U.S. stock futures drop, with Cisco weighing on techs

Thursday, February 7, 2008

U.S. stock futures drop, with Cisco weighing on techs - MarketWatch

A number of retailers, including Costco Wholesale (COST:

COST

, have released same-store sales for January. U.S. chain-store sales in January are expected to be flat and even decline from a year earlier, according to the International Council of Shopping Centers. By either measure, that would be the worst reading, unadjusted for inflation, since 1969 when ICSC began to compile the data.

At 8:30 a.m., weekly jobless claims will be released, followed at 10 a.m. by pending home sales for December.

There's also two overseas rate decisions, with the Bank of England making a quarter-point rate cut and the European Central Bank expected to keep rates on hold. The U.K. central bank said overseas growth prospects have deteriorated and disruptions to global financial markets have continued.

The U.S. dollar and oil futures were little moved, while gold futures tacked on $5 an ounce.

Cisco Systems (CSCO:

CSCO

) may drop to a new 52-week low, trading 9% lower in pre-open trade, after the networking giant forecast 10% revenue growth in the fiscal third quarter, against the 15% rise that analysts had expected. Fiscal second-quarter profit rose 7%

"What began as a slowdown in the U.S. in the second quarter is now spreading as both U.S. and Europe saw unexpected softness in January," said Richard Windsor, an analyst for Nomura International. "This is particularly troubling as North America and Europe make up 70% of its revenue."

Infineon Technologies (IFX:

IFX

) dropped 11% in Frankfurt after the German memory chip maker scaled back its guidance for revenue and earnings from chips used in mobile phones.

GlaxoSmithKline (GSK:

GSK

) dropped around 6% in London after Europe's biggest drugmaker reported a 12% profit fall for the fourth quarter and said 2008 earnings also will fall.

PepsiCo (PEP:

PEP

) edged up 1% in pre-open deals as the group topped quarterly earnings estimates.

Airline consolidation will be a theme, as The Wall Street Journal and The New York Times reported that Delta (DAL:

DAL

) and Northwest Airlines (NWA:

NWA

) could announce a deal next week. The Journal reported that talks between United Airlines owner UAL (UAUA:

UAU) and Continental Airlines (CAL:

CAL) have grown more serious.

Many Asian stock markets were shut, but the Nikkei 225 ended with a 0.8% rise in Tokyo trade. The FTSE 100 tumbled 1.8% in London, dragged lower by the Glaxo results.