4 Earnings Reports Bigger Than RIM’s
Many investors looked forward to Research In Motion’s quarterly conference call. TheStreet provided excellent coverage. We even ran a live blog of the proceedings.
The level of interest should not come as a surprise. It’s only natural to want to follow the trail of blood as a company collapses, in most pathetic fashion, right in front of our eyes.
After Thursday’s earnings call, a friend asked if I was going to write a RIM article. I told him, “No,” because I have nothing left to say. I have called a play-by-play of the RIM implosion since March of last year. Frankly, I’m tired of hearing RIM bulls call the bottom.
But, really, there’s another, more salient reason to not write about RIM. It’s irrelevant. It runs in a space dominated by incredibly innovative companies. And, in a few cases, more innovative than they appeared a short time ago. RIM no longer enters into any equation that matters in the broad spaces you could argue it still (loosely) competes in.
RIM was an opening act to earnings season. One of those odd occasions when slapstick comedy primes the audience for hard-driving rock bands.
Earnings season officially gets under way when Apple reports. As of this writing, according to Yahoo Finance, that event takes place on Monday, July 16. Intel reports on Tuesday, the 17th — that’s confirmed by the company. Also confirmed by the company, Microsoft on Thursday, July 19. On the same day — company-confirmed, as well — Verizon Communications.
These reports should give investors a pretty good feel for what’s going on across several spaces, some of which are tightly connected.
For Apple, we’ll focus on how sales of the third-generation iPad progressed in the company’s fiscal year third quarter. Don’t expect any color on iTV, but it would be nice. If Apple beats its own low expectations and, even more so, if it blows away consensus estimates again, will the stock continue the somewhat familiar pattern of new heights, swift pullback and persistent stagnation at higher lows? While that might frustrate investors, it's been a rewarding trend over the long term.
Intel, as well as Microsoft, can provide color on the success, or lack thereof, of the ultrabook push both companies have led. We’ll get details on Intel’s mobile efforts, as well as its various side projects. And, of course, we expect Microsoft to pull the cross-platform pieces together to tell more of the story about how the company intends to connect Xbox to the Surface tablet to Windows smartphones. What Microsoft says about Windows 8 could also have profound implications for hardware makers such as Nokia and Hewlett-Packard.
On the Verizon call, investors should pay attention to wireless margins. Thanks to iPhone subsidies they took a beating at Verizon in late 2011, but rebounded, as the company predicted, in the first quarter 2012. That trend puts Verizon in the company of other North American wireless firms, such as AT&T, Canada’s Rogers Communications, and BCE.
Solid numbers from these companies — and their peers — could provide the catalyst the markets need to return to bullishness.
Aggressive (and bullish) long-term investors, willing to “double down” on weakness, could benefit by going long AAPL, INTC, MSFT and VZ heading into earnings, coupled with long plays on the SPDR S&P 500 index exchange-traded fund and the PowerShares QQQ Trust ETF .
It’s the type of basket trade you need to be behind 100 percent. In other words, if one or more companies disappoint and the stock(s) suffers, but you believe the long-term story remains intact, be prepared to buy more in anticipation of the inevitable oversold bounce and long-term sustained upside.
—By TheStreet.com Contributor Rocco Pendola
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Disclosures:
TheStreet’s editorial policy prohibits staff editors, reporters, and analysts from holding positions in any individual stocks. At the time of publication, Rocco Pendola was long BCE, INTC, MSFT, NOK, and RCI.