Market Minute: Walmart Sales Edge Lower; Cisco Forecast Disappoints

Earnings news Walmart and Cisco Systems could pressure the broader market today. Those stocks and more are what's making business news Thurdsay

The Dow Jones industrial average (^DJI) fell 113 points Wednesday. That means blue chips have lost ground in six of the past eight sessions. The Standard & Poor's 500 index (^GPSC) fell 8 points, and the Nasdaq composite index (^IXIC) dropped 15.

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Damian Dovarganes/AP
Walmart (WMT) quarterly earnings increased in line with expectations. But a key measure of sales edged lower, and most importantly, the company cut its profit outlook for the rest of the year. It says shoppers have been hurt by higher payroll taxes and gasoline prices.

Kohl's (KSS) net fell 4 percent and the company lowered its forecast.

But the department store chain Dillard's (DDS) topped expectations. Its net rose 18 percent.

Shares of Cisco Systems (CSCO) are set to slide and that could drag down the broader tech sector. The network equipment maker is slashing 4,000 jobs. That's about 5 percent of its worldwide workforce. The company also says earnings rose 18 percent in the second quarter, but it issued a disappointing revenue outlook for the current quarter. Cisco is considered a bellwether for the entire tech sector, because its gear is used in so many products.

The big-time, activist investors we often tell you about had to make regulatory filings this week on significant changes to their portfolios. Among the notable moves:
  • Nelson Peltz has taken a big stake in DuPont (DD).
  • George Soros bought J.C. Penney (JCP) and added to his stake in Apple (AAPL).
  • Warren Buffett's firm bought Dish Network (DISH) and increased its stakes in Wells Fargo (WFC) and General Motors (GM), but sold Kraft (KRFT) and Mondelez (MDLZ).
  • Daniel Loeb bought Walt Disney (DIS).
  • David Einhorn sold his holdings in Microsoft (MSFT) and CBS (CBS).
Several of these big time investors also turned bearish on gold during the second quarter.

And Microsoft is ready to roll out the first major update to its Windows 8 operating system -– and for the first time, it's free. Current users can get it beginning Oct. 18. It will include upgrades to the start screen and multitasking functions.

Fortune 500: America's Largest Companies
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Market Minute: Walmart Sales Edge Lower; Cisco Forecast Disappoints
Previous rank: 9
 CEO: Alan R. Mulally

Ford (F) continues to move along in the midst of a challenging auto market. Europe, in particular, is troubling -- the company announced last year that it would close three factories and cut at least 6,200 jobs there. But there is some good news for iconic American automaker:Iits Ford Focus was named the top-selling car in the world, as of this year. Despite a 72% drop in earnings from 2011 to 2012, Ford expects profitable operations this year in North America, which is the company's most profitable market.
Previous rank: 12
 CEO: William R. Klesse

The refining giant is going through some big changes. Earlier this year, Valero (VLO) announced that it planned to spin off its retail business, called CST Brands, a move that the board approved in April 2013. Shareholders like the strategy, and the company's share price has been increasing, overall, since the initial announcement. Valero remains the world's largest independent refiner, with 16 refineries and ethanol plants across the U.S., Caribbean, the United Kingdom and Canada. Profit margins continue to be tight for the refining business, but as more and more oil and gas companies shed their refineries, Valero remains one of the most powerful games in town.
Previous rank: 6
 CEO: Jeffrey R. Immelt

America's biggest industrial company is feeling the hurt from slowed U.S. and European manufacturing. Early this year, that sluggish growth hurt the company's power and water unit, as struggling U.S. and European manufacturers purchased fewer GE (GE) generators. Given that trend, GE must figure out how to squeeze more profits out of other sections of its business such as aviation, and its financing arm GE Capital. It is also increasing investments in manufacturing tied to the oil and gas industry. This year, it paid almost $3 billion for oilfield pump maker Lufkin Industries.
Previous rank: 5
 CEO: Daniel F. Akerson

American taxpayers still own part of General Motors (GM). The U.S. government is eager to sell its remaining 19% stake in GM -- leftovers from the 2008 auto industry bailout.

In 2010, CEO Dan Akerson led the company through what was then the biggest IPO in history. Today, GM is focusing on selling cars abroad, with China being a key market. GM has roughly 15% market share in China now, and has said it will introduce 17 refreshed models there in 2013. Though the carmaker predicts only modest growth in U.S. and China auto sales this coming year, it is making money. GM is still one of the 50 most profitable companies in the Fortune 500, despite a 32% decrease in earnings in 2012, down from $9.1 billion in 2011 to $6.2 billion.
Previous rank: 17
 CEO: Timothy D. Cook

Apple (AAPL) is bigger than ever -- the company cracked the Fortune 10 this year. But it’s a high-pressure job, being king of the hill. At Apple's press event this past October, it maintained more than disrupted with its software upgrades and iPad mini announcement. Also, this past year has seen a lot of CEO Tim Cook having to apologize -- once in September for the failure of Apple’s maps app, and then to Chinese consumers this April for slow repair services -- this in a market that Cook said this past January would be Apple's largest. Still, when every executive wants to invent the iPod of ___, Apple remains an innovation icon.

Previous rank: 7
 CEO: Warren E. Buffett

Berkshire Hathaway's (BRK.A) per-share book value rose 14.4% in 2012, but it was less than the Standard & Poor 500’s 16-percent gain. Amid a stock market that hit record highs, the index has outperformed Berkshire over the past four years.

CEO Warren Buffett called 2012 a “subpar” year, saying if the market continues to gain this year, the bench market stock index could have its first five-year win ever.  Though the Omaha, Neb.-based holding company made no major acquisitions, it started 2013 with a big one: Ketchup! Berkshire teamed up with 3G Capital for a $23 billion acquisition of H.J. Heinz.

Beyond all that's Americana, Berkshire continued to see opportunities in the printed word. It spent $344 million to buy 28 daily newspapers. In the future, Buffett expects more purchases of newspapers if the price is right.
Previous rank: N.A.
 CEO: Greg C. Garland

Phillips 66 (PSX), ConocoPhillips's spun-off refining arm, was separated from the exploration arm of the energy giant last year. The Phillips 66 name has been among the company's most-recognized brands for decades, first with Phillips Petroleum and then ConocoPhillips after its merger with Conoco in 2002. (The first 66-branded gas station opened in Kansas some 86 years ago.) Its $169.5 billion in sales shot it up to No. 4 on the Fortune 500 on its first year (back) on the list.
Previous rank: 3
 CEO: John S. Watson

The nation's second-largest oil company saw another strong year on better performance from its refining business. Chevron's (CVX) 2012 earnings of $26.2 billion is the second highest result in company history, behind $26.9 billion in profit in 2011.

But while the San Ramon, Calif.-based company earned more from processing crude into fuels such as gasoline and diesel, it also has plans to spend 12% more in energy exploration and investment in the year ahead. A bulk of that investment is expected to go toward upstream crude oil and natural gas exploration production projects, such as one of the world's largest natural gas projects Western Australian.

It also plans to restart business in Brazil, where earlier this year authorities allowed the company to resume production on wells off the coast of Rio de Janeiro. Chevron had been banned, after more than 100,000 gallons of crude seeped into the Atlantic Ocean.

While criminal charges against Chevron have been dropped, the company still faces civil lawsuits seeking damages.

Previous rank: 1
 CEO: Rex W. Tillerson

Refining has been considered a drag on earnings by some analysts, but the world's biggest refiner didn't buy that logic. It resisted the trend of spinning off refineries to focus on oil drilling.

In 2012, Exxon Mobil (XOM) posted the second-highest annual profit in U.S. history, surpassed only by its own 2008 record. Net income rose to $44.8 billion, a 9.3% jump from the previous year and only slightly below its 2008 record $45.22 billion.

In the year ahead, the company plans to reduce oil and natural gas production by 1% and focus on investments in tapping into hard-to-reach fields.
Previous rank: 2
 CEO: Michael T. Duke

Walmart (WMT) reclaimed the top spot in the Fortune 500 in 2012 after slipping to No. 2 last year. The retailer's refocus on low prices continued to attract frugal shoppers into the discounter's U.S. stores.

For fiscal year 2012, sales rose 5.9%, to $443.9 billion. Despite relatively strong sales, Walmart must hold onto its U.S. shoppers, which make up 62% of the chain's net sales.

Beyond the U.S., Walmart continues to investigate allegations that executives in Mexico paid more than $24 million in bribes to speed the retailer's expansion there. The probe has widened to Brazil, India and China.

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