May 12th 2011

CSCO Slumped, Again

CSCO is in the doghouse again. Its earnings turned out pretty good actually, sending the stocks
initially higher after it was released but immediately slammed downwards after the company
announced its outlook of the subsequent quarter (see charts below).

Revenues in billions of Earnings Per Share

dollars F/C Prv Act
F/C Prv Act
$0.42 $0.42
$10.87 $10.90

$10.40 $0.37

CSCO CSCO

Lower-end Upper-end Market F/C Lower-end Upper-end Market F/C

$11.59 $0.41

$0.39
$11.05
$10.84 $0.37

Revenues in billions of $ EPS in $

Other details on the release are: cash flows from operations increased to $3.0B from $2.6B in prior
quarter. During 3Q the company bought back 54M shares at average price of $18.39. CSCO also
plans to cut costs by $1B, but sees pricing pressure in its switching business. Cost-cutting could be done
through workforce reduction amid declining orders from the public sector by 8%.

On other news, INTC raised its quarterly dividend to 31c per share, or up 16%. It will be the second
raise since November 2010 when it raised dividend by 15%. INTC also said that during 1Q the
company used its share buyback authorization to buyback $4B of shares. Meanwhile, also on
Wednesday, INTC said that its processors will power GOOG’s upcoming Chromebook.

1 .DJI 12,630.03 (-130.33 ● -1.02%) .SPX 1,342.08 (-15.08 ● -1.11%) .IXIC 2,845.06 (-26.83 ● -0.93%)
 May 12th 2011

Elsewhere, the Dow Jones Industrial Average ended down 130.33 points or 1.02% at 12,630.00
while the S&P 500 index declined 15.08 points or 1.11% to 1,342.08. NASDAQ Composite also
ended 0.93% lower or down 26.83 points at 2,845.06.

Stocks slumped following the fall in commodities. Oil prices could be considered as the prime suspects
as Brent crude futures finished down $5.06 a barrel at $112.57 while the US light crude futures
settled the day at $98.21 a barrel after being squeezed to as low as $97.50 a barrel during the
intraday session.

Oil slump was driven by the weekly report of US crude inventory which said that crude oil inventories
in the US rose 3,781K, way above the consensus rise of 2,948K. A week earlier, inventory increased
by 3,196K. US gasoline inventories also increased by 1,275K from 680K, while the consensus saw a
drop of 1,835K.

Tracking the decline in oil prices, gold futures for June delivery ended $15.50 lower or 1% at
$1,501.40 an ounce. Silver futures for July delivery was also down, ending the day at $35.52 an
ounce or down $2.97 an ounce or 7.7%.

Thursday offers jobless claims data, as well as retail sales data. PPI will also be released on
Thursday.

2 .DJI 12,630.03 (-130.33 ● -1.02%) .SPX 1,342.08 (-15.08 ● -1.11%) .IXIC 2,845.06 (-26.83 ● -0.93%)
 May 12th 2011

Stock Focus: Johnson & Johnson

JNJ
Last May 11th Resistances 67.86 69.19 69.75 70.54 73.76
$66.57 1.23% Supports 66.20 65.77 64.80 63.54 62.67
WTD MTD Outlook
1.99% 1.29% POSITIVE
YTD 12-Month PT
7.63% 14.19% $69.20

JNJ has broken its key resistance at $66.20 recently and this painted a bullish outlook on the stock.
Immediate target after the breakout now lies at $69.20. RSI has clawed its way back to the
overbought area, demanding caution, while MACD has pulled back up from negative area. EMAs are
still on the rise as well. The key support for this leg up is at the 50-day EMA at $62.47. Also watch
the potential bearish divergence forming on the daily chart as price turns higher and setting a higher
high while the MACD and RSI are still far from scoring new peaks.

3 .DJI 12,630.03 (-130.33 ● -1.02%) .SPX 1,342.08 (-15.08 ● -1.11%) .IXIC 2,845.06 (-26.83 ● -0.93%)
 May 12th 2011

Price Performance - as of May 11th 2011

Code Last Dy WTD MTD YTD 12-Mos
AA 17.05 -2.68% -0.58% 0.29% 10.79% 46.48%
AXP 49.83 -0.68% -0.74% 1.53% 16.10% 24.98%
BA 79.08 -1.09% -0.29% -0.88% 21.18% 23.22%
BAC 12.25 -0.24% -0.49% -0.24% -8.17% -22.17%
CAT 109.98 -2.56% -0.33% -4.70% 17.42% 81.01%
CSCO 17.78 -0.06% 1.25% 1.48% -12.11% -23.23%
CVX 102.26 -2.01% -0.60% -6.56% 12.07% 38.43%
DD 54.12 -3.17% -0.93% -4.70% 8.50% 49.63%
DIS 41.52 -5.44% -3.58% -3.67% 10.69% 24.24%
GE 20.09 -1.03% 0.40% -1.76% 9.84% 22.87%
HD 37.23 -0.11% 0.65% 0.22% 6.19% 9.95%
HPQ 41.06 -1.23% 0.61% 1.71% -2.47% -10.76%
IBM 169.50 -0.52% 0.36% -0.63% 15.49% 35.32%
INTC 23.41 1.65% 0.69% 1.12% 11.32% 9.29%
JNJ 66.57 1.23% 1.99% 1.29% 7.63% 14.19%
JPM 44.23 -2.06% -1.80% -3.07% 4.27% 11.75%
KFT 34.27 0.15% 0.56% 2.02% 8.76% 19.83%
KO 67.32 -0.03% 0.63% -0.21% 2.36% 30.97%
MCD 79.51 -0.25% 1.03% 1.53% 3.58% 18.90%
MMM 95.92 0.22% 0.33% -1.33% 11.15% 20.94%
MRK 36.63 -0.38% 0.66% 1.89% 1.64% 8.73%
MSFT 25.36 -1.21% -1.97% -2.16% -9.14% -1.71%
PFE 20.61 -1.20% 0.29% -1.72% 17.70% 35.33%
PG 65.92 0.29% 1.00% 1.57% 2.47% 7.91%
T 31.38 -0.98% 0.38% 0.84% 6.81% 29.14%
TRV 63.25 -0.96% -0.28% -0.05% 13.53% 27.86%
UTX 89.52 -0.32% 0.35% -0.07% 13.72% 32.86%
VZ 37.26 -0.83% -0.05% -1.38% 4.14% 35.39%
WMT 55.17 -0.65% 0.27% 0.35% 2.30% 9.12%
XOM 81.12 -2.66% -1.90% -7.80% 10.94% 34.17%

4 .DJI 12,630.03 (-130.33 ● -1.02%) .SPX 1,342.08 (-15.08 ● -1.11%) .IXIC 2,845.06 (-26.83 ● -0.93%)
 May 12th 2011

Analysts' Upgrades & Downgrades

Code House Ratings PT
DIS Barclays Overweight $52.00
DIS Citigroup Hold $45.00
DIS Deutsche Bank Buy $50.00
DIS UBS Neutral $42.00
JNJ Goldman Sachs Neutral BUY $77.00
MCD BMO Capital Market perform $84.00
UTX UBS Buy $101.00
n Reiterate n Upgrade n Downgrade n Initiation
US Economic Calendar
Date Time Report Period Actual Forecast Previous
10-May 8:30 AM Import Price Index Apr 2.2% 1.6% 2.6%
10-May 10:00 AM Wholesale inventories Mar 1.1% 1.0% 1.0%
11-May 8:30 AM Trade deficit Mar -$48.2 bln -$47.0 bln -$45.4 bln
12-May 8:30 AM Jobless claims 7-May 428k 474K
12-May 8:30 AM Retail sales Apr 0.7% 0.4%
12-May 8:30 AM Retail sales ex-autos Apr 0.7% 0.8%
12-May 8:30 AM PPI Apr 0.8% 0.7%
12-May 8:30 AM Core PPI Apr 0.2% 0.3%
12-May 8:30 AM Inventories Mar 0.8% 0.5%
13-May 8:30 AM CPI Apr 0.4% 0.5%
13-May 8:30 AM Core CPI Apr 0.2% 0.1%
13-May 8:30 AM Consumer sentiment May 71.0 69.8

Disclaimer: This report is provided for information purposes only. It is not an offer to sell or to buy any securities. This
report has been prepared based on sources believed to be reliable, but there is no assurance or guarantee regarding its
completeness and accuracy. The author accepts no responsibility or liability arising from any use of the report.

5 .DJI 12,630.03 (-130.33 ● -1.02%) .SPX 1,342.08 (-15.08 ● -1.11%) .IXIC 2,845.06 (-26.83 ● -0.93%)