Tick. Tock. Tickertape.
With the minutes winding down on the final trading day of the quarter that was, we can now turn to the events that will shape what promises to be an interesting quarter ahead.
Hopefully, you're already one step ahead of me. If you want to buy before others buy, and sell before others sell, you have to think ahead, instead of reacting to news as it comes down the pike.
Here are the four things I'll be watching closely over the next three months.
The satellite radio merger
No matter where you stand on the union between XM (NASDAQ:XMSR) and Sirius (NASDAQ:SIRI), it's safe to say that a regulatory verdict will come during the fourth quarter. XM and Sirius have been jumping through hoops since they announced their intent to merge more than seven months ago. It's time for regulators to concede that a combination of XM and Sirius won't hurt consumers, or to simply put the deal out of its misery.
I have no problem telling you where I stand on this. Terrestrial radio's lobbying against the merger is proof alone that XM and Sirius are not competing in a vacuum. XM and Sirius have given all of the right answers in addressing fears of price controls and interoperability.
Still, I have to be braced for both eventualities. Because the deal is still not certain to pass, the companies' stock prices don't have the merger benefits baked in. In fact, both companies are trading for slightly less than they did before the deal was even announced.
What's at stake? Plenty. Picture the gee-whiz gadgetry of Sirius' backseat video and WiFi-enabled portable receivers, combined with XM's more attractive cost controls. Picture 15 million subscribers under one roof, with a lot less overhead to divide between them. A successful merger will elevate both stocks. By the same token, with the stocks trading for less than they did the day before the deal was announced, a derailed merger will hurt -- but not obliterate -- the share prices.
Where the toys are
What do you think will scare parents more this holiday shopping season: reading "Mattel" or "Made in China" on a toy box? One can argue that both the company and the country are being unjustifiably targeted as poster children in a global and industrywide problem. Unfortunately, images of the relentless Mattel (NYSE:MAT) recalls are burned too deeply into consumers' corneas.
Mattel is too diversified a company to let this be its undoing, but you'd have to be naive to think that shoppers won't care. There have been one too many news reports of toxic toys, just two months before the holiday shopping season picks up in earnest.
More skeletons in the homebuilding closet
Step right up! Come be the next person burned by believing that the housing-boom rubble has settled. It happened to Michael Vick two quarters ago. Don't let it happen to you in the upcoming quarter.
If the bleak report from the Commerce Department earlier this week -- with new-home sales falling to their lowest level in seven years -- didn't convince you, let KB Home (NYSE:KBH) CEO Jeff Mezger make it clear. "We expect housing industry conditions to continue to worsen through the end of the year and into 2008," he said after the company's horrendous quarterly report.
Investors know that stocks can bottom out before the actual fundamentals land with a thud. Unfortunately, when homebuilders try to call the bottom, they somehow manage to fall through the floor and land even lower. If KB Home doesn't see a turnaround until next year, it may be even longer before existing home inventory dries up, giving developers reasons to be upbeat again.
Movable feasts for couch potatoes
Falling HDTV prices will make LCD and plasma flat-panel screens brisk sellers at Best Buy (NYSE:BBY) over the holidays, but will they be watched? More and more of the major networks are moving their content online to stream on viewers' terms.
ABC has been doing this for ages, but now NBC is launching NBC Direct. The Peacock Network is also teaming up with FOX to launch Hulu, a video-sharing site for network content. The networks also sell episodes online via Amazon.com (NASDAQ:AMZN) and Apple's (NASDAQ:AAPL) iTunes Store.
Sure, it's not that complicated to connect your television to your Web-delivered content, but the appetite isn't as voracious as you might think. Apple doesn't miss much these days, yet its Apple TV convergence appliance has been a dud. Surprising, isn't it? Who wouldn't rather watch video with the family on the sofa than hunched over a clunky PC monitor? Still, it's what consumers have chosen for now.
Maybe this quarter will change things. The networks are going all-out to deliver their new primetime lineups over the Internet. If the last mile will be nailed between Web delivery and your living room -- for the masses, not just the tech-enabled -- it should happen in this new quarter.
Three months later...
Enjoy the quarter. As a member of the Rule Breakers newsletter team, it's my job to try to spot emerging trends early, so that newsletter subscribers can profit from the insight. Earlier this week, I even looked at a few individual stocks with favorable catalysts waiting in the coming quarter. You may want to check that article next.
The weekend will give you plenty of time to figure out where you are and where you want to be. Enjoy the silence, because come Monday, you'll be dipping your feet in the fourth quarter.
