak reports from retailers haven’t been able to push stocks down much today because expectations going in were already so low. 

Cisco stock was already down 32% over the three month period since reporting 1Q FY 08 earnings on November 7.  A lot of bad news was already in the stock.  Cisco’s stock, after having traded down almost 9% in the after hours and opening down almost 6%, has rallied steadily throughout the morning.  I wouldn’t be surprised to see it end in positive territory.

And despite negative January same store sales reports from retailers, almost all of the retailers are up on the day.  With the Retail HOLDRS ETF (RTH), representing a basket of the biggest retailers, down 6% already this week (Mon-Wed) heading into the report, the bad news was probably already in the stocks.

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