What to Watch This Week: Malls, Kinect, Kindles, Homes and Newspapers
There's never a dull moment on Wall Street, especially now that 2012's first earnings season is well under way. Let's go over some of the items that will help shape the week that lies ahead.
1. People watching in the food court: Most retailers operate on fiscal years that conclude at the end of January, so we're still a few weeks away from their quarterly results. This doesn't mean that you should simply kill time at the shopping mall food court until those reports begin trickling in.
Simon Property Group's (SPG) latest reporting period ended in December. Simon is the country's leading mall operator. With 337 shopping destinations throughout North America and Asia, Simon collects rent on its 245 million square feet of gross leasable merchant space.
When the mall landlord posts its financials on Friday, it will give investors a great snapshot of the state of retail: How's the occupancy rate holding up? Are rents running higher or lower? Simon Property Group is a great gauge of the results of the holiday shopping season.
2. Kinect the dots: Microsoft (MSFT) has raised the bar of motion-based gaming and voice-activated functionality with its Kinect camera-based controller for the Xbox 360. The software giant has sold a whopping 18 million Kinect controllers since they hit the market just before the 2010 holiday shopping season.
Is Kinect ready for your desktop?
Microsoft is rolling out a PC version of Kinect on Wednesday. It won't be cheap at $249, roughly double the price of the Xbox 360 version. PC users will also be a harder sell until (and unless) Microsoft convinces computer owners that Kinect makes PC gaming and general computer navigation easier with gesture and voice commands.
It's a bold move for Microsoft, which typically just emulates what's working for others rather than trying to raise the bar itself.
3. Dry drywall humor: It seems that even historic low mortgage rates haven't been enough to get the housing market back on track. Sales of new homes fell in December after rising in each of the three previous months. There was also another report revealing that pending home sales have also softened.
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It's in this unpleasant climate that homebuilders are getting ready for their quarterly fiscal open houses.
Meritage (MTH), PulteGroup (PHM), and Beazer (BZH) will all be reporting later this week. All three residential developers are expected to post improving bottom-line results. Meritage and PulteGroup are projected to post modest profitability. Investors are settling for Beazer simply posting a smaller quarterly deficit.
However, it will be the collective outlook of the three builders that will move the sector. Are sales bouncing back in January? Are cancellation rates under control? Are homebuyers successfully lining up financing in this still-stingy lending market?
4. All the news that's fit to squint: These are challenging times for the newspaper industry. New York Times (NYT) recently sold off 16 of its smaller regional newspapers. USA Today parent Gannett (GCI) acquired a few sports-related websites last week, once again trying to diversify from its print stronghold with some digital-publishing firepower.
If you're hoping for a clearer snapshot of how the two newspaper giants are doing, this is the week for you. Gannet reports on Monday; New York Times checks in on Thursday.
Investors will naturally want to see how circulation rates are holding up, and how advertising is faring. Google (GOOG) shocked investors earlier this month by revealing that cost-per-click -- the amount that advertisers were playing for the average lead -- declined noticeably in its latest quarter. Google was able to make that up in volume, but newspaper companies won't be as fortunate if marketers are also skimping on what they're willing to shell out for print ads.
It should come as no surprise that analysts see both New York Times and Gannett posting lower quarterly earnings than they did a year earlier. Hey, at least they're still profitable.
5. Kindle Fires fire away: We already know that Apple (AAPL) sold a whopping 15.4 million iPads during the holiday quarter. Come Tuesday we'll hear from the company with the country's second-most-popular tablet maker.
Sure, Amazon.com (AMZN) is about far more than the Kindle Fire. It's the world's top online retailer. It was also cranking out traditional Kindle e-readers long before November's introduction of the $199 Fire.
However, Amazon has already revealed that it has sold "millions" of Kindle Fires. Analysts trying to be more specific figure it's moved between 3 million to 5 million of the entry-level tablets. Amazon is unlikely to give a hard number the way that Apple does every three months -- that's just not the Amazon way. However, it should still be an interesting quarter for the company that has been sacrificing near-term margins and earnings growth to get its Kindle products in the hands of as many consumers as possible.
Amazon turns the page on Tuesday after the market close.
Longtime Motley Fool contributor Rick Munarriz does not owns shares in any of the stocks in this article. The Motley Fool owns shares of Amazon.com, Microsoft, and Apple. Motley Fool newsletter services have recommended buying shares of Microsoft, Amazon.com, Meritage Homes, and Apple. Motley Fool newsletter services have recommended creating bull call spread positions in Microsoft and Apple.
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