5 Things to Watch This Week: Red Hat, Houses, Drugs, TVs and Window Dressing

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Best BuyThere's never a dull moment on Wall Street. Let's go over some of the items that will help shape the week that lies ahead.

1. Best Buy can live up to its name: How good or bad was Best Buy's (BBY) holiday quarter? We'll find out for sure Thursday when the consumer electronics retailer posts its latest financial results.

There are plenty of reasons to be apprehensive. The superstore chain has seen its reputation smacked around in recent months. First, there was the Thanksgiving weekend snafu. A lot of people who thought they were scoring great deals through BestBuy.com were told weeks later that the retailer would not be honoring those orders.

Then there was a scorching Forbes article in January that took the company's store experience to task. The writer complained about the aggressive tactics in promoting add-on services and insurance protection. CEO Brian Dunn responded publicly on the Best Buy blog, and that only made things worse.

The hubbub has quieted down, but all of the nightmares in recent months will be revisited if Best Buy cranks out a disappointing quarterly report.

2. Heading out to the corner drugstore: Walgreen (WAG) reports on Tuesday, but the pharmacy chain also has its own painkiller to prescribe.

Walgreen warned earlier this month that its prescription orders fell 10% in February after it lost its contract with Express Scripts (ESRX). Walgreen stands to miss out on $4 billion in revenue and more than 80 million prescriptions this year as a result of the split.

Walgreen also warned of weakness as a result of a mild flu season. That's good news for you but bad news for Walgreen.

3. The Linux penguin strikes again: Red Hat (RHT) checks in on Wednesday.

Most people aren't familiar with Red Hat, but businesses know the enterprise software company all too well. Red Hat provides business software based on the Linux open-source platform. Yes, open source is free, but Red Hat provides solutions and support to corporations at cheaper prices than traditional enterprise software.

Analysts see Red Hat earning $0.27 a share, just ahead of the $0.26 a share it delivered a year earlier.

4. Wall Street window dressing: It's that time of the quarter again. Friday is the final trading day of the first quarter, and that will find some -- though thankfully not most -- fund managers scrambling to shore up their portfolio holdings.

The practice of "window dressing" consists of fund managers dumping losers and buying some of the market's hottest performers. When the quarterly performance reports go out, fund holders will see that the managers were smart enough to own the hot stocks.

There's a fatal flaw to window dressing, of course. Investors aren't stupid. They can see how the fund actually performed during the period. There are plenty of websites and publications that can compare a fund's performance relative to its peers.

There haven't been any recent studies on how common window dressing is these days. One would think that the information age should make the practice obsolete. However, it probably still happens to some extent. Just keep that in mind as you review your fund performance reports when they're issued for the March quarter in a few weeks.

5. If you build it they will move: Homebuilder Lennar (LEN) reports on Tuesday.

The housing market is showing signs of life, and Lennar is likely to post its eighth consecutive quarterly profit. Yes, even a developer hailing from the battered real estate market of Miami has been in the black for two years.

Analysts do see Lennar posting a narrower profit than it did a year earlier but on a healthy 26% surge in revenue.

Some of the key metrics to watch as you go over the report are order cancellations and the backlog of new homes that have yet to be delivered.

These are certainly interesting times for the real estate developers. The economy is showing signs of life, but there's also the matter of rising interest rates. Mortgage rates have risen above 4% for the first time since late October.

This is important because as mortgage rates move higher the value of a home that a potential homebuyer can afford goes down. If prices of existing homes move lower it will make it that much harder for Lennar and its peers to move new homes at current prices.

Then again, there's always renting.

Longtime Motley Fool contributor Rick Munarriz does not owns shares in any of the stocks in this article. The Motley Fool owns shares of Best Buy.


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47 Comments

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burgesswv

I have shopped Best Buy for several years now. Their produc ts & prices are fine with me. Every bit as good as some larger box stores.
They gave my grandson a job while he attended college. Also, my neighbor is employed there, as a manager
I approve of the good service my local store offers.

March 26 2012 at 8:02 PM Report abuse rate up rate down Reply
sjericksen

I only bought something once at Best Buy Norton's Internet-Security/AV program. I read something recently about Best Buy as one of the retail giants maybe folding. Given the comments, posted here about bad service, misleading information etc as consumers we should not have to be put up with rude employees and bad service. This extremely rude B.B.. towards the person returning the faulty router, she's got some nerve attempting to blame the customer. They Broke It. Every now and then, an electronic device is defective
it was completely legitimate and the customers right asking to exchange the faulty router for a working unit.
I would have demanded my money back as well. I will take my business elsewhere.

March 26 2012 at 7:13 PM Report abuse rate up rate down Reply
1 reply to sjericksen's comment
James Taylor

I'll never buy at Best Buy again. I brought my computer in for start up problems. They checked it out and told me my mother board was fried. They sold me a new computer because i wouldn't be able to get a new mother board. I kept the old computer because a friend uses old parts to fix computers. He checked my computer and discovered the mother board was fine. I just had a bad memory stick which he replaced for ten dollars.

March 26 2012 at 8:04 PM Report abuse rate up rate down Reply
DSD

Best Buy, bad news.

March 26 2012 at 6:37 PM Report abuse rate up rate down Reply
Hi torch

The worst customer service in America. I bought a router, it was a bad router (that sometimes happens) I returned it and the employee (girl) was extremely rude and dare to imply that I broke it. I was just going to exchange it, after that negative attitude and aproach, I just wanted my money back. Acouple of months before this I got a GPS, I needed an employee for that, I saw like 7 employees walking and kidding around and totally ignoring me while I was standing there waiting, finally after 15 - 20 minutes I demanded service. It is my fault by knowing a bad Best Buy is I don't know what was I thinking to go there. NEVER AGAIN. Here in San Diego California we have several locations around the County. People, Fry's has better choices and deals, Office Depot, walmart, Costco. DO NOT BUY AT BeaatBuy.

March 26 2012 at 6:17 PM Report abuse rate up rate down Reply
posie549

Best Buy is a terrible company for returns You can't check out the product to see if there is damage before you bring it home. A company I worked for bought a TV. when we opened it and put it up the screen had a terrible crack. Called to see if it could be replaced they said we must have done it. No way we did it when it was like that from the box. Went through a lot of red tape for replacement. So buyers beware.

March 26 2012 at 4:49 PM Report abuse rate up rate down Reply
Greeneyes

Best Buy has horrible customer service and the company truly does not care what the customer thinks.

March 26 2012 at 4:46 PM Report abuse rate up rate down Reply
kas1964

their pre Thanksgiving prices were lower than their Thanksgiving weekend and post Thanksgiving "sale" prices. Was really glad I bought before the Thanksgiving and holiday "sales"

March 26 2012 at 4:45 PM Report abuse rate up rate down Reply
CMEL57

This will be next big box store chain to fold. Besides their unfair sales practices, they are doing away with their CD and DVD department. See Ya.

March 26 2012 at 3:30 PM Report abuse +1 rate up rate down Reply
joanmarie1640

I recently saw a list of ten stores that will no longer be around in five to ten years--no surprise that Best Buy was one of them. Their prices are not competitive, their customer service is bad and they never have on hand any of their sale priced items. Seems they only stock a few of the items in their sales ads, if that, and when those few are sold---there won't be any more coming in. Won't shop there anymore--feels like a scam. My daughter took her Best Buy bought two year old computer into their service dept. for a problem she was having--she was told it would be an easy fix on site. When she went to pick it up, turns out they couldn't fix it and had erased everything in her computer. She was livid but, was told there wasn't anything she or they could or would do about it.

March 26 2012 at 3:26 PM Report abuse +1 rate up rate down Reply
rumandcoke747

Best Buy sells crap like Whirlpool Washers and Dryers !!!!!!!!!!!!!!!!!!!!!

March 26 2012 at 3:16 PM Report abuse -1 rate up rate down Reply