Why Cisco Systems, Tile Shop Holdings, and Millennial Media Plunged Today

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Stock market investors were generally pleased with the congressional testimony that Fed chair nominee Janet Yellen gave today, with new expectations that accommodative monetary policy will continue as long as any hint of economic weakness persists. The Dow and S&P 500 reached new record highs yet again, with Dow 16,000 and S&P 1,800 now within a single percentage point. But Cisco Systems , Tile Shop Holdings , and Millennial Media all missed the record run, falling by more than 10% each.

Cisco Systems dropped 11% following its disappointing earnings report last night. Missing revenue estimates for the October quarter didn't distinguish Cisco from a number of other suffering tech giants lately, but guidance for a steep 9% plunge in year-over-year revenue in the current quarter showed just how serious the situation is for the networking giant. As Fool contributor Anders Bylund noted earlier today, rival Alcatel-Lucent's deal to sell networking equipment to Chinese wireless giant China Mobile might have represented a missed opportunity for Cisco.

Tile Shop took a 39% hit as the specialty tile seller faced allegations from Gotham Research that it boosted earnings by using a related-party supplier to obtain inventory at cost. Tile Shop responded by denying the allegations and suspending its relationship with the supplier in question. The allegations only highlight the difficulties in assessing whether solid growth-story stocks are too good to be true.

Millennial Media fell 12%. The mobile-ad company saw revenue growth slow to 18% in its most recent quarterly report, with margins slipping and a jump in overhead costs only allowing the company to break even for the quarter. With high aspirations to go up against the biggest names in the mobile advertising space, Millennial Media will need to reaccelerate its growth in order to have a shot at entering the big leagues.


Own stocks you can rely on -- forever
Disappointments like these happen from time to time. But as every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal "The Motley Fool's 3 Stocks to Own Forever." These picks are free today! Just click here now to uncover the three companies we love. 

The article Why Cisco Systems, Tile Shop Holdings, and Millennial Media Plunged Today originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Cisco Systems. It recommends and owns shares of Tile Shop Holdings. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story