Cisco’s Russia and China Pain

And, Under Armour's CEO exits.

Steven Lerner 19.May.2022

Today is Thursday, May 19, 2022.

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Cisco’s Russia and China Pain

Shares of Cisco (Nasdaq: CSCO) dropped 12.84% in after-hours trading on Wednesday after the technology company posted mixed financial earnings.

Financials: Cisco reported earnings per share of 87 cents, which was better than expected. However, the revenue of $12.8 billion was below estimates.

International Affairs: Revenue was impacted by the Covid lockdowns in China and especially the war in Europe. Cisco’s decision to stop business operations in Russia and Belarus resulted in a loss of $200 million in the quarter. Those two countries, along with Ukraine, typically represent 1% of Cisco’s total revenue.

Bad Outlook: Cisco anticipates a 1% to 5.5% drop in revenue in the current quarter, which was also below estimates.

Problem Areas: Revenue in Europe, Asia, Africa, and the Middle East plummeted 6%. Service revenue dropped 8%.

Glass Half Full: Demand was strong, with product order growth up 8%. Overall revenue in the Americas increased 5%.

Numbers: Cisco’s stock is down 23% so far this year. It’s a pain that most tech stocks have experienced in 2022.

Final Thoughts: Cisco is considered to be a value play in the tech sector. However, these international issues could weigh the stock down.

Notables

Notable Earnings Today: Kohl's (NYSE: KSS), Lightspeed Commerce (NYSE: LSPD), Applied Materials (Nasdaq: AMAT), Palo Alto Networks (Nasdaq: PANW), BJ's Wholesale Club Holdings (NYSE: BJ), Ross Stores (Nasdaq: ROST), Golden Ocean Group (Nasdaq: GOGL), VF Corp. (NYSE: VFC), Canada Goose Holdings (NYSE: GOOS), Deckers Outdoor (NYSE: DECK), Flowers Foods (NYSE: FLO), Eagle Materials (NYSE: EXP), Apollo Investment (Nasdaq: AINV), Nano-X Imaging (Nasdaq: NNOX), Globant (NYSE: GLOB), Monro (Nasdaq: MNRO), Dr. Reddy's Laboratories (NYSE: RDY), Vipshop Holdings (NYSE: VIPS).

Notable IPOs Today: N/A.

Notable Equity Crowdfunding Campaigns Ending Today: N/A.

Notable Economic Events Today: Jobless Claims (8:30 a.m. ET), Philadelphia Fed Manufacturing Index (8:30 a.m. ET), Existing Home Sales (10:00 a.m. ET).

Under Armour Gets New Leadership

Under Armour (NYSE: UA) announced late Wednesday that Patrik Frisk is stepping down from the company as president and CEO on June 1.

Details: Colin Browne, the company’s chief operating officer, will serve as interim president and CEO while the board conducts a search process for a permanent successor. Frisk will stay with the company in an advisory role until September 1.

Background: Under Armour posted negative earnings in early May and lost money, which analysts were not expecting. Supply chain challenges have hurt the company.

Numbers: Shares of Under Armour dropped 3.42% on the news Wednesday. The stock is down 50% this year.

Final Thoughts: Bullish investors may see Under Armour as a ‘buy the dip’ opportunity, but the company clearly has some supply chain problems.

2 Dividend Utility Picks

Stocks in the utility sector offer steady growth and good dividends. Here are two excellent examples.

Dominant Choice: Up 10% in the past six months, electric and natural gas provider Dominion Energy (NYSE: D) offers a dividend yield of over 3%.

Next Choice: One of the largest electric utility companies in the country and a producer of renewable energy, NextEra Energy (NYSE: NEE) has a dividend yield of over 2%.

Final Thoughts: If you are looking for dividends, then look at the utility sector.