Enterprise Slowdown Adds to Market’s Woes

A dreary day on the East Coast is not being helped by the likes of Network Appliance (NTAP-NASDAQ). They are seeing a slowdown similar to what Cisco said last week. Perhaps it is just a convenient excuse, but this glass is half empty:

The stock market got ripped after Cisco CEO John Chambers noted that the company is seeing softening in U.S. enterprise demand, particularly from the financial, automotive and retail sectors. On that call, Chambers noted that it was seeing particular weakness among its 25 largest customers, a group which includes 8 financial services companies.

Well, last night, Network Appliance (NTAP) CEO Dan Warmenhoven made similarly cautious remarks about spending from the very largest U.S. companies. In a conference call with analysts after the company’s fiscal second quarter earnings report, Warmenhoven said that its U.S. business ex federal grew only 9% in the U.S. in the latest quarter, and that revenue from its 22 largest U.S. ,commercial accounts fell 4% versus last year. He also warned that continued softness in U.S. enterprise market “may also seep into the U.K.”

Warmenhoven says financial services companies were the biggest problem, but that there was softness at other companies as well; he mentioned Texas Instruments (TXN) in particular. Warmenhoven made a grim joke, asking the analysts - who of course work for broker-dealers - to keep the problem to themselves. “Once you start exporting that set of problems to the rest of the economy, everybody is going to go in the tank,” he said. Tech Trader

An upgrade from Bear Stearns is not enough today, and the stock is trading down in line with the indexes. Although everyone you know might be bearish, this pause might not refresh. The market has lost its leadership, which was overdue, and the animal spirits have apparently gone into hiding.

Everyone seems to be a StockJockey in this market, trading around core positions in an attempt to keep their head above water. And if you think Goldman Sachs is a bright spot, this IM message sums up the feelings of most hedge fund managers:

hearing their numbers r bullshit, all assets are in level 3’s, not taking markdowns but getting paid on their hedges in real time

Lloyd Blankfein might be making a King’s Ransom this year, but the next guy to inherit his corner office might have some mopping up to do, if the cynical BuySiders are to be believed. And if RIM and Google don’t hold their recent lows the market might follow, doing its best to frustrate the lonely bulls, and momentum jockeys who piled into the few winners.

The sharpest rallies occur in bear markets. Is that what we saw earlier this week?

Network Appliance Adds To Anxiety On IT Spending; Like Cisco, Seeing Weakness In Largest Accounts
Tech Trader
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No Positions in securities mentioned

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