Looking at the Big Picture and Connecting the Dots II

Now that the hockey drama is over and La Coupe Stanley is back in my hometown for the third time in my life, we can get back to work.  As an addendum to the prior post, we had a few further data points emerge.  CIEN hosted their analyst day yesterday in NYC.  I think the event only reinforced my belief in three dislocations in the market and they are showing signs of impact.  I also think that CIEN further confirmed my thoughts in my Tuesday post.  It is not really a good sign when a company cannot articulate why the pace of their market is not going faster.  Maybe it is macro, maybe it is broader ARPU trends in their downstream markets or maybe the exaflood has not hit yet.  Maybe the future is not going to play out as expected?

After the close, FNSR reported results and it did not go well.  This morning a lot of blame being thrown in the direction of China for the miss and lowered guidance.  If China companies are the cause of the weakness that is disturbing and I am puzzled by the analysts this morning spinning it as positive.  I wrote in early May “futures are down 3 handles to FV, but it is still early.  I would expect a them to uptick starting at 0400 EST.  BofA/ML out with a negative CAPEX call into earnings.  Hard to be long anything levered to US CAPEX.  I would be seller if I owned anything networking stocks levered to US CAPEX.  I think growth companies like APKT, FFIV and BSFT are okay for now.  Would be a seller of CSCO, ERIC, TLAB and ARRS.  All for different reasons.”

After the close today we are going to get the RIMM results.  I have offered up some comments on the mobile device market in the past, but I will have an interest in the results today because when RIMM pre-announced their results on April 28, I read one report from a sell side analyst who said that it was good they lowered expectations so early in the quarter as it gave them more than a month to beat the lowered expectations.  Please…I will be looking at the numbers tonight.

Side note on Greece…. Greece got their first bailout in May 2010.  About a month after the bailout, a top 5 US bank brought their European strategy, credit, macro team in for meeting with me.  I distinctly remember their European strategist (a German) pounding the table to buy the market as Greece has their money and the Greek issue is off the table for at least three (3) years.  At the time I asked him what about the other three PIGS.  He said their might be issues, but no concerns with Greece as Germany has stepped up.  I am glad that worked out and I stand by what I wrote in early May “From a macro perspective it is hard to be excited and easier to be bearish.  Maybe sell in May and go away is a prudent action.”

/wrk

* It is all about the network stupid, because it is all about compute. *

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