Randomly Noted

On the face of it, the fourth quarter earnings report from Cisco Systems this afternoon looked pretty strong. Sales were up 27%. Net income was up 79%.

The stock market’s reaction? Cisco’s shares fell 4.4% because of tepid comments from the company’s CEO about 1Q revenues. And even though the company met guidance it gave earlier in the quarter, investors apparently expected Cisco to beat those numbers nonetheless.

One interesting note from CEO John Chambers: from speaking with customers, he doesn’t believe the economy is headed for a double-dip recession. But that said, he doesn’t believe it will recover as quickly as some had previously thought. Growth, but slower growth.

Intel late today reported its best quarterly earnings and sales in its 42-year history as corporations and small businesses significantly increased orders for PCs and servers powered by Intel chips. Clearly, companies that cut back capital exchpenditure budgets during the recent recession began to feel more comfortable starting to make those purchases again. The two open questions are whether this increase in demand will have a carryover effect into other quarters for Intel? And, which PC makers were the beneficiary of corporate buying?

Stay tuned.

How companies go about handling their foreign exchange exposure can often play a meaningful role in their earnings reports. The latest example of this was with Best Buy earlier today.

The huge electronics retailer reported that its sales were up 7% for the quarter.  A chunk came from new store openings. But also a decent piece came from favorable foreign exchange in its international operations. Including favorable forex translations, international sales were up 11%. Factor out the forex element, and sales were up but 1.4%.

Now shift over to costs. Selling, general and administratives expenses (SG&A) came in at 23% of sales for the quarter, a whopping 1.1 percentage point increase. Part of that was due to new store openings and some other investments. but as the company said: “Also contributing to SG&A dollar growth was the impact of fluctuations in foreign currency exchange rates.”

So, it looks like part of the business got it right, while others didn’t…