Posts by Brian.oco

A host of tech earnings results are pouring in from all corners, with some confidence-building numbers coming from United Technologies, Nokia and (especially) IBM.

Others were a mixed bag. Microsoft checked in with better-than-expected sales of $15.84 billion for the quarter and earnings-per-share (46 cents) was in the range of analyst expectations. But Microsoft projects a softer year financially than most investors had anticipated, so weak guidance may be the culprit behind Microsoft’s stock being down 5% in after hours trading. It’s slightly worrisome to hear a big dog like Microsoft imply that the rest of the year should hit a sour note, economically. Not the message tech traders want to hear.

Google fared even worse in the trading markets, posting earnings of $4.63 per share when analysts had expected earnings of $4.74 per share, well below the mark it needed to hit. Investors shed Google stock quickly, with the stock off 7% in late Thursday trading.

The big winner this week has been IBM. Big Blue announced on Thursday that its Q2 profits rose 22%, mostly due to its high value and in-demand server and software services division. IBM’s technology services grew 15 percent to $10.1 billion, and business-consulting revenue rose nearly 18 percent to $5.11 billion.

Says the Associated Press this morning: “Investors closely monitor how many new service contracts IBM inks during a particular quarter because it helps gauge the company's future revenue. That figure jumped 12 percent in the second quarter to …

Oh, my - eBay shares dropped 7% in Wednesday trading. That after the company announced in a wide-ranging conference call with analysts that it wouldn’t meet current quarterly sales and revenue projections.

That throws cold water on eBay’s reputation as a company that constantly delivers a positive earnings outlook every quarter, but that’s the lay of the land these days, and eBay is no different.

There is some good news in the earnings mix for eBay. The company posted a 22% gain in Q2 net profits and it said that earnings for the remainder of the year wouldn’t rise, but wouldn’t fall, either. It’s a pretty cautious stance from eBay and analysts were quick to notice.

"What eBay is saying now is, 'We don't want to go out on a limb,"' Martin Pyykkonen, a tech analyst at Global Crown, told Reuters. said. "The economy is working against them."

It seems that customer volume is still strong, but the problem is those customers aren’t spending as much money. The average per-transaction sales price on eBay fell during Q2, a clear reflection that consumers are very worried about the economy – but not so much that they won’t spend a little money on their favorite auction items. To get more sellers in the fold, eBay is trying to lure more sellers to the site, and has cut upfront listing fees for sellers to make that happen.

Altogether, eBay’s Q2 net income net income rose to $460 million, …

Federal Reserve Chairman Ben Bernanke is between a rock and a hard place.

Bernanke, who spends another day in front of a congressional panel defending his handling of the Fed during a tough economic period, is stuck with a Hobson’s choice. Lower interest rates to help the economy but risk spurring a higher rise in inflation? Or hike rates to reduce inflation, but potentially hurt the fragile economy – especially the reeling housing market.

So when the Fed Reserve meets next – on August 5 – my bet is that Bernanke will leave interest rates well enough alone. He has to, but events have spun so far outside his control that he’s a bit of a bystander as the economy and stock market look for solid footing. The tea leaves that Bernanke presented to congress pretty much confirmed the fact

It's difficult to chart a course when uncertainty abounds, Bernanke said. Over the rest of this year, the economy will grow "appreciably below its trend rate" mostly because of continued weakness in housing markets, high energy prices and tight credit conditions.
At the same time, inflation has remained high and "seems likely to move temporarily higher in the near term," Bernanke said.

For the tech sector, uncertainty is the last thing CEO’s and investors need. In a classic good news-bad news scenario, most analysts expect a rebound in the coming weeks, if not days, but the metrics they’ve historically used to anticipate the speed and …

I noticed that Market Pulse stock picking guru Bernard Schmitt put Sun Microsystems on his “closely watched” list, ultimately tagging Sun’s stock as a “bearish” one.

Why? He says he doesn’t like the company’s fundamentals; doesn’t like the stability of the software server market, where Sun historically makes it hay; and doesn’t trust a company that keeps slashing jobs but doesn’t seem to have a decent blueprint for long-term growth in an industry that is squeezing server makers out.

But will Jonathan Schwartz, CEO at Sun, may have the last laugh. Earlier today Sun came out with its fiscal fourth-quarter guidance numbers that came in well within Wall Street’s expectations.

Here are the numbers. Sun forecasts earnings of 5 cents to 15 cents per share in the quarter ended June 30, or 25 cents to 35 cents per share excluding certain items.
Analysts polled by Thomson Financial expect a profit of 27 cents per share. Sales numbers look decent, too. Sun estimated revenue of $3.73 billion to $3.8 billion for the quarter, compared with $3.84 billion in the year-ago quarter – not bad in a tough economic climate for business spending.

Investors were pleased. Sun shares were up $1, or 11.4 percent after the news came out, to $9.80 in after-hours trading, after finishing regular trading up 2 cents at $8.80.

I’m not convinced that the company’s belt-tightening campaign could pop investor interest in Sun by 11%. True, the company did slash 2,500 jobs …

Will the new iPhone chomp into Blackberry’s market share?

Some thoughts on the subject are bubbling up on Wall Street, with the sentiment leaning toward Research in Motion, the company that manufacturers the Blackberry, being in good shape for the short term.

After all, the iPhone is great if you’re an Apple computer user, but not so much if you’re not. Most corporate users aren’t Apple users, and are reasonably happy with their Blackberry’s. Not too many IT directors are going to take a sledgehammer to their telcom infrastructure to make way for a cell phone that isn’t as compatible with their computing platforms.

Also, product glitches with the iPhone like no replaceable battery and an added emphasis on things like social networks that corporations could care less about should help protect RIMM’s user base, at least in the business market, and at least for a while.

Thus, a steady drumbeat of support for the Blackberry, although that drumbeat isn’t as loud as it could be.

This from the analytical firm Amtech, which considers RIMM a big buying opportunity because of its better “useability” experience for customers. “Always-on push connectivity is important for the user experience of IM. To date, a session-based experience has not shown the same sticky qualities and heavy usage as BlackBerry. We believe this is also true of social networks and will become so for many other applications. Facebook and many applications look great on iPhone and are much more functional …

News on the markets focused on President Bush’s removal of a 30-year-old ban on offshore drilling off the coast of the United States. But that’s only one step – he needs Congress to remove the ban completely and so far that’s showing no sign of happening.

But there was some news in the tech sector. One potential problem comes from Applied DNA Sciences, one of the more prominent DNA security up-and-comers. It’s announced that its annual meeting of stockholders has been rescheduled to an as yet undetermined date. APDN also announced that its board of directors has canceled the current record date of July 15, 2008 and will notify shareholders when a new record date has been set. Also, the company recently announced a shake-up in management, as well.

Fair or unfair, when a company reschedules a board meeting and pushes a key financial deadline back, you have to wonder. APDN is a classic “pink sheet” company – a trading commodity that Wall Street considers to be frequently traded at under $1 per share. Such stocks tend to move and up and down with alarming speed. This time that speed might be headed downward – stay away from APDN.

There’s also a growing sense that Apple has a huge hit in the new G3 iPhone. As I pointed out in my last post, the company said it sold one million units in just three days. But on the first day the iPhone went on sale, Apple's servers …

It's a busy Monday morning for tech companies on Wall Street, with Apple announcing that over one million new G3 iPhones were sold last week (despite a public relations black eye over a downed Apple server that kept the new phones dark for thousands of new customers). Apple's stock is up five points in early Monday trading and, with consumer spending showing an unexpected rise in June, the new iPhone could be a summer-long blockbuster for Apple.

Elsewhere, there's blood in the water over at Yahoo, although it's hard to say whether it's coming from firebrand investor Carl Icahn or Yahoo CEO Jerry Yang and his siege-weary board of directors. Over the weekend, the board turned down a purported $2.3 billion "take it or leave it" offer from Microsoft for Yahoo's internet search business, and Icahn isn't happy about it. The money is the estimated advertising income Yahoo would earn over the next five years.

This morning, Icahn filed a proxy to nominate a slate of nine directors to replace the Yahoo board and chief executive Yang after the board gave the thumbs-down to the latest Microsoft offer. Says Reuters this morning "Icahn, who owns about 5 percent of Yahoo and is working with Microsoft, reiterated earlier statements that Microsoft Chief Executive Steve Ballmer was no longer willing to negotiate with Yahoo's current board."

Parts of Icahn's letter were written in bolded capital letters, signaling that either the billionaire investor's patience with Yahoo is at an end …

Looking for a “relief rally”? That’s what Wall Street calls a temporary lull in selling that could lead to a more sustainable uptick in broad-based stock prices.

Usually, it’s one industry that feeds the bounce-back and Kevin DePew, an analyst and editor at Minyanville.com, which tracks the stock market, says that technology is that industry right now. As a result, several indicators that he uses are back to levels last seen before the market's mid-March bounce.

In an interview on TechTalk today, Depew pointed to the Bullish Percent Indicator and High-Low Index produced by Investors Intelligence as proof of a tech-drive rally. He says those indicators measure the level of buying - or more recently - selling interest in stocks, as well as the ratio of stocks at new 52-week highs vs. new lows.

DePew points out that, as of Monday, the S&P 500 Bullish Percent Indicator was just 26.5%, indicating a very low level of buying interest - as reflected by recent market action. Similarly, just 11.5% of NYSE stocks were at new 52-week highs, he tells TechTalk.

Those are the ingredients that should lead to a "classic technical rally," says Depew, adding any near-term rally is likely to be led by "staple" (vs. consumer-related) tech stocks such as diagnostics firm PerkinElmer and LCD maker Corning.

“There are several indicators that tech stocks should rise soon,” he said. “Very simply, the number of stocks participating on the downside and the upside in …

Technology stocks received something of a boost yesterday, with the NASDAQ rising 21 points to 2,266.

Traders were buzzing about Microsoft’s admission that it would re-open talks with Yahoo, but only if less-than-subtle co-conspirator Carl Icahn can manage to unseat the Yahoo board of directors. Icahn, the famed corporate raider, owns a big chunk of Yahoo stock and is using his leverage to wage a proxy fight against the Yahoo board to replace it with one that’s more to his liking.

The statement from Microsoft drove Yahoo’s stock up $1.84 in Monday trading, demonstrating that confidence is growing among investors that a Microsoft-Yahoo deal can actually get done.

Reportedly, Microsoft CEO Steve Ballmer has been engaged in talks with Icahn over the past several weeks. In an official statement from Microsoft the company announced that it would be interested in pursuing Yahoo again if Icahn is successful in his bid to overhaul Yahoo's board of directors – specifically during the company's annual shareholder meeting on August 1. In a dispatch from Reuters last week, doubt was raised on whether Icahn had the number of votes he needed to unseat the board – many of whom remain loyal to Yahoo CEO Jerry Yang, who’s reputation has taken a hit during the Yahoo-Microsoft dalliance. Critics say that Chang should have jumped all over the $31 per share offer for Yahoo, especially since the stock has dropped significantly in the weeks following the collapse of the deal. That was $40 …

Dish Network is looking a bit chipped, if not actually cracked or even broken – and maybe Direct TV is poised to pick up all the pieces and put the second-place satellite TV provider back together again.

That’s the picture I’m seeing with Dish, which saw it’s shares drop by $2.20 – or 7% total – after telecom giant AT&T is deep-sixing an agreement to help resell Dish’s programming services this week. Dish’s stock price, trading around $27 per share today, is off from a 52-week high of $42.78.

The news from AT&T seems to be hiding a bigger story. After all, the severing of a mere marketing agreement is hardly cause to put Dish’s stock into crisis mode. Some Wall Street eggheads say that AT&T might have been trying to send a bigger message to Dish.
Lehman Brothers analyst Vijay Jayant told his company’s investors that AT&T's notice of termination does not necessarily mean that the company has not selected Dish as its satellite partner going forward. He said AT&T is "just protecting its option to switch, if it wants to, without a major delay."

That said, if AT&T does cut its ties with Dish completely, then look for a bigger slide in Dish’s stock price. Jayant says that Dish's new customer sign-ups will decline and its churn, or customer cancellations, to increase, if AT%T turns its back on Dish altogether.

That would be a “heavy blow” to Dish, according to Sanford Bernstein analyst …

In the alternative energy movement, the mantra is a simple one: go to where you want to be – not where you are now. Think of hockey great Wayne Gretzky, who once said “I skate to where the puck is going to be, not where it is has been, or where it is now.”

So it goes for the solar power market, where emerging companies are taking a technology that was once considered to be a unique, but ineffective method of heating and lighting your home, used primarily by descendents of Druid sun worshippers and hemp-loving hippies, to growing popularity in the home and commercial energy marketplace.

Why not solar power? After all, the major energy source contributing to solar energy is the sun, which shines every single day for free of charge. In addition, solar power emits zero carbon emissions.

Turns out the sun worshipers were right, and now the rest of the world may be catching on. Currently, solar energy currently provides less than 0.1% of the electricity generated in the United States, but a new report finds that solar power's contribution could grow to 10% of the nation's power needs by 2025. The report, prepared by research and publishing firm Clean Edge and the nonprofit Co-op America, projects nearly 2% of the nation's electricity coming from concentrating solar power systems, while solar photovoltaic systems will provide more than 8% of the nation's electricity. Those figures correlate to nearly 50,000 megawatts of solar photovoltaic systems …

A decent day in tech trading, with both the Morgan Stanley “Big 35” tech benchmark and the Philadelphia Semiconductor Index up from week-long lows. Maybe it’s the first day of the quarter and people are just glad the last one is over, or maybe the July 4th margaritas are going down early. I’m just glad to see a breather in the sliding Dow, as investors continue to search for a bottom. An informal sample of financial news sites today suggests that we are in a bottom, but nobody seems to sure how long it will last. Hey, at least nobody’s talking about a depression for once.

Two pieces of interesting tech news. One is Yahoo, which saw its stock slide below the $20 level – the first time that’s happened since this whole Yahoo-Microsoft merger song-and-dance. Not good news for Yahoo shareholders – remember that Microsoft offered over $30 a share for the company back in February (and probably would have gone as high as $34 per share).

The other eye-opener is Vonage, which seems to be having trouble raising capital at a time when wireless carriers like T-Mobile are moving in on the web-based phone call market. T-Mobile’s @Home, for example, is set to roll out next week. The home-based phone service should attract lots of subscribers at $10 a month – half of what Vonage is charging. Of course, both prices are well below the $65 a month that the typical home phone line user pays.

Amidst the carnage that is Wall Street this year (the Dow Jones Industrial Average is down 20% since last October, classifying the stock market as being in official “bear” territory), there are glimmers of good news, and a good portion of it is coming from the tech sector.

The latest manifestation of that is with the latest numbers from the personal computer market, which is performing better than expected. I would say “much better than expected”. According to the technology research firm iSuppli, global PC shipments are up 12% for the first quarter of 2008 – perfectly matching the 12% average growth rate for PC’s during the first quarter of the last five calendar years.

That’s an interesting number. When the economy was going good, like in 2005, PC sales for Q1 clocked in at 12%. When the economy is going bad, as in 2008, PC sales for Q1 still clock in at 12% - no slowdown at all. That’s got to be an encouraging sign for PC makers and tech companies, overall.

iSuppli says that credit for the continued strong numbers in the PC market goes to mobile units (I’ll have more on that trend in a minute). Overall, PC shipments grew by 69.9 million units from the last quarter of 2007, and that’s a slight improvement in growth from the same period a year before (62.4 million units). Topping iSuppli’s list of PC sellers are Hewlett-Packard, Dell, and Acer.

According to iSuppli analyst Matthew …

The market recouped some of its gains today, but tight credit and – here we go again – high energy prices are scaring the hell out of investors and keeping them out of the market. My gut tells me we haven’t hit bottom yet, even at a Dow Jones average of 11,390. One trader on CNBC’s Power Lunch today said we could “crash right through” the 10,000 barrier if energy prices don’t come down (and help reduce inflation) and if the big financial houses don’t get their act together (now Merrill Lynch is talking about another $6 billion write down because of bad debts.)

On the tech side, not much to address today, with the possible exception of the Chinese government getting closer to a deal to let Apple sell its new iPhone on the mainland.

Reuters broke that story today, reporting that “talks to bring Apple's iPhone to mainland China have cleared their biggest hurdle and are now focusing on practical issues, the country's top mobile operator China Mobile said on Friday.”

I wouldn’t get too excited yet, although the opening of the Chinese market would be a huge coup for Apple. The big problem for China Mobile was Apple’s insistence on a revenue-sharing deal, but that has now been dropped. "Apple is no longer insisting on a revenue-sharing policy, so the biggest hurdle for China Mobile to bring in the iPhone has been cleared, but there are practical issues still to be resolved," said China …

With the stock market down 300 points, once again thanks to high oil prices (now over $140 per barrel), technology stocks should be directly in the line of fire. But they’re not – and some big shot investors think the technology sector might even be a good defensive stop-gap until the economy rebounds.

Take Diane Garnick, a fund manager at Invesco, a firm with over $500 billion in assets under management. She made the case for tech stocks today on the Tech Talk pod cast, arguing that, in a tough economy, companies will look to technology to help them cut costs. But not all the news was so rosy – Garnick thinks that companies like Research in Motion and Apple could suffer if consumers start looking at their pricey iPhones and Blackberries as discretionary items that they don’t really need in a tough economic climate.

There is a good outlook for tech right now,” says Garnick. “It should do well as the economy slows down. You have to think is technology is really a defensive sector and yes, it us. As revenues come down the number one thing that CEO’s want to do is decrease their cost, including employees. And the best way to replace employees is with technology.”

Consumers, on the other hand, are hunkering down and avoiding buying the kids of products that RIM, Apple, and other high-end technology companies make.

“RIMM‘s stock is falling because the consumer is really hurting,” she adds. “Discretionary …

The big news on Wall Street today is the Federal Reserve’s decision to keep the Fed Funds rate at 2% - a move designed to keep rising inflation at bay. When the Fed cuts rates, the idea is that nation’s money supply will be loosened up, and money becomes easier to get from banks, lenders, and other creditors. But easier access to money can also increase the cost of goods and services, thus creating the opportunity for inflation to cut into the nation’s economic gains and cut into key benchmarks like personal income and corporate profits. We’ll see how well that strategy works.

The other eye-opener is the rumor flying around the trading pits that Yahoo and Microsoft will resume merger talks. If so, any credit and/or blame should go to the Yahoo board of directors, which has been chomping at the bit to get back to the bargaining table with Microsoft.

But what I’d really like to talk about today is a long-term trend that should mean big bucks to video software manufacturers and the people who invest in them. According to a new study from the New York-based Kelsey Group, the online video advertising market in the United States will reach $1.5 billion by 2012. That’s a big jump from the $10.9 million earned by online video companies in 2007.

Everyone seemingly wants to get in on the act. Kelsey says that consumer adoption and conversion rates will drive small to medium-sized businesses to spend …

The stock market is taking another major hit today after consumer confidence numbers came in well below expectations. The Conference Board, which measures the monthly consumer confidence number, reports that June’s number fell to 50.4%, down from 57% in May. Big investors had been anticipating consumer confidence numbers in the 56% or 57% range.

But those are just numbers – the real questions what are they telling us? And what does that mean for the technology sector.

The answer to the first question is easy. Americans are absolutely terrified about rising energy prices. With the cost of everything from gasoline to corn to computer parts impacted by skyrocketing oil prices, consumers’ pocketbooks are taking a major hit, and subsequently, so are the bottom lines of U.S. companies.

I keep hearing rumors about an energy bubble that’s about to break, bringing oil prices down from their highs of about $135 a barrel. The thinking is that the U.S. Congress might impose restrictions on oil speculators (which proponents say will cut oil prices in half in 30 days, which I doubt) and that Americans will impose their will on Democrats who stand in the way of drilling for oil domestically. That move I like – sending our money to Saudi Arabia or Russia for oil is insane – it’s devalued our own dollar and made us dependent on overseas governments – not all them stable. Producing our own oil like the Chinese, Russians, and even Canadians do would send …

Is AT&T pricing itself out of a good profit margin with the new iPhone?

A growing number of Wall Street onlookers seem to think so. A few weeks back I wrote that AT&T would be charging $200 for the new iPhone 3G – that’s down from up to $500 for the 2007 model that rolled out to wide acclaim.

Now news comes out that AT&T will have to pay Apple $325 per unit for the sole right to carry the new iPhone model. Oppenheimer Investments analyst Yair Reimer has come out with a new report adding that AT&T will add a $100 per-unit fee for the sole right to sell the iPhone who signed up for the phone and service inside Apple stores. Says Reimer, “When you add these figures to the retail price of the handset, AT&T could be paying as much as $624 for the 8-GB iPhone 3G, and $724 for the 16-GB version.”

Reimer’s is the highest per-phone cost I’ve seen involving AT&T. A few months ago, Piper Jaffrey analyst Gene Munster said that AT&T would be paying up to $466 per iPhone. Other analysts have gone as low as $350 per unit to $700 per unit.

AT&T has a plan, though. The telecom giant seems willing to take a short-term hit – it has already said it will cut earnings by about 12 cents per share for each of the next two years. But down the road AT&T expects data-hungry subscribers to …

Nasdaq is up nine points to 2,463 in Monday afternoon trading, with a slew of encouraging news from the technology sector, especially good news on the cell phone front and news that federal regulators will okay the Sirius/XM Satellite merger.

Sirius is up five percent, to $2.68 while XM rose 6.4%, to $11.57. A few years ago, a Smith Barney broker told me to get in on the satellite radio “boom” but I’m glad I didn’t. The stocks of both of the satellite radio leaders have languished for years, and maybe the only hope is to have XM and Sirius meld into one company that dominates the satellite radio industry.

Lord knows that satellite radio technology works. I’m a radio buff, and love the fact that I can listen to music shows hosted by legends like Bob Dylan and Tom Petty on my XM radio. The comedy channels and BBC are pretty cool, too – all in crisp, clear sound that even FM radio can only dream about.

But paid subscriptions for satellite radio are a tough sell, especially in this economy. Why pay to listen to Sean Hannity or Dave Ramsey in crystal clear audio when, in many cases, the AM sound is fine enough?

It’s a problem that satellite radio leaders are trying to tackle, mostly by offering diversified, powerful menus of shows that appeal to a wide range of listeners. So far, it hasn’t worked. The one card that hasn’t been played is …

I'd hate to be Jerry Yang's therapist today.

The Yahoo CEO turned down a $33 per share buyout offer from Microsoft several months ago, with some saying the price could have gone as high as $37 per share.

But that was then and this is now. The Associated Press is reporting that Yahoo has ended all buyout talks with Microsoft, signaling the end of any deal between the two high tech giants. The reality is that Microsoft walked away from the bargaining table weeks ago and really never came back. Wall Street reacted instinctively and coldly, as Yahoo shares fell 13% in Thursday trading.

Yahoo shares have been none too pleased with Yang's decision to fend off Microsoft, and I'm sure we'll be hearing more from Yahoo investors in the coming days, especially the cantankerous Carl Icahn - a vocal critic of Yang's management style.

Says the AP: "The development, announced Thursday, is expected to lead to an advertising partnership between Yahoo and another rival, Internet search leader Google. That alliance is expected to be announced after the stock market closes."

More on Microchips

In other market news today, a key global microchip group has lowered it growth estimates for the sector in 2008. The news drove the Philadelphia Stock Exchange Microchip Index down 3.4% in today's trading.

Investors should hardly be shocked by the news, as the fallout from high energy prices taking on its toll on the chip sector.

According …

Browsing through the trading numbers early this morning reveals that the chip sector, which I wrote about on Monday, took a hit with the news that Texas Instruments might come in with lower revenues than expected.

TI tightened its revenue outlook Monday, slightly raising its midpoint but also pointing to ongoing weaknesses in the wireless chip market. It’s stock dropped about 2.5% as a result, although National Semiconductor dodged that bullet, and saw its stock price rise by 1%, thanks to a good prognosis for the analog market, a strong market for the chip giant.

There’s also more news from AT&T, on top of its new iPhone strategy which we covered last night. Yesterday, AT&T began offering the Centro, Palm's new flagship smartphone based on the Palm OS. The $100 smartphone comes with multimedia capabilities and several services exclusive to AT&T.

AT&T has a good plan going, covering the smartphone niche from top to bottom with the iPhone and now the new Palm. The Centro seems to offer some nice features, like basic email and texting, along with access to music downloads, GPS navigation, an XM radio link, and live TV, for an additional price.

But what really interest me is the emerging mega-demographic buyer of smartphones – women. According to consumer buying data relased by Palm, more women than men purchased the Centro. In fact, the number of women was almost double the number of men.

The Centro's $100 price tag is an attractive …

No doubt you’ve been reading a lot about the shiny new iPhone 3G. The gurus on this site can help you with the gizmos and gadgets way better than I can, so I’ll focus on the business side – and iPhone carrier AT&T has just announced an interesting new strategy.

Specifically, AT&T will soon stop sharing monthly revenue with Apple, opting instead to buy the phones directly from Apple and turn around and resell them to customers at a discount.

Remember, AT&T is the sole U.S. provider of the iPhone – the result of an exclusive deal with Apple last year before version one of the iPhone was released. The impact for consumers is significant: the move forces Apple to sell 8GB versions of the new iPhone for $199 and the 16GB version for $299. Those numbers were $499 and $599, respectively, on the first go around last summer.

Aside from triggering a stampede of customers out of Verizon and Sprint and into the AT&T fold, the move should help AT&T’s bottom line – expect a sharp increase in subscribers.

Consequently, AT&T sees big profits in the move away from the shared-revenue strategy. It’s already announced a hike in monthly charges, to $30 per month for an unlimited plan (from $20 last year) and to $45 per month for business users.

AT&T needs an edge now that Verizon has picked up Altell (although federal regulators have yet to okay that deal).

Analysts say that …

Everybody's touting Intel as being the trigger for a run-up in chip stocks late last week, although I like the numbers that National Semiconductor is showing.

What's beyond debate, however, is that the semiconductor market is on the rebound amid signs that the sector's long decline may finally be over. The Nasdaq Index was up 46 points on Friday on the news that Intel come out and said that it would be in line with analyst's forecasts, albeit at the lower end. Meanwhile, National Semiconductor saw its stock rise 5% on Friday after besting analysts' expectations for its last quarter. The company made quite a statement on Wall Street, besting the street's predictions by 20% for the quarter - pretty strong stuff.

This bout of good news had analysts positively preening about the suddenly resurgent chip sector, especially with Intel's estimates. ''What Wall Street looks to is to discount and anticipate the future, and so you'd much rather have a situation where a company says we're not quite where we want to be now but we're upbeat in terms of where we're going,'' David G. Dietze, president and chief investment officer of Point View Financial Services Inc. in Summit, N.J., told the New York Times on Saturday.

We'll know more about Intel's forecast later this week but the tea leaves coming from National Semiconductor paint a better picture for microchip makers. The 5% run-up on Friday lifted the stock to a six-month high in the latest leg …

Oh boy, just when we thought we were out of the woods, high oil prices are pulling us back in again.

Oil prices skyrocketed by $7 a barrel today to $135 a barrel, gathering even more momentum after Thursday's big bump-up, and that, unfortunately, is the good news. A new report from a key Morgan Stanley analyst predicted prices could hit $150 by the Fourth of July.

If you don't think that rising oil and energy prices don't impact technology companies, you're mistaken. Technology companies rely on the normally-reliable U.S. consumer to ride them out of recessions. But with $150 a-barrel oil on the way, and gas prices already at $4 per gallon, the calvary just isn't coming.

John Schoen, a senior producer and economics writer at MSNBC, aptly sums up the way that the U.S. consumer sector is taking on water or oil - with a post this week:

"The biggest concern (of rising oil prices) is the potential impact on consumer spending, which accounts for about 70 percent of U.S. economic activity," he writes. "Consumers have already been hit by the slump in housing prices — eliminating the equity "piggy bank" that many homeowners tapped as prices were rising. Home prices fell 3.1 percent in the first quarter of 2008 compared with last year, according to data released Thursday by the government’s Office of Federal Housing Enterprise Oversight."

Adds Schoen, "Rising gasoline prices are one more burden on consumers. Economists estimate that every …

RIMM and its ubiquitous Blackberry is back in the financial news this week, after Goldman Sachs raised its target price on the Research in Motion to $163 from $148.

Why not? Cell phones, especially multi-functional ones like the Blackberry, are the bumper crop of this year's tech toy marketplace. And they're growing even more multi-functional. Says Strategy Analytics, in a new report out last week, cell phone heavyweights like Blackberry and Apple are pioneering fresh revenue streams for the mobile handset industry with their emerging push into value-added services such as navigation, email and music. Current revenues for all three vendors are modest, but growing.

Adds Tom Kang, senior analyst at Strategy Analytics, “Nokia, Blackberry and Apple are among the first to realize that global handset revenues are approaching a peak; therefore fresh growth streams must be found in mobile services. A cocktail of promising applications for wireless consumers is already emerging, such as GPS navigation from Nokia, push-email from Blackberry and iTunes music from Apple.”

One potential trouble spot is the iPhone, which has experienced a decline in market share, especially relative to Research in Motion in the first quarter of 2008. According to the technology consulting and analytical firm International Data Corp (IDC), "Rim's share of the U.S. market for advanced phones with computer-like features such as e-mail rose to 44.5 percent in the first quarter from 35.1 percent in the fourth quarter, while iPhone's share fell to 19.2 percent from 26.7 percent in the …

Today's edition of TechWeb poses an interesting question.

With digital movie rentals coming on strong, is Netflix in a good position to grab a big slice of market share? The mail-a-movie giant hasn't impressed Wall Street with its efforts so far, although it does have a box-top digital set that feeds films electronically to televisions sets ready to roll.

Online movie rentals could be a $1 billion business this year, and shows signs of growing larger going forward. The premise is too juicy not to work - order a movie from a huge catalog of film faves for a few bucks and have the bill electronically added to your cable TV account (or Netflix account, if you're a subscriber). I'm a long-time Direct TV customer and, besides its lousy customer service, the satellite TV company has offered on-line movie rentals from a limited menu of recent cinema offerings. Some are even in high-def, which is nice.

Certainly, Netflix feels it can elbow competitors like Apple and Amazon.com aside and dominate the digital rental market. "Netflix is betting that during this time, we can establish ourselves as a leader in the space," Barry McCarthy, Netflix's chief financial officer, told investors last week.

Working in Netflix's favor is a subscription base of eight million customers. Also boosting Netflix's chances is the fact that would-be competitors like Blockbuster and Movie Gallery (now defunct) have pretty much fumbled in their own end zone with digital rentals and have …

Tom Wolfe once wrote that “you can’t go home again.”

In the computer world, at least, Wolfe has been proven wrong. Prodigal son Steve Jobs was shown the door at Apple and returned to strike gold with the PowerMaC, the iPod, and the iPhone.

Now it’s Michael Dell’s turn to rule the roost for a while – Dell Inc. investors certainly hope so.

Dell, the world’s second-largest manufacturer of personal computers, has never been a particular favorite of mine. The company’s computers are mediocre, service (once a linchpin of the Dell brand) has suffered, according to recent consumer surveys, and business customers have never really warmed up to the Dell hardware line-up.

Perhaps that’s why Michael Dell had to return to the company in early 2007, as the company was taking on water and needed the energy and brand infusion that Dell brings to his namesake.

Maybe that’s exactly what Dell needed. This week, Dell’s first-quarter sales exceeded those all-important analyst expectations, and profits were above expectations, too. That good news immediately fueled a 10% run-up in Dell’s stock, triggering renewed enthusiasm for Dell from investors, who are hoping, I’m sure, that the first-quarter digits were no one-time wonder and that Michael Dell’s turnaround plan is taking flight.

Here are the numbers, at least the relevant ones. Notebook shipments jumped 43 percent in the first quarter compared with a year earlier, thanks to a big boost in non-U.S markets (especially Asia). Overseas sales are …

I know that, technically speaking, airline stocks aren't technology stocks (although I can't think of a more amazing technology that one which enables a 10-ton tube of metal to become airborne in New York and drop you safely in Chicago two hours later) but hear me out.

This could be a good play with technology in the mix.

I'm talking about the small, but growing number of airlines that are experimenting with allowing passengers to leave their boarding passes at home and check in instead using their cell phones.

This from The New York Times last week:

"At least half a dozen airlines in the United States currently allow customers to check in using their mobile devices, including American, Continental, Delta, Northwest, Southwest and Alaska. But so far, Continental is the only carrier in the United States to begin testing the electronic passes, allowing those travelers to pass through security and board the plane without handling a piece of paper."

Since that article came out, it seems that Northwest Airlines is also testing the cell phone ticketing system, so I'd expect they'll all be lining up now. Consumers should love the technology, with one less thing to clutch in your hands as you race through an airport. Security could be a problem and I'm not sure how the FAA will view cell phone ticketing. But past that, I think customers will lean toward airlines that do allow the practice.

Hey, at this point, anything …

Want to take a second look at a former high-flying tech stock?

How about CA, the information technology giant, whose slow-and-steady growth is occurring mostly under the radar of most Wall Street observers?

But that might not last too long, especially as CA’s most recent quarterly financials, released last Friday, said that the company would beat analyst expectations in terms of this year’s revenues and earnings. For the last quarter, CA posted an 18% increase in revenue to $1.09 billion. Net income was $71 million and earnings-per-share, excluding items, came in at 22 cents. Analysts were expecting revenue of $1.09 billion and EPS of 28 cents.

CA had said that it expected between $4.5 billion and $4.6 billion in revenue for the ar ending March 2009. That’s also ahead of Wall Street’s view, which came in at $4.42 billion in revenue, according to Thomson Financial, which polls analysts every quarter.

For all the good news with CA, the company is also displaying a nagging habit of shooting itself in the foot. Says Jefferies analyst Katherine Egbert, the first-quarter results were “solid” but the company’s progress is being slowed down by one time charges that CA is posting, mostly due to acquisition and restructuring charges cost. Egbart estimates that CA lost 9 cents per share last quarter as a result of the one-time charges.

"While we like the direction CA is heading, it is doing so in a slow and steady manner making it difficult for …

Taxes, inflation, oil prices – even the price of corn are dominating the economic headlines these days. But should they overshadow the story of the (briefly resurgent) U.S. dollar?

I don't think so - and I don't think anyone in the tech sector should sell the dollar story short, either. The dollar dictates the price and value of U.S.-made technology products and services. When the dollar's down, it makes U.S.-made computers, for example, less valuable. It takes more and more dollars to buy that computer

And that's been the case of late. In fact, the dollar has been in the tank for several years now and economists and Wall Street gurus alike are understandably worried.

How much has the greenback struggled in the past few years? Let’s put it this way. If someone offered US investors a bond that pays zero interest, has zero collateral, lost a big chunk of its value in the last three years and is flirting with all time lows, would investors be interested?

My guess? Not really.

Dollar-basher say that the U.S. dollar is in a major long-term bear market, and are advising investors to keep their exposure to the dollar at an absolute minimum. They’re also recommending that all long-term savings and investments should be denominated in select foreign currencies against which they believe the dollar is likely to fair the worst.

Critics also say that economic policy decisions by the U.S. Federal Reserve is greasing the skids …

Is the Tel-Com industry going the way of the dinosaur? If worldwide trends in 2008 are any indication, that very well could be the case.

Speaking of case, the tech industry research and analytical firm Heavy Reading is on it. In a study released this week entitled “Reinventing the Telco: A Heavy Reading Progress Report”, the firm concludes that while telecom companies continue to make investments in research and technologies, it’s not really clear how those investments are going to pay off.

Writes Graham Finnie, chief analyst at HR: “Big telcos are continuing to invest huge sums in their networks: In 2007, five fairly representative telcos – Verizon Communications Inc. (NYSE: VZ - message board), France Telecom SA (NYSE: FTE - message board), KT Corp. , NTT Group (NYSE: NTT - message board), and TeliaSonera AB (Nasdaq: TLSN - message board) – spent a whopping $50 billion among them, mostly on the construction of next-generation access and core networks. Yet ask them what new service revenues that investment will support, and things start to get pretty vague. If things stay vague, the long-term survival of big telcos is in doubt.”

Clearly, the telecom industry is in retreat. Land lines and broadband markets have just about hit critical mass in the U.S. and Europe, even as telecoms continue to make big investments in such technologies. Finnie points to France Telecom, which has seen its base of retail consumer lines in the French market fall from 23.2 million to …

I've been following the career arch of corporate raider Carl Icahn for years. The billionaire investor specializes in buying up huge chunks of stocks of volatile companies, then going after the company's board of directors to get the deals he wants.

It's worked pretty well with Icahn's investments in companies like TWA, Motorola, an Time-Warner over the years. Icahn hasn't made as many corporate board members walk the plank as he'd like, but he's made a ton of money as maybe the world's most famous "activist shareholder".

Now, it looks like Icahn has set his scope on Yahoo. After CEO Jerry Yang turned his back on an offer from Microsoft to buy the company, scores of Yahoo shareholders have balked - but none have the bite of Icahn. In the past few weeks, Icahn has been buying up millions of shares of Yahoo stock, hoping to buy some leverage and get the company to reopen negotiations with Microsoft. If that happens, and Microsoft comes back to the table with an offer of, say, $32 per share, then Icahn makes a boatload of money buying in at less than $30 a share (the stock is currently trading at around $27 per share), especially since Yahoo's stock is sure to rise significantly if a deal is struck.

The Icahn template here is a familiar one. Get the board fired - or, at least selected members - and find new board members who'll dance to his tune and push for …

Is the Yahoo deal done yet? The stock market thinks so, slicing Yahoo’s financial value by 15% in the last two trading sessions. If the deal were still alive, then the stock would be moving the other way around. Yahoo’s chief Jerry Yang says the $37-per-share demand wasn’t etched in stone but he’s sporting a good dose of Wall Stree’s most lethal cologne – desperation - for anyone to take him too seriously today. Still, I think he wants Steve Ballmer to come back to the table and do the deal.

But Ballmer and Microsoft seem to want to move on. Traders are still buzzing about how fast Ballmer got up and moved away from the negotiation table – going from very enthusiastic to unusually tepid in the space of a few weeks. The big reasons for Ballmer’s change of heart? First, Microsofot’s employees uniformly came out against the Yahoo deal. That whole “synergy” thing didn’t go over well inside Fortress Microsoft. Maybe Microsoft staffers took their cue from Yahoo management, which considered a future with Microsoft with the all the passion and fervor of a maitre’d ordering at the drive-through window of a Burger King.

So maybe Microsoft employees are on to something. Maybe there is a better and cheaper way to create that symmetry that Bill Gates and Steve Ballmer like so much, and that has paid off so handsomely to investors over the years.

Sramana Mitra, writing in the May 6 edition of SeekingAlpha, …

Okay, let the finger-pointing begin. Should Microsoft CEO Steve Ballmer take the heat for the proposed Microsoft-Yahoo merger falling apart? After all, didn't he say that Microsoft wouldn't raise its $45.7 billion bid for Yahoo, then weeks later, say he'd raise the bid, from $31 per share to $33 per share? And shouldn't Ballmer have thought this deal through? Why Yahoo? After all, the search engine battle is over and Google is king. Why the need for Yahoo in the first place?

Or what about Yahoo chief Jerry Yang - the guy who dug his heels in at $37 per share and seemingly chased away what many analysts are calling a "fair" price for Yahoo. Now Yahoo's stock is in free fall and maybe it's long-term prospects along with it. Google isn't going away and Yahoo continues to lag it's rival in terms of market share, revenues, and any other benchmark you want to use.

So far, there seems like there's plenty of blame to go around. Tech Ticker, along with two prominent technology blogs - Valley Wag and Tech Crunch - are calling for Ballmer's job.
They say that Ballmer could redeem himself by resurrecting the deal. Or, maybe he was wise to walk away from a deal he didn't like (as they say on Wall Street, often the best deal you make is the one you never made). Microsoft's stock actually rose a few ticks, primarily because the Street though the company was in danger …

Samsung Electronics had good news for the world equity markets, telling investors that it would post a 37% increasing earnings over the first quarter of 2008. The news wasn't so hot at consumer electronics competitor Toshiba Corp., which announced a 95% drop in profits.

So why the disparity? Let's tackle Toshiba first. Analysts knew this one was coming, as Toshiba made it plain that its exit from the HD-DVD market would trigger a short-term earnings hit. That's exactly what happened - Toshiba beat feet out of the HD DVD market (which has given way to Blu-Ray DVD technologies in the video marketplace) and it cost them plenty, at least for the short-term. Investments in next-generation technology systems that don't pan out are anathema to earnings statements. Toshiba is the latest in a long line of consumer technology companies (Hello, Gateway) that found that crucible out the hard way.

Samsung didn't make that bet. The Japanese electronics giant, which has made a profitable pivot into the cell phone market, garnered $2.2 billion during a quarter. Sales rose 19 percent to $17.19 billion. Once again, the BRIC story carries the day, as consumers outside of the U.S. and Western Europe buoyed the company's profit line. "Strong growth in emerging markets was balanced by the more difficult economic situation in both North America and Europe," said David Steel, vice president of Samsung's telecommunications business, in a prepared statement.

The cell phone sector was solid for Samsung. According to company figures, …

Harris Associates is typically one of the better value strategists out there - especially when it comes to finding value in technology stocks.

One reason is why is the stock-picking acumen of chief information officer David Herro. He was interviewed on Tech Ticker this morning and had some interesting things to say about the tech sector and the prospects - long-and short-term of some of the sectors biggest names like Intel and Dell.

I was scribbling notes from the interview as fast as I could. So, as accurately as I can gauge, here is Herro's take on the tech sector..

"Opportunities in the technology space are good. Right now, we are running some global portfolios where we have high technology weighting. Why? Because technology is a good cash flow generator and many companies have good moats around their businesses that protect their profit margins. Look at Intel. Intel is simply the global leader in chip technology and they’re recent (quarterly) numbers say they see no diminishment in performance. In the late 1990’s, because of valuations, we wouldn’t touch a tech stock. And that was when tech comp;anies were expensive."

"Now, they are cheap and that’s what we do as value investors, and we will do with that Intel and SAP and Dell.

"We have big positons in HP and Dell – we don't see them as contradictory – they're not taking businesses away fom ech other. Michael Dell is back and is reengineering his business. …

There's a lot of pressure on CEO's to keep costs down in a struggling economy. One way they can do that is by outsourcing their IT services to overseas firms, especially to India.

Now, this isn't exactly breaking news, but the rate that company's are turning to lower cost outsourcing programs is rising fast. That keeps money out of the pockets of US technology services companies, and devalues their stock prices, to boot.

The proof, as they say, is in the pudding. A new report from the Gartner Group says that the current U.S. economic slowdown will lead buyers of IT services to consider increasing the percentage of their labor in offshore, lower-cost locations. In its research, Gartner says that India will remain the dominant location for IT offshore services for North American and European buyers as a result of its scale, quality of resources and strong presence of local and traditional service providers.

The Gartner report also concludes that U.S. companies will shift from cost containment goals to a greater focus on cost reduction and productivity increases in their sourcing decisions. This will lead to a steady increase in the adoption and expansion of offshore services - primarily from India, but increasingly from other countries as well.

“Factors that will give India the edge over other offshore locations are scale and quality of labor. North American and European buyers of IT services have been the force behind a growing offshore services market and India is …

Tech stocks have been lagging along with the rest of the stock market so far in 2008, but its long-term prospects are much, much better.

So says Imran Khan, a JP Morgan senior analysts who specializes in the telecom and Internet markets. Khan is one of my favorite analysts and his argument that technology has a long way to go if it ever hits critical mass - if ever - is a compelling one.

His case is also a simple one - so simple most financial analysts miss it. Tech stocks will rise because capitalism - often brutally criticized in the mainstream press - has given the industry a big opening in places like China and Indiana - and other emerging, middle-class markets that have embraced capitalism.

Says Khan, in his 2008 Global Internet Snapshot, middle-class consumers in such regions are clamoring for the products that tech companies make. For example, in Indonesia, one person in a hundred owns a PC, and only one in a thousand has a broadband Internet connection. There are also 63 million cell phone subscribers there, but that only represents 27% of the country's population of 234 million. In additions, cell phone subscriptions in Indonesia are growing 36% annually. Cut to India, where the country has 166 million cell phone users, and where growth in 2007 was 84.5%.

Of course, the big omission is the U.S., which seems to be catching its breath after massive technology consumption during the past three …

Kind of a quiet day on Wall Street, with traders wondering if Bank of America's less-than-expected Q1 forecast was a bump on the road to a bull market or a legitimate roadblock.

With the market off 35 points in Monday trading (as of 3 PM EST), after rising four percent last week on big earnings reports from Google and IBM, among others, I'd say that it's more of investors taking a breather today. This in anticipation of some big economic numbers coming up this week and a new Federal Reserve meeting where Bernanke & Co. weigh another cut in interest rates.

One story I've been following is China - news from the Pacific Tiger that the nation's economy grew by 8% last year was completely unreported by the U.S. media. What global recession? One story on Yahoo Finance today talked up the Chinese consumers' growing appetite for SUV's and other big-ticket items. Consequently, if Bank of America drops a few bucks in Monday trading, I know of 800 million Chinese folks who don't seem to care.

In the technology market, I know of two companies that really do care about China - a lot. Both Novell Inc. and Microsoft Corp., came out with news this weekend that they plan to push a larger priority on the Chinese market.

Specifically, as reported by The Seattle Post-Intelligencer, both tech giants are plowing money into promoting Novell's SUSE Linux Enterprise Server operating system in the China commercial marketplace. A …

This morning's Tech Ticker drew a bead on short-sellers who saw a wounded beast in Google and bet that the stock would go down this month - even though sellers weren't really sure what Google's 1st quarter financials would look like.

Well, they know now. As I said yesterday, Google performed much higher than analysts on Wall Street had predicted, and saw its stock price rise as a result. That's poison to Wall Street's short-sellers, who bet on stocks going down - not up.

A quick word on short-selling, a strategy I used many times during my years as a Wall Street trader. In simple form, short -selling is a technique employed by an investor who believes the market price of a security will drop. The investor borrows stock, which he then sells (even though he doesn't own it). If the price of the stock drops, the investor can buy the same stock for less than what he originally sold it for, and make a profit, after paying the brokerage commission for borrowing the stock. The investor must return a like number of shares of the borrowed stock to the stock lender.

But if the stock goes up - and not down, as in the case of Google yesterday, it's the short-seller left holding the bag. Tech Ticker analyst Henry Blodgett, one of the few analysts I've seen that told investors to go long on Google, says that Google's stock should stabilize and not go down any …

I’ve been tough on Google this year, and with good reason. Part of what I do is write about how technology impacts the financial fortunes of companies and Google has been losing market share to the lousy economy and to other web portal developers in recent months.

Look at online advertising – some estimates that paid “clicks” – where Web 2.0 providers make their bread and butter – have been off by anywhere from 5% to 15% so far in 2008. And reports from users of Google AdWords – despite a big splash in 2006 and 2007 when paid search was getting a lot of good press – had users shrugging their shoulders and going “eh”.

So, today, my hat is off to Google, as its first-quarter financial numbers came in higher than the experts anticipated. That bodes well for both Google and entire online ad industry.

As Colin Gillis, an analyst with Canaccord Adams. "The boys delivered."
Boy, did they ever. Google reported that first-quarter net income rose to $1.31 billion, or $4.12 per diluted share, from $1 billion, or $3.18 per share, in the year-earlier quarter. Quarterly profits came in at $4.84 a share, well on top of the average Wall Street forecast of $4.53.

No doubt that things have slowed down a bit for Google. For Q1, gross revenue rose 42 percent to $5.19 billion. Compare that to the same period in 2007, when Google's revenue grew at a 63 percent clip. …

It’s a big day for semiconductor stocks, with an upbeat forecast from chip giant Intel boosting stocks in other semiconductor companies and giving the overall market a nice bounce, as well.

Through mid-morning trading, Intel is up $1, to $22 per share. Other chip companies are following suit . . .

-- Texas Instruments Inc. up 38 cents to $29.10
-- Qualcomm Inc., up 74 cents to $41.93
-- Advanced Micro Devices Inc. up 16 cents, or 2.8 percent, to $5.94

Although Intel’s net income fell by 12% for the quarter, thanks to costs incurred in the company’s recent restructuring campaign, the company says its financial picture is a bright one, as is the financial outlook for the entire semiconductor industry.

A break in the economic clouds? Maybe. The chip industry is a legitimate bellwether for the U.S. and global economy. With a better-than-expected forecast from Intel, the thinking on the part of investors is maybe – just maybe – the economy isn’t in as much trouble as many think.

So that sound you hearing from Wall Street is a mass exhale. "Overall, Intel delivered exactly what the market needed: a calming reassurance that macroeconomic weakness was not having an accelerating affect on PC, and by proxy, technology demand," said analyst Cody Acree of Stifel Nicolaus.

Buoyed by strong sales across all sectors and markets, Intel reported earnings of $1.44 billion, or 25 cents a share, compared with profit of $1.64 billion, …

The roller coaster ride for tech stocks grew even wilder today, but in a good, adrenaline-rush kind of way.

The news is mostly all good, with Banc of America Securities issuing a report that boosted semiconductor companies, stating that "a modest inventory build-up has eased".

That's all investors needed to know, as shares of tech stocks rose en masse, with Intel, up 4% after the Banc of America news hit the trading floor, and Apple the big winners. The tech sector was also buoyed by a JP Morgan analyst report that upgraded Apple's profit forecasts. That shot Apple's stock up 2%.

Overall, the key benchmark for semiconductor stocks - the Philadelphia Stock Exchange's semiconductor index - rose by 2.1% in Thursday trading.

The other big news of the day was Yahoo's announcement that web portal pioneer AOL could get involved in a three-way alliance with Yahoo and Google. Of course, Yahoo didn't come out and say that, but the Associated Press today cites sources high up in the company that say the three companies could combine into one cyber-supernova of a company.

Then, only hours later, Rupert Murdoch's News Corp. said it would pursue a partnering deal with Microsoft for Yahoo, throwing a money wrench in to the Yahoo/Google/AOL proceedings.

"We continue to believe (a Microsoft) deal is the most likely outcome," Citi analyst Mark Mahaney said in a memo today. Mahaney also said that adding that any News Corp/Microsoft takeover of Yahoo would …

Surprising news from the Yahoo camp late this afternoon, with Yahoo announcing that it will begin a limited test of Google Inc.'s AdSense for Search service, which will deliver relevant Google ads alongside Yahoo’s own search results. According to a statement from Yahoo, the test will apply only to traffic from Yahoo.com in the U.S. and will not include the company’s extended network of affiliate or premium publisher partners. The test is expected to last up to two weeks and will be limited to no more than 3% of Yahoo search queries.

The news sent shock waves through Wall Street, as traders wondered whether the tit-for-tat moves by both Yahoo and Microsoft over the past few weeks has descended into bloodbath territory with the Yahoo/Google move.

Yahoo offers up a dry explanation in a statement today:

“As previously announced, Yahoo’s board of directors is exploring strategic alternatives to maximize stockholder value, including exploration of potential commercial business arrangements. The Company noted that the testing does not necessarily mean that Yahoo! will join the AdSense for Search program or that any further commercial relationship with Google will result. The Company further stated that it would not comment on the nature or timing of any potential relationship.”

Could the Yahoo/Google one-nighter turn into something more serious? For the record, Yahoo claims it hasn't decided to join the thousands of other Web sites that rely on Google to handle most of the text-based advertising that is tied …

With the semiconductor market on the ropes, Intel is doing all it can to stay relevant - financially and globally.

To that end, today's news that Intel has "doubled down" on China by rolling out its second venture fund in the burgeoning Far East Tiger. The fund, to be called the Intel Capital China Technology Fund II, or as cynical Wall Street traders are calling it "Son of Intel Capital China Technology Fund".

The $500 million will target investments in funding start-ups in booming Chinese markets like wireless broadband, media, telecommunications, and clean-and-green technologies. Already two fledgling companies are in the Intel II mix - Holdfast Online Technology and Newauto Video Technology.

"Given the success of the original China Fund--with investments in more than 28 companies--it is time to renew our commitment," says Cadol Cheung, Intel Capital Asia Pacific managing director.

According to an Intel press statement, Holdfast hosts third-party console games that allow gamers to compete against each other over a wide area network, while Newauto develops and markets video equipment, networking software, and system integrations for Chinese TV stations.

The original Intel China Technology Fund, opened in 2005, has funded 28 companies doing business in China. But it only had $200 million in fund assets so "Son of China Intel" has much larger aspirations.

Intel has had a decent week, even without the new China venture. Traders are still buzzing about Advanced Micro Devices Inc.'s news that it would post disappointing first-quarter …

Today's trading was flat, with most of the tech news coming from the Yahoo & Microsoft camps. Microsoft seems to be getting all Tony Soprano-like on the Yahoo board, issuing a pointed letter that emphasized an April 26 deadline for accepting its $44.6 billion takeover bid for the mega-web portal.

Reportedly, Microsoft chief Steve Ballmer threatened Yahoo, saying if its board of directors board doesn't relent, he would slash Microsoft bid's and demand that Yahoo's shareholders request a new board that would see things in their favor - and in Microsoft's favor, as well.

Yahoo returned fire with a defiant letter of its own that seemed to up the ante up on the hostility meter. Yahoo chief executive Jerry Yang said in a Monday letter that Microsoft CEO Steve Ballmer hasn't done enough to make the merger happen. Various press reports cites Ballmer as being at least two informal meetings between Yahoo and Microsoft, but couldn't say what impact or influence he had on the merger talks.

The latest mail missive could be the last gasp for Yahoo, which has seen its financial fortunes spiraling downward over the past two years. A growing number of Wall Street types are saying that Microsoft and Yahoo will wind up either forging a civil takeover by the end of April. If not, the Yahoo board may have the final say, with both Yang and Ballmer sure to throw their weight around to get a deal deal - in each's favor, …

It’s been a lousy first quarter for tech stocks but the outlook for the second quarter of 2008 looks brighter and shinier.

So say the investment gurus at Tech Ticker – specifically former Wall Street tech analyst Henry Blodget and Barons West Coast editor Eric Savitz.

Savitz says there are plenty of bargains and buying opportunities for tech investors as April opens up. “We’re still seeing a deterioration in fundamentals, specifically with Oracle’s mediocre earnings picture (from last week) and with Google and the ongoing online advertising malaise.”

But Savitz really seems to like certain sectors, like semiconductors, where stock prices have fallen lower than they should have, he adds. “In areas like semiconductors, where stock prices have fallen by 30%, a lot of the bad news has already been discounted. So we’re seeing plenty of tech stocks falling to really good bargain levels.” Security software could be another strong tech channel going forward, he added.

Research and Motion (RIM) might be one stock that fits the tech resurgence bill. RIM is set to announce its earnings on Thursday and Savitz feels the numbers should be pretty good. “Sales are still strong and consumers are warming up to what Rim is selling.”

Tech Ticker reports that analysts are looking for earnings of 70 cents and revenue of $1.85 billion for RIM's fiscal fourth quarter, which Savitz is confident the company can meet or exceed.

RIM, the Blackberry handheld maker is one of the few …

It's kind of a quiet Monday morning on Wall Street, with Treasury Secretary Henry Paulsen's proposal to further regulate and consolidate the U.S.'s financial markets (by bringing heavier Federal Reserve oversight over bank lending, hedge fund risk assessment, stricter controls over the stocks market and currencies market - even tighter scrutiny over your local mortgage broker.)

Don't get too excited - it will take months for Congress to act on these proposals, if it acts act all. Rep. presidential candidate John McCain issued a statement saying he didn't think that action wouldn't be taken until after the November elections.

The other big news, relatively speaking? China Telecom suffered a rough fourth quarter, losing 37% in revenues from the previous quarter, and off 13% for the year. The company said the increase in mobile phone usage in China is to blame, primarily. The question is, can China Telecom make up ground to Asian telecom giants like Nokia and Samsung who already dominate the market? Investors certainly don't think so.

Also, Merck's Vytorin cholesterol drug failed in a key clinical test, with an advisory board advising doctors to opt for cheaper generic drugs, instead. Investors are stomping mad that the failed trial, which actually took place two years ago, only saw the light of day today. Good point. Look for biotech stocks to get rocked today in the aftermath.

Elsewhere, online ad spending trends are in the financial news. Spending on advertising in North America and western Europe …

In case you hadn’t heard, and you probably have, Blu-ray has come out on top over HD-DVD in the new age video consumer marketplace.

I thought that the higher prices for Blu-ray DVD players would work against it, but the superior technology and the always important “look-and-feel” quotient for Blu-ray put the capper on the jug.

Now, what does this all translate to on Wall Street? Let’s take a look.

According to a new research report from Strategy Analytics, “Blu-ray Devices: Forecasting Sales and Ownership”, Blu-ray devices will find their way into 29.4 million homes worldwide by the end of 2008. The report adds that Sony’s PS3 games console will continue to drive the Blu-ray market until 2009, after which stand-alone Blu-ray players will become the dominant segment. By 2012 more than 132 million homes worldwide will own at least one Blu-ray device.

“HD-DVD’s withdrawal leaves the way open for Blu-ray to become a major revenue earner for technology vendors and content owners alike,” says David Mercer, an analyst at Strategy Analytics. “The 265 million homes that will own an HDTV by 2012, and Hollywood’s need for a new growth engine, represent huge incentives for the industry to coordinate marketing activities and demonstrate unified support for the successor to DVD.”

The report predicts that global sales of Blu-ray devices will reach 18.8 million units in 2008, including 4 million stand-alone players, 13 million consoles and nearly 2 million PCs. By 2012, annual sales of all …

I wrote about Motorola last year, when the consumer technology provider was struggling to keep up with tougher Asian market competitors like Samsung and Nokia.

The Associated Press reports that shares of Motorola, which has a market value of about $22 billion, have fallen more than 60 percent since October 2006, amid handset market share losses and criticism for failing to come up with a strong successor to the once-lauded Razr phone.

Lately, Motorola's had a "grandpa" problem - consumers didn't think its cell phones were cool - at least as cool as the i-Phone, the Blackberry, or some of the other leading cell phones out in the marketplace.

So it's taken a year, but Motorola seems to have given up on its cell phone business. Sure, it may not look that way now. After all, the company just announced it was splitting up into two separate entities, with it's loss-leading handset division spinning off on its own. That news, on its own, was good. Motorola stock climbed 5% in trading right after the announcement.

But under the surface, things aren't so calm at good, old Moto. Some analysts expect Motorola shareholder Carl Icahn to ramp up efforts to sell its cell phone business to another provider.

The smart money says that the split-off is Motorola's way of hanging a "for sale" sign on its cell phone division. Shareholders want that to happen and Icahn, the second-largest shareholder at Motorola, is being particularly aggressive about …