Posts by Brian.oco

The holiday shopping season seems to have started out with more of a bang than a whimper - - especially online.

That wasn’t the scenario painted by the ever-negative mainstream media, who published wave after wave of articles bemoaning the lousy economic climate and predicting a disastrous holiday shopping season for retailers, both on- and off-line.

The number on Black Friday are just trickling in, and seem to already be up from last year. In 2006, more than $19 billion was spent on Black Friday alone – or about five percent of all holiday spending. This year, Mastercard’s Spending Pulse report said that Black Friday spending would finish over $20 billion, a five percent pickup from 2006.

Online shopping could even turn out better. eBay Inc., which comprises Shopping.com and PayPal, said shopping traffic was way up on Black Friday. “Early signs from a very busy Black Friday show that many shoppers are grabbing their mouse instead of their car keys this holiday season,” said Jim Griffith, eBay’s “dean of education”. “

According to eBay, Shopping.com’s traffic to merchants increased 61 percent over last year’s Black Friday, November 24, 2006, exceeding industry expectations. The analytical firm Forrester Research had predicted that online payments should top $33 billion this season, a 21 percent increase over the 2006 holiday season.

There could be a “shopping lag” that would show even more strength in the online holiday shopping season. Although Black Friday is an …

Scary reading from the pages of Fortune magazine this week.

In the business weekly's November 19 edition, an article entitled "The End of the Tech Stock Party" goes down like a tofu turkey on Thanksgiving night.

Before I get into what Fortune has to say, it's pretty clear that technology stocks are in a decline. Quarterly numbers from heavyweights like HP, Apple, and even Cisco, who I touted last week, seem okay at first glance. But a closer look reveals that bean counters at the big technology companies believe that the run on computers and other high tech gadgets will slow down, and significantly, in 2008.

The industry fully expects consumers and business customers to tighten their belts next year, pulled back by a rising tide of fresh credit problems on the home lending side that could bleed into the credit card market -- a major, if negative, event for consumers who use plastic for high-end purchases.

Not helping matters is the rising cost of oil and energy. With oil at $100 a barrel, even if it falls back to $70 or $80 or so, as I expect it will, will leave less money in the pockets of buyers who might otherwise buy an iPhone or an HP laptop.

That's pretty much the take from Fortune this week. The editors there are, metaphorically speaking, draping the black bunting and calling the next of kin when it comes to technology stocks. Take the article's lead sentance: …

A quiet holiday week so far in the technology side of the stock market. Most of the action will take place in the retail sector, with both Best Buy and Comp USA opening on Thanksgiving night - - well ahead of Black Friday.

Early holiday shoppers can expect to find computers, digital cameras, and HD TV's at lower prices, as retailers are determined to do what it takes to get people in the door.

Back in the markets, I did run across a report from Gartner Group that touts the application acceleration equipment market. In it, Gartner keeps coming back to a company called Riverbed Technology (Nasdaq: RVBD) that is growing by leaps and bounds on the WAN optimization controller side of the market.

According to Gartner’s market share report, Riverbed demonstrated very strong growth to grab 30.6% of the sector's market share. Says Gartner, this is the fourth quarter in a row that Riverbed has maintained the leadership position in the Advanced WOC category. In the same report, Gartner recognized Riverbed as the market share leader in the WOC category for the 2nd quarter in a row.

According to Eric Wolford, senior vice president, marketing and business development at Riverbed. “Riverbed delivers WDS solutions for the data center, remote office and mobile workers that accelerate the broad set of applications important to business — without sacrificing the security of enterprise data.”

It's not a technology sector that I claim to be too familiar with, …

We've all heard of search engine optimization, or "SEO".

That's the online search engine mechanism that allows online businesses to seed their web landing pages with key code words to entice visitors and shoppers.

One big SEO term this week is "Black Friday" -- the day-after-Thanksgiving shopfest that launches the holiday shopping season.

Online retailers are already advertising their Black Friday shopping specials - - and getting good results. This leads me to believe that the holiday shopping season will be more robust than the notoriously negative national media would have us believe.

Here are some early numbers to back that sentiment up. According to the web online shopping tracking firm Hitwise, online traffic to Black Friday advertising websites is rising earlier in 2007 compared to 2006. Online traffic to a custom category of Black Friday advertising websites increased 52 percent for the week ending Nov. 10, 2007 compared to Nov. 11, 2006. That's an interesting number -- last year's shopping season was considered strong. With online shoppers out even earlier this year, shouldn't this year's holiday season be equally strong - - or better -- for retailers?

Hitwise adds that online interest in Black Friday is taking place earlier this year and becoming more widespread than the past two holiday seasons. Searches on the term "black Friday ads" are up 91 percent compared to last year and have increased 954 percent since 2005. This is a continuing trend as searches for the same term …

Kind of a quiet day in the technology stocks world, which might be considered good news considering the drubbing the sector has taken this week.

Sun Microsystems was in the news, signing off on a Solaris 10 distribution agreement with Dell to make the Solaris Operating System and Solaris support services available directly to customers for most, but not all, Dell PowerEdge servers. The multi-year distribution agreement was announced live from Oracle OpenWorld, where Sun President and CEO, Jonathan Schwartz and Dell Chairman and CEO, Michael Dell, are keynote speakers. That should lead to a bum up in Sun’s and Dell’s stocks.

Otherwise, all the positive action is in the router market, particularly with Cisco Systems. I mentioned yesterday that Cisco had reported solid quarterly earnings and big sales revenues. On the flip side, Cisco’s management also warned that corporations would begin to taper off on their tech investments – a warning that led to the technology stocks downfall we’ve seen in the markets this week.

Yesterday I wrote that tech stocks were a risky play – in the short term and even heading into 2008. For balances sake, I’ll quote Motley Fool columnist Tim Beyers who writes today that the tech sector might actually be a great value play.

Beyers cites a September survey by Russell Investment Group of 340 investment managers, which found that a whopping 73% of these pro stock pickers are bullish on tech -- an all-time high. He also lists three …

I'm starting to think that technology stocks are at a breaking point. A few more sessions of significant losses and you have to wonder when tech stocks will be back in the black.

You can't really blame the bad news on anything tech companies are doing -- unfortunately, it's the "wrong place at the wrong time" scenario. With the economy fighting off credit, dollar and rising energy price issues, technology companies are among the hardest hit right out of the gate.

All of the negative growth economic issues hurt technology businesses. As consumers and corporations reduce spending, one of the first places they start are on things like new computers, printers, new software and servers -- the bread-and-butter of the technology industry.

Richard Parower, a managing director at J. & W. Seligman who heads its Global Technology Fund, says investors are finally realizing that U.S. corporate demand is weakening.

“Tech had held up a lot better up till this point,” Parower told Dow Jones.

Emotion -- most of it played out in shades of anger and frustration -- plays a big role, too. P. Brett Hammond, chief investment strategist at the fund manager TIAA-CREF, told The Wall Street Journal that "investors could continue the sell-off just because they are in a bad mood."

For the beginning of the trading week, stalwarts like Apple, Google and Microsoft fell off significantly. IBM and Ebay did somewhat better, although their stock performance was nothing to write home …

Investors are in survival mode right now, just trying to hang on in a market that has given away much of this year's gains. Key culprits are the ongoing credit crisis, which has banks and lenders reeling under the weight of billion dollar losses (hello, Wachovia) and from a weak dollar, which crimping overseas investments in the products of U.S. companies.

Consequently, last week was one of the worst in recent memory on Wall Street. Both the Dow Jones Industrial Index and the S&P 500 each fell 2.2%, and the Nasdaq was down a staggering 3.5%. One of the few sectors I like these days -- biotech-- was also down 1.1% based on the benchmark Biotech Index. That's a little better than the rest of the market, but down is down, and it's certainly time to be careful about biotech stocks in particular and most sectors in general.

Still, over the long haul, I think biotech is a good place to be for investors, even in a down market. Late on Friday, the biotech sector staged a mini-rally, after traders figured out that the selloff in biotech stocks was a bit much. That's a telling, if innocuous sign. My thinking is that biotch stocks are being dragged down by the rest of the market and excessively so. Overall, the industry is healthy, plenty of new drugs are in the pipeline, regulatory issues about greenlighting clinical trials and approving new drugs are calming down after some volatility from 20004-2006, …

Can you find a profit in a techno-slag heap?

That’s the promise of an up-and-coming stock I found on Morningstar.com this week. I do some consulting work for a mutual fund firm and this technology company fits the bill – across the board.

First some background. The company’s name is Fuel Tech (FTEK) and it’s hip deep in the energy field - - a curious pick, I know for a technology stock supposedly headed upwards. Fuel Tech has about 1,500 coal-fired plants in the United States, where there is a huge market potential for the company’s Fuel Chem's proprietary slag-reduction technology. Morningstar pegs the domestic market for slag-heap technology at $1 billion.

But it’s not the domestic market where Fuel Tech will leave its heavy footprint. It’s China where the promise of the technology really lies. According to Morningstar, Fuel Tech’s alliance with the Chinese energy company Itochu opens the door for the company‘s chemical technology to help Fuel Tech ramp up sales in China much earlier than the company could have otherwise, possibly five years ahead of the pace Fuel Tech could have achieved on its own. China, after all, is the world’s largest consumer of coal.

More good news for Fuel Tech investors . . . there really aren’t many competitors in the increasingly lucrative China market. My only concern is that Fuel Tech doesn’t have the resources to fully take advantage of the China card. The company recently released third-quarter results …

For a long while, it was easy to pigeonhole cell phones in three categories: those that don’t work, those that break down, and those that get lost.

Fortunately, technology has improved cell phone performance in the first two categories (although we’re still losing them -- and at $500 a pop for an iPhone, that can hurt). In fact, cell phones are so improved that owning them has become a necessity and not a luxury in the eyes of the 150 million Americans who have cell phones. According to NetworkWorld Fusion, that number is up from just 16 million in 1994 and will rise to 1.8 billion cell phone users (globally) by 2008.

So if you’re either a cell phone user or looking to buy your first unit, the technology is sufficient – and well on the way to superb. Now, it’s all a matter of getting the cell phone that works best for you. That’s the key – tailoring the myriad cell phones and cell phone plan options that meet your specific needs.

How best to do that? Simple. By cultivating a cell phone persona that matches your personal preferences and your lifestyle.

Why your lifestyle? Finding the right cell phone plan for you means asking yourself some basic questions. How often do you make calls? Are you getting a cell phone mostly for emergencies? Do you make more calls during the day or at night? Call it the ‘savings factor” – where you can get …

You guys know how big I am on video game makers as solid stock plays.

But what about video game retailers?

One of the big ones -- GameStop -- has seen its share price double to $58 during the past year. One of the big reasons why is the mushrooming market for used video games, which analysts say is a busienss that is growing into the billions of dollars.

I'm hardly alone. Zacks.com retail analyst Rob Plaza thinks GameStop is at the top of the list of holiday season retail winners this year.

"The list is getting thinner and thinner. (But) I still like GameStop. I’ve got some more speculative buying opportunities, but GameStop’s probably the safest, because the video game retailer and the video game cycle is still strong. The price points are low enough that you don’t have to take out a home equity loan to buy a video game or the game system. And it’s targeted toward the kids and the teens, and they typically have more discretionary income, or their parents have more discretionary income for their kids than they do for themselves. So that one’s a pretty safe bet to do well this season."

CNBC's Jim Cramer, host of "Mad Money" is all in on GameStop, too. He noted last week that the average video-game player last year was 33 years old, and gamers under 18 made up less than a third of all players. "That means the …

Yesterday I laid out the risks and rewards of investing and trading stocks online.

As I said, it's easy to do and actually kind of fun, but like going to Vegas, you have to be able to walk away from the table if you're losing money.

To help you avoid that, if you really want to start trading online, here's what I look for in a good online investing/trading web site. Lord knows there are plenty of such sites -- some good and many bad.

To know the difference, and to really reap the benefits of online investing provides, be sure to look for sites that provide the tools you need to successfully manage your investments.
Specific features to look for include:

1. An accessible web site with easy navigation.
2. A well-organized trading screen with built-in safety guards to prevent data entry errors.
3. Access to real time quotes-current stock prices displayed on the screen.
4. A quick confirmation system.
5. Current portfolio updates and account balances.
6. Easy access to customer service-preferably 24-hours a day, 7 days a week.
7. A low minimum dollar amount to open an account.
8. The ability to conduct buy or sell stops, which instructs the system to buy or sell a specific security automatically when it hits a predetermined price.
9. A full range of investment vehicles including stocks, bonds and mutual funds.
10. Automatic sweep of un-invested …

My friend and I were texting each other about the Red Sox World Series rout the other night -- way to go Sockies, how to beat 'dem Rockies! -- and, both being Boston natives, were having a grand old time.

My pal won some money on the Series and had a strange question for me. Or maybe my friend is strange without the question. He told me he was interested, now that he had some seed money, in entering the online stock trading world, and did I have any tips?

I'm not a huge fan of novice investors trading online -- at least on a constant basis. Too many day traders bit the bullet after the dot.com bust for me to recommend it. But, I'm not my buddy's nanny and he deserves a fair response.

With that in mind, here's my take on online trading:

First, beware the addictive nature of investing online. Studies show that online stock traders use the Internet an average of 11.6 hours per week; non-traders long on for only 8.4 hours every week. And, during most of those hours, money is changing hands. So you have to be ultra-careful trading online.

Of course, it is the Web we're talking about so the benefits are plentiful. Thanks to the Internet, superior financial advisory services are now available to larger base of customers – not just the $1 million-and-up crowd. With the technological advances and increasing competition that the Internet …

Six weeks ago I wrote that video game stocks were going to be a good play for the duration of 2007 - - and probably well into 2008.

As I said at the time, anyone with a 12-year-old boy in the house recognizes the familiar hoots and hollers from the den or playroom, when the kids fire up the Wii and really get rolling. For my part, I don't mind as long as my boys balance out the Wii time with some fresh-air, outside time. Inside, I'm just happy a Wii console hasn't crashed through my TV screen. But the sheer joy of these boys playing Wii bowling or baseball is amazing to watch.

From an investment standpoint, never mind a cultural one, there's something happening here. I know I've told this story before, but long-time Fidelity Magellan fund manager Peter Lynch made millions for himself and his investors simply by strolling through the mall on Saturday's and noting where all the foot traffic was headed. If it was the Gap, then Magellan bulked up on the Gap. If it was Home Depot, then Home Depot would get a financial shot in the arm come Monday.

The same thing is happening in rec rooms all across the world with Nintendo and the Wii. And it's starting to show up in Nintendo's financial statements.

Earlier today, Nintendo reported that its net profit in the first half of the year through September more than doubled from a year …

I haven't spent a lot of time -- okay, "any time" -- talking about the fast-growing biometrics market.

Part of it was ignorance. I didn't know know much about it.

But I'm all amped up on biometrics after reading a new white paper from BCC Research entitled "The Global Biometrics Market".

Any technology marketplace that draws billions of dollars is fine by me. The biometrics category fits that descrition well. According to the biometrics report from BCC, the global market for the technology was worth nearly $2 billion in 2006 and is expected to increase to $2.7 billion in 2007 and $7.1 billion by 2012, a compound annual growth rate of 21.3% over the next five years.

BCC defines biometrics as the fingerprint, face recognition, hand geometry and "physical security definition" market. We may be in the Information Age, and biometrics does apply to that, but we're also in the Security Age, post 9/11, and everyone seems to want to know who you are.

From a civil liberties standpoint, I'll let the blue-staters square off against the red-staters. The only color I care about is green, and the biometrics market has plenty of that. According to BCC, the fingerprint biometrics, the oldest form of biometrics in use today, will be worth $1.3 billion in 2007, and should grow to $2.7 billion by 2012, BCC says. The main reason for this growth is the decrease in the price of fingerprint sensors, making them more affordable, and …

It’s back.

The dot.com bubble, that is. And with it comes a new wave of venture capitalists that are pouring money not just into Internet companies, but in life sciences companies, as well.
And in increasingly larger numbers.

An October article in The New York Times says it all. “Internet companies with funny names, little revenue and few customers are commanding high prices. And investors, having seemingly forgotten the pain of the first dot-com bust, are displaying symptoms of the disorder known as irrational exuberance.”

While The Times focuses more on technology companies like Facebook, Yahoo and Google, the evidence points to a burgeoning number of venture capitalists snapping open their checkbooks and waving them in the direction of biotechnology companies.

According to Healthcare Corporate Finance News, health care technology firms garnered roughly $2.5 billion of venture capital funding during the third quarter of 2007. That’s up 10% from the same period in 2006 in terms of new venture deals, and up 14% in terms of revenues pouring into health care companies.

The life sciences sector comprises the lion’s share of the new deals (see chart below)

Health Care Venture Capital Investments, Third Quarter Ended June 30, 2007

Sector Number of Deals Dollar Amount, in millions

Medical Devices 34 $622.65
Services & Other 8 $503.00
Biopharmaceuticals 20 $472.54
Pharmaceuticals 21 $390.50
Biotechnology 26 $358.15
e-Health 12 $106.30
Total 121 $2,453.14

In a …

I've been focusing on consumer electronics a great deal in the past few months; partly because that's where so much of the action is and partly because American consumers have ignored the economic naysayers and have continued to shop and buy cell phones, PDA's, HD televisions, and satellite radios, among other goodies.

I know it's barely Halloween but, looking two months ahead, the evidence is mounting that it should be a banner season for high tech consumer toys for the holiday shopping season -- and that should mean better performance for companies like Apple, Verizon, AT & T, and Sony, among others.

The latest proof comes from a study done by the Consumer Electronics Association. Its latest annual holiday buyers survey shows that consumer electronics products should "dominate the holiday wish lists of adults and teens, and will generate $48.1 billion in fourth quarter sales".

“Consumer electronics will be the shining star of holiday retail sales, accounting for 22 percent of all gifts given,” says CEA Economist Shawn DuBravac. “Two of the top five items on adults’ holiday wish lists are consumer electronics, and four of the top five items on the teen list are CE devices, so today’s hottest technologies will be on every holiday shopper’s mind. Holiday sales will be particularly jolly for the video game category (hardware and software), laptop computers and the endless array of accessories available for your favorite product.”

The top five wish list items for all adult survey respondents: …

Okay, Halloween is only two weeks away, so what better time to introduce five "weird" internet & media content stocks that might be more treat than trick.

The list is culled from the financial web site Barrellomoney.com. The site does warn that a few of the 'weird' selections might be high risk stocks for some investors. So be forewarned.

Here goes:

1. New Frontier Media (NOOF), Barrelomoney's top pick on fundamentals received a buyout offer on August 30. Three of three analysts say "buy" according to Yahoo Finance (before the offer) and many insiders indeed have been buying. Steel Partners, the well known activist hedge fund that made an undisclosed offer, was buying ahead of the offer and now owns 15% of New Frontier Media. The stock is not for cultural purists -- the company provides sexually explicit content but it is making good money right now. New Frontier Media trades at a price-earnings ratio of around 16-17. Again, it is not suitable for many investors though due to its very explicit products and the stock could fall back if the buyout deal doesn't come about.

2. Gemstar TV Guide (GMST). This possible turnaround is billed as a more long term selection. Gemstar is a bit of a risk but it does have solid revenues and good management. Though TV critics are skeptical, the company's cable shows have shown signs of life with the Joan and Melissa comedy team and more recently the show about getting …

I've been the first one to say in recent months that I've fallen hard for my new Blackberry . . . or "Crackberry" as I've taken to calling it.

What's not to love? You can do just about anything on a smart phone that you can on a laptop, save for writing long documents and a few other things I've stopped caring about, and you don't have to lug it around airports, train stations, and long walks across cities you happen to be doing business in that day. That's no small benefit. I once dropped my brand new G-4 Apple laptop. It spilled out of my laptop bag outside a cab at the Atlanta airport, denting the unit and causing portions my computer screen to turn a shade of blue reminiscent of the uniform of my favorite football team, the New England Patriots.

Now it seems the rest of the world is catching up to me, or me to them.

In a study by the technology firm QuickOffice, 70% of respondents surveyed say they "trust cellular devices over personal computers for reliable Web access to achieve maximum productivity." In plain English (you have to love the verbiage in technology industry press releases) mobile workers are increasingly hot for smart phones but not for laptops.

One bugaboo for employees on the go is reliability. In the QuickOffice survey, roughly 90 percent of the almost 300 mobile professionals surveyed need to check email daily while away from the …

Has there been a technology "leap" in the semiconductor market?

Some people think so. But should investors go along for the ride?

Earlier this year, George Scalise, the president of the Semiconductor Industry Association, was issuing talking points to the press over the relative health of the semiconductor sector.

Much of it was boilerplate -- 2006 was the “year of the consumer” in the electronics industry, he said, which begs the question what year isn’t the year of the consumer in the electronics industry – but some of his comments hit their mark.

Thanks to a perfect storm of new, in-demand technology products like cell phones, MP3 Players, and HDTV sets that all have benefited from the lower-cost, high-functionality trends in the semiconductor industry, the sector is, well, back in the chips these days.
According to the SEI, global sales of semiconductors soared to a record $247.7 billion in 2006, an up-tick of 9% over the $227 billion reported in 2005. Projected numbers for 2007 look even stronger.

One theme of Scalise’s bears watching for investors for the duration of 2007 and in 2008 - - that the short-term future of semiconductors is attached to the electronics market like a barnacle to the hull of a boat. Scalise points out that the semiconductor content of electronic systems has been rising steadily for years now, and today stands at about 21.6%, as measured by cost.

Says Scalise; “Cell phone shipments exceeded one billion units …

Like the title suggests, it's a good news/bad news scenario for holiday retailers this year.

The good news? More people than ever are buying their holiday gifts online, thus opening up an even wider revenue pipeline from web sales for retailers.

The bad news? The holiday shopping season is shaping up to be as resilient as Lindsey Lohan passing a keg party on her way home from rehab.

First, more on the good news. According to a recent survey by Burst Media, the percent of consumers who expect to complete either a portion or all of their holiday gift purchasing online this year has surged to more than half (50.7%), up from 37.6% in 2006. 13% -- that's a pretty amazing number in only one year.

The bad news indicates that holiday spending is likely to decline from 2006 levels for many consumers. Among survey respondents from the Burst study, one-quarter (25.6%) expect to reduce spending, 36.1% will spend the same amount as the prior year and only 16.8% expect spending to increase. These conservative spending estimates are true even among the highest income segments.

The Burst study also shone a spotlight on some preferred online shopping habits displayed by Americans. Among those . . .

-- Window shopping is a critical part of Internet shopping: Survey findings show over two-thirds (68.6%) of consumers shop online and use the Internet as a resource to research products.

-- Online shopping, however, does not always …

Study after study shows that Americans just aren't saving enough for retirement. Part of the problem is that, as a nation, we have taken on so much debt that we're using our savings to pay it off. The other is that, through the miracles of modern medicine, we're going to live a lot longer and thus will need much more money in retirement than we might have planned.

The byproduct of all this is that most Americans are beginning to face the music and admit that they'll be working well into their retirement years.

According to a new survey conducted by online polling and market research provider Vizu Corporation on behalf of RetireeWorkforce.com, more than three-quarters of people working today plan to continue working into their retirement years. Nearly 40% of all respondents reported they anticipate doing so for monetary reasons, either to meet daily needs or to boost their quality of life.

The survey, conducted during September, says that 34.1% of respondents said they will work to “make ends meet”, while another 14.7% said they would seek employment to “earn extra income to boost their quality of life”. Nearly 22% answered that their motivation for working would be “the mental stimulation and challenge”; 4.7% said it would be “for the personal and human interaction.”

Of all those surveyed, 24.8% revealed they don’t plan to be working in their retirement years. The survey results contain an 8% margin of error at 90% confidence.

…

We've been talking about "upside" in the technology stock sector all week.

Hand held devices and memory cards were the sectors at the top of that list, and should stay that way.

Another side to the upside discussion is who, exactly, will be buying these products? After all, a lot of traffic in the handheld market is corporate driven. Companies are buying Blackberries and Treos for their busy staffers so they can keep in touch with the corporate mothership away from the office (which means you're never away from the office, but that's a story for another day).

What's missing from that equation? Maybe this fact will help answer that question. Of the 213 million cell phones operating in the U.S., only 4% of them are "smart phones", i.e. phones that send and receive email, access the web, and offer global positioning software, among other techno-treats. And, according to the technology consulting group M:Metric, the rate at which people have been buying smart phones is increasing rapidly. Today there are roughly nine million smart phone users in the U.S. That figure has almost tripled in the past two years.

Smart phone developers are beginning to ramp up efforts to accommodate their growing number of buyers - - and that spells opportunity in the stock market. To meet growing demand for smart phones, companies are taking on the Blackberries and i-Phones of the world with significantly less expensive smart phones for hundreds of dollars less than their …

I had to shake my head when I read about the latest GDP numbers today.

The news is good, maybe even great for the economy – a 3.8% upward spike in gross domestic product for the second quarter (the numbers were revised from the original GDP estimates, and were light years ahead of the 0.6% GDP rate in Q1, 2007).

So . . . good news, right? Not if you’re rooting for a recession, as the mainstream media appears to be. I’m not sure if it’s the media’s intense hatred of President Bush or what, but the wire service report out today all throw water on the positive economic news stemming from the revised GDP number.

The GDP number is the leading economic benchmark financial eggheads use in measuring the relative health of the U.S. economy. Simply defined, gross domestic product is the value of all goods and services produced within the United States and is considered the best barometer of the country's economic health.

So what do the wire service reports lead with? If you thought the positive GDP number, guess again.

Yahoo.com runs the story this way:

"New-homes sales tumbled in August to the lowest level in seven years, a stark sign that the credit crunch is aggravating an already painful housing slump."

"Sales of new homes dropped by 8.3 percent in August from July, the Commerce Department reported Thursday, driving down sales to a seasonally adjusted annual rate …

Yesterday I made my case for the handheld mobil device marketplace, and why strong growth there could well point to some profitable stock plays within that sector in 2008.

Today, I'll focus on another potential success story -- removable memory cards. Full disclosure: About all I know about removable memory is in the card I have for my digital camera. But it's a beautiful thing. I pop in the card to take pictures, pop it out and plug the card into my laptop and, voila, I have a great selection of photos to download, print out or email to family and friends.

So for consumers, removable cards offer that Holy Grail of the consumer experience -- ease of use in a quality product.

For investors, the Grail is a bit different. In that case, it's the shoppers themselves. From what I'm seeing, there are plenty of them in the memory card market.

Accoridng to research from ABI Research, revenue from shipments of removable memory cards for handsets is expected to be over $7 billion in 2007, compared with $5 billion expected from headset shipments including both Bluetooth and wired headsets. ABI adds that memory cards will continue to be the highest revenue-generating mobile phone accessory category over the next five years.

ABI Research industry analyst Shailendra Pandey notes that, “With few exceptions, memory cards for handsets are bought by users separately from the handset purchase, whereas an increasing number of headsets are now being supplied …

In the customer service game, perception is everything. It can spell the difference between a company recording its annual revenues in black ink or red.

I read a story once in USA Today about a guy named John Barrier, who didn’t like the way a bank manager in Spokane, Washington, looked at him. John was wearing a construction helmet and grungy clothes.

The problem began when Barrier went to his bank to cash a $100 check. When he tried to get his parking slip validated to save a buck, the counterperson refused, saying he hadn’t conducted a transaction. “You have to make a deposit,” she told him.

When told he was a substantial depositor, she looked at John Barrier differently.

Too late. Barrier asked to see the manager, who – amazingly - - also refused to stamp the ticket. Fed up, Barrier went to the bank headquarters vowing to withdraw the $2 million he had in the bank, unless the manager and the clerk apologized. But nobody called. So the next day he withdrew the money.

The moral of the story? Treat every customer as if they have a million dollars – because they may.

Unfortunately, most businesses with an online/web presence aren't doing a good job of that. Even with first quarter U.S. retail sales 2007 totaling $31.5 billion, a study from the business consulting group Talisma says that U.S. online retailers are failing in key areas of customer service, which has the …

90% of the game on Wall Street is picking stocks that will rise before they actually do.

It's not easy. If everyone could do that, then everyone would be doing that.

But stock-picking is not easy. It's akin to shooting an arrow at a moving target that you can't even see yet. Hockey legend Wayne Gretzky used to say that his greatness as a hockey player came not from going where the puck is, but where it was going to be.

Same idea with stock investing. You have to anticipate where the winners will be, then go there.

One way to do that is to check what the big products might be six months from now. For example, a new study from ABI Research says that more than 100 million handsets with touch screens will be shipped in 2008. ABI also says that increasing numbers of handsets with touch screens have started to appear in the market, including the Apple iPhone, the LG Prada, the HTC Touch, and the Ultra-Smart F700 from Samsung, as well as the P990, M600, and W950 handsets from Sony Ericsson. It also says that touch screens and touch pads are gaining popularity and becoming more common on handsets, while helping to make the handsets more intuitive, pleasant, and efficient to use.

That tells investors the market for handheld devices is markedly bullish, especially compared to the market for, say, personal computers, which hit the saturation point years ago.

Why …

The Wall Street Journal has an interesting article out this morning touting a new defensiveness among investors -- and what they plan on doing to protect their portfolios against a possible recession.

"With the housing downturn, credit crunch, gloomy employment data and a parade of maudlin financial forecasts have been enough to send some investors scrambling for bubble gum and beer," says The Journal. "While economists jawbone about whether the U.S. will sink into recession, investors already are thinking of ways to prepare their stock portfolios for a downturn."

The article states that, even if there isn't a full-blown recession -- usually defined as two consecutive quarters of negative economic growth -- many investors and strategists are bracing for a significant slowdown in growth.

"It's going to feel a lot like recession," says David Kostin, global investment strategist at Goldman Sachs.

The Journal also publishes an index of potential "recession-proof" sectors and companies. On that list, surprisingly (to me, anyway) is the information technology sector, with Microsoft listed as a "safe" recession-proof stock play.

The article also includes the telecom sector, but I don't really have a beef with that. People won't turn in their cell phones over a few bad economic quarters. Listed as the best play in telecom is AT&T, which historically has performed well in tough economic times.

But technology stocks? When the economy goes south, technology has historically been one of the hardest-hit sectors, with the possible exception of auto …

I wrote in an earlier blog about the time I met and interviewed Bill Gates, the brains behind Microsoft.

I cornered Gates outside a back door at the Omni in Atlanta in 1991, where he had just delivered a speech at Comdex. Leaning on a bike stand, Gates riffed for 20 minutes on the future of technology and how, technology-wise, we had just seen the "tip of the iceberg" and that the next 20 years would "change everything".

Bulls-eye. With the Internet, GPS Systems, mass commercialization of cell phones, the iPod, and Google, among other barrier-crashers, Gates was right on the money.

The interview also confirmed what many had said before me. Bill Gates is an unassuming guy who you would never guess is the wealthiest person in the U.S.A.

I was thinking about that interview when I read that Gates has been surpassed as the wealthiest person in the world. The latest Forbes magazine "wealthiest people" rankings shows that Mexican telecom tycoon Carlos Slim is the new numero uno, wealth-wise.

(A side note: Is that a great name, or what? Would you want to play poker against a guy named Carlos Slim, even if he wasn't the wealthiest guy in the world? Not me.)

According to Forbes list of the richest people on the planet, Gates' fortune now stands at $59 billion, according to the Forbes list. gates has accumulated $7 billion more than his Berkshire Hathaway BFF, Warren Buffet. The Oracle of …

Last week I went and did something I swore I’d never do – save 15% or more on my car insurance with Geico.com.

Yep, I know all about the annoying lizard and the perpetually ticked off cavemen. I went ahead and did it anyway.

The trigger point was a letter from Progressive, my old insurer, noting my rate schedule for the next year. Scanning the numbers was like looking at my first house payment 16 years ago.

Now I was the ticked-off caveman. How dare Progressive raise my rates after another year of a perfect driving record! Examining my options took me to the Geico web site, where I dove in, webbed-feet first and made the switch.

The change was dramatic. Instead of $173 a month I’d be paying closer to $100 per month – for basically the same coverage.

Justice, or maybe revenge, rarely tasted so sweet. I couldn’t get on the phone fast enough to fire Progressive and, hopefully, Geico and I will have a long and mutually beneficial relationship.

We’ll see.

The point of my story, and I do have one, is that information that helped me make up my mind was right there on the Geico web site. Easy to find and easy to understand.

So when I was trolling web for news this morning, and I found a study rating the best car insurance web sites, I couldn’t resist.

What did I find?

Surprisingly, to …

I have to admit, on my perch here overlooking Wall Street, of the industries traders typcially jawbone about, video games arean't at the top of the list.

Exhibit "A". At a dinner Wednesday night with three options traders over some Kobi steaks and some good wine, all the talk was about consumer stocks, and how they might be impacted by the ongoing credit crunch (in fact, August consumer confidence numbers released today are down a bit).

On the other hand, I have two boys, both of whom choose their "good report card" rewards from one industry - - and one industry only.

Video games. Heck, I don't need a calendar anymore. All I need is the date of the next Wii video game release and my 11-year-old and my eight-year-old will remind me of that date every chance they get.

I bet they're not the only boys who do so.

So, while consumer confidence is down, the sales of video games are at least one big shiny bright spot in the consumer stock arena.

Let's review the most recent numbers (from the market research firm, NPD). This week, news comes out that U.S. sales of video games and hardware jumped 46 percent in August from a year earlier, with Microsoft seeing sales of its Xbox 360 console shoot up after a price cut.

The top game was Electronic Arts' Madden NFL 08 for the Xbox 360 which sold 897,000 units.

It's no …

Cell phone agreements have long been the bane of many subscriber's lives. Cloudy language, hidden fees, legalese traps, and contract terms that lean heavily in the favor of cell phone companies.

Anyone who's been roped into a lousy cell phone contract can relate. It turns out that Congress relates, too.

Last week, Sens. Amy Klobuchar (D-Minn.) and Jay Rockefeller (D-W.Va.) rolled out a bill that enables cell phone subscribers to leave cell phone carrier contracts before the agreements expire.

The bill is called the The Cell Phone Consumer Empowerment Act of 2007, and its primary goal is to free subscribers to opt out of a contract for any reason up to 30 days after a new agreement is signed or an existing contract is extended. Speaking on the Senate floor last Friday, Klobuchar said it's time to level the playing field in the cell phone contract game. "Early termination fees are a family budget buster," she said. "Families should be able to terminate service without outrageous fees and know if their cell phone will work on their drives and in their home and office." Bill sponsors also inserted language that cell phone carriers must pro-rate early termination fees if a subscriber cancels closer to the agreement's end date.

In the past, cell phone companies didn't even have to offer early cancellations options. Some cell phone comanies allowed customers to leave early -- for a steep price -- but there is no law on the books that …

Corporate marketers are paid to think five years ahead of the curve.

Like hockey great Wayne Gretzky, who once said that he didn't skate to to where the puck is, but "where it would be", today's marketers have to know where the consumer marketplace is going, not where it is right now.

Forrester Research is trying to help. I've talked with and interviewed Forrester analysist many times over the years. I believe that, of all the technology market resarch and industry analysis firms, Forrester is at the top of the list.

So when the company delivers a major report on the major consumer technology markets over the next five years, it's a good idea to sit up and take notice.

In the report, titled “The State Of Consumers And Technology: Benchmark 2007”, Forrester, says that devices that make up the digital home, such as digital video recorders, high-definition televisions (HDTVs), and home networks will be the consumer technologies that grow the fastest over the next five years.

The analysis covers five-year forecasts for 15 consumer technologies. Let's take a look at the highlights from the report.

1. Adoption of digital video recorders (DVRs), which were in only 21 million US households at the end of last year, will more than triple to be in more than 69 million households by 2012.

2. Home networks, in use by nearly 21 million households in 2006, will be in more than 58 million households by 2012.

Apple to iPhone Customers: “Mea Culpa”

With Apple in the headlines all week from its iPhone pricing debacle, I’ve kept a close eye on the company’s stock price.

One rule of thumb on Wall Street is that if your company find itself in the news for negative reasons, take control of the issue and engineer some new headlines, preferably the kind that will minimize any damage to the company’s stock price.

That’s what Apple tried to do when it’s new iPhone price-cutting strategy blew up in its face. Price-cutting is a real departure for Apple. The company is famous for eschewing big sales and dramatic cuts in product prices. It sells quality – and if that quality includes price tags that induce stocker shock, so be it.

So a lot of eyebrows were raised on Wall Street when Apple went against the grain and cut its price or its new iPhone from $599 to $399. Even at $399, the iPhone is vastly more expensive than any other cell phone out on the market, so a good argument can be made that Apple isn’t really leaving all that much money on the table. The lower price should attract a lot more buyers than it would at $599. American consumers, after all, are famous for letting the early adopters pay the full freight, shake out any product bugs, then waltz in a few months later and buy in at a lower price tag.

But Apple didn’t count …

Labor Day weekend is a busy one for travelers. Families out shopping for back to school supplies, sun-worshipers heading back from the beach, and scores of backyard barbecues and college football games to attend, all make for some serious gas-guzzling out on the nation's highways.

With gasoline hovering at $3 a gallon at many pumps across the US, the price of all that road rallying adds up. The typical minivan, on average, costs $65 to fill, making that relaxing ride to grandma's for Sunday dinner a real teeth-grinder.

But what if you could harness a technology that would enable you to drive 500 miles round-trip on a 5-minute charge?

That's the promise of U.S. Patent No. 7,033,406 which promises, maybe even threatens, to do away with the internal combustion engine, and the traditional car battery, all in one swoop.
The patent is the property of Austin-based startup called EEStor, which touts "technologies for replacement of electrochemical batteries." In layman's terms, that means you could use the EEStor technology to drive from Boston to Philly and back without a drop of gasoline.

Today's hybrid technologies can't come close to that level of driving performance. The best plug-in hybrids need an overnight charge to go just 50 miles. In addition, even the most advanced hybrids, like the Honda Prius, still depend on fossil fuels.

According to Ian Clifford, chief executive of Toronto-based ZENN Motor Co., which has licensed EEStor's invention. "The Achilles' heel to the electric …

Last week I wrote that I am a big Apple fan, and I am. I think its products are better than other technology companies and that's especially true of Microsoft.

Anyone who's ever spent hours trying to debug a Windows-based PC or closing out pop-ups ad that appear with all the frequency of horse flies on any New England beach during Labor Day weekend knows what I mean.

For years, the Microsofties would argue this point with me, boasting about their dominance in market share and software product availability. Like liberals and conservatives, or Yankee fans versus Red Sox fans, there really is no honest debate between fans of Microsoft and Apple. The other side can never concede a point.

But, to turn a phrase, the apple has turned in recent years. First, with the sleek new G-5's, then the i-Pod, and this year the i-Phone, Apple has dominated Microsoft in the marketplace of technological ideas. Even Microsfot employees have noticed, as flat-lining market share and a sluggish stock price have caused the company to tighten the spending reins and clamp down on former necessities, like dry towels in employee locker rooms, that have now become luxuries to Microsoft bean-counters. In java-crazy Seattle, Mictosoft employees were even complaining about the quality of the company's cafeteria coffee.

With favorite perks on the chopping block and increasingly listless company stock options on the minds of staffers, Microsoft had a burgeoning employee morale program. Employees look at the progress …

Yesterday I wrote that Apple was having some legal woes attached to its i-Phone. It seems users who travel overseas may be hit with whopping long distance charges.

If the day's bad press bothered Apple CEO Steve Jobs, he's certainly not showing it. In fact, he followed up on the lawsuit challenge with big news on the Apple technology front.

According to the Associated Press, U.S. Apple and German automaker
Volkswagen AG are "discussing the possibility of building an "iCar" which would feature products by the producer of the ubiquitous iPod personal music player."

The wire service reports that Jobs and Volkswagen's chief Martin Winterkorn met several days ago in California, and plan to meet for further discussions, quoting Hans-Gerd Bode, a spokesman for VW.
There are "scores of ideas," but few concrete plans at this point, Bode said.

That sound you hear from Cupertino to Madison Avenue is marketing mavens licking their lips over a new VW stocked with goodies from the Apple franchise. The automaker already enjoys a solid following from the 20- and 30-something demographic. Imagine the throngs of checkbook-waving hipsters lining up to drive a new VW with an i-Phone and an Apple GPS system gleaming back at their fresh, shiny faces from the dashboard.

The idea that Apple would hook up with VW isn't entirely unexpected. Accroding to the AP, Apple already works with VW and other automakers to offer an integrated in-car hookup for iPods.

Right …

I'm a big fan of Apple - - I own three G-5's and an old G-4 laptop, and my two of my three kids own iPods (Nano's).

The sleek design, seamless workability, and rock-like defense against viruses and other threats that always seem to befall those unfortunate souls in the Windows-based world are all hallmarks of an Apple product. It's like I almost feel sorry for Dell, HP, IBM and, of course, Microsoft users.

So what to make of the contunuing fallout of Apple's highly-touted iPhone? Ever since its rollout two months ago, the iPhone has suffered a very Windows-like fate: constant complaints about quality, dependability, and lousy customer service.

Now it looks like a new class-action lawsuit has been filed against Apple. Plaintiffs say that Apple failed to disclose that the device was locked to AT&T's wireless network and that using it outside the U.S. could result in substantial roaming charges.

The following passage comes from AppeInsider, which interviewed
lead plaintiff Herbert H. Kliegerman, a resident from New York State.

"Approximately two weeks after purchasing his iPhone, Kliegerman traveled to Mexico for a week where he continued to use his iPhone to check emails and surf the web. He did so, according to the suit, after reading a statement on Apple's iPhone website stating that "[y]ou can browse the Internet and send emails as often as you like without being charged extra."

Upon returning from Mexico, Kliegerman claims to have received a …

Maybe the guy on those Biz Hubs commercials is right.

Those nefarious multi-function business machines just might be out to get us.

That's the position taken by a North Carolina compuer science professor who says those all-in-one multifunction business machines – the ones that print/ fax/ scan/ and copy -- could be a big security threat for terrorists plotting against the West.

Says Dr. Elva Jones, a Winston-Salem State University professor and chair of WSSU’s computer science department, many of today's digital copiers actually have their own hard drives that store all of the information that's printed, scanned, copied or faxed. If that information gets into the wrong hands, the result could be detrimental to a business.

"I am not aware of any scandalous situations yet of any great magnitude," says Jones, noting that without awareness it’s a matter of time before a controversy arises. "But typically we don't become alert to possible problems until something happens."

He notes that businesses print, scan, copy or fax client-sensitive information (or its own sensitive internal information), all the time without much thought about security risks. However, if the information is saved to a copier's hard drive, the consequences could be huge.

“Imagine the information handled by law firms, banks, accountants, hospitals and research and development firms,” says Jones.

Hard drives are used in printer/copier/fax/scanner machines because they can add to the efficiency of office operations by increasing the speed and traffic on the company's network. …

The Internet is dynamic, gradually shifting form from year to year.

This year's model? Apparently it's all about more consumption -- and less chatting online.

Exhibit "A" comes from the Center for Media Research, which reports this week that Internet users are communicating less and consuming more content than they were four years ago.

Before I get into more, it's worth noting that the Center for Media Research has a dog in this hunt -- it's parent company, MediaPost Communication, produces online content and would welcome any trend that suggests web users are emphasizing content over communications.

That said, here's The Center evidence. The group cites a recent a four-year analysis of the Online Publishers Association's Internet Activity Index, which measures how Internet users divide their time among e-commerce, communications, content, and search.

"Earlier this month, the OPA reported that as of May 2007, Internet users spent 47% of their time online consuming content, compared with 34% in 2003, which represents a 37% increase over four years," says the Center.

Over the same time frame, Internet users spent 33% of their time online communicating, compared with 46% in 2003, which represents a 28% decline over four years.

Search usage on the rise, too. The Center reports that, in 2003, search consumed 3% of time online. Today, it's 5%, a 67% increase.

Why the shift to content? Study researchers point to a faster Internet, which they claim is encouraging more Internet usage. The …

Allow me one last word on the credit crisis of last week.

I hope by now I've demonstrated that credit and debt aren't the sole domain of green eye-shaded numbers crunchers on Wall Street.

As the green-eye shaded numbers cruncher in your own company's finance department can tell you, bad economics effects everybody.

So is the crisis over? Hardly. But banks and other lenders should get back to the business of making loans and making sure businesses just like yours have all the capital they need to grow and prosper.

Some experts even think that there is money to be made from the subprime mess. Stuart Greenbaum, an economist and former dean of the Olin School of Business at Washington University in St. Louis, says that financial institutions, believe it or not, will be at the front of the line of businesses making hay on the crisis crunch.

“Banks that don’t have a lot of bad paper in their porfolios are going to see the credit spreads widen out, and they’re going to end up making money as a result,” Greenbaum said. “The situation has created a buying opportunity, and we’re already seeing the reaction in the price of financial stocks, such as banks and insurance.”

Greenbaum adds that the subprime loan problem is a bit of toxicity that has entered the food chain. He says that although the toxicity is widespread and expansive at this point, the market is built to absorb a …

Okay, you have to admit, I called that one.

In our last blog, I pointed out that a tight money supply could prevent companies, especially smaller ones, from getting money to grow their businesses, make new hires, do more research -- that sort of thing. I said that if companies couldn't get access to money, the economy would suffer. The Federal Reserve had to act (okay, I didn't mention the Fed specifically, but calling Batman wasn't going to help).

So what's the big deal with a tight money supple? Imagine you're a small web design firm looking to roll out a new service or product. You go to a lender to get a line of credit only to have the teller window slammed down on your fingers.

So, yes, lending decisons have a ripple effect that goes way beyond some poor guy who can't pay his mortgage.

But with lenders still smarting over the hammering they've taken in the mortgage market, banks and other lenders were reluctant to lend money to anyone.

Enter the Federal Reserve Board, which cut its key discount rate by 0.5 percentage points on Friday. In plain English, that means the rate the Fed loans money to lenders just got cheaper. That should alleviate some concerns on the part of lenders to lend money. It won't cost as much for them to do so, which is always a good thing in business.

So that small web design firm now has …

August 9, 2007 was a tough day on Wall Street, with stocks falling 400 points on increased credit concerns over the struggling mortgage lending market. On the same day insurance giant AIG released a report showing that borrowers in the category just above sub-prime were showing increased residential mortgage delinquencies.

AIG is a good position to know. The company is the world's largest insurance company and would have its hands full if lenders can't collect from borrowers. It's also one of the largest mortgage lenders in the world. The company says that more than 10% of its sub-prime mortgages were 60 days overdue, while 4.6% in the category just above sub-prime were late during the second quarter.

In addition, total delinquencies in AIG’s $25.9 billion mortgage insurance portfolio clocked in at 2.5%.

Given that bit of disturbing news, can the credit crunch spill over into the technology industry? As I pointed out yeserday, sure . . . but maybe not as badly as the national media would have you think.

With the money supply tightened, some companies, especially younger, less cash-rich technology companies, will find it more difficult to raise the capital they need to work on new products, develop new markets, and keep hiring good, smart people. But most companies know enough to hunker down at times likes this and ride out the credit slide.

Also, if stocks continue to slide shareholders in technology firms may decide to cut their losses and sell their …

Only a few weeks ago, things were rosy on Wall Street . . . well, as rosy as things can get in the money maelstrom of Manhattan.

The Dow Jones Industrial Index (DJIA) -- the chief benchmark for the U.S. stock market -- had surpassed the magic 14,000 mark. Most companies, including technology companies, were reporting solid quarterly gains.

According to the Business Week Global Information Technology Index, IT stocks were up over 6.9% in 2007. Computer & Peripherals (14.4%) and Seminconductors (9.5%) were doing even better.

So why are tech company CFO's acting crankier than Lindsey Lohan over last call? The answer can be found in the credit markets, where poor lending decisions in the sub-prime mortgage market have spilled over into the broader lending markets, with the ensuing credit crisis taking the stock market down with it.

With banks and other lenders licking their wounds over bad loans and loads of lost income, their reaction is a natural one: turn off the money spigots. Not just to the average home-mortgage customer, but to everybody. I'll have more on the mechanics of that process in my next blog, but the takeaway for technology companies is that it's become much more difficult to raise the capital they need to grow their businesses. You know, for operating expenses like new hires, new equipment, new advertising and marketing campaigns. With most lenders going from a flashing yellow light to a flashing red light in recent weeks, credit has …