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Closing Bell: Abercrombie & Fitch

Having a bellwether stock isn't always easy. Just ask Cisco Systems (CSCO) Chief Executive John Chambers. On Aug. 10, Chambers announced record profits of $1.4 billion for the networking giant's fourth quarter, on a 26% increase in sales, to $5.93 billion. But Wall Street heard only the bad news. Investors punished Cisco's stock after Cisco disclosed a second consecutive quarterly uptick in inventory and projected sales growth of less than 2% in the current quarter. Cisco shares fell 10.6% on Aug. 11, to $18.29.

Chambers insists that Cisco is on track to continue gaining share and cranking out profits, and evidently Cisco's board agrees. It reinstated his $350,000 salary, up from the $1-per-year pay Chambers requested when Cisco ran headlong into the tech downturn in April, 2001.

And even the stock slide has a silver lining: With $8 billion left on its massive buyback plan, Chambers may now be looking at a buying opportunity.

Wal-Mart Stores (WMT) has won a battle of sorts in Los Angeles. The L.A. City Council, which in March had contemplated a ban on Wal-Mart Supercenters, voted on Aug. 11 to allow the stores if Wal-Mart can prove that they don't harm surrounding businesses. Wal-Mart called the council's measure "a victory for consumers" and stressed the new jobs its stores create. But the Arkansas-based retail giant isn't out of the woods yet. A recent University of California at Berkeley study found that Wal-Mart's low wages cost California $86 million a year in food stamps, subsidized housing, and other assistance programs. Opponents are expected to use the labor-backed study to slow Wal-Mart's expansion.

He's fired. Donald Trump, 57, has agreed to give up operational control of Trump Hotels & Casino Resorts, which owns three Atlantic City casinos. Under the plan, announced on Aug. 9, the troubled operation will file bankruptcy, and Credit Suisse First Boston (CSR) will gain majority control. The company's $1.8 billion debt will be reduced to about $1.25 billion, while its interest rate will be cut to 7.9% from 12%. But don't write off the Donald: He will hold on to the title of chairman and retain a 25% stake in the company. His estimated net worth of $2.5 billion doesn't appear to be in jeopardy since the source of much of his wealth, Manhattan real estate, remains hot.

The saga continues at the troubled hedge-fund empire founded by former New York Deputy Mayor Kenneth Lipper. On Aug. 11, Edward Strafaci, former executive vice-president at Lipper Holdings, pleaded guilty to federal charges that he overstated the value of two hedge funds, defrauding investors of hundreds of millions of dollars. Strafaci admitted in federal court that he engaged in a scheme to cheat investors between 1996 and January, 2002, when he resigned (BW -- Dec. 9, 2002). His lawyer declined comment. Strafaci will be sentenced in December.

Peace seems to have broken out in the Magic Kingdom. After months of public feuding, Walt Disney (DIS) and Harvey Weinstein, who heads Disney's Miramax Film (DIS) unit, are working on a deal. Disney is expected to provide funding for a new production company that Weinstein will operate. Weinstein has made no secret of wanting out of his contract, which expires in September, 2005, and has slammed Disney CEO Michael Eisner for refusing to distribute the Miramax-backed political documentary Fahrenheit 911. But the two ironed out their differences last month at Allen & Co.'s annual media conference in Sun Valley, Idaho. Eisner didn't mention Miramax during an Aug. 10 call with analysts announcing a 21% gain in third-quarter earnings. Disney and Miramax had no comment.

-- Federated Department Stores (FD) reported weaker-than-expected profits.

-- Toys 'R' Us (TOY) plans to spin off Babies 'R' Us (TOY) and to look for a buyer for its toy business.

-- A federal grand jury is examining allegations that HealthSouth (HLSH) made improper political contributions.

Abercrombie & Fitch (ANF) shares dropped 12.4%, to $29.32, on Aug. 11 after the college crowd clothier said third-quarter earnings will likely plunge below analyst estimates. Even as sales fall, Abercrombie is spending to fix up stores and fatten worker paychecks.

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