What to Watch This Week: Banking, iPad Textbooks, Auctions, Search, and Big Blue
There's never a dull moment on Wall Street, especially now that 2012 is tossing us into its first earnings season. Let's go over some of the items that will help shape the week that lies ahead.
1. Banking on a Bounce: The banking sector got off to a shaky start when JPMorgan Chase (JPM) kicked off the earnings season with a disappointing quarterly report Friday.
We'll get a clearer picture this week when the rest of the financial services heavyweights chime in.
There's Citigroup (C) and Wells Fargo (WFC) on Tuesday. Goldman Sachs (GS) and Bank of New York (BK) check in on Wednesday. Bank of America (BAC) is Thursday's star on the earnings stage.
No one is holding out for a monster showing from these companies. Savers are turned off by historic low interest rates. Tightening lending standards have made it harder for consumers and companies to borrow money. JPMorgan reminded us Friday that investment banking isn't where it needs to be. However, one of the hardest-hit sectors during the recent recession still has a chance to show us that it's taking baby steps in the right direction.
2. Apple Wants to Rock Your School: Apple (AAPL) has sent out invitations for a media event Thursday.
"Join us for an education announcement in the Big Apple," reads the invitation. A chalkboard outline of the New York City skyline is enhanced with the iconic Apple logo.
This obviously won't be about the upcoming iPad 3 or the inevitable iPhone 5. Apple is hammering home the educational theme, leading most analysts to believe that Apple is finally going to come clean on its plans to replace old paper school textbooks with digital reads that can be conveniently stored on iPads.
Your kids or grandkids -- the ones with backs aching from lugging heavy backpacks around -- will rejoice at the chance to digitally consolidate their textbooks. And if the move results in cheaper textbooks that can no longer be lost, parents will join the cheering.
3. Google Yourself: It's only fitting that the world's largest search engine is also the top dog in online advertising. Search is where it's at, and Google (GOOG) has benefited from a healthy stream of traffic consisting of people who want to go somewhere else. Advertisers love that.
However, Google's numbers aren't the only things that will be on display when the dot-com giant posts its quarterly results Thursday afternoon. The company's starting to hire again in China, and that will lead analysts to ask about Big G's plans there. Twitter accused the search star last week of steering search traffic to Google+ results over the more prolific Twitter. Is this just good business on Google's behalf or a problematic step away from its "do no evil" mantra?
There will also be the numbers, of course, and they should be solid. Analysts see earnings climbing nearly 20% higher to $10.46 a share.
4. Santa eBay: A decade ago, eBay (EBAY) was a great place to find secondhand wares at great prices that just weren't available anywhere else. It really was one big virtual garage sale for collectors and deal seekers.
Every passing year finds the leading auction marketplace transforming itself into more of a conventional online retailer. The emphasis on "buy it now" over the bidding process, and encouraging sellers to offer "free shipping" by building the cost into their prices really have turned eBay into more of a flea market than a garage sale.
Thankfully, eBay also owns PayPal. However, the head of the popular payment platform just jumped ship to take the CEO job at Yahoo! (YHOO), so eBay is going to have plenty of questions to field when it reports its latest quarterly results Wednesday.
5. Big Blue Is Not So Blue: One of tech's biggest success stories in recent years has been IBM (IBM). When the company sensed that the era of tech hardware had run its course, Big Blue shifted gears to make sure that it became a bigger player in the higher-margin enterprise services realm.
The move has paid off, and IBM has managed to grow even during the darkest recessionary stretches. You actually have to go back nearly five years to find the last time that IBM didn't beat Wall Street's quarterly profit target, and that obviously bodes well when assessing where it will land come Thursday as analysts see a profit of $4.62 a share.
Bet on the over. It's elementary, Watson.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of JPMorgan Chase, Google, Yahoo!, Citigroup, International Business Machines, Bank of America, Wells Fargo, and Apple. The Fool has created a covered strangle position on Wells Fargo. Motley Fool newsletter services have recommended buying shares of Google, eBay, The Goldman Sachs Group, Yahoo!, and Apple. Motley Fool newsletter services have recommended writing puts in eBay. Motley Fool newsletter services have recommended creating a bull call spread position in Apple.