The next four days could very well set the tone of the stock market for the next several weeks, as some of the largest tech companies in the world will be releasing quarterly earnings results in the days to come. And since these same stocks are also some of the biggest companies in the world, they will have a disproportionate impact on the capitalization-weighted S&P 500 Index, which in turn could drive the rest of the market up or down with it.

Apparently Seagate Technologies (STX) couldn’t wait for the market to close to make its announcement, which it did before the stock market opened this morning. Although the news was generally decent on a comparative basis (e.g., revenue and gross profit up more than 4% from the same quarter a year ago), it fell short of the so-called “whisper number” that many investors were expecting. As result, the stock has declined more than $4 in value today, now down 10% from its closing price of $66.44 on January 9^th.   On the positive side, management confirmed the payment of its quarterly dividend at $0.54/share (payable on Feb. 24 to shareholders of record as of February 10), which works out to a yield of 3.4% at today’s price. Seagate remains a ‘HOLD’ in our Investments Portfolio.

Later today we’ll hear from Microsoft (MSFT), which is set to make its announcement after the market closes. Interestingly, its stock price popped up a couple of dollars late last week, only to give about half of that back during trading today (perhaps due in part to Seagate’s potentially trend-setting disappointment).  Its share price has increased 30% from a year ago due in large part to the success of its tablet and aggressive movement towards the cloud, but the past 75 days shows a classic “pigtail” trading pattern that usually erupts into a large move in one direction or the other as the coil becomes progressively tighter. So, if the results are appreciably outside of analysts’ estimates then we could see a very large change in value. Microsoft is a ‘BUY’ in our Investments Portfolio up to $48.

Next up is our old friend Apple (AAPL), which has gone from “zero to hero” over the past nine months, appreciating almost 50% in value. But investors tend to go from one extreme to the other on this stock, and it now appears to be suffering from its own success. Expectations are so high for a blowout quarter that anything less than that could push the stock back down to the $106 level where it has found strong technical support over the past ninety days.  Apple is still a ‘BUY’ up to $115 in our Investments Portfolio.

Reporting on Tuesday is AT&T (T), which has fallen out of favor over the past three months but appears to have found support around $33 where it currently sits. Earlier today AT&T announced it has agreed to buy Nextel’s wireless business in Mexico for $1.875 billion, so it appears the company is continuing to execute its innogration strategy on an international basis. We still have AT&T as a ‘BUY’ in our Investments Portfolio up to $39.

Also reporting tomorrow is Western Digital (WDC), a long-time favorite of ours that is down more than $5 in trading today in sympathy with competitor Seagate mentioned above. In this case Seagate’s pain may be Western Digital’s gain, as we feel the two companies should be judged independently based on their very different hardware applications for cloud storage. Currently WDC is trading above our buy limit of $95 so it is a ‘HOLD’, but if it drops below that later this week we suggest you add it to your portfolio.

On Wednesday we’ll hear from Qualcomm (QCOM), the subject of considerable speculation over its future relationship with the Chinese government due to a recent lawsuit alleging billing improprieties. As we stated earlier this month, our interpretation of the comments made by the company since then indicate that the relationship will remain intact, in which case the stock might be a bit oversold at the moment.  Qualcomm is a ‘BUY’ in our Investments Portfolio up to $85.

Below is a list of all of our portfolio stocks reporting earnings during the next month, and you may want to consider putting stop loss orders under your positions in case the market starts to move away from you faster than you can react.

INVESTMENTS PORTFOLIO:

Microsoft (MSFT)                              Jan. 26

Seagate (STX)                                    Jan. 26

Apple (AAPL)                                     Jan. 27

AT&T (T)                                             Jan. 27

Western Digital (WDC)                    Jan. 27

Qualcomm                                          Jan. 28

Cisco (CSCO)                                      Feb. 11

NEXT WAVE PORTFOLIO:

Silicon Motion (SIMO)                     Jan. 26

Teradata (TDC)                                 Feb. 5

Paycom Software                              Feb. 2 – Feb. 6 (estimated)

FireEye (FEYE)                                 Feb. 11

Zynga (ZNGA)                                   Feb. 12

Varonis Systems (VRNS)                  Feb. 17

Nimble Storage (NMBL)                   Feb. 25 – Mar. 2 (estimated)

                EQUITY TRADES PORTFOLIO:

Riverbed Tech. (RVBD)                   Jan. 29

LinkedIn (LNKD)                              Feb. 5

Symantec (SYMC)                            Feb. 5

Kongzhong (KZ)                               Feb. 23 – Feb. 27 (estimated)

Autodesk (ADSK)                             Feb. 24 – Mar. 2 (estimated)

salesforce.com (CRM)                      Feb. 25 – Mar. 2 (estimated)

NASDAQ Composite Index:                                                                        

Friday, January 23 = 4,754.88                                                 

Trailing 12 months = + 13.3%                                        

Trailing 7 Days = + 2.9%                                      

Trailing 4 Weeks = + 0.7%

Next Wave Portfolio Update

By Rob DeFrancesco

Shares of Nimble Storage (NMBL) during the past couple of weeks have come under selling pressure after the company at the start of the year announced that Eric Mann, senior VP of worldwide sales, had resigned after being on the job for only three months. There appears to have been some type of personality clash between Mann, a veteran of EMC and NetApp, and the Nimble management team.

In the middle of this month at the Needham Growth Conference, Nimble CEO Suresh Vasudevan said Mann—hired quickly last fall after the company’s then head of sales, Mike Munoz, had to take an extended leave of absence because of a family emergency—possessed the right credentials for the job, but did not integrate well with the sales organization.

It became quite apparent after five or six weeks that this was not a good fit, said Vasudevan. Part of the problem was that Mann remained based on the east coast, while Nimble is located in California. In addition, Vasudevan indicated that Mann did not step up to meet the aggressive sales management pace needed for a growth company working to take market share from much larger vendors.

Until Munoz returns from leave or a replacement for Mann is found, Nimble’s regional sales leaders will report directly to Vasudevan. It looks like the entire hiring of Mann was a mistake from the start. While Mann is highly qualified and just happened to be readily available to step in for Munoz, that didn’t mean he was the correct person for the position.

The main investor concern at this point is whether or not this upheaval at the top of the sales chain was caused by poor execution or itself caused disruption among the sales force in the latest quarter. For fiscal Q4 (ending January), there is now a somewhat elevated level of risk associated with a potential shortfall on the top line. The consensus revenue estimate for the quarter is $66.5 million, representing growth of 59.6% from the year-ago period.

A limiting factor for any potential shortfall: Nimble primarily sells its products through its worldwide reseller partner channel, with most deals closing without any involvement from the company itself. Very big deals are handled by inside sales teams, but Nimble is still small enough that top management gets involved in these contracts, meaning the company’s bench is deep enough to handle these larger enterprise arrangements (with limited interruption in the sales process) while the search is on for a new head of sales.

Nimble Storage is a ‘Buy’ in the Next Wave Portfolio up to $28.

Paycom Software (PAYC) shares in late November traded to a new all-time high of $29.42. Following the 65% jump in the stock to that level just since the end of October, it made sense for a bit of a pullback. The announcement in the middle of January of a secondary offering by outside investors caused the shares to retreat into the low $20, but a subsequent rally has taken them back above $27.

Credit Suisse last week started coverage of Paycom at ‘Outperform’ with a price target of $30, saying the provider of cloud-based payroll/human capital management (HCM) solutions has significant competitive advantages—including a full suite of HCM offerings, real-time analytics and a single database architecture.

Paycom delivers a simple and uniform user experience, while at the same time eliminating data integration issues associated with the maintenance of multiple databases, according to the firm.

Paycom Software is a ‘Hold’ in the Next Wave Portfolio.