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Cisco Points to More Pain Thursday

CISCO POINTS TO MORE PAIN THURSDAY

The headline:Cisco Tumbles In Extended Trading After CEO Says He Sees Challenging Times Ahead

In this market, anytime a CEO uses the word ‘challenging’ you can expect the stock will get beaten into the ground, Jeff Macke said, which is exactly what happened to Cisco in the aftermarket.

The trend with tech earnings seems to be that if a company doesn’t project forward the stock will get hit, Pete Najarian said.

But Guy Adami thinks Cisco looks compelling. The quarter wasn’t particularly bad, he noted, and the valuations are back to being attractive down so low.

Speaking of valuation, Karen Finerman bought Microsoft (MSFT), down another 2%, as a value play on Wednesday. The hype and worry over the Yahoo (YHOO) deal has brought Microsoft down to levels that make its value really stand out to her.

Thursday futures will be lower thanks to Cisco, Jeff Macke said, and it reminds him of the adage to “sell the rips and buy the dips” when the overarching trend is so obviously down.

MBIA TO RAISE $750 MILLION

The headline: Bond Insurer Will Issue 50.3 Million Shares of Common Stock To Raise $750 Million

The traders were nonplussed with this move by MBIA . Karen Finerman said it wouldn’t solve the bond insurer’s problems because it just wasn’t enough money. Jeff Macke called the offering “ambiguous.” MBIA is issuing convertibles but even if it were common stock he still wouldn’t be intrigued. “Why bother?”

WHALE WATCHING: WARREN BUFFETT

The headline: Buffett Says No Credit Crunch Underway But U.S. Dollar Likely to Decline

Guy Adami reiterated his prediction than 2008 will be a net positive year for the U.S. dollar.

Jeff Macke agreed, saying even though the U.S. uses its currency “like toilet paper in the world market,” there is too much dollar negativity for one to be short. He would be inclined to be dollar positive.

TIME WARNER, IT IS A CHANGIN’

The headline: Time Warner Shares Jump on Solid 2008 Profit Forecast, Restructuring Plans

Pete Najarian expressed bullishness on Time Warner under the premise that it might be getting ready to spin off AOL. The stock is O.K. to own on its breakup value alone, he said.

Jeff Macke was dubious that Time Warner could even find a buyer for AOL anymore. But if Microsoft can come out of the woodwork and bid on Yahoo, Pete said, surely someone will sniff around AOL.

BREAKING: WSJ: Delta Merger Talks with Northwest Airlines Pick Up Steam; Preliminary Talks Between UAL and Continental Have Grown More Serious

The late-breaking news of a potential deal in the works between Delta and Northwest sent Delta shares up 4% in after-hours trading. The WSJ reported that a merger could be announced as early as next week.

Pete Najarian, who has been calling for consolidation in the space, called the synergies between Delta and Northwest “perfect.” The domino effect of a UAL/Continental deal would be good for the market too, he said. And fewer airlines to compete with would intrinsically be good news for lost-cost carriers like JetBlue (JBLU).

FUTURE UNCLEAR FOR CME, NYMEX

The headline: CME Group , NYMEX Plummet after Dept. of Justice Recommends Review of Futures-Clearing Rules

Have patience with NYMEX, Guy Adami urged. Even though the stock was crushed on this news the company holds a lot of value.

Karen Finerman, on the other hand, has run out of patience for the exchanges. Any regulatory issue is reason enough to get out of a stock, she said, since it’s impossible to know how damaging it will be or how long it will last until it’s often too late. The momentum seems to be out of the exchanges anyway, she said. It’s time to say goodbye.

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Trader disclosure: On Feb.6, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (INTC), (YHOO), (DIS); Najarian Owns (BIIB), (CSCO), (EBAY), (MSFT), (XLF), (C), (BIIB), (NWA), (AMR); Najarian Owns (AAPL) Calls, (NIHD) Calls, (SKS) Calls; Najarian Owns (MA) Puts; Finerman Owns (GS); Finermna's Firm And Finerman Own (TEL), (TYC); Finerman's Firm Owns (KSS), (RTH), (RTP), (WMT), (YHOO), (JCP), (AEO), (BR), (SUN); Finerman's Firm Owns (MSFT) And Is Short (MSFT) Calls; Finerman's Firm Is Short (SPY), (IYR), (IJR), (IWM), (MDY), (BHP), (COF), (SPG), (WFC), (MHGC); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts; Fineramn's Firm Owns (CROX) And (CROX) Options, Finerman Owns (CROX)

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