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tv   Fast Money  CNBC  May 9, 2012 5:00pm-6:00pm EDT

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it's beginning to be like a broken record. stocks fall in the morning on euro panic. >> the s&p 500 look familiar here. >> rer bound in the afternoon. >> i found apple and the sell off as an opportunity. >> dr. doom can't keep this market down and neither can chained protesters. dan is ringing his hands. pressure on the trading floor. this is fast money. >> live from the nasdaq markets, i'm melissa lee.
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another day and another combat. stocks opened to get losses by the end of the day. what do you make of this? the morning action or the afternoon action? >> can i choose both? basically i think the market told you everything you need to know. in the morning they were down and rumors that perhaps greece was not going to get the money and then you get the money and the market rips. that's a tune they have been dancing to for six months to a year. that is the tune it will be dancing to and as long as you move in a positive direction in europe, the u.s. stock market is the place to be. i am 30% invested. >> you are willing to step into the markets. >> i am. today we bought jpmorgan that has not had a good run. i don't think the story is different, but i think the
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valuation is attractive. could it go lower? of course. i want to own it here for the long-term. >> hi. >> can you use these as proof that the market is in fact resilient and we seem to defend certain levels? >> what can we glean? >> i tell you what we can glean. 1340 being supported on the downside and down to 1343 today. we talked about this 1370 level in the s&p and we are smack in the middle. if you are fullish, you trade against 1340. you have to be -- you can't be bullish or bearish. to be dogmatic, don't be dogmatic. allow the price to be your guide. now you can stay long against 1340. i will throw something for the bulls out there that i tossed around last month. there is now a chance if things go well in europe that we have an outside month to the upside. the low we put in was lower than last month and now we have to get back up above 1442.
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though that's not great, there is something for bulls and bears both. you dogmatic? >> dogmatically bearish. >> 1340 is say number that i almost, yes. we bounce off of it and we have done that a couple of times. >> we have breaking news on cisco. john? >> big news is the guidance and collaboration is disappointed. they guided to revenue mid-point for the next quarter of $11.6 billion. the street wanted 11.99 billion and they got it to 2-5% growth. the street wanted 7.1. they are guide toad a non-gaap mid-point and the street wanted 49. all the reason why they say that, they said europe is getting worse. the problems in southern europe spreading to northern europe. the enterprise is getting worse than john chambers had seen it.
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on top of all of that, all the stuff that issed about contin b be bad. they continue to work on the areas that they need to work on. wall street not happy with this guidance. >> yeah, thanks a lot and keep us posted on what happens on the conference calls. the stock is falling out in the after hours session on the guidance that is given on the conference call. we have a stock that traded well and anticipation of decent to good earnings and why should we be surprised at the lower guidance given what was said a couple weeks ago? >> not only was it well, but the may weekly that expired on the calls, over 40,000 traded and 40,000 of the may 20 calls expire next friday. options traders were setting up. the stock was up 4% on the year and down about 12%. the implied move was about 6 and moving on the last four
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quarters. 8%. here we are down about 8%. that is 20% off of this year's highs. that's a massive move for a big u.s. multinational here. back to the story about banging off the 1340 and looking for upside, i think cisco and mcdonald's, people are telling you guys stuff. the 1340 may be the top side of the range soon. >> cisco. i think i am surprised because it was the soek february 8th where they really didn't make reference to this. if i were on that conference call, what's changed in the last couple of months? i don't think much has changed, but something has fundamentally changed. >> we got the data point out of juniper that guided. that took the stock down after an after hours pop. they took share and that may not necessarily be the case given this guidance. >> fair enough, but how do you trade cisco tomorrow? it was in a clear up trend until
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the last month or so from 12.5 to 13 or north of 20. that up trend has been broken. you have to allow the market forces to take action and do what it wants. tomorrow is a no touch. the volume will be heavy, but there no events in names like cisco. although valuations are compelling in regards on to what they said, i would stay away entirely. >> it broke through in the after hours where everyone was talking about them bouncing off. now that you are down, 17 is probably the support area for the time being. i do think it's a no touch. you might be able to buy it for a trade, but for a trade only, against 17. >> they say enterprise spending is weak. does that throw up alarm when is it comes to the likes of a hewlett packard or ibm and another company that may see the seem weakness in enterprise? >> think we will see weakness
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tomorrow. it used to be that cisco was the bell weather and whatever he said was a proxy for any other company and they lost their way a little bit. this is a little bit disconcerting. i don't look at the technicals and valuation basis, it will break 10 as a multiple tomorrow. that is sort of something that is a red flag for something. not a red flag, but look at this. obviously they have a tremendous balance sheet and gobs of cash. it's something that we will look at. i don't feel like we have to own it tomorrow. >> i would say for the people at home, breaking ten on a pe multiple, who cares. they are expected to have low single digits for the next few years. to me in a lot of ways. all the tech stocks are trading with a 10 or 11 handle. when they miss earnings, they kept going and going, every
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quarter. it was the fiscal q4 they reported in august near the lows of the market where they started to and it wasn't as bad. then the stock started moving again. >> take a look at the cubes now. we are down about a half percent in the after hours session. cisco is not the only component and priceline is seeing a decline in the after hours based on the earnings and the weak guidance. they are seeing priceline on my screen below $700 a share or so. >> let's talk about priceline. the quarter was okay. i think what people were disappointed with, eps beat and revenues were in line and the guidance that you spoke to was not great. i go back to basically april 10th when we flagged the day on huge volume. lower on the day and you think priceline trades at a huge valuation. it doesn't given the growth rate. i think if you have to plush down to 685 and it traded at
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some point after the release, priceline is absolutely worth the look. >> in terms of the options market, what did you see with the climb? we have spoken to to this on the show. the pull back had been top performers and it wasn't only priceline, but it was cng and lu lu and rl. >> this is not a huge trader. a lot of blocks are small and it's retail-orient and a lot of retails can't buy a lot, but they can buy calls. you don't see big blocks in the name. i didn't frank le see a lot of set up, but when you look at the chart, the thing traded a lot to apple. it had that whoosh after apple earnings and it came back. i think i disagree with guy a little bit and the low was like 675. i think you can see if we are going to see air come out, the flyers that haven't been hit yet.
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>> priceline had a 62% coreration share of apple. >> cpw. >> i want to go to brian who has been manning the priceline conference call. >> of course. the conscious guidance a lot of what is on the stock, but i want to share a couple of interesting things and the ceo talking. name your own price and the bread and butter. in terms of hotel rooms, it declined. part of that is reduced capacity. less seats available for them to do that service. q2 projections are based on 162 for the pound and 131 for the euro and this is basically changing material effects and results the macro economic conditions that would impact the travel business and they cited weakness in southern europe as a drag. two quick things, china and mobile. saying that hotel accounts are increasing. all the platforms to try to grow their business in china.
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they are doing reasonably well. a fast growing source of business and all the brands are devoting resources to capture the business. obviously if their guidance in q2 is weaker than consensus, that may be a weakening trend. back to you. >> what was that assumption on the euro? >> 131. >> thanks. on the priceline conference call, we are seeing the impact on a lot of multinational companies. certainly a hot topic and seems more and more likely that greece and a few others could exit the euro zone after the recent elections. on the fast money halftime report with his take on this. >> by next year, greece will exit the euro zone and lead to contagion to members of the euro zone and greece will not be the only to exit. >> is he right sf and how do you
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trade if he is right? the publisher of the world-renowned letter. great to see you. you have been predicting a northern and southern euro for sometime and do you believe the exit of greece will lead to this break up of a northern and a southern europe? >> has to. it has to go that way. a true dichotomy between northern europe and the productive and work ethic oriented area and the south. when greece goes, it will only be a matter of time. six months later it sees the economy because of tourism and portugal will say we want to do the same. we need to get it back and spain will want this back. italy will want the lira back. you will end up with the dichotomy and the split. it's only a matter of time. whether it happens this year or next year is another question. >> what strikes me is the casualness.
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if greece leads, it's immediately that day, there is going to be a massive bank run in europe. >> everybody is going to take the money out. money supply plummets and they go into a depression. >> probably. >> to me it doesn't seem like a good thing. >> it's the only thing that saves greece at this point. the chaos that will occur in that period of time will be ugly. one of the statements that i like is confusion breeds contempt when it comes to markets. there will be confusion and contempt in the market place. stocks and other commodities, those currencies, there will be contempt for them. they will come under pressure until it understands there will be the stronger northern euro. that will be a strong currency. >> i want to go to simon baker who is our contrarian. i take it you don't believe in the break up scenario. >> i just -- to this point, the casualness of it, what you talk about the consequences, they are
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out of the euro and they are taked out and cross border trading. half of greece will lose half of the life savings overnight. it's a disaster and we say that this is the option and once the vote is there to understand the consequences, it won't be easy to pull out. it will be longer term than you think. it will be extremely difficult. >> clearly it's going to be difficult and technically there is no way for grease to pull out. no legal rational to accomplish the task. do you think that greece with 20 or 25%, pick a number. it's going to continue accepting the demand that germany continues to foist upon them? no, it's not going to happen. >> i think germany will relent. they don't want greece get out there. they are being tough and they will back off and don't allow greece. it's not in any's best interest for to leave. >> we have to leave it there.
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we have breaking news and after hours movers. in case you are a believer in the scenario, you want to trade as if there is a northern and southern euro. gold as well as the s&p 500. good to see you. let's go back out to john. we are seeing as you know cisco decline sharply in the after hours session on disappointing guidance. what's the latest? >> yeah, more detail on what's going on. john chambers recently said he is talking to enterprise customers about what they see through the rest of the year and they are looking to spend more in the second half if, if, two big ifs. if europe doesn't get worse and europe as a big factor and we have seen it go away for a while. number two, government policy. if government policy doesn't continue to be sort of a burr in their side. that's two things that could
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inhibit the up tick that they expect in the second half. the tone overall is not optimistic. cisco talking a lot about gaining share and controlling what they can skproel that is gaining share. >> what are are the margins like and i want to understand how they are gaining share? >> mostly in switching. the problem is the enterprise is tough for them and they have been talking about that and that got worse. it was a bit tough for them. the margins are 61 to 62%. gross margins came in this quarter at about 62%. >> to be on the margins? >> the margins were good. the quarter was okay. the quarter was fine. clearly the commentary is not good. those are two big ifs. they are note throw away ifs. those are two major ifs. if europe gets better and political unrest doesn't
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continue. those are huge things that aren't seeming to be getting any better. it looks like they will push it down below 17. >> we're are just after the session lows on shares of cisco. a story we are gedefinitely following for you. kate kelly will join us from las vegas with comments just made on yahoo. you will only see it here on fast. stay tuned. from around the world...countrs ...with the best math scores. ...the united states would be on that list. in 25th place.
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>> comments for dan, she spoke to him about his mission to bring change and a mission is putting it lightly. what's the latest here? >> melissa, i came from the panel where dan lowe from third point demanded that the ceo scott thompson step down and spoke publicly for the first
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time in a while other than the form of a letter about his thoughts on yahoo. character and integrity matter. that of course being of issue. the problem it would seem with scott thompson is he padded his resume with educational credentials. they missed every trend on the internet. this is yahoo in general. social, local, you name it. there is a lot of work to do, but from the board level, what we want to see is better process and a rebuilding of the whole firm's culture. it is bloat and not focused, but this is a great business. this is a great management team we don't think is as currently constructed. finally he talked about ali ba ba and japan being valuable assets and he would like to see them rationalize. there is no rush. that doesn't mean liquidate everything tomorrow. he had positive things to say about the business and there is a lot to be salvaged.
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he is critical of the board and current management. that was a big theme there. as i have been at salt the last day or two, i heard a lot of fund managers including others talk about equities and the experience of looking at the stock market. investors are not getting the yields they want or should get from bonds. you don't want to overallocate. you want to look at equities and studies are showing that investors are shying away. here's a kicker and exception to that. commentary. he thinks portugal will sneak through and it's not a greece or a spain. a lost interesting thoughts. >> long portuguese debt. that's an interesting trade. in terms of yahoo, i wonder if you think it would gain traction. >> i have a question for you. is there a deal to be had between the boards? i don't think that it's in the board's interest to have this fighting go on.
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>> i think the deal that they put on the table is replace four of the directors with me and three of my associates, have scott thompson resign and replace him with the global head of media at least on an interim basis while a proper search is conducted. today he said he wants patty hart who ran the search to give back the $15,000 remuneration he got for fining thompson and he suggests a new search for those who will do it for free. it seems like an ultimatum and you have to wonder whether or not we answered this. i don't know if you have more traction on this on whether they are willing to press for the change and they have the 5 plus percent change for yahoo making the demands. >> that's an excellent question. i must say the sentiment at a place like this and perhaps this is n surprising, you keep it
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going, dan. he is on a couple of other senior ceos and a lot of them were voicing support. firing them would be a no brainer and what would you do if you had someone on your board or situation or management team and one said i would fire them immediately. it seems like there is a lot of spirit here. who he is actually lined up in terms of a shareholder coalition is unclear. >> thanks so much for that. great get there with the comments. the salt conference in las vegas. >> i still think yahoo is a buy here. i think the risk reward sets up low. >> the business is fine. >> both of them. an activist gains traction and you use the word bloated. i can't speak to yahoo if it's bloated, but if he goes in and
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they clean it up, by definition the company should run better. i'm not saying you can't go lower, but my sense is the risk reward sets up nicely when you have somebody like dan running the show. >> that are is the main point. you think about the board turn over they had and the management and the ceos they had, nobody has been able to do it. cutting jobs and this has a billion dollar market cap. when you look at the parts, it's all in asia. you have cash sitting on the balance sheet here. there is no doubt that lobe and his people can do a better job than anybody over the last five years and they had three or four ceos and do this deal and get rid of thompson. >> this is the mental calculation whenever there is an activist in there. if it is a win-win, either the business must change and the activist will enact change that forces the business to get better. >> if that's possible. sometimes kodak could have had a
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great activist and i'm not saying that yahoo is kodak, but they did look into the sale and montying the assets. i never understood how that fell apart. that's a lot of the value. >> it may be low. i have to take a break. we are breaking down cisco's big slide with the analysts. stay tuned for the commentary. bla upon ♪ n
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take another look at cisco. analyst with cgc partners. do you give a pass to the stock at all? can you read anything positive. you have a $23 price target and do you think they are kitchen
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sinking or is there real reason to be concerned? >> the first bucket is the quarterly results. they did everything we wanted to do. growth margins were up and they beat by a penny and controlled expenses. they talk about the conscious environment and a slow down in spending. cisco is taking shares from competitors and this is a macro issue and this is what's going to cause concern. it is causing concern in the after hours and this is what will cause concern for the guard. cisco 10s to guide conservatively and they're talking about 2% growth for the next quarter. >> 2% growth and you say it's a macro issue. cisco can run business as well as they can, but growth will remain in the low single digits. within the universe, can you see that cisco may not be a buy rating and there other places to
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put the capital? >> cisco, we know cisco will be a low single digit grower and most people understand that's part of the thesis. you will be experiencing that 2% to 5% growth range and double that on the bottom line. that's faster than the top line and they pay a dividend and they are relatively shareholder-friendly with the cash. they are fighting this. we knew it in the public sector. the orders are expected to be flat going forward, but the bone chilling component is the enterprise spending is slowing down. >> it's karen. say we have that modest revenue growth on the bottom line that you stick to the 23 or what do you use to get that down somewhat? >> it's a great question. we have to sort of work through the model, but we are not going to be lifting the price target. let's put it that way.
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>> it's interesting because collin said everybody knew it would be a low revenue grower, but the estimate was for 7.1%. >> love collin. >> who are doesn't. >> if everybody knew, you make that. collin understands that as well. people are expecting and people are looking for a much better situation. the push back would be did they get themselves back in the same pickle they were in earlier last year when this company appeared to be coming apart at the seems? >> it's a very valid point. the long-term guidance is 5-7%. most of us sat at the high end and got the high end of the range for this quarter, but for the current quarter is a couple points lower than everyone was looking for. given the fact that they take the share that leads you to the macro issue, that's a cause for
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concern not just for cisco, but the broader environments. there is argument as to is sisk cisco good for economic activity? they have had their own issues, but they are beyond this. they are working closely with ceos as a business partner. you have to take that commentary as a negative signal. >> so on that, it seems that this issue of a fiscal clip, everyone talks about that's why they are not spending in the rest of your universe. who is most exposed to that besides civic oi. -- cisco. >> you have to worry about microsoft's exposure and they have been doing a good job keeping their numbers together. replacements of the existing upgrade cycle and they get ready for the windows refresh. that's one of the names that will have to go back and
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reconsider how this will impact and the derivatives outside and the names that have broken in and such as juniper. >> thank you very much for your analysis. bgc partners. mike, the problem here with this european malaise, it hits the markets and we are seeing a play out in one of the most favorite sectors on wall street technology. >> i think one of the important things to remember about companies like cisco, it is not exactly like this and trading at one of the old high flying valuation days. you take a look at this disappointing news and say i want to hit bids and shorts, i am not inclined to hit bids on stocks trading at times earnings if they will be growing revenues, all be it at a slow pace. those are what you assign to declining businesses and if i was going to try to hit bids, i would look for companies that are taking market share from.
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that's what collin was alluding to. if you see the weakness, you have to look at the weakest and not the strongest. >> give us another example of a weaker player. >> why don't we take a look at the other players in their space. that's a good place. >> that's juniper. >> that might be one, but you have smaller players too. you can look into advent and you have another couples and that's what i would try to do if i was doing this myself. i wouldn't hit a bid in it. you can look to louisen that is not a place i would like to be. you have common ground and that would be something i would look to. nec also. >> we have breaking news from julia boorstin on facebook. about a week before the initial public offering. >> that's right.
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they filed another s 1 with more disclosure about mobile in particular. it may affect revenues and results. the company points out that advertising is growing and the number of users is growing faster than the number of ads. more people are accessing on the mobile plaid form. they don't have as many ads as the traditional web flat form. they pointed out that average prices per ad were hurt by poor conditions in europe and the real headline is the fact that the facebook and mobile devices contributed to the fact that the number of daily users is agreeing more rapidly than increase in the number of as delivered. this could be in focus as the company starts trading a week from friday. >> that are is a problem that all of these companies are having and moving to mobile. they want to move people to
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mobile. they are not having a mobile strategy, but in the end, it bites them. >> you might as well get rates on the surge for advertising and it's much lower than on desk tops. >> coming up next on fast, we fountain after hours mover that is moving higher. we will name names after this. [ female announcer ] e-trade was founded on the simple belief that bringing you better technology helps make you a better investor. with our revolutionary new e-trade 360 dashboard you see exactly where your money is and what it's doing live. our e-trade pro platform offers powerful functionality that's still so usable you'll actually use it. and our mobile apps are the ultimate in wherever whenever investing. no matter what kind of investor you are, you'll find the technology to help you become a better one at e-trade.
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par. >> welcome back to fast money. we have news on trading higher. >> tesla is just beginning the quarterly earnings conference call and the reason that shares of tesla are up more than 7% is all about the guidance for the model m. that is the mid-sized sedan coming out this summer and saying it is ahead of schedule. originally it said it will be delivered by july. the plan on delivering is starting in june. they have orders for 10,000 model ss that delivers in june. they also have the orders for another 1,000 model xs and that's the model that will be coming out next year. the shares are moving higher on a day and slidely wider than
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expected loss. they are expecting 69 cents and revenue in line at $30.2 million. the earnings in the first half don't matter in terms of what people are looking at. that's about the roadster. it's the model s production and the fact that they will start in june, not july. that's the reason shares are moving higher. >> i have two comments. that and it's moving higher closer to a 50% shortage. my inclination would use it to sell again. my second point, you are a big guy and so am i. can you fit in those things? >> you can. that is true. one other thing to keep in mind that will get a lot of attention over the next couple of weeks, the range had been confirmed. that's huge in the world of electric vehicles. you are talking about cars and some say we can get 60 or 75
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miles. 300 miles or more they are saying. >> that's a concern that you ha have. >> thank you very much for the update. that's the theme of after hours movers to the upside. take a look at mns, monster beverage with better than expected earnings and volumes up 28% and buying one full percentage point and nice gains there up 13%. this was rumored by coca-cola and they set out and said no, we are not interested. avon shares moved big time. 9% higher as a round of new rumors. the news may be making shareholders happy suffering through the lack luster performance and even with the rise. shares are down 26% year on year. you added this to your
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portfolio. a small position on friday. >> it's up today as well. here's 1 that is absolutely right for activism in that you have a shareholder base that has been beleaguered for years. you have a big change in the ceo. you have a non-staggered board and it's not the best time of the year to do it, but you have at least one party that is cody. we saw with the shares of -- that is maybe some powder, dry powder for them and the only thing is, there is a new ceo and that's not enough to keep these guys from getting sold if you have two interested parties and i'm surprised we haven't seen an activist come out yet. so far. another that i think is also interesting that i -- last week i wouldn't have said so right for activism is chesapeake. you have a shareholder base that
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is caught in an abusive relationship for years. the valuations have come down dramatically and a board that has been asleep at the switch. the worst case is derelict in their duties. this is right for activists. i am still so troubled by the shenanigans that i wouldn't own, but i would not be short and it wouldn't be surprising to see a real activist. they are shareholders that they are down in the mud as they are really right for a spring up right. >> i want to go to you. if you top the play avon, one way might be the opposite. to connect the dots here, jab holdings is the majority
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stakeholder and the sale of the perhaps building up reserves to make that $10 billion bid come to fruition. >> the interesting thing on all the names is when you have this speculative activity, it proteles options higher and it has done that in chesapeake and avon too. one of the best ways to take advantage of that, we will dip my in and buy avon gear. some might buy calls and take advantage of that elevated premium. that's the july 19th and 24 strangle. that would be a good sale. you sell them for 1.05. if you have a partial position
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in the stock, what's going happen here is you buy more of it at 19. net of the 2.10 you are collecting, you get it below $16. on the flip side, if the stock rallies through the higher 24 strike, you get called away and you are also going to collect that additionally. you have 22.5% to the upside in about 70 days. that's a good way to capitalize. >> absolutely right. >> it's tempting in a situation like this to say there is got to be something going on. there is upside there and there is a big spread in the value between where you will add and where you will lose. $9.3 billion in enterprise values and you end up owning it. it's 11.3 billion to the upside.
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on a stand still basis, you collect 10%. >> catch more "options action" at the 5:00 show and follow on twitter as well. you get constant updates there as well. all the action on a 2012 priceline.com trading lower in the after hours session. breaking down the earnings and getting details straight from the conference call after this. [ male announcer ] this... is the at&t network.
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the sell off with gold closing below $16 an ounce. 1594.20. a contrarian has been buying. why? >> the technicals and the fundamentals have never looked better. the global background and global credit and military, gold will be at 2,000 in 18 months. you have to own it. it is 5% in the portfolio and every central bank is printing money whether it's china, the u.s., japan, inflation will be a problem.
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not a buyer of bank stocks and the trust preferred. tell us more about it in the fast money portfolio. the senior vice president and it's great to have you with us. this is probably one of the most important questions. there is a hybrid between stocks and bonds. they pay you a yield. what's the catch? >> the catch on these is that the trust preferred will no longer be counted as tier one capital. in effect between 2013 and 2016, the banks are going to have to take these off the balance sheets and replace them with other types of preferreds. now that we collect the coupon at 5% or 6%, you get called away. we are not buying anything long-term. with rates at zero%, any
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long-term paper, they can buy it not taking a lot of risk. >> i like goldman sachs. a couple of hjg and hjj are two symbols out there. they are trust preferred that are out there. if you want to get more risky, bank of america and citigroup. i would caution people to be more. they are not trading at premiums. in most cases it's $25 a share. >> jhs capital advisers. you want to know how to sell something? you are in luck. some of you did just that. a big weight is up after this. stay tuned to hear from ken victor. founder next on fast.
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>> movers that will move in tomorrow's session, cisco systems down by more than 8%. when it comes to revenue growth, take a check on priceline and warn being southern europe, weakness in southern europe specifically. priceline is trading below $700 a share. 693 is the last there. we have your first move tomorrow and we come right back. stay tuned. [ male announcer ] citi turns 200 this year. in that time there've been some good days. and some difficult ones. but, through it all, we've persevered, supporting some of the biggest ideas in modern history. so why should our anniversary matter to you? because for 200 years, we've been helping ideas move from ambition to achievement.
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time for the final trade. >> look at jjg if there is strength. everybody is expecting weakness. >> karen? >> go with my boyfriend, jamie diamond even though he doesn't know he is my boyfriend. >> now he does. chesapeake had an interesting day price-wise and chk for trade. >> dan? >> a shout out to a body named david gould and fast money. she getting better. get better big guy. >> bet better soon. thank you so much for watching. check out the web extra and the man who

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