Posts by Brian.oco

Google's stock is up 10% today, and the stock market is up over 250 points (at 2 PM EST), and I don't think the twin spike is merely a coincidence.

Why? As I wrote yesterday, the market looks to major tech players like Google, Apple and IBM, just to name a few, to act as virtual "canaries in the gold mine" to gauge the short-term health of the U.S. economy, and, by extension, the stock market.

So when Google comes out with a great story on web traffic and revenue growth for the third-quarter, that is going to feed into investor perceptions that maybe, just maybe, there are ample reasons to get back into the stock market, and I think that's reflected in what we are seeing today.

The internet giant is cautiously confident that it will survive the current economic downturn, although Google is taking nothing for granted. "We are all in uncharted territory," Google Chief Executive Schmidt told analysts yesterday. "We are very realistic about the macro environment, but we are optimistic about Google's future."

Job one for Google is to cut spending. As Reuters put it earlier today, "Wall Street analysts were pleased by efforts to rein in expenses. Many have complained for years at how Google was "spending like drunken sailors" to hire new employees and install computer data center capacity as its growth exploded."

But Google only hire 500 staffers for Q3, bringing the total number of employees up to …

The stock market has responded favorably, relatively speaking, to the rumor that Microsoft is once again making a bid for Yahoo. Traders are buzzing over whether Steve Ballmer will make the same $33 per share offer now that he made a few months ago. Actually, I wouldn't be surprised if he did - that's how bad Microsoft wants Yahoo from what I'm hearing on Wall Street.

Now, with Yahoo reportedly once again walking back to the plate, the market seems to have something to hang onto.

Two additional themes with a tech flavor also have the street on edge. First, we're expecting a report on video game sales later today, which is supposed to be positive, from what analysts are saying. If you look at Gamestop, the stock seems to be poised to make a jump in advance of the game report. If Gamestop takes off, the sector should be in good shape - despite the gloomy holiday shopping projects we saw earlier this week.

Meanwhile, Google is announcing third-quarter earnings after the close today, with analyst estimates at $4.76 for earnings-per-share and $4.06 billion for revenues. Says the financial web site First Call today, "Shares of Google are trading lower into the company's earnings report tonight amid generally low expectations, as investors and analysts brace for a slowdown in online advertising. Also, Google will likely maintain its policy of not providing an internal forecast, leaving some uncertainty in the minds of investors and analysts."

Look …

Today's stock dive - over 700 points - is being linked directly to this month's retail sales number, which fell 1.2% for September. That's twice as much as analysts had expected.

Retail sales are of particular interest to the technology sector, which counts heavily on consumer spending to buy its gadgets and gizmos. That's especially true in the last quarter of the year, when the holiday shoppers come out, waving credit cards and checkbooks at retailers like there was no tomorrow.

Just maybe not this year. According to a brand new Harris Interactive study, 45% of US adults plan to spend less money on gifts this holiday season than last because of the state of the economy, and one in five plan to spend significantly less.

Here are some other key trends from the Harris study:

-- Some 80% will purchase fewer gifts this year . . . by . . .
-- Buying gifts for fewer people (46%)
-- Buying a smaller amount of gifts for the same number of people (43%)
-- Or making some gifts instead of purchasing them (22%)
-- 63% will buy less expensive gifts.

The one silver lining is that consumers are using the Internet to buy goods and services, and many of them -- 55% -- like to buy their technology toys online.

I wonder how many of those will be foregoing eBay to do their holiday shopping this year. eBay came out …

Last week, in the middle of the worst stock market meltdown since the 1930's, U.S. Secretary Henry Paulson called on some of the banking industry's leading lights to figure a way out of this mess. Paulsen, with Lloyd Blankfein (Goldman Sachs), John Mack (Morgan Stanley), Vikram Pandit (Citigroup), Jamie Dimon (JP Morgan), and Ken Lewis (Bank of America); came up with a series of steps to fix the U.S.e conomy, both in the short- and long-term. Let's summarize what the group decided to do . . .

Immediate Goals:

> International coordination and cooperation by financial regulators
> Establish fair value accounting
> Regulate (or at least mediate) market manipulation
> Have the Inter-bank lending and the President's working group stick together on policy

Near Term:

> Establish new public capital
> Establish new private capital
> "Open bank" assistance and depositor confidence
> Public purchases of MBS
> Ensure public insurance for assets
> Strengthen financial institutions
> Emphasize foreclosure prevention
> Enhance liquidity at the Federal Home Loan Banks
> Expansion of money market guarantee program

Intermediate Term:

> Build a stimulus plan for housing
> Expansion of FDIC failure resolution procedures
> Establish an office of insurance information
> Fix credit default swap mess
> Engage in systemic regulatory reform

These are the steps that the United States' leading economic minds are planning …

At the end of trading today (Friday) it looks like the stock market won't end up in positive territory, but it will come close - an event every trader and investor on the planet planet will take in a Wall Street minute.

No rhyme or reason why, it just seems that the market is finally ready to capitulate after eight straight days of mega-losses that wiped out over $2 trillion in portfolio assets in the U.S. alone. A point worth noting, markets always self-correct - in both directions. So eventually profit motives will be so strong that investors won't be able to resist the urge of buying stocks on the cheap.

Now to the tech market. In my last post, I mentioned that one possible safe haven from this Mother of All Stock Markets is medical technology stocks. I specifically mentioned how Baxter International was well positioned to survive and even thrive throughout the chaos.

Well, one big trading partner of Baxter's is well-positioned, too - Amgen, the big biotechnology giant. Amgen specializes (from the firm's web site) "in the discovery and manufacture of human therapeutics." Amgen markets products in the areas of supportive cancer care, nephrology, inflammation, and metabolic diseases. Principal offerings include anemia treatments Aranesp and Epogen, rheumatoid arthritis drug Enbrel, and white blood cell stimulator Neupogen.

Amgen, which has a marketing alliance with Baxter International, has a great balance sheet, with plenty of cash on hand to weather this economic storm. Like most …

Grasping, clawing, and scratching for a single slice, however thin, of good news out of the worst stock market week ever.

Okay. IBM’ earnings were actually pretty good. Tech spending for software and services – what Big Blue does best – is holding up, and if there is a soft landing spot in the stock market – one that will give investors a nice bounce into the next rally – the software side of the technology sector could be it.

One other piece of good news comes from utilities giant General Electric, whose third quarter earnings should also meet expectations – not a mean feat in this sour economy. That should give the stock market a shot in the arm today, global meltdown nothwithstanding.

Some other, more sobering, news from the economic front . . .

-- The global coordinated rate cut won't stop the recession, said Paul Donovan, senior international economist at UBS. “At some point too, even policymakers are going to have to accept; 'look we've put in place enough but we've had to pay for the massive stuff ups of the last decade.' And that's going to mean substantially higher unemployment, it's going to mean significant losses in pension funds. It's going to see massive losses in confidence right around the Western hemisphere, and increasingly it seems in parts of Asia as well. We're going to have to pay for it and as we pay for it, I think we're going to see …

A coordinated effort by global central banks, led by the U.S. and the Federal Reserve Board’s 0.5% emergency rate cut today has more or less calmed the financial markets this morning (down about 100 points in mid-morning trading).

I say “more or less’ because who really knows? But the economists I’m seeing and reading think that lower rates will get more people back into big ticket items like houses, cars and travel packages – a must for an economy that is being dragged down by frightened consumers. Plus, the rate cut relieves pressure on banks who either can’t or won’t find people and businesses to lend money to. The rate cut should help in that area (it historically has normally done so) but as I’ve been saying, we are not in ordinary times anymore.

The economy is also taking a toll on mobile phone sales, with UBS telecom analyst Maynard Um telling Reuters that his mobile phone growth forecast of six percent, made earlier this year, is being sliced in half to three percent growth. Same goes for JP Morgan analyst Ehud Gelblum, who is slashing his forecast from 8.1% to 6.1% for the next year. Both analysts blame the U.S. economy, but say that growth in Europe is already slowing and that growth in China will continue, but at a much slower pace.

Of course, market saturation won’t help the stocks of cell phone makers. The U.S and European markets are just about full-up on cell …

The stock market seem to be stabilizing, aided by news that the Federal Reserve will buy up short-term debt in order to get companies financially interacting again. I won't get into the gruesome details, but buying up short term debt (known as commercial paper on Wall Street - a mechanism that enables companies to borrow money overnight or or over the course of a few days) is an area that the Federal Reserve rarely gets into.

Of course, these are historic times and the Fed will every tool in its arsenal to reverse the sliding economy. That's what we're seeing here - and it seems to be generating a positive reaction among investors.

On the tech side, another byproduct of the U.S. credit crunch is a virtual halt to venture capital activity. Dow Jones VentureSource reported that in the third quarter of 2008 venture capital activity was off 66% from the same period in 2007. It's worth mentioning that 2007 wasn't a great year for VC activity, either.

Historically, in the tech sector, venture capital money is used to fuel Initial Public Offerings - "IPO's" in Wall Street lingo - which provides firms with much-needed capital to grow their businesses.

Just how bad is the VC market for tech firms? Jessica Canning, global research director for VentureSource, told Forbes last week that it as the "worst IPO market we've ever seen."

Consequently, there is very little money out there for tech firms to expand research …

The impact from the ongoing credit crisis is finally starting to translate into layoffs for the tech sector. The folks I'm talking to say that AT&T, Apple, Yahoo, Sun, eBay, Microsoft, Nortel, HP, EDS, and even Google are going to be passing around pink slips with alarming aggressiveness in weeks to come.

Sun looks like its ready to layoff 2,500 employees, Yahoo up to 3,500, Apple about 1,500, and HP will slice off a whopping 25,000 staffers after its buyout of EDS. Industry statistics say that about 1,417,000 tech staffers are out of work so far this year, and that's just in Silicon Valley (I.e., California) alone).

We'll know more in the last two weeks of October, when a lot of tech heavyweights issue their third quarter performance numbers. Yahoo, for example, which has had a rough ride this year - with its stocks price sliding by eight percent in trading just today - may lead the way with massive layoffs if Q3 numbers don't come in as expected. From the analyst notes I've seen this past week, nobody thinks that's going to happen. I certainly hope we're all wrong on Yahoo, but I suspect the worst.

Also, look for Google to re-evaluate its $1 billion investment in AOL. While nothing solid seems to be in the works regarding layoffs, AOL has closed down its AOL Journals and AOL Hometown sites, and investor confidence in the company is as low as I've ever seen it.

I'm …

Well, as they say in Vegas, in for a dime, in for a dollar.

Or in the case of the Congressional bailout that President Bush wasted no time whipping out his sharpie and signing into law, how about $700 billion?

The revote in the U.S. House of Representatives was never in doubt. Traders I know on Wall Street were telling me industry lobbyists, and especially tech industry lobbyists, were pushing hard for the bill. Rumors of companies all over Silicon Valley running out of cash to meet payroll spread like wildfire, although I think a lot of that is just hyperbole. It's possible some small tech outfit might be running into a cash crunch, but most firms still have access to credit, albeit at stricter terms and potentially higher rates. But few lobbyists were playing it safe, talking up the bill to Washington pols and predicting dire electoral consequences if the bailout bill didn't go through.

But go through it did. By the end of next week we should have a good idea if the bailout should work or not.

One bit of good news on the credit front came from the financial sector, but directly effects the tech world. Wells Fargo agreed to purchase Wachovia Corp. in a $15 billion deal. Why should we care about that? Because the deal went forward without any federal intervention (unlike the purchase of Wachovia's bank deposits by Citicorp last week, which was mid-wifed by the Federal Deposit Insurance …

I want to get to the impact of the current economic crisis on tech workers, but first a word on U.S. Treasury Secretary Henry Paulsen, who engineered the mammoth $700 federal bailout of Wall Street with your tax dollars. And your kids' future tax dollars, and their kids' future tax dollars.

I've heard from a lot of Wall Street wise-guys that Paulsen has misread the problem, and that we, as a country, are giving the federal government way too much power that we'll never get back. Oh, and that there is no guarantee that the bailout will even work.

Exhibit "A" is Bud Conrad, Chief Economist of Casey Research, author of the Wall Street research publication "The Casey Report". He says that Paulson has failed to foresee the economic crisis as only a bank crisis and that Paulson is wielding “financial nuclear weapons.”

Conrad writes: "And who is in charge of managing these huge swaths of the U.S. economy? Everybody seems to believe that Paulson is the right person to manage this situation. I disagree."

Conrad asks us to examine Paulsen's track record of insisting, again and again over the last year, that there was no problem. He points out that Paulsen is on record claiming that the subprimemess was “contained” at only $100 billion. And, adds Paulsen, it is hard to overlook the multiple failed ideas he has floated, including the super SIV (four big investment banks to wrap SIV assets in tissue paper and …

The stock market seems to be playing a waiting game with a Congressional bailout taking on a new shape in Washington. I’m hearing about a new bailout plan that would raise FDIC insurance limits from $100,000 to $250,000 and would include some kind of capital gains tax relief to ease pressure on investors. The core of the plan – billions in payouts to Wall Street firms strangling on toxic debt – is still intact.

Still, that sounds better to me than the “crap sandwich” (as one House GOP leader put it) that Barney Frank and Nancy Pelosi tried to foist upon taxpayers on Monday. Let the free markets run their course, as painful as that may be. But the new provisions, geared toward protecting banking customers and easing taxes and regulations on investors, is a major step in the right direction.

Once passed, and that should happen this week, look for an immediate lift on Wall Street, with credit becoming slowly more available and businesses breathing a sigh of relief. I do believe we’re kicking the can here and not addressing the root cause of this economic prices – falling home prices and horrible lending practices – but something needs to be done now.

That’s the new meme from Wall Street, anyway. Whitney Tilson, founder and managing partner of T2 Partners and Tilson Mutual Funds appeared on the invaluable Tech Ticker this morning. He said that Congressional approval will have an immediate "psychological impact" on the financial …

I might have mentioned that I wrote the book proposal and the first two chapters for Peter Schiff (aka "Dr. Doom) and his increasingly prescient book "Crash Proof: How To Profit From the Coming Economic Collapse." Schedule conflicts made it impossible to keep working on the book, but Schiff finished it all the same, publishing it two years ago.

I'm glad he did. In the book, Schiff points out how it was a credit-driven consumer economy that fueled the technology bubble, and then the housing bubble right after it. As politicians figured out that demand for credit could be leveraged, with Wall Street's help, into a massive Ponzi scheme where everyone got what they wanted: consumers got houses they couldn't afford, politicians got plenty of votes and lobbyist money from book economic times, and Wall Street got plenty of business from borrowers. Lenders then turned those loans over to Freddie Mac and Fannie Mae, the chief buyer for home mortgages and chief enabler for both Wall Street and Main Street's addiction to debt.

Well, the bill has come due and the party's over. Look at the numbers: net mortgage issuance in calendar 2005 was $1.1 trillion. Net mortgage issuance in the 2nd quarter of this year, annual rate, was $80 billion. That tells me that Wall Street is already come to terms with what Schiff refers to as a "severe recession" that's barreling down the pike. Now, after 15 years of bull markets and unbridled growth, fueled by …

I’m writing this post on Sunday night, just hours after the U.S Congress tapped into our wallets for up to $700 billion in funds to bail out Wall Street for its addictive reliance on bad loans and risky credit deals.

In the process, and what you won’t read or see in the mainstream media, Congress bailed itself out, or tried to, anyway. Nancy Pelosi and Barney Frank can rail against deregulation all they want, but the real culprit in this historic economic slide was Washington’s political wish that everyone own a home. To that end, both the Clinton and Bush administrations used Fannie Mae and Freddie Mac to buy up mortgages after encouraging lenders to loosen lending rules to make sure even people with bad credit and who didn’t have a down payment could buy a home.

Investment bankers were only too happy to comply, mindful of a thirty-year run where housing prices rose steadily, thus feeding the tragically-misplaced perception that the good times would never end. At least President Bush, for all his faults, attempted to ring the bell and alert Congress in 2003, 2005 and 2007 (and finally, once again in 2008 that led to some reforms against Fannie and Freddie, but by then it was too late) about the cancer that had stricken both mortgage agencies.

Now we’re left with what one Republican GOP leader accurately called a “crap sandwich). Here are the details, based on a rundown tonight from the Associated Press.

…

I've been writing for a year now on how the information technology sector would be impacted by an economic downturn. Well, it looks like we're going to really find out. As I've written, when credit dries up and loans and capital are hard to get, tech companies hunker down and freeze new hires, push off marketing campaigns, and roll back research and development efforts. And if none of that stuff works, then layoffs come next.

But that's only IF companies stop spending money on information technology products and services. Right now, it would seem such spending is slowing, or will begin slowing soon. But actually, that hasn't happened yet.

One of the country's top technology analysts, Mark Murphy of Piper Jaffrey, has actually looked at the numbers and scoured the estimates and concluded that things aren't as bad as they seem right now in terms of IT spending.

Using the slaughtered financial sector as a bellwether, Murphy concludes that IT spending from one of the U.S.'s worst-off industries may not be so bad. Talking with senior tech officials at some of the country's largest (remaining) financial institutions, Murphy says that things actually look fairly optimistic.

From Murphy's report . . .

Positives:

Projects have not been stopped midstream; those that began last year continue to move forward.

Investment banks that saw this coming took actions to reduce costs a year ago, and have actually begun to improve spending in recent months.

Spending …

While we play "wait and see" for Congressional leaders to hammer out some kind of bailout package for lenders and banks, there's other news going on - believe it or not - on Wall Street.

While switching between CNBC, CNN and Fox News to get the latest on the financial crisis, I caught Stifel Nicolaus airline analyst Hunter Keay saying that, going forward, airline travel is going to be a "mid-priced luxury good" - akin to buying jewelry or purchasing a tuxedo. All this grim economic news is tough to take but at some point you have to laugh - imagine being wedged into the middle row of a flight from New York to LA, have the stewardess toss a bag of peanuts at you, and that is considered a "luxury" experience. I'll take the train, thanks.

The big news on the tech front continues to be T-Mobile (a division of Deutsche Telekom) and it's new G-Phone. There's a lot of talent on DaniWeb so I'll leave the reviews to the experts. What I'm looking at is DT's stock price this week, and it's hard not to notice that the G-Phone is falling flat as a revenue-enhance - at least so far. DT's stock is hovering around $15 and $16 per share and it's showing no inclination to shoot upward even as the G-1 Phone is front and center publicity-wise.

Part of the problem is that the reviewers I've read don't like the G-1. Many are saying …

The market is hovering around positive territory - but barely - after billionaire financier Warren Buffett announced that he was plugging in $5 billion to newly-minted commercial bank Goldman Sachs. The investment was seen as a vote-of-confidence in the splintered financial sector by one of America's most respected market visionaries. It's also a signal from Buffett that the $700 billion payout should pass, in some form.

After watching U.S. Treasury Secretary Henry Paulsen's testimony in front of the U.S. Senate Banking Committee yesterday, I have my doubts, although the fact that the Sage of Omaha backs the bailout tells me it has a better shot of passing than I thought 24 hours ago.

For a great blow-by-blow description of what it's been like trading the financial markets the past few days, I'm going to direct you to a pair of links on CNBC.com. Read the narrative and see if it doesn't scare you silly, as it did me.

http://www.cnbc.com/id/26856741

http://www.cnbc.com/id/26856892/site/14081545/

In tech news, such as it is these days, Yahoo is apparently entering into a new round of talks with Time-Warner to buy out America Online. On Tuesday, the Yahoo board of directors met for the first time since activist investor Carl Icahn was granted access to the boardroom, according to the Financial Times. No word on what role Icahn played in the move, and the Times' source says that talk are not underway yet, but should begin shortly.

Time …

The stock market is down 370 points after Monday trading and nobody is really sure where we go from here.

I’ve been around Wall Street for over 20 years and I’ve never seen anxiety like this – people are scared to death and a run on investment accounts - including once staid money market funds – is not out of the question.

The $700 billion bailout prescribed by the White House is no sure thing, either. The idea is to take the bad debt off the books of investment houses and transfer them to the U.S. government – specifically you and me. That would ostensibly free up cash and encourage financial institutions to get back into the business of lending people and businesses money so the economy can get back on its feet after suffering the fiscal equivalent of a heart attack.

Consequently, any news from Wall Street is being greeted with some combination of hope and trepidation by investors. Take Microsoft’s announcement today that it plans on buying back $40 billion growth of company stock. Normally, companies do because their stock has fallen even though financial fundamentals are good.

Microsoft, which also announced that it had received a “Aaa” rating from Standard & Poors, saw it’s stock rise by 6%, as of late afternoon trading. So maybe investors agree that the company’s stock price is too low, and that the buyback is just the recipe needed to jack it back up again.

Tony Goldman, …

Some good news - rare good news - from the U.S. stock market late today as reports and rumors seem to point to a new U.S. government agency to assume and/or manage bad debts for financial services companies.

The new agency, similar to the Resolution Trust Corp of the early 1980's, which was used to minimize the damage done by the savings & loan scandals of the time, would indeed be welcome news to investors and to big banks and lending firms. By accepting the bad debts incurred by financial firms, a new RTC-like agency would open up the credit market and get money flowing again.

That's why the market is up 400 points as of 3 PM today (Thursday).

That, however, is the good news. For tech stocks, it's all downhill from there, with shares of Dell sliding 11%, a seven-year low, on tepid demand for IT products by businesses. The company came out with a statement today reiterating its point that tech spending is weak and that it is now negatively impacting sales.

Dell is hardly alone in airing this sentiment. Forrester Research has come out with new research stating that, for 2009, technology spending estimates have dropped from plus-9.4% to plus-6.1%. The good news there is that Forrester raised its second-half tech spending rate from 3.4% to 5.4%. I suspect that's only because technology companies have to reduce inventories of store-up products to sell to consumers.

So while a decline in tech …

Technology workers are nervous enough without worrying about the health and safety of their investment deposits. While I think what I'm bringing to you now is nine parts hyperbole and one part reality, it makes for an interesting and even frightening discussion.

Specifically, are your bank and investment deposits safe? Today's Tech Ticker has an economist who thinks there might be justified cause for concern. Before I get into that, note that the Federal Deposit Insurance Commission (FDIC) insures individual bank accounts for up to $100,000, although if you have more money than that in the bank and your bank goes under, you're under your own.

Also note that the fundamental health of the economy is good. Right now, I'd like to see the evidence that the virus coursing through the finance and housing sectors - and it's a bad one - is coursing just as harshly through other sectors, even technology. As Tech Ticker points out, U.S. Treasury Secretary Henry Paulson has said as much. "The banking system is safe and sound," Paulson declared at a mid-afternoon press conference Monday, seeking to ameliorate such concerns. "Nothing is more important than the stability and orderliness of our financial markets [and] regulators remain vigilant," Paulson added. "We're working through a difficult period in our financial markets right now as we work of some of the past excesses, but the American people can remain confident in the soundness and resilience of our financial system."

To counter that argument, Tech …

One of the year’s biggest disappointments has to be Seagate Teachnology. The high-tech heavyweight is taking on so much water that barnacles are starting to grow on its bottom line.

Hey . . . at least something is growing on Seagate’s bottom line.

Before I get into Seagate’s woes, I realize that the industry is sluggish right now and that consumers are holding tight praying for a better economic picture in 2009. That’s certainly the case of late. According to Forbes.com, 30% of U.S. companies slashed their technology budgets in the third quarter of 2008. Another 29% say they will do the same in Q4, Forbes adds. We’ve already seen the ramifications of lower tech spending this year, with big guns like Hewletter-Packard and Dell reporting reductions in corporate spending while explaining why their quarterly numbers are written in red ink rather than black.

That’s not to exonerate Seagate, which has been a disaster for its investors this year. Through early September, the company’s stock has declined a whopping 45% since January 1, 2008. Insiders have been selling the stock in increasingly high numbers, and no insiders that I can find are buying much of it up. Obviously, when company insiders are baling out, you have a big red flag that can be seen all the way from Wall Street. It’s also a sign that we should see more trouble ahead for Seagate’s stock. I’ve seen some analysts who believe that Seagate is an anomaly …

Telecom stocks are emblematic of how skittish investors are over the tech sector today. Some telecom giants are taking a beating over reduced consumer demand for their products, both here in the U.S. and abroad (especially around the once-robust Pacific Rim).

Here's a quick snapshot . . .

AT&T Inc fell $.34 or 1.1 percent, to $31.22.
Qwest rose $.06 or 1.6 percent, to $3.71.
Sprint Nextel rose $.10 or 1.4 percent, to $7.24.
Verizon fell $.52 or 1.5 percent, to $34.21.

AT&T and Apple are the stocks that interests me. Apple - whose iPhone is carried exclusively by AT&T -- has had a listless training session. That surprised me given the good news from Apple that it is fixing a much-touted glitch in its iPhone that should help stop dropped calls, lengthen its battery life, and provide better performance. Early reviews on the fix from Apple message boards across the web have been generally positive, especially with feedback touting faster performance. The fix also improves the iPhone's text-messaging component - a bug in the ear of iPhone users over the past few months. You'd think that investors, especially tech investors, would ride that bit of good news into a share bump for both AT&T and Apple.

Didn't happen. Apple also saw its share fall by about $2 during early afternoon trading, showing that its own investors either weren't impressed by the glitch patch-up or shrugged it off as a non-event on an …

That little spike in semiconductor stocks we saw in Q1 may be coming to a screeching halt, if the new numbers we're seeing are any good.

Actually, the drop in semiconductor revenues from Q1 2008 to Q2 is fairly amazing, and I don't mean that in a good way.

Here's the scoop. Semiconductor equipment revenues during the second quarter of 2008 amounted to $7.83 billion. That's down from $10.6 billion reported in the first quarter of 2008 -- sharp decline of 26%. From year to year, the revenue figure for the semiconductor industry fell to 26% from 29% - not as bad, but hardly encouraging, either.

So what's the reason? Sure, the slowing global economy is having an impact. Companies are holding on their wallets like barnacles attached to the hull of a boat. On a year over year basis, the second quarter revenue represented a sharp drop of 29% - along term trend that doesn't show any sign of abating.

That's going to mean a continued slowdown in the semiconductor field, in my opinion. With revenues dropping like a stone, capacity expansion will curtail on an industry-wide basis, with key areas like new hires, research and development and marketing all feeling the pinch of an increasingly sour tech spending climate.

I'm just guessing here but it's going to take a few quarters to shake this out, with the semiconductor sector likely rebounding during the second half of 2009 - six months after a new …

In Part I of our look at the proposed economic policies of John McCain and Barack Obama, we found that each candidate brings his parties economic idealism to the table, whether that's a good or a bad thing.

McCain will be a no-taxes, free-trading, domestic drilling supply sider right out of the Ronald Reagan handbook. Obama will be a tax-raising, government spending, protectionist in the Lyndon Johnson mold.

For the tech industry, it's a mixed bag. They'll appreciate McCain's free trade bonafides, because they'll be able to ship cheaper jobs overseas and sell more products there, too. His lower tax policies should also allow consumers to buy more of the products that tech companies sell here in the U.S. But Silicon Valley will endorse Obama's call for billions in green technology research grants for the industry, along with his call for computers in every school room.

Let's continue with our comparison and see how each stacks up in other key economic areas:

On Housing & Credit

Obama wants to hold fraudulent credit and mortgage lenders accountable by making them give loan applicants honest and easy-to-understand information on loans. He’s also proposing a tax credit for middle-class homeowners and says he will open a $25 billion fund to help people refinance their homes and save them from foreclosure. Obama will also ease bankruptcy court rules to help people keep their homes and reduce pressures on onerous payments.

The centerpiece of McCain’s housing proposal is the …

There’s an old joke that the definition of a successful politician is a person who can stand on a fence and make voters believe it’s a platform.

That’s a tall order, however, for presidential candidates John McCain and Barack Obama – especially when it comes to their economic policies (and that goes double for the tech sector).

Americans are well aware that the economy isn’t exactly operating on all cylinders and will make the economic policies of each candidate a priority before they decide who earns their vote. The fact that McCain shook the political world and chose conservative Alaska governor Sarah Plain as his vice-presidential running mate only adds more fuel to the fire. An “X-factor” in that she is largely unknown to the American electorate, at least compared to her more liberal counterpart, Delaware Sen. Joe Biden, voters seem just as curious what the running mates have to say about the economy as they are the top-of-the-ticket candidates.

So, how do the candidates differ on the economy? And are there any areas in which Obama and McCain agree? For technology investors and consumers, those are the key questions.
Let’s have a look, issue by issue. I'll have part II on this issue tomorrow.

Silicon Valley

Obama is a proud greenie, and his support of renewable technologies would seem to stand him in good stead with technology big-wigs. And, yes, Steve Jobs, Bill Gates, and Jerry Yang, among other tech glitterati, have contributed …

For the record, I don't think there is a lot of money in web browsers. They don't draw a lot of advertising money (although many of the web sites they send users to make money via advertising) and nobody has found a great profit-making model out of browsers, either. Just ask Netscape.

What browsers can do is attract a lot of eyeballs and a host of identifiable users. That's what Google is after with the release of its Chrome web browser. Google is the original "software as service" company, with applications like Gmail and Google Docs being more online services than downloadable software apps like Internet Explorer or Microsoft Word.

All that has changed for Google with Tuesday's unveiling of Chrome. Not that Google has a hands-down winner in Chrome - the competition is stiff. Microsoft's Internet Explorer has about 72% of all web browser market share. Mozilla's Firefox (my personal favorite) and Apple's Safari make up most of the rest in terms of market share.

Google follows the same blueprint of Explorer and the others in that it doesn't charge for people to use Chrome, so there's nothing new there for Wall Street. What could intrigue traders, investors, and analysts is that Google promises Chrome to be bug-free, crash-proof, more search-friendly, and cleaner and faster than Explorer (in particular) and the other major web browsers. What I don't like, as an Apple user, is that Chrome only works on Windows, so legions of Mac users like …

The big news in the financial markets today is that New Orleans largely escaped the wrath of hurricane Gustav, which hit land about 85 miles west of the city, and lost some of its luster on the way in to shore. Still, oil companies haven’t tallied any potential damage yet and that could change the financial calculus on oil and energy prices going forward. For now, oil prices have dropped down to $109 per barrel and the stock market has responded vigorously, rising 175 points in Tuesday morning trading.

On the tech side, it’s the telecom stocks that are making the most noise. By 10 AM, we saw AT&T Inc rose $1.05 or 3.3 percent, to $33.04; Qwest rose $.14 or 3.7 percent, to $3.92; Sprint Nextel rose $.28 or 3.2 percent, to $9.00; and Verizon rose $1.10 or 3.1 percent, to $36.22. I think that’s primarily due to lower inflation numbers that came in this morning, meaning consumer spending could rise without inflationary pressures in the air.

The big news was human resources and technology outsourcing firm Convergys Corp., which saw its stock rise 5% to $15 per share after news that the company was evaluating plans to split off its information management business into its own publicly traded company.

Wedbush Morgan Securities analyst Scott Sutherland said that the step would be a positive one for Converys, stating in a research report that the company could concentrate separately on its people-focused customer and human resources management …

In the words of the immortal Chris Farley . . . “Holy Shnikey’s!”

That was my reaction after watching Dell’s stock tank after what pundits are billing as an “underwhelming” second quarter earnings performance.

Investors seemed to agree on Thursday, as Dell stock fell 13% to under $22 per share (off its 2008 high of $30 per share). Perhaps the most worrisome sign from Dell was its pronouncement that worldwide wide technology spending was veering downward for the rest of 2008.

I saw the Dell numbers before everything hit the fan. My takeaway was “okay . . . not bad”. After all, Dell had been beating analyst’s expectations by about $400 million per quarter. In Q1, the stock shot up after Dell announced its financial numbers and the landscape looked like a rosy one.

What seems to be bothering investors and analysts now is Dell’s profit margin picture. The company has been slashing its computer prices, in part to keep up with the lower cost models rolling out of HP and IBM. Dell has been releasing its computers to Wal-Mart and Best Buy knowing full well that the retailers would cut the cost of its computers significantly. Consequently, Dell’s gross profit margin decreased from 20% to 17.2% from Q1 to Q2. Net income dropped as well – to $616 million in Q2.

Analysts were quick to pounce. JP Morgan analyst Mark Moskowitz labeled the margin drop "a stunner”. BMO Capital Markets analyst Keith Bachman labeled …

Just getting back from Virginia and an investment conference on Monday and Tuesday. A good friend of mine who runs a five-star Morningstar market neutral fund says that, for the first time in a year, he can see the clouds breaking for the financial markets. He said that large cap stocks would rise sustainably first and to expect small caps to take a while to rebound.

He had an interesting point about emotional investing in tough market environments like the one we’ve seen this year, with the Dow down 13.9%. “When markets are turbulent, and people are losing money, our fund suffers, “ he said. “People start acting impulsively and draw money out for almost any reason. But when people take the time to sit down and read our market commentary’s and study the companies we choose, then they do a lot better.”

His point? Don’t panic in a bear market. If anything, redouble your efforts to study what your investment firm is doing and why. Like my friend’s fund, they usually have a good reason why they pick the companies they do. Find that reason and see if you don’t agree before you pull the parachute.

Otherwise, the market is way up this afternoon (plus 104 points by 1 PM). A good durable orders number (meaning companies are increasing their investments in big products like trucks and metal and lumber, etc) has helped. Also, we saw some good news on the housing front. Yesterday’s Case-Shiller Index …

A lousy way to start off the week on Wall Street. Stocks were down 250 points by 1 PM Monday, mostly from downbeat earnings expectations from financial giant AIG. Adding fuel to the fire was a modest spike in oil prices (to $115 per barrel) mostly due the onslaught of the hurricane season and uncertainties about the health of Georgia’s oil supplies after its wrestling match with Russia.

Some good news? Housing sales were up 3.1% last month – way better than real estate analysts had expected and gasoline prices have fallen significantly (down to $3.40 a gallon in bucolic Bucks County, Penn. Where I live). Gas prices here were $4.15 a gallon only six weeks ago.

On the tech front, Advanced Micro Devices needs cash and it’s selling its digital TV chip division to Broadcom to get it. The $193 million deal has triggered the usual blather about refocusing on core operations for AMD, but the company is way behind Intel in chip sales and needs some liquidity to stay competitive. Plus, the digital TV unit was a downer for AMD.

Dirk Meyer, AMD’s newly minted president and chief executive, said the sale will make the chipmaker "leaner and more focused while seeking to create a business model to deliver sustainable profitability," He also said it will lower the amount of revenue the company needs to break even.

For its part, Broadcom can now claim to offer the market a complete line of digital TV …

It's football season and time for the old "option" play - with Cisco Systems, IBM and Hewlett-Packard lining up in the backfield.

Options are a riskier way of investing on stocks. Essentially, options allow you to buy or sell a company's stock at a stated price and a stated date. Investors who bet the stock will go down buy "puts" giving them the right to sell the stock at a higher price. Investors who think a stock will go up buy "calls" which give them the right to buy the stock at a lower price on a specified date. Expiration dates on options could leave investors holding the bag, though, and losses can be severe

But Goldman Sachs thinks that a technology play involving options on Cisco and HP are a great call right now. Prices for options contracts on both are the cheapest they've been in five years, Goldman Sachs says.

In a research report, the investment firm explains it all for you: "Implied volatility, a measure of expected price swings and the key gauge of options prices, is the lowest for technology stocks since 2003 when compared with the Standard & Poor's 500 Index, the strategists said. It may increase as slower economic growth and a stronger dollar damp demand for computers."

``This provides an attractive entry point to buy options to express views in the tech sector,'' Goldman options strategists John Marshall and Stuart Kaiser write. ``The recent dollar strength and slower global …

Salesforce.com is one of those companies that business writers and Wall Street investors refer to as an “upstart” or a “growth” company. But those days may be over.

The company pioneered the concept of software-as-a-service, which enables companies and individuals to access software over the Internet via a web browser. Now it looks like the new kid on the block is all grown up, with analysts pegging Salesforce.com’s value at close to $1 billion.

But the company hit a speed bump this week when it announced its third-quarter revenues would clock in at around $274 million. That’s up from $263 million in Q2, but it’s also below that Wall Street had expected from Saleforce.com in terms of sales and revenues. The Street struck quickly, with PiperJaffreey first cutting its advisory on Salaesforce.com from “buy” to “neutral”.

I don’t think the Salesforce numbers were that shabby. Net income for Q2, after all, was 167% higher than the same period in 2007 – a year where the word “recession” wasn’t yet on everyone’s lips. Piper Jaffrey is probably accurate in pointing out that the company’s stock price, which fell to $55 from $65 in a single trading session this week, was too high and unsustainable. Salesforce stock has been trading at 200 times the company’s forecasted earnings per share, so keeping the stock price lifting skyward was too much to ask.

Still, company CEO Marc Benioff is tamping down expectations …

I spend a lot of time on this blog talking about specific technology companies that could take off and add some real beef to your financial portfolio (or warn you about tech stocks that could cut into your market gains).

What I'd like to do more is to discuss countries where the opportunity to make a buck through good technology plays is on the rise. By that I don't mean established bourses like the U.S. - I'd like to focus on smaller, more developing economies that are leaning on technology to grow their economies.

Take South Korea, for example. It's rise from a poverty stricken, agrarian economy to a robust, tech-driven economy has turned the country around. In 20 years or so, South Korea has turned from one of the poorest countries in the world to one of the wealthiest. And it looks to be even stronger in future years thanks to a commitment to developing technology companies like Samsung, Nokia and LG, and a burgeoning interest in using technology to grow an increasingly "green" economy over the next 40 years.

The South Korean market is a natural for tech investors. Consider the following statistics from Tech Ticker:

-- Over 90% of Korean households have Internet access and more than 30% have broadband, both figures among the world's highest.

-- Over 80% of Korean households have mobile phones, with local giants Samsung and LG dominating the industry, thanks to some high barriers to foreign competition.

Last week saw a potential top in commodities prices, as both oil and gold prices seem to have stalled out from their upward march in 2008. That should have spelled relief for the stock market, which has been down by 13% in 2008, as measured by the Dow Jones Industrial Average.

Yet, it didn’t. The week saw the Down finish lower by 0.63%, while the Standard & Poors 500 index rose by a meager 0.15%. The market may be waiting until after Labor Day, where it can have another two weeks to be certain that commodity prices have topped out. In the meantime, Americans will be back from their summer vacations and “idle” time, where historically that leads to more investment activity on Wall Street.

In a hopeful sign, tech investors aren’t waiting for Labor Day or any other day. Last week the Nasdaq index rose for its fifth straight week, by 1.59%. Signs that companies are still investing in technologies has given investors a good reason to seek shelter in tech stock, especially given so much uncertainty with ongoing credit and energy price issues.

That should spell opportunity for investors who want to get in ahead of the market. When investors are pessimistic that historically means that there are good buying opportunities out there for investors who do their homework, have some patience, and don’t mind some risk.

The key is taking stock evaluation on a company-by-company basis.

Consider a company like Qualcomm, about …

I've written about the importance of knowing your investments before you buy them. You might remember the story about Fidelity Magellan mutual fund legend Peter Lynch, who would spend his Saturdays walking around Boston looking to see where shoppers were spending their money. Then he'd invest Magellan's money in the same company's stock.

That's why retailers like The Gap, Target and Boston Chicken found their way into Lynch's high-flying fund.

An article in today's Motley Fool has a similar theme. Writer Selena Maranjian tells the story of buying America Online back in 1995 after being impressed on how easy the site was to use and how many of her friends and family were using AOL, too. Her $3,000 investment in AOL has turned into a $215,000 windfall in 2008.

Following the "buy what you know" theme, Selena says it's important to actually use the product or service - or talk to people you trust who use them. A lot of it just common sense, she writes. "Do you have some SanDisk (Nasdaq: SNDK) memory cards in your digital camera? Do you use a Cisco Systems (Nasdaq: CSCO) router in your home computer network? SanDisk stock has been volatile over the past decade, but those who've hung on have enjoyed a compound annual growth rate of 21%, and a total gain of over 575%. Cisco shares have increased in value more than 15-fold in the past 15 years, despite that big stock-market hiccup a few years ago. These …

Markets are down about 50 points in mid-afternoon trading on Tuesday, mostly due to investor worries about continued woes in the financial services sector. In short, nobody is buying the notion put forward by Wall Street optimists that the credit crunch – now one-year-old – is coming to an end.

It's a slow process. Like a virus that works its way through your system, the credit crisis has already ravaged sub-rime mortgage loans, Alt-A loans (where mortgage holders don’t have to pay the principle borrowed every month) and are now focusing on prime loans, especially in hard hit home mortgage markets like Las Vegas, San Francisco, and Miami. Prime loan foreclosures are way up nationally, with one-third of new homeowners since 2005 burdened with mortgages where they owe more than the value of their homes.

Again, this is only high stress areas – most of the country hasn’t shared the home value misery of Californians, for example. But with prime loans in increasing trouble, banks and lenders are pulling way back on issuing homes loans, thereby crimping the mortgage market even more.

Look for auto and credit card loan problems to creep up next.

In tech news today, some good news in a report issued by Compass Intelligence on business technology spending trends. Spending will be solid but companies are also looking for ways to cut costs and get the most out of their tech investing dollar (big surprise there). Overall, small and midsized business will …

Internet Broadband subscribers are being peeled away by cable television and there’s really not much the phone companies can do about it, analysts say. That could move a lot of money around on Wall Street.

According to Leichtman Research Group, cable companies added 887,000 high-speed Internet subscribers in the 2nd quarter of 2008 – about twice the number of new subscribers added in the same quarter of 2007. The firm says that 76% of new subscribers went to cable companies – a telling sign. According to Leichtman, cable companies now have 35.3 million broadband customers, compared with 29.7 million at the phone companies. AT&T remains the country's largest Internet service provider, with 14.7 million customers, just ahead of Comcast Corp. with 14.4 million.

Obviously, that’s going to draw the attention of investors, much like the Black Widow in the movie The Natural, after Roy Hobbs struck out The Whammer on three pitches. Sure, a slowing economy has lots to do with less people signing up for phone company Internet broadband services. And yes, the market, at least here in the U.S., has become saturated. And, as Leichtman’s research points out, the two largest telecom providers, Verizon and AT&T, opted to emphasize pricier and more comprehensive over entry level DSL. But in a tough economy with consumers looking to strip down expenses, that wasn’t exactly a bright idea.

Other analysts have come to the conclusion that cable television will wind up having a monopoly on broadband, phone, and …

This week doesn’t bode well for the overall stock market, even though the Dow Jones was up 300 points on Friday, and even though tech stocks have held up well over the past few weeks in a volatile traading environment.

My chief concern is the Russia military action in Georgia. This weekend, the Russians went after a key oil pipeline that delivers oil to the west. According to wire service reports on the ground in Georgia, damage was significant.

That’s the last thing the energy markets needed, and by extension, the stock market. If the damage to the pipeline is severe, then look for oil prices to rise, perhaps significantly. That would put a damaging crimp in the progress made in the oil market the last few weeks.

On the tech front, some big news may be brewing at Sprint Nextel, which is mulling over a sale of its Nextel wireless division. There’s a lot to look at here but perhaps the significant one is that Sprint only purchased Nextel in 2005. The value of that purchase is up for debate – analyst say that the $35 billion paid for Nextel has been slashed, value-wise, to a value of about $5 billion today. That’s an 80% loss in only three years.

The economy hasn’t helped in that regard, but Sprint can point the icy finger of guilt its own way. As Reuters reports on Sunday, technical service issues have triggered a flood of customers heading to …

Oil is falling again, off $31 from its July high of $148 a barrel, but some analysts think this is bad news. Paul Kedrosky, a strategist at Ten Asset Management sees oil falling more and settling as low as $90 a barrel and takes his case to Tech Ticker today to explain why this is a negative for the economy.

“Lower oil prices could negatively impact work being done in bio-fuels and solar and wind,” says Kedrosky. “Any price under $100 per barrel is bad for alternative energy market. There is not as much need to explore and invest in alternatives if oil is more affordable for the masses.”

But the people who are hurting most under Kedrosky’s analysis are Wall Street millionaires, and not average Americans. This is where he falls of the beam, but let’s hear him out.

“It will really hurt the venture capitalists, some are highly leveraged in alternative energies,” he adds. “Solar companies would also be hurt by low oil – not a lot of demand for a difficult and not always reliable energy source to use.”

Still, the $4 drop in oil this morning has boosted the stock market, which rose by 200 points in mid-morning trading. I imagine Kedrosky thinks this is a good thing – at least I hope so. Ultimately, I don’t subscribe to the “low oil prices are bad for the economy” pitch that Kedrosky made (I can accept a few VC’s losing some dough over …

Here’s a factoid that might interest you.

The one-day record holder for a movie premiere is Spiderman 3, which brought in $59 million in ticket sales on its opening day.

The one-day record for a video game – Grand Theft Auto IV – earned $310 million on its opening day.

Last year, video game sales finally surpassed Hollywood, and is now an $18.8 billion behemoth – a 40% increase from 2006. Studies show that 68% of Americans play video games, and I’m saying that it’s no coincidence that the video game industry has skyrocketed since the launch of Nintendo’s Wii. I was one of those dads with a sleeping bag and a sleepy nine-year-old boy camping out in a Target Store parking lot waiting to be among the first to buy the Wi. It was the first time I’d done anything like that but the look on my son’s face when he got his Wi will stay with me the rest of my life.

As a parent, I’m not huge on video games, but the Wii is different – and that’s why I love Nintendo’s stock (more on that in a moment). Quite simply, the Wi is a revolution in video games and is changing the way people interact with video games, and in a very good way. A study conducted by the University of Wisconsin found that playing sports on Nintendo Wii increases heart rate, boosts maximum oxygen intake - and burns calories. Researchers also …

A good friend of mine thinks that data technology access kingpin Qualcomm can be to the wireless market in the 2010’s what Microsoft was to software in the 1980’s and 1990’s. Granted, Qualcomm is smack in the sweet spot – the premier provider of high-speed data access products and services at a time when wireless technology, especially cell phones, have become pervasive worldwide.

Qualcomm has built a great business providing wireless providers with mobile communications technologies. The company is well managed, has a virtual monopoly on its product, has little debt, and has about $12 billion in cash on hand.

But . . . there is always a “but” . . . cell phone companies won’t always want to pay the fees Qualcomm gets on a regular basis, especially as critical mass pressures drive cell phone prices down. Somewhere in a corner office at Verizon or AT&T, bean counters are devising ways to drive those fees down and Qualcomm may start feeling the heat. Already there has been a spate of insider selling on Qualcomm stock, feeding speculation that the Qualcomm ride may be slowing down.

Still, that shouldn’t stop the company’s forward momentum, if it happens at all. Qualcomm has the market cornered on 3G technology and it is allegedly holding the best patents for wireless technology devices on the market. Essentially, no competitor can get in on the future action in wireless access without giving Qualcomm a slice of the pie.

Altogether, it’s a …

Three questions for the week, plus a new opportunity for profit growth in the technology market . . .

1. What Will the Fed Do? - The Federal Reserve is in a fragile position, as is the economy. With the Fed scheduled to announce its next move on interest rates tomorrow morning, what will they do? Raise rates and risk further slowing the economy? Or lower rates and open the door for higher inflation? Most likely it will do neither, but even that could have a big impact on investors.

2. Yahoo's Jerry Yang Safe at Home - The much anticipated Yahoo shareholders meeting last Friday turned out to be anticlimactic. Firebrand shareholder Carl Icahn was a no-show, the Microsoft deal is officially off, and embattled CEO Jerry Yang and the Yahoo board were both given votes of confidence by shareholders. But Yahoo isn't out of the woods yet - not with potential suitors like Google and AOL still out on the horizon. Investors still need to proceed with caution when it comes to Yahoo. I fear a false sense of security now that the dust seems to have settled. Will Yahoo investors rush in too soon and get pummeled?

3. Tax Rebates Come and Gone - What Will Consumer Spending Look Like? - The consumer spending numbers come out this morning, and most analysts say that the June numbers will be lower thanks to an end to government tax rebate checks. What's the consumer spending landscape …

Thursday saw another horror show on Wall Street, with the Dow tanking 200 points over the weaker-than-anticipated GDP number and the shaky job market (the U.S. unemployment rate rose to 5.7% today).

Still, tech stocks seemed to navigate the tumult of bad news in surprisingly robust fashion. We covered Motorola yesterday and its stock is on the upswing. Same with Symantec, and Cablevision, and Dell, which saw its stock rise 2.4% on a Cowen & Co. upgrade.

Even Yahoo was up a tick or two, in anticipation of a quiet shareholder meeting today (Friday). Call it anticlimactic, but the deal struck between Carl Icahn and Jerry Yang to place three Icahn cronies on the Yahoo board in exchange for the corporate takeover artist to give up his proxy fight over control of Yahoo, had dampened the steel-cage match mindset going into today's meeting. Hell, Icahn reportedly had no plans to even show up at the Yahoo board meeting.

"It will not do shareholders or Yahoo any good to have the annual meeting turn into a media event for no purpose." wrote Icahn in a blog post Thursday.

Still, early reports on the board meeting show some fireworks going off. Yahoo Board Chairman Roy Bostock took the floor in front of an unfriendly audience and played "let's vent" with the crowd. Here's a snippet of Bostock's remarks . . .

-- (On calls for Yahoo board members to produce time sheets to shareholders): "I'd welcome it. …

First, the not-so-good news, then on to some encouraging revenue numbers for Motorola.

Below I’ve condensed today’s big economic news as reported by the Associated Press, with the second quarter gross domestic product numbers coming in less than expected . . .

-- Economic growth clocked in at a 1.9 percent pace in the second quarter. That was better than a 0.9 percent pace logged in the first quarter, but was still considered a subpar performance and fell short of economists' forecasts.

-- Consumers boosted spending at a 1.5 percent growth rate in the second quarter, helped by the government's tax rebates. That was up from a 0.9 percent pace in the prior period.

-- Exports grew at a 9.2 percent pace, aided by a weaker value of the U.S. dollar, which makes U.S. goods cheaper to foreign buyers. That was even better than the 5.1 percent growth rate in the first quarter.

-- The economy contracted by 0.2 percent in the final quarter of last year, the worst showing since the last recession in 2001. The government previously estimated the economy had grown by 0.6 percent for that period.

On the tech front, Motorola offered up some good news today, reporting a nice profit and steady market share numbers. The profit was only $4 million, but it was better than most analysts had expected. Better yet, it stems a year-long tide of revenues losses and weak sales for Motorola. Revenue was $8.08 billion, …

Information Week has a great piece out on how IT CEO’s are riding out the rough economy. Surely, the 266 hike in the Dow Jones Industrial Average today, thanks to lower oil prices and a report indicating increased consumer sentiment, should soothe the jangled nerves of even the most downcast boardroom baron.

The IW piece, written by Marianne Kolbasuk McGee and John Soat, includes a survey of 600 business technology decision-makers that shows things may not be as bad as the pundits want us to think.

In the survey, 40% of respondents say they decreased IT spending this past quarter relative to their original 2008 budgets. At firms with annual revenue of more than $500 million, 50% of respondents say they dialing back on IT purchases.

But McGee and Soat say the future is looking a bit brighter.

“Still, there are plenty of business technology executives going forward with big projects, even adding to their IT workloads--and budgets--with new projects, backed by managements that see a chance to invest in technology-driven efforts to leap ahead of weakened competitors. CIOs are protecting customer-facing projects--they're about half as likely to be cut as ones that don't touch customers. Not only that, smart CIOs are looking for ways to use the IT tools at their disposal to cut costs in their organizations and in other parts of their companies.”

That doesn’t mean you should stampede to your broker and start loading up on shares of your favorite tech …

I was going to write that the Q2 quarterly numbers (not just in the tech sector but across the board) were better than most experts predicted.

For the most part, that’s true. U.S. companies have performed fairly well for the past quarter, thanks especially to increased sales overseas and a boost from the taxpayer stimulus packages that went out last spring. So far, 61 percent of the Standard & Poor's 500 index companies reporting results so far have surpassed projections, and 72 percent of them were able to top last year's sales figures.

What’s killing the market right now, which dropped 240 points today, is the financial sector. The International Monetary Foundation issued a report today that a bottom for financials is “nowhere in site”. That scenario stiff-arms investors who might otherwise invest in banks, brokerages and lenders, but won’t do so until the credit picture crystallizes and the housing market (which is tied tightly to the financial sector) starts rising again.

But, if you pull financials out of the overall quarterly earnings picture, you see a vibrant, healthy corporate growth environment that should outpace 2007’s growth rate by 10%, according to Standard & Poors.

"Regardless of the estimates or hype, a double-digit gain from non-financials is impressive -- in any economy," said Howard Silverblatt, S&P's senior index analyst.

Verizon is the latest tech gitant issuing a rosy Q2 review – it reports revenues growth at 12% for the quarter. Verizon is the U.S.’s second-biggest …

Stocks are up this morning - up 56 points a half-hour after the open - thanks to a higher-than-expected durable goods report. In real-speak, that means that heavy equipment and bulk manufacturing buyers broke open their checkbooks last month and bought more bulldozers and crates of metal than Wall Street thought they would

It's a nice piece of news for the economy but I wouldn't get too excited - a lot of investors are awaiting next week's gross domestic product number and past that, I don't think we'll see a real bounce back until after Labor Day and more so after November 1, especially if the media gets its way and their messiah Obama is elected president. At least then we'll stop seeing economic headlines from the AP written in the newest font on the printing block - Scary Transylvanian.

Otherwise, an interesting piece of news out of China today is worth discussion - especially to U.S. tech companies.

According to the China Internet Network Information Center, over 253 million Chinese are using the Internet, the highest number ever for the country. What's more, the share of the Chinese public using the Internet is still just 19.1 percent, giving western technology companies a huge opening to exploit. Already, companies that supply technology infrastructure like SAP, IBM and Microsoft are making hay overseas, tempering their losses here at home with big gains in countries like India, Russia, Brazil and now China.

In contrast to the 253 million …

The good news in the stock market today is the continued drop in oil prices, with a barrel of sweet, light crude dipping below $125 for the first time since June. Already, commuters are seeing that decline priced in at the pump, with a gallon of gasoline falling below $4.00 per gallon – in some areas to $3.70 per gallon – as demand slows and prices drop.

At the same time, the earnings season has been better than a lot of people expected. IBM, Apple, AT&T have led a tech charge in better-than-expected revenues in the last quarter, even though the bean counters have done a great job of lowering analyst expectations by tamping down future earnings (Wall Street calls that “guidance”).

So, it’s oil and earnings that are carrying the markets right now, and the timing could not have been better. "Having had a significant drop in the oil price at the same time as various earnings have been disclosed has made a huge difference," Diane de Vries Ashley, managing partner at Zenith Capital Partners in Coral Gables, Fla., tells Reuters. "Other circumstances would not be providing this subliminal euphoria we're seeing. Without that kind of move (in oil) you really can't get people to focus on anything but, frankly, their gas tanks."

Not all the news is so promising for technology companies. A lot of that muted guidance we’ve seen in the past week from some of the top tech companies is hardly surprising, given …

AT&T’s stock is up two percent today after announcing that second quarter revenues rose 30 percent – an uptick that many pundits are ascribing to its booming wireless business.

Me? I’d say that, more directly, the high profile partnership with Apple and the iPhone have fueled that boom in wireless sales. AT& T is the telecom carrier for the iPhone and that had to contribute to AT&T adding 1.3 million new customers to its wireless consumer base. AT&T says that 40 percent of those new customers are new iPhone buyers. Even as the stock rises, investors should notice that AT&T hasn’t even booked the revenues from its new iPhone sales from last month – the Q2 numbers came in without the iPhone figures – so the company has some serious money in the bank going into the last half of 2008. Undoubtedly, more iPhone customers will add more money to AT&T’s coffers, making the Apple/AT&T alliance one of the most productive and profitable (for both companies) in recent history.

Consequently, most Wall Street observers have to be pleasantly surprised with AT&T. It’s the first of the big telecom carriers to post Q2 earnings with Verizon and Quest on deck. AT&T’s stock is trading at around $31 (before the bump up today) which is a year-long low for the company. AT&T has been losing a slew of landline customers as more people desert their home phones for cell phones or phone service from cable and Internet companies. The company …

Sometimes the financial media should just, well, shut up.

This week, using Apple’s most recent guidance statements, is good proof of that.

By any measure, Apple just had one of its best quarters ever. The new Apple iPhone is a mega-hit. Consumers love the brand. Even Mac PC and iPod sales are way up. And sales, despite a brutal economy, are up. But Apple, which traditionally tempers enthusiasm for longer-term financial prospects by lowering future guidance numbers, has done that again.

The company says that fourth-quarter revenues should hit $7.8 billion, with a profit of $1 per share. Analysts had expected Apple’s fourth-quarter numbers to be higher, with revenues at $8.3 billion and profits at $1.23 per share.

Naturally, it was the guidance numbers that made the headlines in the business press. Pundits made much of the company’s announcement that margins would fall to 31.5% in Q4 from 34.5% in the third quarter. Yes, Wall Street hates declining margins but you have to examine the big picture here.

For the first time in my adult life, Apple has a real shot at upending Microsoft’s hold on the PC marketplace. Think about it. Know anybody who loves Vista? Know anyone who is inspired by a recent model PC, especially when compared to what Apple is offering in its desktop and laptop lines? As more people buy iPhones and iPods, it’s becoming easier for them to transition every piece of home or even office hardware over to …