Weekly Wrap

This will go down in my Chicks History Book as the "Cisco Fallout Week". Cisco came out with their earnings on Tuesday and all bells broke loose. Ding ding, SELL! Ding ding, SELL MORE!! Ding ding, if it's a tech stock, SELL IT!!!! It was a Cisco Sell-Off, and it trickled down through the rest of the market. But what exactly happened? As you read in our last Chicks' Question of the Week, our Chick Susie under-dresses to try and hide her intelligence. This week she was wearing the grungiest overalls. Her summary of the Cisco conference call was brilliant, so instead of linking you to post, I'm going to copy and paste it from our Chicks Message Board:

Cisco announced their second quarter numbers after the market closed today, (Tuesday) and since they missed EPS estimates by .01 everyone from here to eternity (great title for a movie) is whining. Please note that this comes on the heels of 14 consecutive quarters of beating those estimates. Regardless of the heat and sell off that Cisco and other tech stocks will take tomorrow, here are what the numbers had to say:

Gross Margins...	61.8% Q2 2001 compared to 64.7% Q2 2000
Net Margins.......	19.7% Q2 2001 compared to 20.6% Q2 2000
Flow Ratio.........	1.28 Q2 2001 compared to 0.99 Q2 2000

I tried to listen to the conference call, however for some technical reason was not able to, hope they weren't using Cisco equipment. I did secure their pro forma consolidated statements of operations after my attempts at listening to the call and I think the important notes that I was able to garner from the information they released is that their inventory in house has increased quarter over quarter by 48 days. Also, the flow ratio exceeded our 1.25 threshold for the first time since I have been tracking the company.

The positive nuances that I came away with were $6.75 billion in net sales, compared with 4.36 billion for the same period last year, that's up 55%, and we are in the midst of a slowing economy?

Chambers was quoted, 'We remain confident about the market opportunity ahead of us over the next three to five years." (Note: I added the italics.) This confidence is based on the continued impact of the Internet on productivity, and just how much more work needs to be done before every company is an e-company and a majority of the world's countries are e-countries.'

Since we as Chicks are long-term investors, we should not let tomorrow's market change our focus. However, we should begin to keep a watchful eye on that Flowie.

I told you she was smart. Great summary of the glum news, Susie. From there, the market went down hill.

Five stocks hit their 52-week lows, three of which the Chicks own in our portfolio: Cisco, Sun Microsystems, Nokia, Corning and LM Ericsson are hopefully as low as they can go. Chick-owned Oracle is also nearing it's 52-week low. (Can someone get me a beer right about now?) The Dow lost almost 1% this week and the tech-laden Nasdaq was down 7.7%. But, since the year began, the Nasdaq is right where it started and the Dow is only down 1%. That means you could have gone to sleep January 1st and woke up today, and your portfolio would look pretty much the same.

Hmmmm, what is there good to discuss?

bebe stores announced January 2001 Sales Increase of 21.4%. This was all because of Chick Lorene at the Annapolis Mall store. She was a little upset that she wasn't voted the best dressed Chick that she bought out the store. But, what this bebe announcement doesn't tell you is that same-store-sales decreased by 1.5% over last year. Put simply, Lorene bought 1.5% LESS at her local bebe store than she did last year. (Sometimes these sales increase numbers can be deceiving. Anyone can increase their store sales if they increase the number of stores.but the best clue as to how the store is really doing is checking the same store sales year to year. In bebe's case, and to my dismay as I own also own shares, they didn't do as well as last year.)

Can you bring me another beer?

Speaking of, beer-maker, Adolph Coors (RKY) from Golden, Colorado, beat estimates!! Beer sales were up!! Fourth-quarter earnings rose 24% because of the increased sales of Coors Light, Killian's Red and other beers. (It wasn't me. Now I sound like that new Shaggy song. and even if you did catch me on video, it wasn't me buying that case of Coors Light for the Super Bowl party. Nope, wasn't me.) On news, their stock traded up 2.5%. As I look at their chart, their earnings have been up and down for the past 8 quarters. I wonder if beer consumption has any correlation with the stock market? Something for me to look into over the next beer, I mean quarter.

Cheap Tickets (CTIX) beat the street by a penny. The online discount travel site specializes in non-published airfares. Their net income was down 34% but according to their CEO, Sam Galeotos, "Online travel is going to grow 40% over this next year as it grew 70% last year." Their own site grew 77% over the past year. He also stated that during a soft economy people are looking for travel bargains. Either that or a free beer. (Wasn't me.)

Big news in the food supply chain... literally.  Fleming Companies (FLM) (I had never heard of them either) signed a partnership deal with Kmart (KM) to be their main supplier of food to all Kmart stores. In an interview with CNBC, Fleming's CEO Mark Hansen said, "This move pushes us into being an industry leader." He also said this enables them to concentrate on their core business and allows Kmart to focus on their core business instead of finding different suppliers for all their stores across the country. Fleming Companies will supply them all. What does this do for Fleming? For starters, they can now drop some of their smaller accounts and concentrate on their big ones, mainly Kmart and Food4Less chains. With these increased volumes, they are able to decrease costs. Hansen said that their bottom line would increase by 20% per year putting them at 4.5 billion per year in sales. Wow, those are some apples. Fleming's stock was up 45% on the announcement, and Kmart's up 5.33%. Do you think either of them is going to sell beer in the near future?

Dell Computers, (DELL) is rumored to be laying off as many as 4,000 employees by the end of this year, beginning next week. Dell was down almost 10% on the news. (Ahem, yes I own Dell too.) The firings are expected after they announce their fourth quarter earnings next week. Yee Haaa, I can hardly wait. This is after Motorola already announced that they too would be laying off some 4,000 employees, or 3% of their work force. It is the third round of employee cuts for Motorola in the past 10 weeks.

Gulp.

Other companies that came out with their earnings this week :

WorldCom (WCOM)

Gannett (GCI)

TheStreet.com (TSCM)

Barnesandnoble.com (BNBN)

Electronic Data Systems (EDS)

Anheuser-Busch (BUD)

Humana (HUM)

For further information on their earnings, go to USA Today's Earnings Scorecard.

Have a great weekend. and thank goodness the market is closed.

Chick Karin

Below are companies that have reported their most recent quarterly earnings already this year. If the company you are researching is below, it might be worth your while to go read the USA Today Scorecard to see if they turned a profit this past quarter. (Warning, you might want to get yourself another beer, it isn't a pleasant site for many of these companies.)