Tech Stock News And Analysis

Tech Stock News and Analysis

Tuesday, October 31, 2006

Nuance Communications Inc. (NUAN), a
speech and imaging solutions provider, on Tuesday raised its
outlook for the fiscal fourth quarter ended Sept. 30.

The company expects a loss of 1 cent to 2 cents a share on

revenue of $126 million to $128 million for the quarter.
Excluding special items, its estimate is for earnings of 13
cents to 14 cents a share.

In August, it had forecast a loss of 3 cents a share on
revenues of $116 million to $120 million. Including items, its
estimate was for earnings of 11 cents to 12 cents a share.

Saturday, October 28, 2006

WebMethods Inc. will delay the release of its third-quarter earnings report until Nov. 2, the company said Wednesday.

The Fairfax, Va.-based software company said it rescheduled this quarter's earnings statement in order to take into account the acquisition of Infravio and Cerebra, which were completed during the second quarter of this year.

Earlier this month, webMethods released preliminary results, which did not include results from the purchases. The company said it expects results to reflect the preliminary report.

Shares of webMethods dropped 3 cents to close at $7.39 on the Nasdaq.

Thursday, October 26, 2006

Microsoft Corp. (NASDAQ MSFT) posted a rise in quarterly net profit on Thursday, boosted by a strong performance at its database software division.

The world's largest software maker reported a net profit of $3.48 billion, or 35 cents per diluted share, in its fiscal first quarter ended September 30 versus a profit of $3.14 billion, or 29 cents per diluted share, in the year-ago period. Sales rose 11 percent to $10.8 billion in the quarter.

Analysts, on average, had forecast Microsoft to report earnings per share of 31 cents on revenue of $10.7 billion, according to Reuters Estimates.

Microsoft posted sales and profit growth at its server and tools business, powered by strong sales of its database software platform, SQL Server, and solid demand for its Windows server software.

Shares of Microsoft have risen about 25 percent since June, soaring to a near-two-year high based on investor optimism that much-anticipated upgrades of its Windows operating system and Office software suite will soon pay dividends.

Shares of NetLogic Microsystems Inc., a designer of processors used in networking systems, plummeted in afternoon trading on Thursday after the company posted a 5 percent drop in third-quarter profit, and issued a disappointing fourth-quarter outlook.

For the quarter ended Sept. 30, the company on Wednesday reported a profit of $3.4 million, or 16 cents per share, down from $3.6 million, or 19 cents per share, last year, even as revenue climbed up 3 percent to $26.6 million.

Jeffries & Co. analyst Adam Benjamin, who has a "Buy" rating on the stock, cut his 2007 earnings estimate to $1.01 per share, from $1.46 per share, and lowered revenue guidance for the year to $102 million from $131 million. Analysts currently expect the company, on average, to post 2007 earnings of $1.47 per share on $129.5 million in sales.

Caris & Co. analyst Nicholas Aberle, cut his rating on the stock to "Above Average" from "Buy" and said an inventory correction, as well as the delayed release of a new product, may weigh on the company over the near-term.

"(A) U.S. inventory correction and fading Asia demand (may) materially impact fourth-quarter results," Aberle wrote in a note to investors. "NetLogic provided December quarter guidance which was much softer than expected, with revenues expected to fall roughly 13 percent quarter-over-quarter to $23 million, thereby driving earnings per share down to 24 cents per share."

Analysts polled by Thomson Financial expect the company to post, on average, earnings of 35 cents per share on $28.2 million in sales.

Shares of NetLogic, which have traded between $18.69 and $45.03 over the last year, were down $5.37, or 22 percent, at $19.11 in afternoon trading. Earlier in the session shares set a new 52-week low of $18.66 on the Nasdaq.

Oracle Corp. Chief Executive Larry Ellison is shaking up the software industry again, only this time a takeover bid isn't involved -- yet.

Ellison posed a challenge to Linux software leader Red Hat Inc. late Wednesday by announcing that Oracle would begin offering maintenance services for Red Hat products -- and charge less for that than Red Hat does. Red Hat shares were crushed by the news.

Redwood Shores-based Oracle expects to offer discounts of at least 50 percent. The threat wiped out more than one-quarter of Red Hat's market value -- nearly $1 billion -- amid Thursday's deepening investor worries about the much smaller company's ability to withstand the challenge.

The assault on Red Hat continues Ellison's aggressive efforts to build upon the market clout that Oracle already amassed as the world's second-largest software vendor behind Microsoft Corp.

Oracle has spent about $20 billion snapping up other business software makers during the past two years, sometimes refusing to take no for an answer. In the biggest deal of the lot, Oracle launched a hostile bid for PeopleSoft Inc. that took 18 months to complete.

If Red Hat's stock continues to falter, the company could become increasingly vulnerable to a takeover. Oracle executives refused Wednesday to say if they might be interested in buying Red Hat.

"I don't think this will kill Red Hat," Ellison said Wednesday in response to a question from a packed audience attending the biggest convention in Oracle's 29-year history. "This is capitalism. We are competing."

Global Equities Research analyst Trip Chowdhry believes Red Hat might turn into a prime takeover target, but predicted IBM Corp. is more likely to be the buyer than Oracle.

Investors are convinced Oracle's attack will hurt Raleigh, N.C.-based Red Hat.

The company's stock plunged $5.05, or 25.9 percent, to $14.46 during Thursday morning trading on the Nasdaq Stock Market, where Oracle's shares fell 6 cents to $18.56.

Red Hat Chairman Matthew Szulik downplayed the threat to his company, hailing Oracle's move as a positive development for Linux -- an alternative to the dominant Windows operating system that fuels Microsoft's profits.

"There are always concerns, but keep in mind that Oracle ... acknowledged that Red Hat is the technical leader in the market," Szulik said. "We still have a rich product pipeline. We will compete."

Chowdhry thinks Wall Street's concerns about Red Hat are justified. He predicted Oracle's move will trim Red Hat's revenue by about $40 million to $50 million annually. Red Hat's revenue in its last fiscal year totaled $278 million -- a fraction of Oracle's $14.4 billion in revenue.

"Oracle has outsmarted Red Hat," Chowdhry said.

Oracle's challenge comes just a few months after Red Hat trumped Oracle by buying open-source software maker JBoss Inc. for $350 million.

Red Hat's handling of the JBoss deal was just one of several factors that irritated Oracle, Chowdhry said. He believes Red Hat made a crucial mistake by bragging that its Linux products would turn software into a commodity, prompting Ellison to attempt to counterattack.

Ellison said he is more interested in accelerating the open-source movement than crushing Red Hat.

Because much of Oracle's propriety software is designed to run on the Linux operating system, Ellison believes the company will make more money if more major corporate customers embrace open-source software.

Oracle's push into Red Hat's market won't affect financial results for at least the next few quarters, Chief Financial Officer Safra Catz told analysts during a Thursday meeting.

But Ellison's cutthroat tactics could position Oracle to hire away Red Hat's top talent since those workers are more likely to be worrying about their job security, said software industry consultant Joshua Greenbaum.

"Larry plays a hardball game," said Greenbaum, who runs Enterprise Applications Consulting. "This shows he hasn't lost his touch for savvy moves or drama."

Ellison's flair has paying off recently as both Oracle's profits and stock price have been climbing.

Oracle's market value has increased by $34 billion this year, a gain of more than 50 percent that has increased Ellison's net worth by about $8 billion.

Wednesday, October 25, 2006

QLogic Corp., a maker of network switches and adapters, said Tuesday its fiscal second-quarter profit fell despite higher sales.

For the quarter ended Oct. 1, the company earned $30.4 million, or 19 cents per share, down 29 percent from $43 million, or 24 cents per share, during the same period a year ago.

Excluding stock options costs, the amortization of intangible assets and acquisition costs, the company earned $38.3 million, or 24 cents per share, from continuing operations in the most recent quarter. Income from continuing operations totaled $30.5 million, or 17 cents per share, in the year-ago period.

Revenue rose 22 percent to $145.3 million from last year's $119 million.

Analysts, on average, were looking for earnings of 22 cents per share on sales of $141.2 million, according to a Thomson Financial poll.

QLogic said revenue from its storage area network infrastructure products helped boost the quarter's results.

Shares slipped 6 cents to $19.17 in after-hours trading, after losing 10 cents to end at $19.23 on the Nasdaq.

Digital Angel Corp shares soared 41% to $3.53 in Wednesday morning trade after the South St. Paul, Minn.-based company said the U.S. Patent and Trademark Office has granted it a patent for its syringe-implantable glucose-sensing RFID microchip. The microchip measures the glucose concentration levels of diabetic patients, the company said. Digital Angel said its sister company, VeriChip, will market and distribute the product. Shares of Applied Digital Inc.(ADSX), the majority owner of Digital Angel, jumped more than 50% on the news.

Tuesday, October 24, 2006

Web travel-search company Travelzoo Inc. said Tuesday its third-quarter profit almost doubled on continued growth in online advertising.

The profit results beat Wall Street's estimates, but sales growth fell short of analysts' projections. Shares surged $6.60, or 20 percent, to $39 in morning trading on the Nasdaq, where they've traded between $16.50 and $52.99 over the past year.

Net income grew to $4.6 million, or 28 cents per share, from $2.3 million, or 13 cents per share, in the prior-year period. The results topped Wall Street's expectations of 24 cents per share, according to an analyst poll by Thomson Financial.

Revenue rose to $17.6 million in the quarter, up from $13.4 million in the year-ago period. Analysts, on average, had expected $18.2 million.

Travelzoo reported quarterly revenue growth at both its North American and European units. Also aiding the bottom line, Travelzoo said its effective income tax rate for the quarter was 46 percent, down from 48 percent in the year-ago period.

Monday, October 23, 2006

Texas Instruments Inc., which makes chips for mobile phones, said Monday that profit rose slightly in the third quarter, but it warned that orders declined and fourth-quarter semiconductor growth will be below the seasonal average.

Texas Instruments said it earned $702 million, or 46 cents per share, in the July-September period compared to $631 million, or 38 cents per share, a year earlier.

Profit from continuing operations were 45 cents per share.

Analysts had expected TI to earn 45 cents per share, according to a survey by Thomson Financial. Last month, TI predicted operating profit would be 44 to 46 cents per share.

Revenue rose 13 percent to $3.76 billion from $3.34 billion a year ago, slightly below analysts' forecast of $3.80 billion.

The company expects fourth-quarter earnings of 40 to 46 cents per share on sales of $3.46 billion to $3.75 billion. Analysts were expecting profit of 45 cents per share on higher revenue -- $3.81 billion.

Chief Executive Richard Templeton said the third quarter was one of the best in the company's history, but he also warned about a 12 percent decline in orders.

Templeton said TI believes that customers -- manufacturers that use TI chips in their products -- have built up their inventories and are running leaner, and that the wireless market will tilt toward low-priced cell phones.

The shift toward lower-end phones means a decline in the average value of the TI components in handsets, said Ron Slaymaker, TI's vice president of investor relations.

"We don't hear our customers talk about any broad turndown in consumption, it's just the mix in wireless," Slaymaker said.

Slaymaker said the company believes the order decline "is near term." But the slowdown is occurring in the traditionally strong fourth quarter, and the first quarter is usually weaker.

To deal with the slowdown in orders, TI has slowed new hiring and reduced travel and other discretionary spending, Slaymaker said.

In trading before financial results were announced, TI shares rose 51 cents or 1.6 percent, to $31.88 on the New York Stock Exchange. In after-hours trading, the shares were down 58 cents or 1.8 percent, to $31.30.

Mobile phone chip maker Texas Instruments Inc. reports third-quarter earnings on Monday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Analysts are betting that solid sales of mobile phones will help Texas Instruments deliver a strong third quarter, but concern has cropped up that the company could be in for a soft fourth quarter.

Cell phone maker Nokia Corp., which is one of Texas Instrument's largest customers, said on Thursday sales of low-priced handsets ate away at third-quarter margins.

The company also said that although it expects the value of the global mobile market to grow, it believes the average selling price of mobile phones will continue to decline.

BY THE NUMBERS: Analysts polled by Thomson Financial expect the company to report, on average, earnings of 45 cents per share on $3.8 billion in revenue.

The company narrowed its third-quarter outlook in September, when it said it expects a quarterly profit between 44 cents and 46 cents per share from continuing operations, compared with previous guidance of 42 cents to 48 cents.

TI also narrowed its revenue forecast to between $3.71 billion and $3.87 billion, sharpened from a previous forecast for $3.63 billion to $3.95 billion.

ANALYST TAKE: UBS analyst Uche Orji, who has a "Buy" rating on the stock, wrote in a client note that although the company may be able to grow both market share and gross margins over 2007, in the near-term, he thinks an inventory correction and a transition to low-end handset sales could put the company in a pinch.

Deutsche Bank analyst Ross Seymore, who has a "Buy" rating on the stock, thinks Texas Instruments will meet the Street's estimates, but is predicting weak fourth-quarter guidance.

"The company will likely not be immune to recent softness in analog sales, and comments from Nokia about soft 3G market in Europe could offset gains from new entry-level products," said Seymore, in a note to clients. "While fourth-quarter guidance may be cautious, we believe Texas Instrument's valuation remains attractive."

STOCK PERFORMANCE: Shares of Texas Instruments tumbled at the start of the quarter and hit a 52-week low of $26.77 on July 21, then shot up more than 25 percent in the following weeks to reach $33.89 on Sept. 28. The final trading day of the period, shares gave up nearly 2 percent of that gain, to end at $33.25.

The stock closed Friday at $31.37 on the New York Stock Exchange.

Friday, October 20, 2006

Shares of SanDisk Corp. plummeted Friday after the flash memory maker posted better than expected third-quarter results but forecast a continued decline in flash memory prices.

The stock, which has traded between $37.34 and $79.80 over the last 52-weeks, was down $12.09, or 19.6 percent, at $49.64 in afternoon trading on the Nasdaq on quadruple its average trading volume.

On Thursday Sandisk posted a 4 percent decline in third-quarter profit but topped analysts' expectations.

However, the company said third-quarter average selling prices per megabyte of flash memory fell 25 percent sequentially, with expectations for fourth-quarter prices to drop 15 to 20 percent sequentially.

Citigroup analyst Craig Ellis cut his rating on the stock to "Hold" from "Buy" and said SanDisk is no longer a "new money idea."

"We are now incrementally more cautious in our SanDisk modeling, the company's near-term catalyst profile, and in longer-term share appreciation potential," he wrote in a note to clients. "Given these considerations, we can no longer argue for new money to be put to work in the name."

Other analysts were not as bearish on SanDisk's results.

In a client note, UBS's Alex Gauna wrote that results "were slightly shy of UBS expectations but exceeded consensus estimates on much better than expected bit growth and higher royalty and licensing revenue." He added that, "We were quite surprised by the magnitude of initial adverse reaction to SanDisk results."

W.R. Hambrecht analyst Daniel Amir said the company had a good quarter and speculated that investors may have been disappointed because SanDisk did not meet "whisper" numbers for the quarter.

"We view any sell-off in the stock today as a buying opportunity for investors," Amir wrote in a note to clients.

Thursday, October 19, 2006

Google profit jumps, gross revenue up 70 percent

- Google Inc. said on Thursday quarterly profit rose 92 percent as the company tightened its grip on the Web search market.

Net income for the third quarter grew to $733.4 million, or $2.36 per diluted share, compared with the year-earlier quarter's $381.2 million, or $1.32 per share.

Gross revenue rose 70 percent to $2.69. Excluding traffic acquisition costs of $825 million, the financial cut which affiliated Web sites receive for featuring Google advertising, revenue rose to $1.87 billion.

Analysts had been looking for a net profit, on average, of $2.13 per share, according to Reuters Estimates. Excluding stock-based compensation and amortization, the consensus forecast was for a profit of $760.1 million, or $2.41 a share.

Wall Street analysts on average had projected revenue, excluding what Google pays to Web site affiliates, to rise 66 percent from the year earlier to $2.62 billion, according to Reuters Estimates. Forecasts ranged between $2.48 billion and $2.76 billion.

Wednesday, October 18, 2006

EBay Beats Wall Street's Expectations As Third-Quarter Profit Increases 10 Percent

EBay Inc. reported Wednesday that third-quarter profit increased 10 percent from the same period last year, beating Wall Street's moderate expectations and encouraging executives to raise earnings forecasts for the full year.

The San Jose-based online auction company earned $280.9 million, or 20 cents per share, for the three months ended Sept. 30, compared to $254.97 million, or 18 cents per share in the year-ago period.

Revenue for the third quarter totaled $1.45 billion, up 31 percent from last year's $1.11 billion and at the high end of what Wall Street traders had expected.

Excluding charges unrelated to ongoing operations, eBay earned $367.41 million, or 26 cents per share, up nearly 24 percent from the same quarter last year, when eBay earned $280.16 million, or 20 cents per share.

On that basis, which doesn't comply with generally accepted accounting principles, eBay was expected to earn $342.4 million, or 24 cents per share, on sales of $1.43 billion, according to analysts polled by Thomson Financial.

Excluding one-time costs, the company expects a profit of 27 cents to 28 cents per share in the fourth quarter -- traditionally the company's strongest, thanks to holiday shoppers -- on revenue in the range of $1.62 billion to $1.68 billion.

For all of 2006, the company expects to earn $1.01 to $1.02 per share on revenue in the range of $5.87 billion to $5.93 billion.

That's slightly more bullish than eBay executives were at the end of the second quarter. In July, the company said it would likely earn 98 cents to $1.01 per share in 2006 on revenue in the range of $5.7 billion to $5.9 billion.

EBay shares closed Wednesday at $28.50, down 28 cents, or nearly 1 percent, before the earnings report was released. The stock has traded in a 52-week range between $22.83 and $47.86.

Information storage company Datalink Corp. on Wednesday said earnings for the third quarter rose from a year ago as the company doubled the number of large businesses it serves.

Net income rose to $1.3 million, or 11 cents per share, from $295,000, or 3 cents per share, a year ago.

Revenue increased to $33.2 million from $31.2 million, with service revenue hitting a quarterly high of just over $11 million.

Datalink said the number of large businesses it counts as customers rose to 15 in the latest quarter from 8 a year ago. Those companies each generated more than $500,000 in revenue, with one accounting for 13 percent of overall revenue in the quarter. The company's customers include food processor Tyson Foods, wireless telecom Cingular and finance company GMAC Residential.

The company said it expects earnings for the fourth quarter to range from 11 cents to 16 cents per share, with revenue coming in between $36 million and $40 million.

Tuesday, October 17, 2006

Google Inc. reports earnings for the fiscal third quarter on Thursday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: The Mountain View, Calif.-based company remained head and shoulders above its nearest competitor for U.S. search queries. In August, Google captured 44.1 percent of searches, while the No. 2 player, Yahoo Inc., trailed with 28.7 percent, according to data from comScore qSearch.

August was a busy month for deals.

The company inked an agreement to provide search for News Corp.'s Fox Interactive Media Web sites, which include the popular social hangout, MySpace.com. Google will send at least $900 million in advertising revenue to the media conglomerate over three years in exchange for the right to sell advertising on the sites.

Google signed on to provide text advertising on eBay sites outside the U.S., and joined forces with eBay and its Skype Voice over Internet Protocol technology to develop click-to-call advertising.

The search leader also signed a distribution deal with Viacom Inc. to distribute MTV Networks video clips over its advertiser network, as well as to sell some for $1.99 on Google Video.

BY THE NUMBERS: Google doesn't issue regular guidance, but analysts polled by Thomson Financial expect earnings of $2.42 per share on $1.81 billion in revenue.

ANALYST TAKE: In an Oct. 8 note to investors, Citigroup analyst Mark Mahaney wrote that Yahoo Inc.'s announcement that weakness in automotive and financial services advertising would weigh down third-quarter results was "the biggest intra-quarter development for Google."

The analyst wrote, "Our call is that Google has most likely been insulated from this weakness," as it has fewer sites devoted to those areas than Yahoo. Manahey also noted that Google relies more on search ads and less on display ads, and takes a higher percentage of revenue from international business compared with Yahoo.

Mahaney wrote that he expects Google to post results in line with expectations.

Jeffries analyst Youssef Squali wrote in an Oct. 12 note to investors that he expects Google to post solid third-quarter earnings, driven by incremental market share gains in search. The analyst added that he expects Google to report increased revenue from its own sites and its network of advertisers, for total gross advertising revenue of $2.65 billion.

Lehman Brothers analyst Douglas Anmuth wrote in an Oct. 5 investor note that he expects Google to meet or beat estimates, but that while the company undoubtedly improved in the quarter, it faces tough year-over-year comparisons.

STOCK PERFORMANCE: Shares of Google fell 4.2 percent during the quarter, ending September at $401.90 on the Nasdaq. In the past 52 weeks, the company's stock has traded between $294.56 and $475.11.

IBM Handily Tops 3Q Forecasts With 5 Percent Revenue Growth; Profit Jumps 50 Percent

International Business Machines Corp. handily topped Wall Street forecasts for the third quarter, with revenue growing 5 percent as strong sales of software and hardware helped offset more weak growth in the key computer services business.

The quarter's net profit of $2.22 billion marked a 50 percent improvement from a year ago, thanks largely to a lower tax bill.

Net income for the three months ended Sept. 30 amounted to $1.45 per share. In the same period last year, IBM earned $1.52 billion, or 94 cents a share, as the company absorbed a $525 million tax expense on foreign earnings that were repatriated to the United States.

Wall Street analysts expected a per share profit of $1.35, according to a survey by Thomson Financial.

IBM's share price surged 5.5 percent to a 52-week high following the report, rising $4.78 to $91.78 in after-hours trading. The stock had risen 24 cents to $86.95 on the New York Stock Exchange in advance of the report, which came after the close of Tuesday's regular session.

Third-quarter revenue totaled $22.62 billion, up from $21.53 billion a year earlier. Global services accounted for $12.02 billion of the tally, an increase of just 2.7 percent. Hardware sales improved 8.9 percent to $5.58 billion, while software revenue rose 8.5 percent to $4.41 billion.

Despite the better-than-expected showing, analysts peppered the company's chief financial officer with questions about another disappointing performance for the services business, which accounts for more than half of IBM's revenue.

Profit margins from the services business improved to 27.8 percent from 26.1 percent in the year-ago period. But adding to the concerns voiced by analysts, IBM reported that the unit had signed $10.5 billion in new contracts, down 29 percent from the year-ago period and the second straight disappointing quarter for that indicator of future revenues.

The tally marked an improvement from this year's second quarter, when there were $9.6 billion in new contracts, but CFO Mark Loughridge acknowledged that a number of major deals expected to be finalized by the end of September "slipped out of the quarter."

"We fully expected to grow our signings more. We just didn't get the deals closed," CFO Mark Loughridge said in a conference call after the report, noting that the current quarter's signings should benefit from the delay.

"I want to point out that although revenue growth for services was not at our objective, it was an improvement from the second quarter to the third quarter," he said. "We need to continue that momentum."

Software "was our largest profit contributor," Loughridge said. "We've been investing heavily in our software business for some time. Our performance in 2006 underscores that this strategy is working."

IBM said its gross profit margin improved a notch to 42 percent, up from 40.6 percent in last year's third quarter.

In the first nine months of 2006, IBM earned $5.95 billion, or $3.81 per share. In the same period last year, earnings totaled $4.75 billion, or $2.90 per share, a number that also reflects the big tax expense. Revenue so far in 2006 has totaled $66.71 billion. That's down 2.3 percent from $66.71 billion in the year-ago period, which included sales from the personal computer business that was sold to China's Lenovo Group Ltd.

Yahoo Inc.'s third-quarter profit slid 38 percent amid slowing revenue growth that has raised investor doubts about the Internet bellwether's strategy and execution.The Sunnyvale-based company said Tuesday that it earned $158.5 million, or 11 cents per share, for the three months ended in September. That compared with net income of $253.8 million, or 17 cents per share, in the same period last year.

The results matched analyst expectations, according to Thomson Financial.

The quarters weren't totally comparable because of new accounting rules requiring Yahoo to deduct the cost of employee stock options from this year's profit.

Revenue for this year's quarter totaled $1.58 billion, a 19 percent increase from $1.33 billion last year.

After subtracting commissions Yahoo paid its advertising partners, the third-quarter revenue fell to $1.12 billion. That figure missed analyst expectations that had been lowered by Yahoo management a month ago.

"While we are tremendously excited about many things happening at Yahoo, we are not satisfied with our third quarter financial performance," Yahoo Chairman Terry Semel.

Investors have been disappointed with Yahoo for most of this year, largely because the company hasn't been targeting online ads as effectively as Google Inc., the Internet search leader that runs the Web's largest marketing network.

Although it continues to run the most trafficked Web site on the Internet, Yahoo is facing a stiffer challenge from recent upstarts like MySpace.com, Facebook.com and YouTube.com, which Google is in the process of buying for $1.65 billion.

The problems have battered Yahoo's stock price, which has dropped by 38 percent this year. Yahoo shares dipped 3 cents Tuesday to close at $25.15 on the Nasdaq Stock Market, then regained 45 cents, or 2 percent, in extended trading.

Motorola 3Q Profits Drop 45 Percent on Lower-Than-Expected Sales

Motorola Inc., the world's second-largest cell-phone maker behind Finland's Nokia Corp., reported a 45 percent decline in third-quarter profit Tuesday on revenue that came in well below analysts' expectations.

The earnings met Wall Street's estimates, but sales of the company's hot-selling Razr phones left total revenue still nearly half a billion dollars lower than forecast.

Earnings for the July-through-September period were $968 million, or 39 cents a share, down from $1.75 billion, or 69 cents a share, a year earlier.

Excluding certain items, the Schaumburg, Ill.-based company said operating earnings were 34 cents per share, matching the consensus estimate of analysts surveyed by Thomson Financial.

Revenue was $10.6 billion, up 17 percent from $9.05 billion a year ago but well under the consensus estimate of $11.07 billion.

Shares in Motorola closed down 64 cents, or 2.5 percent, at $24.85 on the New York Stock Exchange before the report was released. They touched a six-year high of $26.30 last Friday.

Intel Corp. (NASDAQ:INTC) on Tuesday posted a third-quarter profit that fell by more than a third from a year earlier, as the world's biggest chipmaker felt the impact of price cuts and an inventory write-off.

Intel, which supplies the vast majority of chips that power personal computers, had a net profit of $1.3 billion, or 22 cents per share, compared to $2 billion, or 34 cents per share, a year earlier.

The company had been expected to show a profit, excluding special items, of $1.02 billion, or 17 cents per share, according to the average analyst forecast on Reuters Estimates. On that basis, Intel said it earned $1.5 billion, or 27 cents per share.

Intel has been struggling to restart profit growth by rolling out new products aimed at regaining market share lost to rival Advanced Micro Devices Inc. (NYSE:AMD), and by cutting costs through layoffs and the sale of money-losing businesses.

Intel shares have risen nearly 12 percent since the start of its third quarter in early July, but are still about 20 percent below a year-high touched early last December. AMD has risen 3 percent since early July and is down about 40 percent from its 52-week high hit in March.

Troubled Sony said Tuesday it may lower its annual earnings forecast at a time when the Japanese electronics and entertainment company has been hit with extra costs for a massive battery recall.

Tokyo-based Sony Corp. has also slashed the price in Japan for the PlayStation 3, even before it arrives in stores. The game console is set to go on sale here and in the U.S. in November.

Sony said in a statement it's looking into various factors to possibly lower its earnings projection. It said a decision has not yet been made, but it will disclose any revision quickly.

The battery and PlayStation woes are the latest troubles battering Sony. The company has been tackling a turnaround after getting beaten by rivals on key consumer electronics products such as digital music players and flat-panel TVs.

Sony previously said it expects operating profit of 130 billion yen ($1 billion) for the fiscal year ending March 2007, down 43 percent from the previous fiscal year. It expects net profit at the same level, 130 billion yen, which would be up 5 percent from fiscal 2005.

Nihon Keizai Shimbun, Japan's top business daily, reported Tuesday the Sony board will meet soon to make a decision on a forecast revision. Sony declined comment on the report.

Nearly 8 million Sony lithium-ion batteries were recalled in recent weeks by practically every major laptop maker in the world, including Dell Inc. and Apple Computer Inc.

Sony initially said the battery recalls will cost the company between 20 billion yen ($168 million) and 30 billion yen ($252 million).

That cost may rise as more companies have recalled laptop batteries, including Japanese makers. Sony said it will probably include its own Vaio laptops in the recall.

Japanese laptop-makers, including Toshiba Corp. and Hitachi Ltd., said earlier this week they may demand compensation from Sony.

Web portal business Yahoo Inc. said Tuesday it agreed to acquire AdInterax, which helps companies make and manage online advertising that incorporates animation and video, for an undisclosed amount.

Yahoo said buying the Troy, N.Y.-based company will help it provide rich media advertising creation and campaign management tools to marketers.

Fysix Corp., doing business as AdInterax, developed tools for building floating animations, expandable banners and streaming video. The technology also offers tracking and reporting capabilities.

Shares of Yahoo fell 23 cents to $23.95 in morning trading on the Nasdaq.

Monday, October 16, 2006

Asyst Technologies Inc stock rose more than 9 percent Monday in the wake of its first-quarter earnings report that shows a narrowed first-quarter loss.

Shares closed at $8.71, up 75 cents, in Fremont-based Asyst (NASDAQ:ASYT), which makes equipment used to transport semiconductor wafers in the manufacturing process.

The company Friday reported a loss of about $500,000, or a penny a share, compared with a loss of $3.7 million, or 8 cents a share last year.

The quarter's financials include $1.8 million in restructuring charges, $3.2 million in amortization expenses and $1.4 million in stock-based compensation expenses.

Excluding expenses, Asyst would have reported income or $4.5 million, or 9 cents a share, up from a loss of $879,000, or 2 cents a share, in the year-ago period.

Revenue was down slightly, to $117 million from $117.5 million last year.

Analysts polled by Thomson First Call expected the company to post, on average, earnings of 8 cents a share on $116.1 million in sales.

Looking forward, Asyst forecast sales of $120 million for the second quarter, and from $125 million to $135 million for the third quarter. Net income for the second quarter is expected to be from $1 million to $2 million, or 2 cents to 4 cents a share.

Asyst expects to release full second-quarter results on Nov. 9.

Shares of SumTotal Sink After Company Announces Expectations of 3rd-Quarter Loss

Shares of SumTotal Systems Inc., a software maker focusing on learning and business performance, plunged Monday after the company cut its guidance and said it expects to post a loss for the third-quarter.

In morning trading, SumTotal shares were down $1.03, or 13.7 percent, to $6.45 on the Nasdaq, after dropping as low as $5.91 earlier in the day. Over the past year, SumTotal shares have traded between $3.96 and $7.77.

SumTotal said it expects to post a loss of $2.6 million to $2.8 million, or 10 or 11 cents per share, on revenue of $26.8 million to $27 million.

Adjusted for non-cash accounting adjustments and one-time charges, SumTotal expects to post a profit of $900,000 to $1.1 million, or 3 cents to 4 cents per share, on revenue of $27.3 million to $27.5 million.

Analysts polled by Thomson Financial expect a profit of 9 cents per share, excluding $2.2 million in amortization of intangibles and $1.2 million in stock-based compensation, on $26.9 million in revenue.

The company had said in August it expected to post a loss of $900,000 to $1.9 million, or 4 to 8 cents per share, on revenue of $25.5 million to $27.5 million. On an adjusted basis, it called for a profit of $2 million to $3 million, or 8 cents to 12 cents per share, on $26 million to $28 million in revenue.

Company officials blamed higher than expected costs, mainly in its services business, for the loss.

Carlyle part of $1.3 billion acquisition of Open Solutions

The Carlyle Group and Providence Equity Partners have agreed to pay $1.3 billion to acquire software maker Open Solutions.

News of the pending acquisition sent stock in Glastonbury, Conn.-based Open Solutions up as much as 23 percent in Monday trading.

District-based Caryle and Providence, R.I.-based Providence will pay $38 per share for Open Solutions, a 25 percent premium over its Friday close, and 32 percent more than its average stock price over the last 30 days.

Open Solutions (NASDAQ: OPEN), founded in 1992, makes software for Internet Banking and e-commerce.

Last week Carlyle, Blackstone Group and Texas Pacific announced an acquisition in which the three buyout firms agreed to pay $17.6 billion for Freescale Semiconductor, one of nearly three dozen acquisitions Carlyle has announced this year.

Friday, October 13, 2006

Shares of Acme Packet Inc. (APKT), which makes computer networking equipment, rose as much as 70 percent in their market debut on Friday, the day after they priced above a forecast range.

The stock was up $5.51, or 58 percent, at $15.01 in morning Nasdaq trade after rising as high as $16.19 earlier in the session. It opened at $14.

The 11.47-million-share offering raised $109 million on Thursday after pricing at $9.50 a share, compared with an $8 to $9 forecast.

The range was upgraded earlier Thursday from an initial $6.50 to $7.50 per share forecast.

The pricing gave the company a market capitalization of $538.7 million.

In September, shares of computer networking company Riverbed Technology Inc. rose 57 percent in its market debut after pricing above a forecast range. That stock was down 39 cents, or 2.1 percent, at $18.45 on Friday -- but still about 90 percent above the offering price.

Acme Packet creates products to deliver secure communications across Internet network borders, according to the filing with the U.S. Securities and Exchange Commission.

The Burlington, Massachusetts-based company plans to use net proceeds from the offering for working capital and other general corporate purposes, which may include financing growth, developing new products, capital expenditures, acquisitions and investments, according to an amended filing with the SEC.

Goldman Sachs & Co., Credit Suisse, JPMorgan and ThinkEquity Partners LLC are underwriting the IPO.

Thursday, October 12, 2006

Simclar (SIMC) , a contract electronics manufacturer, was surging 44% Thursday after the company said a review of its financials found that errors in its accounting were limited to its unit in Mexico.

Additionally, Simclar said revenue for the quarter ended June 30 was $30.5 million and earnings were $790,000, or 12 cents a share. Shares of Simclar were gaining $2.25 to $7.34 in premarket trading.

Because of the accounting mistakes, Simclar will restate its financials for 2005 and the quarter ended March 31. Last year's earnings will be revised down to 15 cents a share from 19 cents, and first-quarter net income will decline to 8 cents a share from 11 cents.

"We recognize the seriousness of this matter relative to internal controls and the integrity of our financial statements," said Sam Russell, chairman and chief executive. "However, these errors do not impact our basic business operations and there is no evidence of fraudulent activity on the part of any employee."

The company said an examination of its other business units didn't find any similar errors to those that took place in the Mexico operation.

Wednesday, October 11, 2006

Advanced Micro Devices Inc. (AMD) was upgraded to neutral from reduce at UBS, due primarily to valuation, given the recent pullback in the share price.

The Sunnyvale, Calif. semiconductor maker's stock closed Friday down 4.4% at $24.01, and has 31% in the past 6 months.

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Analyst Thomas Thornhill believes the stock now has "limited downside risk" given the expected completion of the ATI Technologies (ATYT) merger, the potential upsides to market share gains and continued design win momentum.

He has a 12-month price target of $25 on the stock.

Transmeta Announces Patent Infringement Lawsuit Against Intel Corporation

Transmeta Corporation (NASDAQ TMTA), the leader in efficient computing technologies, today announced that it has filed a lawsuit against Intel Corporation in the United States District Court for the District of Delaware for infringement of ten Transmeta U.S. patents covering computer architecture and power efficiency technologies.

The complaint charges that Intel has infringed and is infringing Transmeta's patents by making and selling a variety of microprocessor products including at least Intel's Pentium III, Pentium 4, Pentium M, Core and Core 2 product lines. The complaint requests an injunction against Intel's continuing sales of infringing products as well as monetary damages, including reasonable royalties on infringing products, treble damages and attorneys' fees.

"Transmeta has developed a strong portfolio of intellectual property rights to capture and protect our proud legacy of developing advanced computing and microprocessor technologies," said John O'Hara Horsley, executive vice president and general counsel at Transmeta. "Intel has acknowledged that Transmeta has been an innovative spur to some of Intel's own development efforts, roadmap decisions and new product successes. At the same time, Intel has practiced multiple Transmeta inventions in its major microprocessor product lines. After endeavoring to negotiate with Intel for fair compensation for the continued use of our intellectual property, we have concluded that we must turn to the judicial system to be fairly compensated for our inventions."

"Transmeta's commitment to technological innovation has yielded highly valuable intellectual property. As a part of our business decision last year to increasingly focus on monetizing our IP through technology licensing, we understood that in some cases we might need to pursue enforcement through the courts," said Arthur L. Swift, president and CEO of Transmeta. "We believe that the action we have taken today is an appropriate step to return value to our stockholders from our investments over the past decade."

About Transmeta Corporation

Transmeta Corporation develops and licenses innovative computing, microprocessor and semiconductor technologies and related intellectual property. Founded in 1995, we first became known for designing, developing and selling our highly efficient x86-compatible software-based microprocessors, which deliver a balance of low power consumption, high performance, low cost and small size suited for diverse computing platforms. We now also provide, through strategic alliances and under contract, engineering services that leverage our microprocessor design and development capabilities. In addition to our microprocessor product and services businesses, we also develop and license advanced power management technologies for controlling leakage and increasing power efficiency in semiconductor and computing devices.

Analyst Sees "Exceptionally Strong" 4Q for AMD, Rambus Up on Toshiba Licensing

Semiconductor stocks were on the march Wednesday afternoon, with memory chip interface designer Rambus Inc. among the most actively traded of the bunch, thanks to a licensing agreement with Toshiba.

Both Advanced Micro Devices Inc. and Intel Corp. advanced -- AMD shares rose $1.25, or 5.4 percent, to $24.39 on the New York Stock Exchange, and Intel a more modest 31 cents to $21.20 on the Nasdaq.

ThinkEquity analyst Eric Ross upgraded AMD to "Buy" from "Sell" and lifted his price target to $30 from $20.

"While we still believe AMD may face difficult margins in the third quarter, we have heard from our sources in Asia and Europe that fourth quarter should be exceptionally strong," Ross wrote in a note to clients.

Another mover, PMC-Sierra, saw shares jump 3.9 percent, although the stock was trading at less than half its average volume at $6.15 on the Nasdaq.

"On a percentage basis, it looks like a big move, but all the semi stocks are moving up," said Stifel Nicolaus & Co. analyst Cody Acree. "To some extent, the sector may be bouncing back after a relatively large pullback in the space, or it may be nothing more than investors moving money into technology and out of commodities or energy."

Elsewhere in the sector Broadcom Corp. shares were up 15 cents at $28.95, after an International Trade Commission judge found that Qualcomm Inc. infringed upon one out of three of its disputed patents.

"We believe the companies will eventually reach a settlement in their patent dispute, but an injunction against Qualcomm would likely serve as a catalyst for further negotiations," wrote Deutsche Bank Securities analyst Ross Seymore, in a note to clients.

Qualcomm shares rose 68 cents to $37.75 on the Nasdaq.

Some of the most dramatic gains came for Rambus Inc., which said Wednesday it signed a licensing agreement with Toshiba Corp. Shares added $1.94, or 11.2 percent, at $19.22 on the Nasdaq.

Network equipment maker Adtran Inc. shares got a boost in morning trading on Wednesday after an analyst upgraded the stock on the belief that the company won a lucrative contract with AT&T Inc.
Morgan Keegan analyst Simon Leopold upgraded Adtran to "Outperform" from "Market Perform."

"We believe Adtran has won a new contract with AT&T for optical systems worth $40 million to $50 million (nearly 10 percent of our 2006 sales estimate)," Leopold wrote in a note to clients. "With the AT&T deal, we now see an improved growth outlook and presume that additional customers will sign similar deals improving growth further."

Leopold lifted his 2007 sales estimate to $564 million from $553 million, while analysts polled by Thomson Financial expect the company to report, on average, $556.7 million in revenue.

Shares of Adtran, which have traded between $19.96 and $32.87 over the last year, were up 88 cents, or 3.9 percent, at $23.66 in morning trading on the Nasdaq.

Tuesday, October 10, 2006

For longtime tech-sector observers, it must have been like old times.

Last month, Canadian tech heavyweight Research In Motion Ltd. (TSX:RIM) delivered a blowout quarterly earnings report that sent its stock up about 20 per cent in one session.

The results from the BlackBerry-maker likely got some investors to thinking that maybe it's about time to stash some money in the tech sector again, about six years after a spectacular flameout.

Some analysts are saying that wouldn't be a bad idea, since they believe that the beaten-down sector is due for a resurgence.

"We believe very strongly that we are approaching a multi-year up cycle for tech," said Ben Rogoff of London-based Polar Capital LLP, which manages the Mackenzie Universal World Science and Technology fund.

"We think it starts in the fourth quarter and we think we're talking a three- to five-year investment horizon, where tech stocks significantly outperform the market."

You wouldn't know this from a quick glance at the Toronto stock market's information-technology sector or the tech-intensive Nasdaq in the U.S. Both indexes are pretty much flat for the year to date.

But both indexes have been in the ascendancy lately after hitting lows for the year during the summer.

And Rogoff said an examination of past booms -- in 1969, 1983, the late 1990s -- shows that when the tech sector starts to outperform, it does so "in a very stealthy way."

"If you look at [U.S. brokerage] Piper Jaffray, they had an unweighted tech index. And they follow it for like 20 years. If you had bought tech 61/2 years after the two previous tops, you outperformed the broader market by 30 per cent over the next two years, 50 per cent over the next four years," he said.

Another sign that tech could be in for a serious rebound is the fact that earnings have improved.

"The reality is that the earnings picture is improving and you're seeing earnings estimates finally going up," said Robert Carey, chief investment officer for First Trust Advisors in Lisle, Ill.

"And I think if you take a look at where the earnings from the technology sector are today, versus even a couple of years ago, they have recovered -- in fact, we're looking at a chart right now of earnings from continued operations in the S&P 500 tech companies and they're higher today than they were in 2000."

He also noted that valuations look attractive and that it's not difficult to find companies selling at a price/earnings ratio of 20 times earnings with earnings going up in the 20-per-cent range.

The tech sector includes a wide variety of companies, ranging from the telecom-equipment sector to computer manufacturers and lots in between.

So where does the investor start?

"Nothing in tech is possible without semiconductors doing what they do," said Carey.

"And that is really the foundation of things, and that sector has been out of favour for a while -- but we are starting to see evidence that semis are ramping up and business conditions are improving."

As an example, he cited KLA-Tencor Corp. (NASDAQ:KLAC), which makes automated testing equipment for the chip companies.

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"They had a very strong second-quarter backlog that's building, and as long as they can get the machines out the door, they should have a very substantial increase in earnings in the next 12 months," said Carey.

"Earnings are expected to jump around 50 per cent next year and it's selling at 17 times earnings. It's a mid-cap name and it's a company that does business with all the major chip companies around the world."

Rogoff, on the other hand, says the driver for the resurgence in tech is broadband.

"We see broadband as something more than just your Internet connection," he said.

"We think about broadband as being the ability to access info from any device anytime, and what this is doing is fundamentally changing the software industry, because we're now delivering software via the Internet, the browser."

Some of his favourite names are companies like Salesforce.com (NYSE:CRM), which manages customer information for about 24,800 customers and about 501,000 subscribers.

Rogoff also pointed to WebEx (NASDAQ:WEBX), which is delivering software via web browsers and "turning the software industry on its head."

This isn't to say there aren't Canadian tech success stories -- there are. But the trouble is the Canadian tech sector is so limited.

"With Research in Motion, if you bought it in 2000, everything they said they were going to do, they delivered on and actually beat it, and you haven't lost money," said Gavin Graham, director of investments at Guardian Group of Funds.

"And that's as good as it gets for an overwhelming success story in the tech sector over the last half-decade."

Monday, October 09, 2006

Shares of Powerwave Technologies Inc. tumbled Monday after the wireless communications equipment maker warned of a significant third-quarter sales miss, because of delayed production and shipments.

The Santa Ana, Calif.-based company's shares fell $1.30, or 16.7 percent, to $6.50 in afternoon trading on the New York Stock Exchange, nearing a 52-week low of $6.20.

Powerwave, which makes radio-frequency power amplifiers used in the base stations of cellular and other networks, lowered its revenue guidance to between $155 million and $160 million, from the prior estimate of $200 million to $210 million. The new outlook is well below Wall Street's estimates of $206.2 million, according to Thomson Financial.

The company expects to report third-quarter results Nov. 2 after the market close.

"We believe its credibility took a big hit today given the size and company-specific nature of the miss," wrote Jefferies analyst Bill Choi in a note to investors. Past quarterly misses, he said, have been due to lower-than-expected spending from one large customer, Cingular.

Choi kept a "Hold" rating on Powerwave, but said he planned to update revenue and earnings estimates soon.

The company said it experienced difficulties in starting up a new system in Europe, and saw delays in production transfers from one of its manufacturing facilities.

Choi said weakness from Europe and original equipment customers accounted for about $10 million to $20 million of the revenue shortfall.

"We remain concerned over continued slowdown in overall wireless capital spending heading into 2007," he wrote.

Baird analyst Kenneth Muth said in a note to clients he is advising a "wait-and-see" approach with the company's shares, given Powerwave's internal operating issues and the likelihood of competitive market share loss. But he added that the stock could rise in 2007, as the bar is set low and capital expenditures are "looking better."

Muth kept Powerwave at "Neutral" with a $7 price target.

Friday, October 06, 2006

Report: Google in Talks to Buy YouTube
Google in Talks to Acquire YouTube for $1.6 Billion

Internet search leader Google Inc. is in talks to acquire the popular online video site YouTube Inc. for about $1.6 billion, the Wall Street Journal reported Friday, citing a person familiar with the matter.
Mountain View-based Google and San Mateo-based YouTube are still at a sensitive stage in the discussion, the newspaper reported on its Web site.

The blog TechCrunch had reported on rumors of the acquisition talks. Representatives from Google and YouTube did not immediately return calls to The Associated Press.

Founded in February 2005 by three former employees of eBay Inc.'s PayPal electronic-payment unit, YouTube is surging thanks to the increased availability of high-speed Internet connections and gadgets such as camera phones and digital cameras capable of taking video. Most of YouTube offerings are short amateur clips, although professional filmmakers, television networks and even political campaigns have posted materials.

YouTube users watch more that 100 million videos daily, and the site's market share tops that of similar services offered by Google and other popular Web sites, according to some research firms.

Google's video service lets everyday users post clips, too, and unlike YouTube, Google also gives them the choice of selling video. All YouTube clips are free.

When rumors circulated earlier this year that some major media companies were interested in buying YouTube, the company's chief executive, Chad Hurley, said the company was not for sale and a future initial public offering was possible.

Shares in Google rose $1.36 to $413.17 in midday trading Friday on the Nasdaq Stock Market.

Computer peripherals company Mobility Electronics Inc. said Friday it expects its third-quarter revenue to fall short of Wall Street's estimates, and it warned future programs with two customers are in jeopardy.
The company, which makes docking stations and other connectivity and power products for portable computers and mobile devices, said it expects sales to fall between $24.1 million and $24.3 million.

Analysts, on average, are looking for sales of $26.9 million, according to a poll by Thomson Financial.

Mobility said it saw significantly lower sales to the pharmaceutical field trials industry, and a shortfall of about $1.2 million in sales of universal power adapters for portable computers to Targus, a computer accessories maker.

"While we are disappointed with the shortfall in the connectivity and high-power areas, we had another solid quarter with our low-power products," said Charles Mollo, chief executive, in a statement.

The company also said it "does not expect to generate material, if any, revenue going forward through its relationship with Energizer Holdings Inc."

Mobility added its current deal to supply combination AC/DC power adapters for portable computers to computer maker Dell Inc. will likely end soon after the end of the year. The company said it is looking into other options to maintain a relationship with Dell, either through direct programs or alternative distribution channels.

Wednesday, October 04, 2006

Shares of graphics chips maker Nvidia Corp. shot up in Wednesday trading, after an analyst predicted there could be upside to 2007 estimates.

Friedman Billings Ramsey analyst Chris Caso reiterated an "Outperform" rating on the stock, and lifted his price target to $34 from $32.

"Our checks at Nvidia and ATI Technologies Inc. channel partners suggest that near-term conditions for NVDA remain strong, due to stabilizing personal computer build rates, as well as Nvidia design wins resulting from ATI Technologies roadmap uncertainty," Caso wrote in a note to clients. "We further think chipsets, notebooks, handsets, and PS3 provide enough growth drivers to comfortably meet 2007 estimates, with room for upside."

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In July, chip maker Advanced Micro Devices Inc. announced plans to acquire Nvidia competitor ATI Technologies Inc. in a deal valued at $5.4 billion.

Analysts polled by Thomson Financial expect the company to post, on average, earnings of $1.28 per share for the year on $2.91 billion in sales.

Caso's comments come on the heels of a less optimistic outlook from Pacific Growth Equities analyst Satya Chillara, who cut the company to "Neutral" from "Buy" on Tuesday because of what he believes is softening demand and increasing competition in the fourth quarter.

Shares of Nvidia, which have traded between $15.26 and $31.88 over the last year, rose $1.79, or 6.3 percent, at $30.09 on the Nasdaq.

Shares in TiVo Inc. continued their decline Wednesday after an appellate court granted a stay on an injunction that would have banned EchoStar Communications Corp. from making or selling DVR products in the U.S.

Bear Stearns analyst Kunal Madhukar said uncertainty related to the litigation process is likely to continue for one to two years. He downgraded the stock to "Underperform."

Tuesday's ruling _ the latest in a two-year-old patent dispute between the maker of digital video recorders and the operator of the Dish satellite television network _ postpones a ban issued in September pending an appeal of another court's ruling. That decision found that EchoStar DVRs violate TiVo's patent on its "time warp" software, which controls how viewers can pause and rewind live television shows.

As part of the initial ruling, the court ordered EchoStar to stop making and selling the DVRs and to take back existing models from subscribers, sending TiVo shares surging.

Tivo shares lost nearly 7 percent after the market closed Tuesday. In recent trading on the Nasdaq, TiVo fell 76 cents, or 10 percent, to $6.77. Madhukar said the decline resulted in the stock's giving back gains from when the original ruling was issued.

If TiVo ultimately prevails, EchoStar will likely be forced to license the TiVo software _ otherwise it will have to stop offering DVRs. TiVo already has such a deal with EchoStar competitor DirecTV Group Inc., and similar deals with cable companies such as Cox Communications and Comcast Corp.

But Madhukar thinks the introduction of high definition recorders could hurt TiVo in the short term, particularly as cable companies offer their own versions of standard definition DVRs.

EchoStar shares added 12 cents to $32.19 in recent trading on the Nasdaq.

Japanese electronics maker Fujitsu Ltd. said on Wednesday it would recall 287,000 notebook PC batteries made by Sony Corp., bringing the number of Sony batteries recalled to more than 7.5 million.

Fujitsu last week joined a growing list of computer makers recalling Sony batteries, but did not say at the time how many batteries would be affected.

Besides Fujitsu, Dell Inc., Apple Computer Inc., Lenovo, IBM and Toshiba Corp. have recalled the laptop PC batteries, which Sony has said can short-circuit on rare occasions, overheat and catch fire.

Following the recall announcements in August by Dell and Apple of a total 5.9 million batteries, Sony said the two recalls would cost it between $170 million to $254 million. But a Sony spokesman said after the Fujitsu announcement that total recall costs for Sony are now likely to exceed the previous estimate.

The company will make an announcement as soon as its latest estimate and impact on the company's earnings become clear, he said.

Prior to the Fujitsu announcement, shares of Sony ended down 3.3 percent at a nine-month closing low of 4,450 yen. The Tokyo stock market's electrical machinery index IELEC was down 1.27 percent.

Compounding the blow to Sony's reputation as a top-class manufacturer is a delay in the launch in Europe of its long-awaited new video game console, the PlayStation 3.

Sony said last month it would postpone the launch of the latest version of its blockbuster game machine in Europe and some other regions to March from November due to a production glitch, missing the critical Christmas shopping season.

On Tuesday, the maker of Bravia flat TVs, Vaio personal computers and Cyber-shot digital cameras said it would start rolling out its Blu-ray high-definition optical disc recorders in Japan in December. That is about a month behind rival Matsushita Electric Industrial Co. Ltd.'s launch of similar equipment.

In addition, Sony's models, unlike Matsushita's, will lack a function enabling users to record on dual-layer discs, further stoking concerns over Sony's technological competitiveness.

Tuesday, October 03, 2006

MRVL shares lost 12% Tuesday after the company said demand for its chips would decline in the third quarter and administrative expenses would rise.

The company blamed lower demand from its hard disk drive customers. It said the personal computer sector is weak and inventory has increased.

Marvell Technology's stock closed Tuesday at $16.80, down $2.29, or 12%.

The 52-week range for Marvell's stock is $16.70 to $36.83.

Marvell Technology Group said it expected a significant increase in administrative expenses in the third quarter of fiscal 2007 due to higher costs related to a previously announced internal review of stock option practices and related accounting matters.

Sehat Sutardja, Marvell's president and chief executive officer, said he expected the sales downturn to be a "short-term event."

"We remain focused on continuing to aggressively invest in our business and to expand the reach of our technology into a growing number of high volume targets," he said in a prepared statement.

Marvell Technology is a fabless semiconductor company. It provides digital and mixed-signal integrated circuits for data storage and broadband communications. The company's products include chips that convert analog data from a magnetic disk into digital form for computing, preamplifiers, and Ethernet switch controllers and transceivers.

Shares of Skyworks Solutions Inc. rose in premarket trading Tuesday, a day after the maker of integrated circuits said it plans to exit its baseband operations in order to focus on research and sales for its core business.

Baseband chips convert digital sounds into sounds in mobile phones. Woburn, Mass.-based Skyworks also said it will cut 425 jobs, or 10 percent of its worldwide workforce, as part of a restructuring plan.

In premarket trading, Skyworks shares rose $1.73, or 34 percent, to $6.79. The stock has traded in a 52-week range of $4.03 to $8 and is almost flat since the beginning of the year.

In a client note, Stifel Nicolaus analyst Cody G. Acree lifted his rating to "Buy" from "Hold," and set a $10 target price.

"With Skyworks' exit of the baseband business, the company is making a solid step toward addressing the largest ongoing concern of investors, which we believe to be its lack of sustainable and meaningful profitability," wrote Acree. Gross and operating margins will almost immediately improve with the disposal of the baseband segment, the analyst wrote.

The company also makes power amplifiers and radio products, and its core business, excluding baseband revenue, has grown 17 percent since 2002, the analyst added.

Citigroup analyst Craig A. Ellis also reaffirmed a "Buy" rating and said he approved of the company's plan to exit the baseband segment.

Monday, October 02, 2006

Semiconductor Sales Set Record at $20.5 Billion in August, Industry Group Says

Semiconductor sales worldwide surged to a monthly record of $20.5 billion in August, fueled by higher demand for memory chips used in PCs and mobile gadgets such as cell phones and digital cameras, an industry group reported Monday.

The figure was more than 10 percent higher than the $18.6 billion reported in August 2005, and a slight increase from the $20.1 billion reported in July, the Semiconductor Industry Association said.

The previous one-month record for worldwide chip sales was $20.4 billion in November 2005.

Much of the growth in August was driven by higher sales of dynamic random access memory chips, which are widely used to store information in computers and other electronics. Sales of DRAM chips increased by 31.4 percent from a year ago, and 7.5 percent from July.

Manufacturers of mobile consumer products also were ramping up production for the holiday season, driving up sales for NAND flash memory chips commonly found in digital music players and cameras.

A decline in gasoline prices also appears to have boosted consumer confidence, a boon for an industry that sees about half its sales from consumer products.

"Once again we saw relatively strong sales across a very broad range of semiconductor products, which reflects healthy end markets," SIA President George Scalise said in a statement. "Inventories have risen both at semiconductor manufacturers and in the channel in recent months, but remain in line with requirements for the holiday build season."

Revenue from microprocessors -- the chips that serve as the brains of computers -- declined by 6.8 percent from a year ago as the average price has fallen 18 percent.

The San Jose-based SIA has represented U.S. chip manufacturers since 1977.

The stock of Canadian-based Internet gaming software maker CryptoLogic Inc. took a pounding Monday, after the U.S. Congress passed legislation over the weekend that effectively blocks on-line gambling in the huge U.S. market.

CryptoLogic tumbled 18 per cent, or $4.08, to $17.98 in early trading in Toronto, after Congress passed a bill that bans the use of credit cards, cheques and electronic money transfers for on-line gambling. President George W. Bush is expected to sign the bill into law Monday.

In a news release earlier Monday morning, the Toronto-based company said that as a result of the legislation, licensees of its licensing unit, WagerLogic Ltd., will cease accepting wagers from U.S.-based players effective immediately.

“Based on historical results, the annualized impact on revenue of [Monday's] decision would have been approximately $30-million for the full year 2006, with an estimated effect on earnings of approximately 80 per cent of that amount,” the company said.

However, it played down the threat of the new law to its business model.

“The company has spent five years preparing for this eventuality by shifting its revenue base to fast-growing European markets, and is positioned for long-term profitability and growth,” it said in a release.

“While the new U.S. developments will be a challenge for the whole industry, our company's diversification, strong balance sheet, thriving European customers and potential new business in emerging markets enable us to face the future with confidence,” said Lewis Rose, CryptoLogic's president and chief executive.

The company said more than 70 per cent of its licensees' revenue come from outside the United States.

“We believe Internet gaming can and should be regulated, licensed and taxed. The U.K. model is the right one: Create a safe, secure and regulated environment for players to enjoy this form of entertainment,” Mr. Rose said. “We will continue to advocate regulation as the logical solution for all stakeholders, including players, investors and governments. In the meantime, we will continue to deepen our existing relationships and attract potential new customers in Europe, Asia and other thriving and emerging markets.”

The company said it is proceeding with plans to relocate its global headquarters to Ireland, “with continued commitment to its operations in Canada, the United Kingdom, Cyprus and Singapore.”

Sunday, October 01, 2006

Tech sector sees strongest gain since 2001

The nation's tech industry added 140,000 jobs in the first half of the year, almost double the growth in the same period last year and the strongest since 2001, according to a report released Tuesday.

The report by AeA, a high-tech trade association, said from January through June, the number of tech jobs in the country reached 5.81 million.

Technology manufacturers added 33,100 jobs in the U.S. in the first half of the year, bringing the total to 1.37 million jobs, a 2.5 percent increase. This is the second consecutive year high-tech manufacturing is seeing net job growth.

The high-tech services sectors -- communication, software, and engineering and tech services -- grew by 2.5 percent, adding 107,000 jobs over the same time period for a total of 4.44 million jobs. Within this sector, engineering and tech services added the most jobs -- 49,800 -- followed by software services, which added 44,500 jobs.

Even the communications services sector saw its first net job growth since 2000, with a 0.9 percent increase of 12,700 jobs from January to June.

"The good news is that the U.S. high-tech industry is adding jobs for the second year in a row, and adding jobs across all tech sectors" said AeA's President and CEO, William T. Archey. "But job growth is by no means as strong as we believe it could be, and it continues to lag growth in the private sector as a whole. Strong tech growth benefits our economy because tech industry wages pay 85 percent more than the average private sector wage and support numerous other jobs."

AeA (formerly the American Electronics Association) is the largest nonprofit high-tech trade association in the United States.