It's shaping up to be a slow Monday, with little domestic data to chew on and only one major U.S. index component -- food distributor Sysco -- reporting earnings. The most notable news among Dow Jones Industrial Average (INDEX: ^DJI) components this morning is confirmation that Swiss bank Julius Baer is acquiring the Merrill Lynch international wealth management business (ex-Japan) from Bank of America. The deal adds much-needed exposure for Baer outside of Europe, while Bank of America benefits by shedding a noncore asset and strengthening its balance sheet as part of an ongoing realignment. Though initial estimates had been higher, the final deal amount was $880 million, paid with a combination of cash and shares.
Although this week is starting off on a quiet note, a number of high-profile earnings reports are scheduled, beginning on Tuesday with Home Depot.
Remodeling, routers, and retail
Home Depot (NYSE: HD) investors will get to see just how severe the pull-forward effect of an unseasonably warm winter was when the company reports second-quarter earnings Tuesday morning. Last quarter's results saw a number of categories, such as outdoor gardening, show strength normally reserved for this quarter, leading to a 6.1% increase in U.S. same-store sales. Expectations for this quarter are a bit muted as a result, with estimates calling for a 2.5% increase in sales to $20.7 billion and earnings per share of $0.97. The company has met or exceeded analyst earnings estimates for 17 quarters in a row, and given that track record, I'm betting we'll see more of the same tomorrow.
Following the closing bell on Wednesday, networking giant Cisco (Nasdaq: CSCO) reports earnings for its fiscal fourth quarter. Expectations call for earnings per share of $0.46 on tepid 3.7% revenue growth. Shares have failed to fully recover after CEO John Chambers offered measured guidance for the current quarter and generally negative commentary about the enterprise and public-sector IT spending environment. In addition to a weak economy, competitive pressures are weighing on Cisco's performance. One particular area of interest for investors lately is the threat of software-defined networking. The concept is similar to that of server virtualization, except with networking hardware -- something that could eventually marginalize the importance of feature-rich networking equipment sold by Cisco. Fellow enterprise IT player VMware (NYSE: VMW) made a big splash in July with the acquisition of SDN specialist Nicira for $1.26 billion, lending credence to the opportunity this disruptive technology presents.
Last but not least, Wal-Mart (NYSE: WMT) releases numbers for Q2 2013 Thursday morning. The report, which comes from the world's largest retailer and private employer, will help shed light on both the U.S. and international economic landscape -- particularly consumer spending, which has continued to erode in recent months. Within the U.S., the company is looking to continue its streak to four quarters of positive same-store sales within its namesake U.S. stores. Overall, estimates call for revenue growth of 5.7% and earnings per share of $1.17.
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