What to Watch This Week: Smartphones, Discount Brokers, Airbeds and a Side of Fries
Let's go over some of the items that will help shape the week that lies ahead on Wall Street.
1. Microsoft's Oopsy: Last week was an interesting one for Microsoft (MSFT), as the Nokia Lumia 900 -- the flagship smartphone using Windows Phone, the software giant's latest mobile operating system -- hit the market.
It wasn't a smooth launch. A software glitch led handset maker Nokia to offer a $100 wireless carrier credit on the $99.99 phone, effectively making it a free deal with a two-year minimum contract.
Microsoft itself will be the one under the market's microscope this week. The tech behemoth reports its latest quarterly results Thursday. Will Microsoft come through with more details about its upcoming Windows upgrade? Are folks still buying Microsoft Office productivity suites in this era when free cloud-based solutions are becoming more accessible? The Xbox 360 has been the top video game console over the past year, but now that the Wii U is set to roll out later this year, are we getting any closer on the rumored Xbox 720 system?
Microsoft may not answer every question, but you can bet that a lot of investors will be listening to whatever it does say.
2. Banking on Earnings: There is no shortage of major banking quarterly reports, led by Citigroup (C) on Monday and Goldman Sachs (GS) on Tuesday.
However, discount brokerage firms will also be in the spotlight. Charles Schwab (SCHW), E*TRADE (ETFC), TD Ameritrade (AMTD), and Interactive Brokers (IBKR) are all reporting this week.
The market may have had a strong first quarter, but that doesn't mean that discounters were raking in big bucks. In fact, analysts forecast all four brokers will post lower quarterly profits than they did a year earlier.
It's easy to blame such poor profit numbers on the cutthroat commission schedules the firms need to offer to woo investors. Low interest rates are also making it hard for discounters to get noticed by promising the chunky savings rates on idle cash that they used to offer a couple of years ago.
So if you hear the E*TRADE Baby crying this week, it may be about more than just teething pain.
3. Sprint to the Challenge: As the country's two largest carriers brag about their 4G LTE coverage, distant bronze medalist Sprint (S) is busy trying to catch up as customers develop a need for speed.
Sprint has gone live with its LTE network in select markets, though even those launches won't be official for another two months. Sprint has a lot of ground to cover, and it doesn't help that it's at least a couple of years away from profitability.
However, Sprint is so committed to the faster platform that it will begin selling 4G LTE phones as early as next week. The Viper 4G LTE will hit Sprint stores by Sunday, and the same is reportedly true about Samsung's Galaxy Nexus.
Will Sprint fans revolt if they're buying 4G LTE handsets even before the fast connectivity is broadly available? Will Sprint be able to stand out as the only one of the three major carriers still offering unlimited data plans to new customers? Time will tell.
4. McEarnings: McDonald's (MCD) is serving up its latest financials.
The world's largest restaurant operator proved its recession-resilient mettle during the economic downturn. Expanding into premium items including chicken-topped salads and fancy beverages has helped offset the penny pinchers gravitating to the fast-food chain's dollar menu.
McDonald's is doing so well, that Burger King is essentially ripping it off with a new menu featuring fruit smoothies, flour-tortilla-wrapped chicken snacks, and cool blended coffee creations. I guess you can say that even the crown is chasing the clown. Globally, though, there's only one winner donning golden arches.
Wall Street sees Mickey D's posting a quarterly profit of $1.23 a share Friday, just ahead of the $1.15 a share it delivered a year ago.
5. Air Mattresses Bounce Back: Four years ago, Select Comfort (SCSS) shares traded for as little as $0.19. The company behind the Sleep Number beds -- air-chambered mattresses with adjustable settings -- seemed on the way out as a penny stock. It isn't easy selling premium bedding in a recession.
Things have improved dramatically for Select Comfort. Consumers are spending on premium mattresses again, and the unique adjustable nature of the Sleep Number system is a hit. When Select Comfort reports Wednesday, investors are holding out for a profit of $0.39 a share for the holiday quarter.
You read that right. Select Comfort is about to earn twice as much as the company's stock was worth less than four years ago.
Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Citigroup and Microsoft. Motley Fool newsletter services have recommended buying shares of TD AMERITRADE Holding, The Goldman Sachs Group, Interactive Brokers Group, McDonald's, Charles Schwab, Nokia, and Microsoft. Motley Fool newsletter services have recommended creating a bull put spread position in TD AMERITRADE Holding and creating a bull call spread position in Microsoft.