The speculating community is monitoring Cisco (CSCO) for day/hour/minute it arrives at a stable cycle bottom, not THE perfect bottom, just a tradable one.

While we wait...below is a contrasting perspective on Gen'l Motors (GM) a Dow Jones 30 stock. The article provides an interesting view on what motivates stocks vs. Bonds traders.

"Shares and bonds risky, but stock still enticing
08/08/2006 17:55:43
By Torrye Jones NEW YORK (Reuters) - Investors in the U.S. auto sector have long sought the comparative safety of bonds as carmakers face an increasingly uncertain future, but strength in shares of General Motors Corp. of late is leading some to reconsider owning its stock.

The Detroit carmaker has been hit hard this year by surging pump prices and customer flight from gas-guzzling sport-utility vehicles, with Japanese rivals capturing more of the market.

But talk of a GM partnership with Renault SA and Nissan Motor Co. Ltd. has sent GM shares sharply higher.

"The stock carries much more risk, but if you believe that an alliance makes a turnaround more likely, then obviously risk takes on more volatility and therefore more success in the likelihood that the stock will perform," said Marc Pado, chief U.S. market strategist at Cantor Fitzgerald in San Francisco.

GM shares have climbed more than 38 percent since April 20, when the company reported better-than-expected first-quarter results, outperforming the benchmark Standard & Poor's 500 index, which fell almost 3 percent in the same time period.

Since the start of the year, the stock has soared more than 60 percent, although it is still far from its April 2000 high at $94.62, according to Reuters data.

BONDHOLDER-FRIENDLY MOVES

In a bankruptcy, bondholders typically recover at least a percentage of their investment before anything is paid to shareholders, who usually rank last on the repayment list. As such, signs a company is financially healthy tend to boost its shares more than its bonds.

But some portfolio managers say even if the automaker's turnaround efforts prove successful and bankruptcy looks less likely, GM's bonds may be a better investment.

"I would think you would get a better bang out of the bonds, and the reason why I would say that is in order for GM to turn itself around, they have to do things that are more bondholder-friendly than shareholder-friendly," said Andrew Harding, who oversees fixed-income assets at National City Investment Management in Cleveland.

According to MarketAxess, the price of GM's benchmark 8.375 percent bond due 2033 has risen 9.125 cents to 83.125 cents on the dollar, from 74 cents on the dollar on April 20 when the automaker's first-quarter results beat analysts' estimates.

"If they do in fact turn themselves around, the bonds will recover substantially, whereas the equity price may just meander for a while," Harding said.

On the other hand, some investors say the chance GM bonds will climb back to face value, or par, is unlikely.

"With GM bonds, there is still room for appreciation," said Dan Zaldivar, senior corporate strategist for RBC Capital Markets in Chicago. "But I don't think anybody is expecting there to be any single catalyst that's going to propel GM bonds to par on the long end."

APPLES VS ORANGES

Still, long turnarounds can be frustrating to equity investors. For example, home-furnishings retailers Pier 1 and Bombay Co. have been struggling through tough times in the past few years.

With both companies facing competition from specialty retailers and discounters, investors have been discouraged by several attempts to fix their problems. Pier 1 shares have declined 29 percent since January, while Bombay's are down 33 percent.

Auto-sector stocks like GM may not face the same problems.

"I don't think GM stock is going to fall apart," said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York. "Deep value players that have stepped into it are committed to seeing the stock do a real recovery."

Either way, investors have different considerations when looking at auto-sector stocks and bonds.

"They are two completely different investment animals -- it's an apples and oranges kind of thing," Cantor's Pado said. "Anybody who would be involved in buying distressed corporate debt is looking to recoup their original investment within a certain number of years off the interest and then if things work out, they continue to collect going down the road.

"Whereas an equity investment in a distressed situation, you're looking for a significant increase return on your investment," he said.

"But you acknowledge that you're taking on not only risks in terms of whether the company's going to survive and come out of it, but how long it might take -- and you're not getting paid along the way."

Bill --

How big a threat to Cisco is Huawei among the price conscious and specialized router makers among "do it yourself" IT departments?

Or will Cisco's ability to integrate boxes plus service across the full range be enough to continue their dominant market position?