Posts by Brian.oco

I was talking to my brother again this Easter weekend – the one who traded equity options on Wall Street for 20 years.

He’s consulting now, but still has some good opinions on the markets – especially the stock market over the past two or three bruising months – and the stock market going forward.

He tells me that the technology side of the market won’t go up until the U.S. housing market gets its act together. More specifically, tech companies won’t spend as much money or hire as many people, and will keep a tighter lid on costs, until they are convinced that U.S. consumers feel better about the value of their homes and start spending money again.

It’s a classic domino effect. When consumers start spending money, businesses start spending money. And when both consumers and businesses spend money, technology companies make money.

With that said, today’s run-up of 225 points on the Dow Jones Industrial Average (as of 1 PM trading on Monday) came after two economic signs that things may finally be calming down.

More on that from the Associated Press this afternoon:

“Wall Street extended its big advance Monday as investors applauded a new agreement that will give Bear Stearns Cos. shareholders five times the payout than was outlined in a JPMorgan Chase & Co. buyout deal a week ago. Investors were also pleased by a stronger-than-expected housing report and sent the Dow Jones industrial average up about 225 …

Information Week is out with a new story ranking the top Internet search firms (by number of searches) for the month of February, 2008.

The results may indicate why Microsoft wants a piece of Yahoo so badly, even though Bill Gates & Co. seem unwilling to up their share-per-price bid for Yahoo.

IW, in a headliner entitled "Microsoft's Search Share Continues To Decline" says that for the month of February, 2008, Google had 5.86 billion searches, Yahoo had 2.14 billion, and Microsoft had 953 million. The magazine cited research provided by comScore.

While framing the internet search in 30-day terms, comScore's data shows that Microsoft's share-per-search has been stagnant over the previous three years. Microsoft saw its search share drop by 0.2% for the month overall.

Why, when it comes to online search, Microsoft is pretty much an afterthought? Information Week says that the company has experimented with a potpouri of search models, all to its detriment.

"There have been repeated shake-ups of Microsoft's search strategy in the last few years, with the company first moving from MSN Search to Live Search, and then creating an entirely new organization for search and advertising, run by Microsoft senior VP Satya Nadella," says the magazine. "Last September, the company held an event called Searchification to unveil an entirely re-architected version of its search engine. Live Search 2.0 was supposed to provide more relevant query results and an easier-to-use interface. But these moves have meant little in terms …

Kind of a quiet week in the technology corner of the stock market. That's not so bad, as people can exhale and figure out if the latest Federal Reserve move to cut the Fed Funds rate by .75 points signals the bottom (finally) of the bearish stock market. if so, then buyers will move back into the market and some semblance of sanity can prevail as the big financial houses move to stabilize themselves amidst the aftershocks of the credit and lending crisis.

One tech story that only grows bigger, however, is the Yahoo-Microsoft face-off. On Tuesday, Yahoo's directors made a pitch to shareholders to back Yahoo, and not Microsoft, in any bid to merge the two companies. Yahoo wants no part of any merger, unless Microsoft ups its initial takeover offer of $44.6 billion, and is breaking out the big financial guns to paint a rosy picture of the web portal giant's financial fortunes.

That's why Yahoo told its investors Tuesday that the company could increase revenue by more than 50 percent and double cash flow in coming years. It also offered, via documents recently filed with the U.S. Securities and Exchange Commission, that the bulk of its future growth should from Internet display advertising, including banners and video advertising, as opposed to traditional search advertising.

In a separate news release, Yahoo says it is poised for "accelerated financial growth" in 2009 and 2010, according to Chief Executive Jerry Yang, who used his CEO bully pulpit …

Forbes.com has a great piece on former microprocessing kingpin Intel, which held its annual meeting today (being Wednesday). The lowdown on the thoroughly reported story is that Intel may be building things up higher (or better) than they actually are.

At the meeting, Intel employees were busy rolling out the red carpet for investors - dubious investors, according to Forbes. But it was the kind of eagerness that psychologists might call forced coersion, i.e. making the best of an increasingly bad situation.

Says Forbes: "Intel's investors could certainly use some fun, however geeky. Intel shares are down almost 25% this year. And problems with Intel's NAND flash memory business caused Intel to lower its gross profit guidance to 54% of sales, from 56%, late Monday. "This business will not be a drag on the Intel Corporation," CEO Paul Otellini said Wednesday. "We are going to fix it."

Intel is feeling its age, especially coming through a few years of painful restructuring Intel Chief Financial Officer Stacy Smith, quoted in the Forbes piece, said that the rebooting will continue apace, with Intel cutting its workforce from 100,000 employees to about 80,000 "once it completes a deal to spin off a portion of its memory business, which will specialize in a kind of memory designed to store the software widely used to run devices such as cameras and other electronics, later this year," Forbes said. The business outlook appears a bit rosier, with Intel grabbing a bigger …

I was so wrapped up in the AOL hoopla yesterday that I forgot to mention how well technology stocks are doing so far this week.

Sure, today's trading session wasn't exactly stellar: Microsoft, Apple, AOL and others all lost ground - but only by a little.

Monday and Tuesday were much friendlier to tech investors, many of whom are pinning big hopes on the Federal Reserve and it's decision to infuse the banking industry with $200 billion in capital in an effort to get borrowers and lenders back on the financial dance floor together and into each other's arms.

Shares of Apple, Sun Microsystems, Electronic Arts, Intel and AMD all rose by more than five percent during the two days, bumping up the Nasdaq Composite Index jump by four percent. Cisco and Microsoft saw their stock prices rise by 4.84 percent, and 4.39 percent, respectively.

Reports CBS Marketwatch, "Experts said Wall Street was reacting favorably to the Federal Reserve’s announcement that it would inject up to $200 billion in the nation’s banks and brokerage firms to shore up the credit markets as well as investor confidence.

Still, analysts predicted that the market will remain volatile during the coming months.

“This was a very oversold market, and today we’re just seeing a short-covering relief rally,” Ram Kolluri, president at Global Investment Management, told CNNMoney.com. “We’re not off to the races now.”

Still, it's better than nothing.

More turmoil at AOL today, as the technology giant fired the head of its Platform A ad-network business yesterday. Blodget, reporting on the ever-valuable Tech Ticker portal on Yahoo.com’s finance site, says that Curt Viebranz, was canned, but there was little love for AOL's senior management.

One reason why Viebranz was let go was because he forwarded a budget estimate that AOL leaders concluded could not be made. Blodget says the firing is symptomatic of larger problems at the company, saying that AOL “is disintegrating” right now. “There is nothing positive to say about near term performance of AOL – the current CEO has a six-month window or AOL may well be sold to bail out Time Warner.”

Blodget also told viewers that AOL's own media properties are reportedly doing poorly, and the network business, which is doing well, isn't large enough to offset this. “Sources say AOL and Yahoo are continuing to talk about a possible merger, but I still don't think this would be a more attractive alternative for Yahoo shareholders than the Microsoft bid.
Finally, a source tells me that Time Warner's CEO, Jeff Bewkes, plans to give AOL's turnaround until mid-year to show results, at which point he'll sell the company or spin it off.”

Negotiations between AOL and Yahoo are continuing, he adds, and Time Warner is prominently involved. Blodget says that the proposed merger would make great sense, but Yahoo shareholders, who would have jumped at such a …

Ughhh . . .

The markets continue to resemble a guy who swallowed too many red hot chili peppers, only with no Tums or ice water in sight.

The problem this week is last Friday's jobs report. Down 63,000 jobs and with the outlook unsteady for new hirings, economists buzzed about a new high in foreclosures and other home mortgage problems. The thinking here is that jobs are the last bulwark against the loss of homes through foreclosure. If you can't meet your rising mortgage payments, due to an ARM or other non-fixed loan, and then you lose your job, then your next move is to mail the keys to your house to the mortgage company and get out of Dodge.

"Walkaways" is the term mortgage industry lenders use. And their could be plenty more of them if the jobs numbers continue to slide.

It's a lousy start to the week, so let's try to brighten up the room a bit in anticipation of those tax rebate checks Washington has promised us. If you need money fast, the payments may help a bit, at least in the short-term. But you need to have your taxes filed first or you won't get your check.

So take these steps to file your taxes online and pave the way for that check from Uncle Sam, which I picked up off of Checkpoint Software's web site (they make tax software packages).

1. Before you start, make sure your …

Ugh. The tech meltdown turn toward the telecom sector this week, fixing its dark gaze on companies like AT&T, Verizon, and Sprint Nextel, among others.

On Thursday, shares of telecommunications companies fell badly from the ongoing fallout amid credit concerns.

The carnage was grim and deep. U.S. traded shares of Paris-based Alcatel-Lucent fell nearly 5 percent. Ciena Corp. fell ahead of its earnings report, scheduled for Friday.
Novatel Wireless Inc. was an exception, as its shares rose more than 3 percent after the wireless modem maker said it will buy back up to $25 million of its stock through Sept. 5.

A rundown of telecom stocks from Thursday's trading . . .

-- AT&T, down 43 cents to $35.02

-- Sprint Nextel Corp., down 20 cents, or 2.9 percent, to $6.80

-- Verizon Communications Inc., down 67 cents to $35.28

-- Alcatel-Lucent, down 28 cents to $5.41

-- Ciena, down $1.05, or 4 percent, to $24.94

-- Novatel, up 34 cents to $10.77

I'm particularly concerned about Sprint. Last week, week, Sprint's shares plummeted 20 percent following lousy earnings results and a bleak rest-of-2008 forecast from the nation's third-largest wireless carrier.

Today, CNET News is reporting that rumors are swirling today over the future of Sprint. "First off, Seeking Alpha is reporting that Sprint has hired Morgan Stanley for a possible spin-off of its Nextel brand. Sprint's ongoing troubles have been widely reported over the last few months …

I caught a technology sector analyst from Invesco on Yahoo's Tech Ticker this morning who had some interesting things to say about the dysfunctional relationship between the technology stock sector and the subcrime . . . err . . . subprime credit debacle.

It seems that the credit & lending downturn has finally caught up with technology companies. Says Yahoo, in teeing up the segment "For much of 2007, technology stocks outperformed as the sector was perceived to be largely immune to the housing downturn and the resulting unrest in the credit markets. The past few months have seen a sea change in that view: Technology stocks have been among the hardes hit in recent months as the subprime crisis filters out to all aspects of the global economy."

Diane Garnick, an investment strategist at Invesco, appearing on Tech Ticker, told viewers that tech stocks are not immune to the subprime crisis because of its impact on the global economy and the inability of both corporations and consumers to borrow and spend.

"It's not long-term loans or big credit issues that's hurting tech companies," she said. "It's more of a commercial paper issue. Tech companies can't get the credit they need to make business investments over the short term." This, in turn, creates a domino effect where technology companies devote less revenues to research, hiring, and overall spending.

"That creates a ripple effect in the economy where other companies and eventually, consumers recognize a slowdown and …

Businesses are snapping their wallets shut, at least when it comes to software spending - usually a good leading indicator of economic growth.

One key benchmark, the ChangeWave corporate software spending survey, has seen a shift into negative territory for the first time in years.

In its January, 2008 survey results, ChangeWave says that better than one-in-five respondents (22%) now say their company will spend less for software over the next 90 days compared to the previous 90 days -- 8 percentage points worse than our previous survey in October 2007.

Just 16% of respondents say their company will spend more -- 2 points worse than previously.

A total of 1,802 respondents involved with software purchasing in their company participated in the survey.

"These latest software results -- combined with our recent consumer spending survey - should end the 'are we or aren't we' in economic recession debate once and for all," says Tobin Smith, founder of ChangeWave Research and editor of ChangeWave Investing. "Now both businesses and consumers are singing from the same 'cut-thy-spending' hymnal."

Nearly one-in-10 respondents (9%) cite "a general slowdown in business conditions and capital budgets" as the foremost factor driving their companies purchasing decisions -- a number that is up 3 points since October 2007 and triple the percentage of a year ago.

In a follow-up question, respondents were asked if there had been any adjustments made to their first quarter capital budgets over the past 90 days.

How stupid is the state of Maryland? No, not it's fine people, but it's short-sighted governor Marty O'Malley and its state legislature, which recently upped taxes state-wide in an effort to fund new programs and pay for additional government services.

The tax hike has residents steaming and companies rallying to protest the new levies. At the forefront are Maryland's technology companies, which could see the state grab up to six percent of its earnings in taxes.

In fact, the Tech Council of Maryland, Maryland’s largest trade association representing the state’s IT and Biotech industries, is organizing a repeal effort, with a major rally this week in Annapolis. The council is joining with members of the Fight the Tech Tax Coalition at a legislative rally to call for the repeal of the computer services sales tax on February 27, 2008.

Tech Council of Maryland CEO Julie Coons says lawmakers must realize the potentially devastating effect of the computer services sales tax on their jobs and on Maryland’s IT industry.

“The computer services sales tax represents an about-face on the state’s longstanding efforts to attract technology businesses,” says Ms. Coons. “The state has spent years of effort and taxpayer dollars to successfully recruit technology jobs to the state and build incubators for high tech research -- successfully -- only to turn around and create a hostile tax environment. This ‘penny wise,’ approach does not take into account the lost revenue if businesses and high-paying jobs leave the state.”

It’s like the 1990’s again, with all of the big name merger and acquisition activity. We’ve read about Microsft and Yahoo in the last few weeks and now comes wind of a proposed $1.0 billion deal between video game titan Electronic Arts and Take-Two Interactive Software.

EA is known for its “Madden” and “Need for Speed” video games, while Take-Two is the developer behind the popular “Grand Theft Auto” video game.

If EA were to pull this deal off, it would surpass Activision as the largest video game publisher in the world. But it won’t be easy.

Activision has already slapped a ‘reject” stamp down on the offer, scoffing at the “inadequate” bid laid out by EA. At $26 per share for the bid, Activision probably has a point. No doubt EA thought the bid, larger than the $18 per share offer made by Activision for the French multimedia giant Vivendi.

And EA is trying to strike before the proverbial iron is hot, or at least before some like-minded competitors do. Wall Street has been buzzing with rumors about proposals for Take Two from Rupert Murdoch’s News Corp and Viacom, both of whom would love to get into the increasingly lucrative video game marketplace.

According to a dispatch today from Reuters, Take-Two Chairman Strauss Zelnick, said he hadn't ruled out a potential deal.

"We didn't slam the door, we just said look, the price is not right and the time is wrong," Zelnick told …

Anybody reading this blog knows that the media has been adamant about the U.S. economy tanking into recession, with reporters putting their notebooks and tape recorders down and waving pom-pom's in support of economic strife for millions of Americans.

Why? Once again, who knows? Probably because it's a compelling story line and probably because the media would love to hang a recession around President Bush's neck before he leaves office.

Fortunately for the rest of us, they may never get the chance. On top of some encouraging quarterly performance numbers from the likes of IBM, Wal-Mart and Cisco, now the Conference Board is reporting that, while the economy has indeed lost steam, it won't lose enough to fall into a recession. “While the correction in the financial sector is just beginning, the correction in the housing sector is nearly over,” declares Gail D. Fosler, president and chief economist of the Conference Board. Her analysis comes from StraightTalk, a newsletter designed exclusively for members of the Conference Board’s global business network.

The Board reports that while the U.S. economy has weakened, business activity and corporate profits continue to rise. Consumer spending is continuing at a rate of 2 to 2.5 percent a year, and with the exception of the auto industry, the economy is showing gains virtually across the board.

“Exports are booming and imports and import penetration are down,” says Fosler. “While there is continuing uncertainty about the economic outlook, economic shocks from the contracting financial …

It's not exactly a great time for CEO's and other boardroom types to be squawking over executive pay - especially over the prickly topic of who decides how much cash & compensation corporate managers should take home with them.

But even in a tough economic climate where shareholders are understandably skittish about corporate spending and company profits, senior executives don't want any so-called outsiders having too much of a say in their take-home pay.

That's the takeaway from a new survey by BDO Seidman, LLP, a New York-based accounting and consulting organizations, which says that an underwhelming thirty-one percent of chief financial officers at leading U.S. technology businesses indicate that their company allows shareholders to vote on their executive compensation plans, compared to more than two-thirds (69%) that do not. Perhaps hypocritically, the same survey says that shareholders should have "some say" about who gets what on the executive pay front.

To that end, a solid majority (61%) of the CFOs personally feel shareholders should have a say on executive compensation plans, compared to over one-third (39%) who do not.

CFO's are also in a sour mood about regulatory changes from Congress that many say has inhibited corporate financial performance. Over, two-thirds (67%) of the CFOs say their company’s compensation plans have been impacted by regulatory changes focused on improved disclosure but another solid majority (65%) of these financial leaders believe that Section 404 of Sarbanes-Oxley has led to improved processes. About the same number say …

Nobody has ever accused Microsoft of not knowing how to play hardball.

From its history of monopolistic practices, of elbowing competitors out of the marketplace (hello, Netscape!), or lifting ideas it likes from adversaries like Apple without shame, Microsoft is more than ready to throw the first punch.

With that in mind, it could be that Yahoo’s board of directors might just get flattened by the Microsoft machine. This after reports from Seattle that Microsoft is prepared to take its $31 per share takeover offer for Yahoo right past the company’s board and straight to Yahoo shareholders.

The proof? How about the fact that Microsoft has hired proxy solicitation group Innisfree M&A Inc. to help oust Yahoo's 10-member board, all of whom are up for re-election this year. According to the Associated Press and The New York Times, a source close to the deal who is not authorized to speak publicly about it said Tuesday that Microsoft could spend $20 million to $30 million on that effort.

As the AP points out, that’s peanuts compared to the $44 billion Microsoft has on the table in its offer to Yahoo.

According to The New York Times DealBook blog, Innisfree has until March 14 to nominate a slate of directors for Yahoo. Microsoft and its advisers declined to comment. Election results should be made available by June.

Another gambit up Bill Gates’s sleeve is to lobby Yahoo shareholders to sell their shares to Microsoft directly. What …

Ugh . . . .

Another lousy week for tech stocks. For the whole stock market, for that matter.

But technology stocks bore the brunt of it. Let's look at some of the bigger players.

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Company One-Week Return

Cisco (Nasdaq: CSCO) - 12.4%
Oracle (Nasdaq: ORCL) - 11.3%
Research In Motion (Nasdaq: RIMM) - 9.8%
Google (Nasdaq: GOOG) - 6.1%
Intel (Nasdaq: INTC) - 5.4%
Akamai (Nasdaq: AKAM) - 4.9%

Source: Yahoo! Finance.

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It's hard to say where the icy finger of guilt should point. Analysts who follow the sector say that Cisco's fall-off could be attributed to plummeting business spending sentiment, even though the company recently reported strong quarterly earnings and strong sales. But Cisco's management issued a quote stating that the company thought that spending was slowing - a big red flag coming from a company with as much clout as Cisco.

So this week the Motley Fool had an interesting take on the direction of the technology corner of the stock market. Noting that the sector looked like it had gone 15 rounds with Joe Frazier in his prime, the Fool was fairly bullish about the rest of the year for tech stocks, listing the following three reasons why we should be bullish, too.

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1. Once you're in, you're in. Tech firms tend to operate on long-term contracts. Think of Oracle. The database specialist requires its customers to …

An update on the Microsoft & Yahoo merger comes today in the form of an email from a member of the Yahoo board of directors to shareholders. The email, which was published on Todd Bishop's Microsoft Blog earlier this morning, gives a good inside account of why Yahoo shareholders may have reason to believe that more money is coming down the pike from Seattle.

Here's the most compelling excerpt . . .

"As you'll see from the news release we issued today, our board of directors has reviewed microsoft's unsolicited proposal with yahoo!'s management, financial and legal advisors. after a careful evaluation, the board has unanimously concluded that the proposal is not in the best interests of yahoo! and our stockholders. of course, the board of directors is continuously evaluating all of its strategic options in the context of the rapidly evolving industry environment and we remain committed to pursuing initiatives that maximize value for stockholders.

"We believe microsoft's proposal substantially undervalues yahoo!--including our highly recognizable global brand, large worldwide audience, significant recent investments in advertising platforms, future growth prospects, our ability to generate free cash flow and our earnings potential as well as substantial unconsolidated investments (like alibaba and yahoo! japan)."

Late last night, both the The Wall Street Journal and New York Times had published news commentary on the merger talks, with The Journal stating that Yahoo "is unlikely to consider any offer below $40 per share." The Times adds that Yahoo may be …

It's cold up here in Bucks County, PA today - so cold that Al Gore's ego froze in the middle of a speech on global warming. Of course, the former vice-president blamed the deep freeze on - you guessed it - global warming.

Thanks folks, I'm here all week. Don't forget to try the veal.

I'm tempted to blame the most recent Yahoo-Microsoft glitch on global warming. After all, if Big Al can, then so can I.

The Yahoo board shocked the tech industry, and Wall Street along with it, when it rejected the Microsoft buyout bid this weekend. I'll have more on that tomorrow, but my best guess is that the merger is inevitable but the Yahoo board is holding out for a bigger offer.

Otherwise, I spent a lot of time indoors this week, watching TV with the kids because of the cold weather. I must have seen 300 commercials on cell phones from Verizon, AT&T, and Sprint among others, and recognized that the next big holiday season ad campaign is on tap this week - no, not Groundhog Day - but Valentine's Day.

Obviously, the mobile phone companies believe that, even in a down economy, cell phones are a big gift item this year from loved one to loved one. So when I saw the following list of the most popular cell phones for this Valentine's Day, I knew I had a column idea, if nothing else.

Apparently, Valentine's Day is …

Even as U.S. Treasury Secretary Henry Paulson reassured us on Friday that the economy "would not go into recession" in 2008", some people, especially consumers, aren't buying it.

This is exactly what I'm talking about when I vent over the power of perception and the media's glee in talking down the economy by highlighting the negative and shielding the positive.

People are scared and I know why. No, it's not because they know someone who's going to lose their house to foreclosure - foreclosures represent less than half of one-percent of U.S. homeowners. And now banks, realizing they could be left holding the bag if a homeowner is foreclosed, are doing more to work with owners and try to keep them in their homes.

No, people are scared because the media has told them to be scared. It's a self-fulfilling prophecy and one that, despite the best efforts of the alarmist media, won't come true in a technical sense. As Paulson points out, GDP growth remains in positive territory, albeit at a slower growth rate. "And everyone knows you can't have a recession with positive growth, right,?" Paulsen told reporters yesterday.

But in a fundamental, emotional way, the media just about has its cherished recession. Consumers are snapping their wallets shut and businesses are holding off on expenditures.

The tech industry is feeling my pain. Just ask John Chambers, chairman and CEO of Cisco Systems. In a wide-ranging phone discussion with analysts and reporters, Chambers …

The most recent quarterly returns are in on U.S. cell phone sales, and Apple seems to have taken a big bite out of Windows' market share. And it has Research in Motion in its gun sights.

For years, Windows Mobile and Research and Motion phones dominated the cellular marketplace. But that was then and this is now. The iPhone, despite a life span of only six months, already is the second-highest selling mobile phone in the U.S.

According to the high-tech research firm Canalys, Apple's iPhone garnered 28 percent of the U.S. mobile phone market in the fourth quarter of 2007. Research in Motion, with 41 percent, had the largest share of the market. Windows Mobile phones had a 21 percent share of devices sold in the quarter, falling into third place behind Apple. Apple did cut its price for the iPhone $100 during the 2007 holiday season, although Canalys doesn't say how much of an impact that had on U.S. sales (my guess is . . . plenty).

Kudos to Apple, but of course, these are just U.S. numbers. Globally, the cell phone landscape shakes out differently. Nokia, which typically dominates around the world but not in the United States, sold 52.9 percent of smartphones worldwide in the fourth quarter. Research in Motion grew its share of converged-device sales to 11.4 percent, up 121 percent over the same quarter in 2006. Despite its limited availability around the world, Apple took third place with 6.5 percent of …

It was supposed to be Christmas in May, with technology company executives harboring visions of wallet-waving consumers dancing in their heads.

The reason? The proposed tax rebates coming from Washington that would put up to $1,500 in many Americans back pocket, and hopefully send them out to buy things like computers, cell phones, and Blu-Ray DVD systems.

Every politician from the President on down said the economic stimulus package would spark a spending surge that would keep the Americans economy out of recession and on the road to a strong recovery.

Not so fast.

A new survey of average consumers concludes that Americans may not be as all-consuming as politicians are hoping for when it comes to jump-starting the economy through a broad-based tax rebate. The survey, from the tax-specialist firm CCH CompleteTax survey, canvassed 2,200 Americans and found that politicians may have exaggerated a bit on what Americans would with their tax rebates.

I know, I'm shocked too!

The reality is, according to the CCH study, is that Americans have different priorities than politicians -- shocking, once again. “While it may be in the overall economy’s best interest for individuals to go out and buy more, when you ask the average person what they would do, they’re more focused on their financial well-being than on the health of the economy,” says David Bergstein, CPA, a tax analyst for CCH CompleteTax.

Plain and simple, that means paying down debt or banking the money …

Are technology companies getting a raw deal over a new international accounting rule?

Plenty of tech company CFO's seem to think so. In a survey released this week by BDO Seidman, LLP, an accounting and consulting group, about half - 49% - of all chief financial officers at U.S. technology businesses surveyed feel they are at a competitive disadvantage to their foreign counterparts.

The problem? A new accounting rule that allows foreign competitors to report their financial results under International Financial Reporting Standards (IFRS), without reconciling the figures to U.S. Generally Accepted Accounting Principles (GAAP). If that seems to be a bit wonkish for you, it all comes down to U.S. versus international accounting rules.

And U.S. tech company financial types prefer the U.S. accounting method - by a long shot. When asked which financial reporting standards provide better revenue recognition rules for technology businesses, by a ratio of over three-to-one, sixty-nine percent of CFOs cited U.S. GAAP compared to only a fifth - 21% - for IFRS. Given the opportunity, over a third of these CFOs would switch to IFRS in order to level the playing field with their international competitors.

All complaining aside, the all-important tech sector looks pretty rosy for 2008, if you ask a CFO. I find that strange, given the recessionary sentiment we face from the media and many Wall Street analysts every day. But the BDO Seidman survey says different: roughly three quarters - 73% - of CFOs at leading …

Microsoft’s CEO has a message to Google: watch out.

In a wide-ranging phone meeting with analysts and business journalists this morning, Steve Balmer, Bill Gates’ right-hand man and the chief executive officer at Microsoft says that the company’s recently-announced deal with Yahoo would foster stronger competition with industry leader Google. The $44.6 billion deal is presently being reviewed by regulators and is widely expected to pass muster within six months.

But even if the deal doesn’t go through, Ballmer says Microsoft plans on strengthening its on-line ad business, currently the mainstay of the Google mothership.

"We have a chance to get further sooner through the acquisition of Yahoo," Ballmer said, adding that Microsoft is "on a path, and we'll stay on that path, regardless."

Ballmer also had something to say about the company’s Windows software operating system, especially with Apple chomping away at Microsoft’s market share in the operating system universe.

We're going to have to invest more than we ever have in consumer excitement," CEO Steve Ballmer told financial analysts Monday. "We are going to be doing more to highlight Windows, and that is going to require more investment." He added that the company’s next generation of Windows, called Windows 7, is already in the works although he offered no timetable for release.

Ballmer also cited Windows Mobile, noting that Microsoft is investing not only in the product’s operating system, but also in new mobile applications.

In addition, a new tabletop computer …

Lots to talk about today. You've probably already have read about Microsoft's $45 billion buyout of Yahoo. Obviously, Microsoft is giving up on its MSN web portal and throwing it's weight and capital behind Yahoo. For Yahoo, which has seen its stock slide precipitously in the last year, the deep pockets of Microsoft are a welcome balm or a company which took on Google in the mega-billion search engine wars and basically got its head handed to it.

The upside is huge. Google, the leader in the market for Internet search services and advertising, estimates that the market for Web search & advertising should reach $80 billion by 2010. Google has grown faster than Redmond, Washington-based Microsoft in every quarter since the 2004 IPO as its search engine won more users.

All I can offer right now on the Microsoft-Yahoo deal is that the early reports indicate that regulatory approval of the merger, both here and in Europe, should be a green light. It may take a few months to get the deal approved, but yes, a green light going in.

Another thought: why does Microsoft continue to pour money in other areas when the backlash against its new Vista operating system remains so high? Talk about taking your eye off the ball, but producing bug-free software has never been Bill Gates' strong point.

Interesting that the Microsoft-Yahoo deal is rolled out the same day that Google announced that it had failed to meet quarterly earnings …

The Business Software Alliance has long been on the case of U.S. companies who use, inadvertently or not, unlicensed software for their business operations. Make no mistake, the BSA has aggressively gone after and imposed heavy fines on companies who are caught in the act using pirated software.

It's not hard to catch a software thief -- all it takes is one disgruntled IT employee who knows that the latest batch of Microsoft Office software was . . . ummhh . . . tainted. One dime dropped to the BSA and the manhunt is on.

This week, the BSA is adopting a softer, gentler tone. It's touting a study from International Data Corporation that says reducing software piracy in the United States by just 10 percentage points over the next four years could generate more than 32,000 new jobs, $41 billion in economic growth, and $7 billion in tax revenues above current projections. And it's not just the U.S. While the United States has much to gain from reducing illegal software, high-piracy emerging economies like China, Russia and India could experience even more dramatic, positive impacts, the IDC study suggests.

The study, commissioned by BSA says that the information technology industry is already a major contributor to the American economy. In 2007, the United States spent nearly $458 billion on IT goods and services including computers, peripherals, network equipment, packaged software and IT services. That spending accounted for 3.4 percent of gross domestic product (GDP), supported more …

It didn't take long for the Federal Reserve to act after this morning's announcement that last quarter's Gross Domestic Product (GDP) number - the key index in measuring the health of the U.S. economy -- was a lousy one.

For the quarter, GDP clocked in at a meager 0.6% - about one percent lower than most economists had anticipated. Market watchers say that businesses really put the breaks on spending during the last three months of 2007. Consumers did, too, but not as aggressively as U.S. businesses.

The low number set off a chain reaction of anxiety and disgust over the economic picture the U.S. is staring at. The low GDP number was bad enough. What may be worse down the line is the signal that inflation -- in the form of rising prices for things like oil, energy, health care, and even widgets and washing machines -- are rising. Normally, the Federal Reserve's decision to cut rates by another half-point, which was announced this afternoon, would be a welcome balm for a weakening economy. But with inflation on the rise, can the Fed afford to cut prime lending rates, send more money back into the economy, and force inflation up even higher?

It's a dichotomy that economists have long wrestled with. Rising inflation in a weak economy is known as "stagflation" and is viewed by economists with the same enthusiasm a disoriented vampire greets daylight.

So far, the Federal Reserve hasn't blinked in the face …

Let's all take a breather at the end of another topsy-turvy week on Wall Street, where things have calmed down as of mid-morning on Friday (the Dow Jones Industrial Average is off a mere four points at 11:30 AM EST, and is actually up for the week . . . but the media doesn't want you to know THAT!)

I'll have more to say about Microsoft and its upbeat earnings release announced yesterday -- PC sales are up and the computer software behemoth seems to be weathering the rough economy very well. But let's save that for Monday and keep things light here as the weekend and a welcome martini and a warm fire await us. Or me, anyway.

One piece of interesting news comes from next week's Super Bowl, which is apparently a big driver in consumer technology sales. That could provide a short-term boost to the technology sector in a down economic quarter. After all, if consumer are willing to plunk $1,500 down to watch the Super Bowl on a big screen, HDTV, how bad can things really be?

Take those HDTV's. Super Bowl XLII is expected to drive the purchase of approximately 2.4 million high-definition television (HDTV) units, according to the Consumer Electronics Association and the Sports Video Group.

It's hardly a new development. The Super Bowl has retained the title of top driver for HDTV purchases for three years running, generating some $2.2 billion in HDTV sales so far in 2008. Other …

New Stimulus Package . . . Tips on Travel Costs

News from Washington this morning says that congressional leaders and Bush administration officials have reached a deal on an economic stimulus package that would send checks to most taxpayers in an effort to keep the economy from falling into recession.

That's good news for technology businesses, big and small, who may be understandably nervous about a widespread business slow down stemming from the housing and credit crisis, the high cost of oil, and the decreasing value of the U.S. dollar.

The rumor from D.C. is that Americans earning $75,000 or more or couples earning at least $150,000 will be excluded from the rebates. In addition, CNN is reporting that the deal would pay taxpayers $600 and two-wage-earner households as much as $1,200. A per-child credit of $300 is reportedly in the cards

The stimulus plan will also include tax breaks for businesses to encourage them to buy equipment. The total price tag of the package is expected to be at least $150 billion, which is equal to about one percent of the nation's economic activity for a year.

Even so, business owners are already showing signs of cutting back and looking top-to-bottom for ways to slash operating costs. One way they're doing so, according to a recent article from Forbes is to decrease business travel. The Forbes articles cites David Ulevitch, CEO of Open DNS, a networking services start-up, who stays at a friend's house …

Keeping track of the economic news is getting nerve-racking - akin to watching a train wreck in slow motion.

In the past 24 hours we've seen . . .

- A Fortune magazine study showing that about 75% of Americans who think we're either already in a recession or are heading toward one (no surprise to me -- we in the media have been scaring people half to death over the economy over the past year. That sentiment has now taken hold among consumers in a self-induced prophecy. The trouble is, about two-thirds of the economy relies on consumer spending. So if Americans pull back financially, we really could fall into a recession).

- An amazing interview on CNBC last night between "Mad Money" host Jim Cramer and Donald Trump. In it, The Donald alternated between touting a "great investment environment" within three months to the U.S. sliding into not a recession, but a depression.

- The announcement of a fiscal stimulus package from the White House, totaling $150 million in tax rebates, loans, and other aid packages to lower-and-middle income Americans. Wall Street watched President Bush's speech on the stimulus package, shrugged, and sold more stocks. I think even Wall Street is finally realizing there isn't much government can do to sway the economy one way or another.

-- Also news from the Financial Times on the impact that the economic crunch is having on the technology sector. Comparing things to 2001's nasty tech …

Today's batch of economic news is mixed, and seemingly conflicted as ever.

Hey, don't shoot me - I'm only the messenger.

But for techies wondering how secure their jobs really are these days the news from the most recent Federal Reserve Beige Book report signaled economic growth for November and December, 2007 - a period where many pundits had said a recession had already started.

Wrong again, pundits.

The news allowed the stock market to exhale on Wednesday and recoup some of the losses it had absorbed for the month. Perhaps more importantly, the Fed report calmed the jangled nerves of consumers and business owners -- at least for the time being.

This from the Associated Press this morning:

"The Beige Book survey of regional economies indicated that economic activity increased modestly from mid-November through December, though at a slower pace than in a previous survey.

The report seemed to quell some concerns about prospects for the economy that took on new urgency after Intel Corp. issued disappointing earnings after the closing bell Tuesday.
The Fed's report bolstered enthusiasm among bullish investors who pointed to results from JPMorgan Chase & Co. and Wells Fargo & Co. The banks' reports appeared to remind Wall Street that while the fallout of souring loans was widespread, it wasn't necessarily evenly felt. And buyout news in the tech sector gave a boost to investor sentiment."

I understand how aggravating it is to log on your …

If you've been following this blog, you know I'm no nay-sayer on the economy. A realist, yes, but I won't wave pom-poms for a recession like so many others in the media.

That said, I don't think there's any doubt that 2008 will be short of a robust year for technology. And that's okay. Economies have cycles -- always have, always will.

After six years of sustained growth, we're in a dip, no question about that. But it's not a recession yet and, technically, may not be a recession at all. The classic definition of a recession is two straight quarters of negative economic growth. And that hasn't happened yet.

Still, as former General Electric CEO Jack Welch said on TV this week, "we won't have a recession, but it will sure feel like one."

One technology area that could hit a speed bump is the mobile phone sector. In anticipation of a soft year sales-wise, the analytical firm In-Stat says that revenue for mobile business applications will continue to be robust, but perhaps not robust enough to meet the optimistic forecasts of many mobile industry experts.

Noting that mobile business application growth was near the 50% mark between 2006 and 2007, the market research firm said its surveys reveal that the growth will likely slow to 44% from 2007 to 2008.

The discrepancy between the hoped-for growth number and the actual growth figures is explained by decision-makers expecting more business than what they …

Okay, I was downed by technology issues for a few days but I'm back up with a vengeance.

And just in time, as the major technology companies begin to release their quarterly earnings statements. IBM was first up earlier this week, and easily surpassed analyst expectations. Wall Street attributed Big Blue's earnings growth to overseas sales, especially to the "BRIC" countries (Brazil, Russia, India and China). Domestically, the jury is still out. If businesses do pull back and spend less, computer companies should be among the first to feel the pinch.

Maybe that's why the stock market fell by 280 points yesterday. Traders can only take so much talk of recessionary fears before they begin selling with the intensity of the Spears' sisters calling for more tequila at last call.

Intel reported this week as well. At first blush, things looked good as quarterly earnings were up 51%. Unfortunately, Wall Street uses a different measuring stick and the consensus was that Intel failed to meet analysts' earning projections. Says the Associated Press on Wednesday "Intel's failure to meet earnings and revenue forecasts for the fourth quarter and its first-quarter projections that came in at the low end of analysts' forecasts weighed on stocks. Earlier this week there was market speculation that the technology sector, which sometimes benefits from a weak dollar and overseas strength, might be able to withstand the weakness sweeping other parts of the economy."

Net income for Intel's holiday-sales-fueled fourth quarter rose to …

Interesting news from a new study of 112 homes in the Seattle area that shows a 10% reduction in home energy bills through the use of "smart grid" technology.

The study, conducted by the U.S. Department of Energy, and reported on CNet News this morning, says its GridWise Project not only saves consumers money - - about 10% on average, according to the report, but it eases the strain on local power grids, as well.

Smart Grids can automatically lower the settings on home appliances like heaters and washers and dryers, triggered by signals sent by utility companies over the power grid. For example, smart grids can turn the heat off on a dryer in the last few minutes of use, saving money and saving energy, with no loss in productivity.

"The trial showed that consumers are willing to have utilities remotely dial down the appliances to lessen the load on the power grid and reduce their consumption, said Rob Pratt, program manager at Pacific Northwest National Lab, at a teleconference on the study results. "We could save $70 billion in investments in the next 20 years by offsetting construction of new infrastructure that would otherwise be needed to meet load growth."

Pratt noted that Smart Grid technology would also provide more reliability to the power grid, allowing utilities to isolate problems more easily. Clean power sources such as wind and solar, which pose technical challenges because they don't supply a steady stream of electricity, can …

There's an old saying in marketing that the consumer always gets what he or she wants.

That's likely never been more true than with today's cell phones, where users are clamoring for more than just songs downloads, video, GPS, systems, and, increasingly, voice mail technologies.

Voice mail? Did he just say "voice mail"? Isn't that a bit, say, 1990-ish?

After all, there's nothing sexy about voice mail applications, and nothing to be gained by cell phone manufacturers by adding new voice mail features to this generation of phones.

Or is there?

A survey of more than 3,300 customers of Verizon Wireless, AT&T Mobility, T-Mobile and Sprint in North America says that, increasingly, cell users want even more options and more flexibility than they have now, especially visual voice mail.

That would seem like a tall order, even with video services. Don't cell users have all the options in the world? And the next one. Apparently not.

According to the Sprint survey, cell users are clamoring for new cell features, such as:

-- The ability to avoid dialing into voicemail to retrieve messages
-- Not having to write down details within a voicemail
-- Being able to discreetly read messages without having to listen
-- The ability to respond to messages with a single click as a call, sms or email
-- Video voice mail as part of the primary package offered by cell phone providers

“The launch …

Warner Brothers certainly has a lot of weight to throw around the consumer technology - and their latest move landed squarely on increasingly frustrated HD-DVD providers.

In a move that signals a tectonic shift in the consumer video industry, Warner Bros. Entertainment announced last week that it will release its high-definition DVD titles exclusively in the Blu-ray disc format, most likely starting later this year. The news came straight from the top -- from Barry Meyer, Chairman & CEO, Warner Bros. and Kevin Tsujihara, President, Warner Bros. Home Entertainment Group.

“Warner Bros.’ move to exclusively release in the Blu-ray disc format is a strategic decision focused on the long term and the most direct way to give consumers what they want,” Meyer said in a statement. “The window of opportunity for high-definition DVD could be missed if format confusion continues to linger. We believe that exclusively distributing in Blu-ray will further the potential for mass market success and ultimately benefit retailers, producers, and most importantly, consumers.”

The news is a huge public relations boost (not to mention financial windfall) for blue-ray technology providers.

Evidently, Warner Home Video was getting tired of straddling both the traditional DVD and Blu-ray worlds, and decided to take a definitive stand. For the short term, Warner will continue to release its titles in standard DVD format and Blu-ray. After a short window following their standard DVD and Blu-ray releases, all new titles will continue to be released in HD DVD until …

The drum beat has already started for next week's Consumer Electronics Show in Las Vegas, where you won't be able to swing a dead rotary dial phone without hitting a slick sales type breathing the word "wireless" into your ear.

Elena Malykhina, writing in Information Week this morning, advises show goers to "look for mobile TVs, wearable computing devices, portable media players, wireless in-vehicle technology, next-generation networking equipment, and much more."

CES is historically a big coming out party for new technologies and this year should be no different. Information Week reports that CES will have more than 2,700 exhibitors showcasing products in over 30 categories -- and that wireless technologies should cast a huge shadow over all of them

Vaguely disappointing, to me at least, is that the wireless influence will be a "more of the same" affair, with no new wireless phones announced. But the event should be stacked high with vendors touting new wireless peripheral equipment like portable media players, GPS systems, new networking software, mobile TV (a market we covered two weeks ago) and more.

"Although many of the top phone makers, including Nokia (NYSE: NOK), Motorola (NYSE: MOT), and Research In Motion (NSDQ: RIMM), will be at the show, none of them have officially disclosed plans to introduce new mobile devices," says Information Week's Malykhina. (But) that doesn't mean the show won't be packed with other mobile and wireless innovation likely to hit the mass market over the next year or …

Yesterday we looked at the 2008 technology spending market from the small business side. To be charitable, things look "iffy" for IT spending -- at least during the first six months of the year.

Now it appears that, from the technology side of the market, 2008 could be a mixed bag, products-and-services-wise.

One example of that comes from the consumer technology industry analysts from The NPD Group. In a new report released today, key firm analysts say that 2008 could be a year of transition for the consumer technology market. Topping the list of key issues are the impending analog television shut-off, the drive toward connectivity, and the growing penetration of broadband Internet access in American homes. Stephen Baker and Ross Rubin, industry analysts at NPD who write the report, believe the consumer tech market’s moves might not be driven by one specific product or set of products, but instead will be dictated by larger sea changes in the industry.

“As many of the fastest growing electronics categories mature in 2008 overall electronics sale growth is likely to plateau,” says Baker, vice president, information technology industry analysis, at the NPD Group. “Retailers and brands will increasingly look to beyond-the-box services and other offerings to drive continued growth.”

“We are entering the third generation of digital products in many categories, as more consumers have embraced the high-definition experience,” adds Rubin, director, consumer technology industry analysis, at the NPD Group. “The growth of broadband at home -- and …

I'd like to dive into the technology stock sector for '08 this week, but let's first tee things up with the outlook from the folks who do most of the IT spending -- small business owners.

According to the numbers from the Discover Small Business Watch, released this morning, small business owners are wary about the economy and that their optimism about this year is less so than it was in early '07. At 92.7, the Discover Small Business Watch Index is down from 93.2 in November, a full 17 points lower than in January, 2007.

Says Sastry Rachakonda, director of Discover's business credit card. "The mood remains cautious as fewer small business owners feel like economic conditions for their businesses are getting better."

Let's be clear. Small business owners, who represent 70% of the nations' business economy, are bearish going into 2008. On the surface, that should negatively impact IT spending. According to Discover, only 28 percent of small business owners feel that economic conditions for their own business are getting better. The percentage has been steadily decreasing since September, 2007, when 40 percent of owners felt conditions were improving.

A significant majority -- 65 percent of small business owners -- feel that economic conditions in the U.S. are getting worse, slightly fewer than the 68 percent who felt that way in November. The number who believe it is getting better remained the same.
42 percent said they have experienced cash flow issues over …

If McDonalds can advertise, “Over 1 billion served” on each of its restaurants signs, then why can’t Comcast, Verizon, Sprint and the rest of the broadband world say the same thing?

Well, technically, soon they can. That after a new report from Strategy Analytics that estimates over one billion broadband global users in 2008. China and India seem to be the growth hot spots, as the study says that the vast majority of this growth will come from emerging markets, according to company analysts.

Strategy Analytics says that the Asia-Pacific region will lead the world in terms of total users. Subscription growth in the Asia-Pacific market is anticipated to be 27 percent in 2008. In total, emerging markets will account for over 60 percent of total broadband users.
“While DSL clearly remains the dominant access technology, we are forecasting impressive growth of ‘alternative’ technologies such as Wimax,” says David Mercer, Vice-President of the Strategy Analytics Digital Consumer Practice.

New technologies like Internet TV, MPEG 4, TV on PC’s and pervasive HD TV have fed the growth in broadband technology, which for the first time ever should surpass mobile technologies in terms of user base. Most of the growth in the broadband sector has been fed by video. According to SA, the first half of 2007 saw major changes in the availability and distribution of online video. More than 250 video start-ups have emerged so far, each promising a quality experience to the PC or Internet-connected STB.

It should be a slow week for technology stocks, what with the holidays fast approaching and a dearth of any meaningful quarterly earnings surprises.

The former you know about, with Christmas only a week away. Late December is notoriously dull for the stock market as traders think more about fun and family than they do financial statements.

The latter is just a quirk of the calendar. The only meaningful earnings rollouts this week come from Micron Devices and Oracle. Zacks Research that Oracle should meet analyst expectations but Micron could disappoint. Says Charles Rotblut, CFA, Senior Market Analyst for Zacks.com, "Two analysts have cut their fiscal first-quarter estimates on Micron Technology (NYSE: MU) within the last 30 days. The revisions caused the average projected loss to worsen by two cents to 14 cents per share. The most accurate consensus is even more bearish at a loss of 16 cents per share. Micron has missed expectations twice during the past four quarters."

Don't think that investors haven't noticed. Shares in Micron Technologies Inc. fell near their 52-week low in early trading today as investors have seemingly had enough of sub-par performance in the memory-chip market.

Jefferies & Co. analyst John Lau blames a lousy global market for memory chips, forcing chip providers like Micron to slash prices. Lau says he saw prices halved in a memory chip used in personal computers that dominate the fast-growing market in developing countries. The good news, according to Lau, …

Yesterday I wrote that Google was ranked dead last in a national survey of Internet search engine companies when it comes to consumer privacy rights. I also notes how Congress was taking a closer look at Google's privacy practices, particularly in light of its proposed merger with Doubleclick.

Now it seems that the heat is really on.

Earlier this week, a key member of the U.S. House of Representatives has called Google on to the carpet to explain its consumer privacy procedures - - and he's not happy with Google's reponse.

Republican Rep. Joe Barton, a key member of the House Energy and Commerce Commiitte, which oversees Internet commerce rules and regulations, slammed Google CEO Eric Schmidt in a letter (included below) that the company is dragging its feet in allowing closer scrutiny of Google's privacy practices. In particular, Barton wants to know
what Google does with search queries, how long information is kept, what data will be merged with DoubleClick's, and how the company performs its partial anonymization of search results. Unlike competitors like Ask.com and AOL, Google does not discard consumer search queries after 18 months -- a practice that Barton calls "disconcerting".

According to the web site, CNETnews.com, The Federal Trade Commission is reviewing the Google-DoubleClick merger, "which Microsoft and a band of pro-regulatory groups are hoping to derail. The FTC could allow the deal to proceed, attempt to block it, or attempt to impose conditions." European regulators …

A recent study on the privacy rankings of big internet search engine providers reveals that Google might have some ‘splainin to do, especially if Congress gets its way. In the process, its proposed merger/buyout with Doubleclick might be in trouble.

First, Google’s privacy problems, as defined by some privacy experts.

The September, 2007 study by Privacy International entitled “Race to the Bottom: Privacy Rankings of Internet Search Companies”, tracks the privacy practices of big Web search engine companies. The ranking lists the best and the worst performers both in Web 1.0 and Web 2.0 across the full spectrum of search, email, e-commerce and social networking sites.

Privacy International ranked Google dead last in terms of privacy compliance. I’ll let the technology consultancy explain its reasons why

“We are aware that the decision to place Google at the bottom of the ranking is likely to be controversial, but throughout our research we have found numerous deficiencies and hostilities in Google's approach to privacy that go well beyond those of other organizations. While a number of companies share some of these negative elements, none comes close to achieving status as an endemic threat to privacy. This is in part due to the diversity and specificity of Google's product range and the ability of the company to share extracted data between these tools, and in part it is due to Google's market dominance and the sheer size of its user base. Google's status in the ranking is also due …

From what I'm seeing out here in the trenches, economists just can't seem to agree on the health of the U.S. economy, in general, and the technology economy, in particular in 2008.

Last week's consumer numbers seem to suggest that people are still willing to break out the checkbooks and buy new computers, cameras, TV's and other tech-related consumer goods. CEO surveys are a bit more cautious, perhaps because marketing and research spending are flat so far in 2007.

To give us further hope, a new forecast out this morning suggests that the manufacturing economy - - especially computer makers -- is going to rise higher in 2008.

The forecast comes from supply management executives in their December 2007 Semiannual Economic Forecast. In a report released today, supply managers say that
expectations for 2008 are at a higher level for the manufacturing sector than the non-manufacturing sector.

Specifically, expectations for 2008 are high as 62 percent of survey respondents expect manufacturing sector revenues to be greater in 2008 than in 2007. The panel of purchasing and supply executives expects a 6.8 percent net increase in overall revenues for 2008, compared to an increase of 2.4 percent reported for 2007. Manufacturing industries expecting the greatest improvement over 2007 — listed in order — are: computer & electronic products; electrical equipment, appliances & components; transportation equipment; miscellaneous manufacturing; fabricated metal products; food, beverage & tobacco products; textile mills; paper products; and printing & related support activities.

…

You've heard of Wi-Fi . . . but how about Wi-Fly?

That's the moniker tech analysts are using to label new inflight internet access applications. That's right. Starting this month on select airlines, you can start checking email, watching the latest batch of YouTube videos, or catch the score of the Celtics game on NBA.com
The New York Times is reporting that Jet Blue, Virgin American and Alaskan Airlines are all rolling out test programs that allow fliers to access the Internet. The Times says that services will range anywhere from free of charge to $10 per flight.

“I think 2008 is the year when we will finally start to see in-flight Internet access become available, but I suspect the rollout domestically will take place in a very measured way,” Henry Harteveldt, an analyst with Forrester Research, told the newspaper. But “in a few years time, if you get on a flight that doesn’t have Internet access, it will be like walking into a hotel room that doesn’t have TV.”

The technology will have its limits (you can't log on when the plane is either taking off or landing and initially, at least, download times could be slower than you might like) but analysts like Harteveldt expect the airlines and the companies that make in-flight internet access software to clean up financially. Some airlines will even save you the trouble of whipping out your lap top. Virgin, for example, will offer internet access as …

On a trip to Newport Beach, Oregon, this past summer, I was introduced to a global positioning satellite device for the first time.

It was a real eye-opener. All I had to do was type in the address I was heading toward, and the satellite took care of the rest. For the two-hour trip, I was gently reminded by the device's "voice -- call it Julie Andrews-like in her "Sound of Music" days, to "turn right in one mile" or "turn left at Juniper Street" . . . and so on and so on until we reached our destination.

Now I'm hooked. I bought my own GPS unit on my return home and, judging from the research I'm seeing, I'm hardly alone. ABI Research says that traffic and driving "location" technologies will reach more than 83 million users worldwide by 2012.

The technology is getting better as the market is growing bigger. ABI sites in a recent report entitled "Traffic Information for Navigation Systems" that the technology's next frontier is a richer variety of location-aware content. According to ABI, the first prominent example of such dynamic content is real-time traffic information, which will be further enhanced by the addition of historical and predictive traffic data to assist drivers in determining the best route.

“When it comes to collecting and distributing useful traffic data,” says research director Mike Ippoliti of ABI Research, “the emphasis is shifting. Reporting of ’incident data’ from accidents, road closures, other emergencies is …

IDC is out with its annual IT market forecast and, at first glance, 2008 won't be setting any box-office records, business-wise.

According to the Boston-based consultancy, growth in global technology spending will slow next year, rocked by a potential U.S. economic downturn that could crimp spending on computer hardware.

Overall, IDC estimates worldwide technology spending growth to range between 5.5 percent and 6 percent in 2008, down from about 7 percent this year. U.S. spending growth will dip to 3 percent to 4 percent next year from 6.6 percent in 2007, IDC said.

The report also predicts that companies will target faster-growing emerging markets along with small and midsize businesses, to offset slower U.S. spending growth, and in some cases, they will need to make acquisitions to launch into promising sectors.

IDC sees big software makers targeting business application firms in emerging markets such as Brazil's Datasul, China's Kingdee International Software Group, and India's 3i Infotech. A foothold in those markets will be crucial, since IDC sees tech spending in Brazil, Russia, India, China and nine other emerging countries, including Poland and Mexico, growing 16 percent in 2008.

In the report, IDC offers the following predictions for the technology sector in 2008:

-- Worldwide IT spending will grow at a slower pace in 2008. Economic uncertainties and downside risk will dampen IT spending growth in the U.S. and elsewhere. As a result, worldwide IT market growth will be a moderate 5.5-6.0%, down from 6.9% …

Two new studies out today on the burgeoning automotive sensor marketplace.

First up is BCC research (full disclosure, I have written for BCC Research, but not on automotive sensors).

According to BCC’s latest technical market research report, Automotive Sensor Technologies: Global Market, the global market for automotive sensors is expected to be worth $8 billion in 2007. That number should rise to over $13.5 billion by 2012, a compound average annual growth rate (CAGR) of 10.8%, says BCC.

In the report, BCC breaks the market down into applications of power train, chassis and body sensors. Of these, power train sensors have the largest share of the market. Valued at nearly $4.7 billion in 2007, this segment is expected to be worth $7.7 billion by 2012, a CAGR of 10.5%.

The second largest segment, chassis sensors, was worth an estimated $2.1 billion in 2007 and will reach $3.5 billion by 2012. The body sensors segment is currently worth $1.3 billion but will be worth $2.2 billion in 2012, for a CAGR of 11.7%.

According to BCC, the role of automotive sensors has grown from being small incidental add-on components some 20 years ago to being one of the major considerations of automotive design. Today cars, trucks, minivans, and sport utility vehicles incorporate a high level of sensor technology to meet the consumer’s need for safety, environmental compliance, comfort, communications, and even entertainment.

“Automotive engineers are increasingly finding innovative ways to produce ever more sophisticated and …

Just checking out some of the stock prices of the big online retailers after Black Monday – the biggest online shopping day of the year.

eBay was up 3.45% in Monday trading while Amazon was up 3.0% -- both prices indicative of the bullish sentiment investors are showing on online retail companies this holiday season.

I discussed eBay in the last few blogs so let’s let Amazon take a turn. After hitting a one-year high of $101.09 in October, the stock hit the skids in November, sliding back to the low $80’s range. That number should pick up again throughout the month as shoppers fill their holiday stockings with Amazon book and CD orders, gift card purchases, and online auction items.

That said, there is an “X-factor” with Amazon that could sway its stock price in any direction. I’m talking about the company’s newly released Kindle, Amazon’s brand-new (released last week) e-book reader, otherwise known as the iPod for the best-seller set.
Kindle allows users to store electronic versions of hundreds of books, and with a good deal of flexibility, too. Readers can search, or jump to any spot in the text and even expand the type size for dark plane rides or dimly-lit bedrooms.

As many critics have already pointed out, why try to improve on traditional books in the first place? Printed books are user friendly, don’t need charging, are fairly cheap to own (especially in the secondary book market, an area which …

Retail stocks should see even a bigger bump this month -- and possibly into 2008 -- due to an increased demand for a product that basically didn't exist a dozen years ago -- gift cards.

That's the big news coming out of "Black Monday", the newest holiday on Wall Street's docket representing the busiest on-line shopping day of the calendar year. As it turns out, many, if not most of today's online shoppers are turning to buying gift cards online instead of actual products via the ecommerce route.

According to a pre-holiday survey by First Data Corp., a global leader in electronic commerce and payment services, three out of four consumers (77 percent) are extremely, very likely or somewhat likely to buy gift cards for family and friends this holiday season.

Of those, over half will redeem their cards with purchases made online -- representing a new and burgeoning profit center for retailers big and small. And about 20% of gift card recipients will never redeem their gift cards at all -- due to forgetfulness, loss of the card, or "regifting" of the card back to other people.

According to First Data, the majority of survey participants (66 percent) plan to buy the same number of gift cards again this holiday season with 19 percent planning to purchase more. The mean number of gift cards consumers plan to purchase is five.

The study also reports that immediate family members will be the primary recipients of …

Monday is upon us, and thoughts on Wall Street turn away from turkey and football to key companies issuing quarterly earnigns statements this week.

It's a particularly crucial period for computer makers, video game companies, digital camera companies - in short - - any company with a potential gift to be stashed away under the Christmas tree this year.

Yesterday I gave you some fresh numbers on Black Friday and the holiday shopping season. Today I have some more tid bits -- followed by a rosier-than-expected earnings scenario from one of the world's top computer makers.

Again, the numbers point to a more bullish holiday shopping season. According to ShopperTrak.com, Black Friday accounted for $8.96 billion in sales last year, while the entire Thanksgiving weekend accounted for $18.1 billion. The International Council of Shopping Centers estimates that Thanksgiving weekend usually accounts for 10% of holiday sales. Zacks.com senior retail analyst, Robert Plaza, predicts Black Friday sales this year should be in a range of $9.23 to $9.27 billion and total Thanksgiving weekend sales should total between $18.6 and $18.73 billion.

One company that could really benefit from increased holiday consumer spending is Dell Computers. According to Charles Rotblut, senior market analyst for Zacks.com., Dell should come up big this week when it reports earnings.

"Internal changes at Dell have allowed the company to top expectations for four consecutive quarters," says Rotblut. "One of the 22 covering brokerage analysts believe the computer …