This week one of the biggest earnings stories will come from Research in Motion (RIMM). Research in Motion is scheduled to report earnings after the close of the market on Thursday, September 15th. These earnings are important for other tablet and smartphone stocks because it will give investors an idea at how fast, or slow, the smartphone and tablet market is growing. If Research In Motion presents higher revenue than the company's fiscal fourth quarter, we may see a new light shine on the stock. Keep in mind the stock is down about 58% from the February 2011 high; which makes the stock look very buyable.
To review, revenue fell about 11.6% from the fiscal quarter ending February 26, 2011, to the fiscal quarter ending May 28, 2011. Gross profit, expenses, net income and EPS decreased as well. This should be expected because the company's fourth quarter includes December and post Thanksgiving holiday shopping. However the stock was punished because while comparing the fiscal quarter ending May 29, 2010, to the most recent earnings report, we see a decrease in operating income, net income, and EPS. This indicates the company may be slowing down; but we will not know for sure until the current fiscal year is complete. Until then investors can only speculate as to whether the stock will head up or continue to crash.
My own opinion is neutral. While I believe the company is slowing down due to competitors developing more innovative and fun products, Research in Motion is continuing to produce business friendly products; such as its business centered tablet. As aforementioned, this is why investors of Samsung, Nokia (NOK), Apple (AAPL), Microsoft (MSFT), HTC, and other tablet and smartphone companies will be watching this earnings report and conference call. Research in Motion should give investors an early look at how the holiday season could play out. Because of this the company's earnings can potentially shift the broader technology sector up or down in the second half of this week.
Earlier in the week, Monday the 12th, the small cloud startup Overland Storage (OVRL) is scheduled to release full-year earnings. You can view more details on why Overland is a stock to watch here. While Overland may be a small cloud company, the earnings could affect other cloud giants such as EMC and NetApp (NTAP). As the previous article discusses, Overland has seen continued revenue decreases over the past few years. This can be attributed to decreased expenses and the larger cloud companies hoarding customers. I am expecting numbers that surpass expectations; which are very low for Overland. Despite the slowdown in financial data and extremely low volume, investors are not shying away as the stock has continued to outgrow the Nasdaq over the past year.
Investors will be considering many macroeconomic issues this week, but Research in Motion's earnings may cause a stir for the technology stocks in your portfolio. Not to mention if Research in Motion reports consumers are not spending as they have in the previous 4-6 quarters we may see a consumer goods and service sector sell-off as well due to continued recession fears. Similarly if Research in Motion reports and guides for stronger consumer expenditures, we may have some real evidence that consumers are still spending at healthy rates; which may help to ease recession fears. Either way Research in Motion will be a Tech stock to watch this week.
Disclosure: I am long EMC.