5 Things to Watch This Week: Tablets, Tunes (Times 2), Taxes and China
There's never a dull moment on Wall Street. Let's go over some of the items that will help shape the week that lies ahead.
1. The iPads Are Coming: The cool thing about watching Apple (AAPL) is that there's always an annual update to look forward to when it comes to its leading product lines, and Wednesday will be the iPad's time to shine: Apple has scheduled an event that's widely expected to focus on the tech giant's defining tablet line.
The original iPad and last year's iPad 2 set the bar and raised it when it comes to portable tablets. There will be plenty of hype surrounding the unveiling of the iPad 3 -- or the iPad HD, as many are starting to call it -- in two days.
The obvious upgrades include better graphics, a stronger processor, and higher camera resolution. It remains to be seen what Apple tacks on beyond that.
Many analysts are also predicting that Apple won't kiss away the iPad 2 entirely. DigiTimes, an Asian tech news publication that has strong connections with Apple's Asian suppliers, is reporting that Apple will sell a new version of the iPad 2 with half the storage capacity of the new iPad and a much lower price.
That cheaper model will help Apple compete at the entry level with the $199 Kindle and Nook tablets that sold in the millions during the holidays.
2. Satellite radio in the spotlight: It has been three years since Liberty Media (LMCA) gave Sirius XM (SIRI) the capital infusion that it needed to stay afloat: Now, things will start to get really interesting.
In exchange for lending the satellite radio operator more than $500 million at the time, Liberty Media received 15% interest on the loan as well as a 40% preferred share stake in Sirius XM. That hefty chunk of equity in the satellite radio provider didn't seem like much when the stock was trading in the pennies, but Liberty Media's position is now worth roughly $6 billion.
On Tuesday, Liberty Media will be allowed the opportunity to increase its stake in Sirius XM. It may seem like a silly thing to do, given how cheaply it acquired its original stake. But increasing its position substantially would allow it to utilize Sirius XM's billions in net operating losses, which can be used to offset taxable gains in the future.
Liberty Media is under no obligation to act right away, though after having to wait three years before making its decision, you can be sure that the company knows exactly what it wants to do here.
3. Cracking open Pandora's box: One of the more intriguing companies to report this week is Pandora Media (P). The country's leading music-discovery service has grown extremely popular in a short period of time. Pandora's smartphone app is usually the music category's top draw, serving up 2.1 billion hours of music to its 40 million active users in its previous quarter.
After Pandora posted back-to-back profitable quarters, Wall Street is expecting to hear a different tune. Analysts see a small deficit when the dot-com darling reports on Tuesday.
Investors can use a positive earnings surprise. Shares of Pandora continue to trade below last year's IPO price of $16.
4. A taxing situation: The good news for taxpayers waiting until the last possible moment to prepare their 2011 taxes is that they have until April 17 this year to file their returns. That's likely also good news for H&R Block (HRB), which will have a little extra time to push its industry-leading accounting services.
H&R Block reports its latest quarterly financials on Wednesday. Analysts foresee a small profit, reversing a marginal loss a year earlier. However, investors will be tuning in to gain any insight as to how the company sees the current quarter playing out. Obviously this is the period for H&R Block that makes or breaks its fiscal year.
5. China's consumers on display: There are 1.3 billion people in China, the world's most populous nation. It has been growing quicker than most regional economies in recent years, helping grow the country's bustling middle class.
Investors have taken that trend to the bank, buying into companies such as leading online dating website operator Jiayuan.com (DATE), hospitality chain Home Inns & Hotels (HMIN), and media marketer Phoenix New Media (FENG).
How are these companies faring these days? We'll get a clearer snapshot of all three when they report their quarterly numbers this week. Despite the restrictive ways of China's government, the growing middle class won't be denied some freedoms at this point.
Longtime Motley Fool contributor Rick Munarriz does not owns shares in any of the stocks in this article, except for Liberty Media. The Motley Fool owns shares of Jiayuan.com International and Apple. Motley Fool newsletter services have recommended buying shares of Jiayuan.com International and Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple.