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Monday, November 3, 2008

You ain’t seen nothing yet


September earnings reports were lackluster to say the least. Guidance came down. But just wait. October earnings are going to be shameful.

Companies with October quarter ends such as Cisco, Dell, and Hewlett Packard will be lugging two months of a horrendous IT spending environment. I would anticipate they will all miss earnings forecasts, probably by a lot. Indications from the trenches are that spending did not improve in the month of October (why would it have) and that customers are increasingly pushing for more financing (naturally). Last month, we saw the effect of a slow September on companies reporting. This month we will see two months of major hesitance reflected. Business is still very much reduced from normal seasonality and numbers for these companies have not been reduced enough. I think they're shorts into their reports.

I'm presently short Cisco and Dell and I'll probably have HPQ on too by the time you're done reading this.


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