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Strategies & Market Trends : Gorilla and King Portfolio candidates - Moderated -- Ignore unavailable to you. Want to Upgrade?

To: Uncle Frank who wrote (2531)	1/15/2009 12:14:46 AM
From: stockman_scott	Respond to of 2955

Apple CEO Steve Jobs takes medical leave latimes.com His departure renews questions about succession at a company that's closely identified with its celebrated CEO. By Dawn C. Chmielewski and Jessica Guynn From the Los Angeles Times 8:38 PM PST, January 14, 2009 Reporting from San Francisco and Los Angeles — The decision by Apple Inc. boss Steve Jobs to take a medical leave after learning that his health issues were "more complex" than originally thought renews questions about the succession plan of a company whose fate has been closely linked to its charismatic leader. On Wednesday, only a week after assuring investors that he felt fit to lead the Silicon Valley giant, Jobs wrote in an e-mail to employees that he would pass day-to-day management duties to Tim Cook, Apple's chief operating officer, until the end of June. Cook will reprise the role he played in 2004, when Jobs underwent surgery to remove a cancerous tumor from his pancreas. "Steve Jobs is simply not going to be the force in the company that he has been in the past," said Boston University management professor James Post. "What we are really seeing is another step taken toward the next generation of leadership at Apple." Jobs has not said whether his cancer has returned, only that he is suffering from a hormone imbalance that caused him to lose weight at an alarming rate. Some investors questioned whether Apple had been forthcoming enough about the health of its chief executive -- a murky area of securities law. The shares of the Cupertino, Calif., company tumbled more than 7% to $79.30 in after-hours trading following the release of Jobs' e-mail. Shares had fallen nearly 3% to $85.33 before the news. Apple's stock has been buffeted by rumors about Jobs' health since he appeared drawn and gaunt at a developers conference in June. Gossip swirled anew last month, after Apple said that he wouldn't deliver the keynote at the Macworld Conference & Expo for the first time in 11 years. In an effort to quell the speculation, Jobs, 53, disclosed the hormone imbalance on Jan. 5 and said he was working with doctors to correct it. "I will be the first one to step up and tell our Board of Directors if I can no longer continue to fulfill my duties as Apple's CEO," Jobs said then. But he said Wednesday that his health issue was "more complex" than thought and that curiosity over his health continues to be a distraction, not only for him and his family but everyone at the company. "In order to take myself out of the limelight and focus on my health, and to allow everyone at Apple to focus on delivering extraordinary products, I have decided to take a medical leave of absence," Jobs wrote, adding that he plans to remain involved in major strategic decisions during his absence. Michael Obuchowski, managing director of First Empire Asset Management Inc., whose accounts hold Apple stock, said Wall Street was wondering if it was getting the full story about Jobs' health last week but was willing to give him the benefit of the doubt. "Now, a few days later, he's coming out with a cryptic statement," Obuchowski said. "I think the amount of goodwill left right now among Apple's investors is shrinking rapidly." Though he declined to discuss Apple specifically, SEC spokesman John Nester said there was no specific requirement that companies disclose their executives' health problems. "But if a health issue is material, the company could have a disclosure obligation," he said. "Materiality is determined by facts and circumstance." There is no established legal precedent on the issue. "You can start a healthy debate among securities law practitioners on the topic of disclosure related to CEO health," Stanford University law professor Joe Grundfest said. Apple could face shareholder lawsuits, Columbia University Law School professor John Coffee said. If the company's stock falls sharply in response to Jobs' medical leave, he said, plaintiffs' firms will probably file suit, betting they can uncover pertinent false statements made about Jobs' health. Coffee said Apple's board may fall under increasing pressure about its succession plan, if only to convince investors that Apple could survive without Jobs. Names frequently circulated as possible contenders for the top job include Cook; Jonathan Ive, a senior vice president who oversees the industrial design team; and Ron Johnson, senior vice president of retail. Cook, 48, is more operations maestro than flashy impresario. But the Compaq Computer veteran, who joined Apple in 1998, is known for being as obsessive and demanding about Apple's products as Jobs himself. He took over the sales force and customer support in 2000. While Jobs was recuperating from surgery to remove his tumor, Cook filled in and took over the Macintosh computer division. The following year, he became chief operating officer. Following in Jobs' footsteps is no mean feat, and powerful CEOs rarely go willingly. Marshall Goldsmith, author of the upcoming book "Succession: Are You Ready? (Memo to the CEO)," said the Apple co-founder had been cast as a heroic, visionary figure who rescued the company after he returned from a decade-long absence in 1997. That puts the company in the unenviable position of replacing a leader seen as irreplaceable. "Now you're seeing the negative side of what was earlier a positive story," Goldsmith said.

To: Uncle Frank who wrote (2531)	1/15/2009 12:27:37 AM
From: John Carragher	Respond to of 2955

i look it as a buying opportunity.

To: Uncle Frank who wrote (2531)	1/15/2009 9:45:50 AM
From: stockman_scott	4 Recommendations Read Replies (2) \| Respond to of 2955

uf: That is depressing news about Steve Jobs...I fear that his pancreatic cancer has returned...He had surgery to remove a rare tumor in the pancreas back in 2004...Yet, pancreatic cancer is very tough to beat...My family has some close friends that have died from it recently...Less than 5% of patients with pancreatic cancer live beyond 5 years from when the treatments are started...Jobs is only in his mid 50s but he's going on his 5th year since he was diagnosed and operated on -- and he's lost A LOT of weight very quickly in the last year...I hope Jobs can beat the odds and I'm sure he'll get the best medical treatment money can buy. Job's is maybe one of the most influential personalities of the last century...what he did to Apple when he returned in 97, transforming the money-losing maker of the Macintosh computer, with his focus on stylish design and simple-to-use gadgets that won over millions of buyers, turning Apple's Ipod media player and Iphone into best sellers, etc. This was truly remarkable and Jobs has revolutionized several industries. This guy changed the way we live. And don't forget that Steve Jobs' reach extends far beyond Apple. He's also the guy who bought a struggling special effects division from George Lucas and presented them with the task of making the first fully computer generated animated feature. Nine years later, Toy Story was born. That company is called Pixar...It was transformational and was sold to Disney for a multi-billion dollar profit. The news that Steve Jobs would be handing over the reins of Apple was a sad moment. Supposedly it's only until June, but I think there's a good chance he may not return as CEO - and I hope I'm wrong. Despite positive treatment, there is no known cure for pancreatic cancer. It can be declared "in remission" (likely the case with Jobs, at least to this point) but it does not ever simply go away. Apple can't replace Steve Jobs and it will probably be a long time before such a charismatic leader with a dynamic vision emerges again.

To: Uncle Frank who wrote (2531)	1/16/2009 1:09:54 AM
From: stockman_scott	Respond to of 2955

Apple's CEO takes a medical leave and online speculation explodes businessweek.com When Steve Jobs Said “Stay Hungry. Stay Foolish,” He Did Not Mean This Foolish kara.allthingsd.com

To: Uncle Frank who wrote (2531)	1/16/2009 1:18:13 AM
From: stockman_scott	Respond to of 2955

Apple’s Cook Pushes Staff in Lieu of Jobs’s Magic (Update2) By Dina Bass and Connie Guglielmo Jan. 15 (Bloomberg) -- Apple Inc. founder and Chief Executive Officer Steve Jobs is prone to fits of passion, table pounding and screaming. Tim Cook, who will oversee the company while Jobs takes medical leave, never raises his voice. Still, Cook’s management style won’t be a shift for employees. He’s been quietly running the company for several years, said Mike Janes, who worked with the executive for five years at Apple. “Steve is the public face of Apple and nothing beats when he goes out and says, ‘Ta-da,’” said Janes, who ran Apple’s online store. “But at the end of the day, someone has to take all those amazing product designs and turn them into that big pile of cash you see in the company’s bank account. That’s Tim.” Known for marathon meetings and late nights at the office, Cook will have to keep Apple running smoothly until Jobs’s planned return in June -- all while reassuring investors that he shares Jobs’s flair for marketing and innovation. Jobs has personified Apple since he returned to the Cupertino, California- based company in 1997. Cook, 48, has filled in for Jobs before, during the CEO’s cancer treatment in 2004. Jobs, 53, underwent surgery for a rare form of pancreatic cancer that year, keeping him away from Apple for more than a month. Cook’s earlier stint should help calm investors’ concerns, said Michael Gartenberg, an analyst at Jupitermedia Corp., who has covered Apple for 13 years. “He has significant responsibility for making sure the trains run on time in Cupertino,” he said. “It worked out fine for Apple the last time it happened. We’ve no reason to believe it won’t this time.” Energy Bars Cook already expects his direct reports to be on call at all hours, Janes said. In 2002, Janes flew with Cook to Singapore to meet with regional staff. After a plane ride spent on the phone, Cook went directly to the office and held an eight-hour meeting, fueled by his ever-present energy bars. Apple shares dropped $1.95, or 2.3 percent, to $83.38 on the Nasdaq Stock Market at 4 p.m. New York time. They fell 11 percent in late trading yesterday after the company announced the medical leave. Jobs had said the week before that he would remain at Apple during treatment for a nutritional ailment. The illness caused Jobs to lose weight last year, fueling speculation that his health was deteriorating. “It’s the price you pay for the success of having a great leader,” said Gene Munster, an analyst with Piper Jaffray & Co. in Minneapolis. He has recommended Apple’s shares since June 2004 and doesn’t own them himself. “I’d much rather have the great leader and deal with their transition out of the company, rather than have no great leader at all.” Southern Roots Analysts and shareholders are used to Cook’s slow, Southern drawl from Apple’s conference calls. Born in Mobile, Alabama, Cook earned an engineering degree from Auburn University in his home state and a master’s of business administration from Duke University in North Carolina. He sits on the board at Nike Inc., the world’s largest maker of sneakers, and is an avid biker. Apart from Cook’s athletic side, Janes says he knows nothing about the man’s interests. Cook was brought on in 1998 to overhaul Apple’s inefficient manufacturing and logistics. At the time, the company’s Macintosh customers were switching to cheaper machines from Dell Inc. and Hewlett-Packard Co. He had previously been a vice president at Compaq Computer Corp. and spent 12 years at International Business Machines Corp. Asking Why Even with his soft-spoken manner, Cook’s “relentless” questioning can wear down and terrify poorly prepared underlings, Janes said. “He is the master of the Socratic method -- he will continue to ask why and why and why,” said Janes, who is now CEO of an event-ticket search-engine company called FanSnap Inc. in Palo Alto, California. “If you’re not prepared, it can be a very uncomfortable place.” Apple’s employees have a good sense of Jobs’s thinking, making it easier to stay on the same track, said Apple co-founder Steve Wozniak, who left the company in the 1980s. “Everyone knows what he wants most at Apple while he is away,” he said. While Jobs guides product development, other managers do most of the work designing the devices. Senior Vice President Jonathan Ive helped create the distinctive look of products such as the iPhone. Bob Mansfield, also a senior vice president, leads the team that developed the ultra-thin MacBook Air. Like Jobs, Cook has a strong passion for Apple and can inspire deep loyalty among employees, Janes said. If Jobs ultimately can’t return to the company, Apple will probably opt for a team approach: using Cook for his operational strengths and other leaders for design and marketing, said Ashok Kumar, senior research analyst at Collins Stewart Plc. “Tim and his team at Apple are extremely strong and perhaps underrated by the general public,” said Accel Partners’ Jim Breyer, a venture capitalist. “At the same time, Steve Jobs is a true product genius who is simply one of the great entrepreneurs of not only our lifetime, but of the 20th and 21st centuries.” To contact the reporters on this story: Dina Bass in Seattle at dbass2@bloomberg.net; Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net Last Updated: January 15, 2009 16:12 EST

To: Uncle Frank who wrote (2531)	1/16/2009 2:38:57 PM
From: stockman_scott	Respond to of 2955

Can Apple Fill the Void? __________________________________________________ By BRAD STONE The New York Times January 16, 2009 It has been in the air for some time, but Apple can dodge the question no longer: How important is Steven P. Jobs to its future? By all accounts, Mr. Jobs’s perfectionism, autocratic managerial style and disregard for conventional wisdom are at the heart of Apple’s remarkable streak of success. Since he returned to Apple in 1996, the company has set a new standard for design in personal computers, built a chain of sleek and always-crowded stores, jump-started the sale of digital music and turned the mobile phone into a fun, flexible computer. This is clearly the stuff of business legend. But now the company faces the real possibility that its inspirational leader may fade from the scene. Mr. Jobs, Apple’s co-founder and chief executive, said on Wednesday that he was taking a leave of absence from Apple until June because his health issues — he is a survivor of pancreatic cancer — are “more complicated” than he first thought. That terse letter, after he had played down his illness just last week, left Apple watchers asking what might happen to the company if Mr. Jobs does not return in June as planned. Analysts are quick to point out the strength of the company’s management bench. Timothy D. Cook, its longtime chief operating officer, will take over at least temporarily and is responsible for Apple’s manufacturing and sales operation, which are the envy of the consumer electronics industry. Jonathan Ive, Apple’s design chief, runs the team that has created much of the functional, visceral and emotional allure of Apple products, whose design ambitions extend right down to its elegant packaging. But some Apple watchers and former employees are skeptical about Apple’s fate if it is forced to soldier on without Mr. Jobs. “If you look at the history, Apple can coast for several years and still do very well,” said Paul Mercer, who worked for Apple in the 80s and subsequently developed software that was used to design the user interface for the first iPod. “But it’s very risky, and without Steve, the long term is untenable.” The stories about Mr. Jobs are well known, like his insistence that even the insides of the Macintosh computer, which hardly anyone ever sees, should look good. His obsession with detail permeates everything Apple does, and that principle will certainly not disappear from the company if he is gone. But there are other aspects of his role that do not get as much attention and may be more difficult to replace. At many technology companies, various divisions often work at cross purposes, competing with one other to develop related products. This can lead to devices and software that are sometimes incompatible, frustrating customers. Mr. Jobs, former Apple employees say, has the authority and long-term vision to yoke Apple managers and employees together under a single cause. “Steve is terrific at attracting and retaining people, creating an agenda and getting people to stick to it,” said Stephen G. Perlman, a Silicon Valley entrepreneur who was a principal scientist at Apple in the 1980s. “It’s very hard to find somebody who is so credible, and who has such a strong following that he is able to cut through corporate politics.” Mr. Jobs has also been Apple’s chief deal maker. After introducing the iTunes store in 2003, he persuaded entertainment companies to sell digital versions of their products when they were largely bivouacked, hiding in fear of piracy. In large part because of Mr. Jobs’s efforts, those barriers have fallen, though other challenges remain like getting the Hollywood studios to relax their restrictions on renting or downloading movies over the Internet. In their moments of great anxiety, Apple fans look back to the late ’80s and early ’90s for a glimpse of Apple without Mr. Jobs. After he was ousted in a boardroom coup in 1985, Apple actually thrived for several years, unveiling the first Mac with a color screen, the PowerBook laptop and QuickTime, which broke ground in bringing video to personal computers. But then, to the horror of its diehard fans, Apple withered. Its stock fell 68 percent from its 1991 peak to Mr. Jobs’s triumphant return in 1996. In the meantime, three chief executives came and went, and Apple’s core product, the Macintosh, did not evolve as fast as computers based on Microsoft Windows. Part of the problem, say people who were at Apple during the lean years, could be traced back to Mr. Jobs himself: he had not allowed anyone with talents similar to his own to rise at the company. Some think that may also be true today. “Steve’s personality is such that he had not brought up other people who could do what he does. He’s the kind of person who pushes away people who are like himself,” said Ted Kaehler, who worked on the original team that developed the first graphical user interface at the research center known as Xerox Parc, and he later worked at Apple in the ’80s. But some Apple watchers are reluctant to use the past as a guide. Andrew Hertzfeld, who helped develop the original Macintosh and now works at Google, says that Apple has had 12 more years under Mr. Jobs’s leadership to soak up his unique values. He also notes that products already in the pipeline — which analysts say may include new iMacs and smaller iPhones — already bear Mr. Jobs’s imprint and can sustain Apple for years to come. “It will take half a decade for the absence of Steve to really show up in the products,” Mr. Hertzfeld said. Some think Mr. Jobs’s imprint on Apple could last even longer, perhaps for decades, even if for some reason he is unable to come back in June. James W. Breyer, an influential Silicon Valley venture capitalist, sits on the board of Wal-Mart and says the values of its founder, Sam Walton, still drive the retailer 17 years after his death. “I can’t recall a board meeting where Sam’s spirit and contribution have not been cited in some way,” Mr. Breyer said. “In the same way, I expect Steve Jobs, through his genius, will always represent the DNA of Apple.” After the initial shock of Mr. Jobs’s letter sent Apple’s stock sharply lower in after-hours trading on Wednesday, investors were a little calmer on Thursday. The shares fell 2.3 percent to $83.38. Still, there are those who worry that Mr. Jobs’s absence will have an impact even beyond Apple. “The whole world is concerned about Apple. I’m concerned about Silicon Valley,” said Mr. Perlman, the entrepreneur. “I need Apple to be harrying Microsoft. We need someone stirring the pot. God forbid that there is no one stirring the pot anymore. We’ll become Detroit.” Copyright 2009 The New York Times Company

To: Uncle Frank who wrote (2531)	1/17/2009 2:43:15 PM
From: stockman_scott	Respond to of 2955

Tim Cook and the State of the Mac havemacwillblog.com

To: Uncle Frank who wrote (2531)	1/17/2009 2:55:07 PM
From: stockman_scott	Respond to of 2955

Forecasts 2009, IT Companies: Intel, Apple, Microsoft havemacwillblog.com Posted on January 13th, 2009 by Robin Bloor in IT Trends It will not be surprising if every vendor I mention here sheds staff this year. Staff cuts and revenue reductions are poor ways to judge the success of companies in these parlous times. The economy is messing with our metrics. We should judge success by: 1. Movements in market share 2. Sustainability of business strategy 3. The profitability picture (not short term, but over the medium term - because there may be quarters where profits vanish into necessary restructuring) Having said that, let’s consider the situation of Intel, Apple and Microsoft in that order… Intel Intel presents a mixed picture. It has done serious competitive damage to AMD in the x86 market. So in terms of market share, the situation looks positive, despite the fact that Intel’s revenues will inevitably suffer to some degree this year. The competitive challenge for Intel is that it must now compete with Nvidia and AMD’s subsidiary ATI in the graphics market. Graphics is where the action is on PCs, Macs and laptops, because the graphics card is doing most of the work. (To be honest you could put a puny cpu in many of these devices and as long as you plugged in sufficient memory and a powerful graphics card, the user wouldn’t notice.) In theory Intel should be feeling the heat in the graphics market from both Nvidia and ATI, who appear to have superior technology. Nevertheless, Intel dominates the market and it actually increased its market share last year. It now has 47.3% of all desktop and notebook graphics, mainly because it has 57.1% of the notebook market - and that by the way, is the market that’s growing. Aside from these competitors, there’s also IBM, which - just in case you hadn’t noticed - has about 100% of the home games machine market (if you only count the most recent consoles from Sony, Nintendo and Microsoft.) As far as chips are concerned, IBM, like Intel, AMD and Nvidia is all about graphics. Ultimately, a computer game is 99.99% graphics and the most advanced graphics applications from that perspective run on IBM chips. There can be little doubt that IBM will ultimately come into direct competition with these other players. The battleground for that fight will most likely be around the “home entertainment center.” It’s too early to know how that market will pan out. In my view Intel is doing better than it could have expected and that may be due to the effective leadership of Paul Otellini. I don’t think we need be concerned for Intel this year, unless we witness its market share slipping in any of its important markets. Apple My coverage of Apple is on-going so I’ll just upgrade it a little here. In case you’re unaware of it, my view is that Apple has broken Microsoft monopoly irreversibly, with the consequence that it can no longer be stopped in the desktop market or the laptop market. Microsoft, Dell, HP et al will simply have to get used to Apple having a growing share of those markets (by revenue.) I’d go as far as to say that “the Mac is now a saloon car, while the PC is a small run-around.” The products are not really in direct competition. If you want a Mac then you don’t really want a PC - and vice versa. The more interesting aspect of Apple is that the iPhone is a much bigger success than anyone (including Apple) ever expected it to be. Apple has single-handedly recreated the mobile phone market and recreated it in its own image. The App Store is a huge success that must be dispiriting for RIM and Nokia (the two also-rans in this market.) It was bad enough for them that Apple redefined what a mobile phone should be, now they’ve redefined what the business model should be. The mobile market is going to be important this year because preliminary signs indicate that it may not stop growing - at least in terms of corporate investment. In a way it’s logical. There’s a technology revolution going on that reminds me a little of the application avalanche that occurred as the PC market developed. The old mobile phone is dying and now everyone and his country cousin wants to be in on the new device, which is at once (and by varyng degrees): A mobile phone A PDA A geographical reference resource with GPS A games machine A web access device A music/video player An ebook reader A camera From here on in, it’s Apple’s to lose and there’s no indication that it will lose it. Most likely it will establish a monopoly that’s every bit as solid as it’s iPod monopoly has proved to be. The iPod is, of course, starting to fade, but the iPhone is much more powerful. The recession will not stop Apple’s momentum, even if it succeeeds in holding down its share price. Microsoft Microsoft is looking very much like a sunset company these days. It was no secret in Redmond or anywhere else that it needed to go beyond the gushing revenues streams of Windows and MS Office and reinvent itself. It’s a rare event in industrial history that any vendor gets to be in such a powerful position as Microsoft achieved in the 1990s and it’s more than surprising that it has failed so clearly to carve out more territory. Taking it piece by piece: Server market: In the server market Microsoft has done really well. As far as business growth and technology direction is concerned, it has performed powerfully after a faltering start. This area of its business remains healthy, is populated by good products and is much to be admired. The XBox: Had it not been for a surprising innovation from Nintendo, the XBox would now be the dominant games console and qualify as yet another stellar Seattle success. You cannot even accuse Microsoft of having failed to innovate. Microsoft has done well. It’s just that Nintendo did far better. The Web: Microsoft has compeltely failed to dent Google’s dominance. Despite Ray Ozzie’s new initiative and his unbridled optimism, this is unlikely to change any time soon. The Mobile World: Game, set and match to Apple. That’s a mixed pciture and none of it would matter much were it not for the threatened state of the jewels in the Microsoft crown; Windows (as a PC OS) and MS Office (as PC Apps). Both of these are now under threat. Windows Vista quite simply failed to compete with Apple’s OS X. This broke the Windows monopoly. So far it’s not as much of a disaster as it could be. Microsoft cannot compete effectively with Apple, because Apple does the whole business stack from the iron to the apps, including the channel to market. Apple can innovate at points in that stack where Microsoft has no position - and it does (think hardware design, think Apple Stores, think iTunes, etc.) The truth is that Microsoft cannot actually compete effectively with Apple at all. This is not as much of a disaster as it might be, because Apple doesn’t want to own the PC market. But Microsoft’s partners (Dell, HP, Acer et al) are hurting. There is a possibility that one or two of them will hitch their wagon to PC linux in one of its varieties and head off in a non-Microsoft direction. Microsoft has played a very effective game of whack-a-mole (or whack-a-penguin perhaps) with Linux so far, smacking it down wherever it crops up. The more successful Apple is, the less likely that a whack-a-mole strategy will work against Linux. The brightest jewel in the Microsoft crown is MS Office. There’s little doubt that MS Office in its various forms (Star Office from Sun, Open Office and Lotus Symphony) is drawing some users away from Microsoft and so are Zoho and Google Apps, but so far it doesn’t really qualify as a haemorrhage. If and when it does, there will be wailing and gnashing of teeth in Redmond.

To: Uncle Frank who wrote (2531)	1/20/2009 10:52:26 AM
From: stockman_scott	Respond to of 2955

Cisco Plans Big Push Into Server Market _______________________________________________________________ By ASHLEE VANCE The New York Times January 20, 2009 SAN JOSE, Calif. — Within the next few months, Cisco Systems, the largest maker of networking equipment, plans to release a product that threatens to shake up the technology industry and put the company on a collision course with traditional partners like Hewlett-Packard and I.B.M. The product — a server computer equipped with sophisticated virtualization software — is a bold but risky move by Cisco into an unfamiliar, intensely competitive market that typically produces far lower profits than Cisco makes from network gear. But it reflects the company’s ambition to grow beyond its roots as the so-called plumber of the Internet to offer everything from instant messaging software to digital stereos. For years, Cisco remained content to sell the switches and routers that direct the rivers of data flowing between computing systems. It dominates that market, making most of its $40 billion a year in revenue, and 65 percent gross profit margins, from such products. The other major makers of computer hardware, including H.P., I.B.M. and Dell, have enjoyed a mutually beneficial relationship with the company, which is based in San Jose, Calif.: Cisco sells networking gear, while they sell personal computers, servers, storage systems and software. Industry experts say that Cisco’s push into the server market will disrupt that comfortable symbiosis and could cause an all-out war among the tech titans for one another’s customers. “This will be the most important and most talked-about product of the year,” said Brent Bracelin, a hardware analyst for Pacific Crest Securities. “There will be massive competitive reactions from both I.B.M. and H.P., and we expect this will lead to a new wave of industry consolidation.” Cisco executives played down the potential for serious conflict. “We see this not as a new market, but a market transition,” said Padmasree Warrior, the company’s chief technology officer. “Any time there is a major transition occurring, there will be large companies that have to compete in some areas.” The technology driver behind this transition, according to Cisco, is virtualization software. Over the last decade, virtualization software has experienced a meteoric rise. Virtualization products let companies run numerous business applications, rather than just one, on each physical server, allowing them to save electricity and get more out of their hardware purchases. Recently, however, virtualization technology has started to have a more significant impact on business computing systems as a whole. New tools developed by VMware, the market leader, make it possible to shuffle business applications around a data center just by pointing a computer mouse at an icon on the screen. The mobility of the software has broken some of the traditional, linear connections among computers, storage systems and networking hardware. As a result, companies like Cisco see an opportunity to produce a new, potentially disruptive class of hardware and software management systems that span an entire data center. With customers looking to manage their data centers as a single entity rather than separate units, the world’s largest technology companies must now fight to secure the most prominent, central position possible. Cisco’s newfound aspirations stretch well beyond the $50 billion server market to include management software and possibly even storage. “Our vision is, how do we virtualize the entire data center?” Ms. Warrior said. “It is not about a single product. We will have a series of products that enable us to make that transition.” Cisco could show off the first of its new systems as early as March. The company would not disclose the exact nature of the product, although people with knowledge of Cisco’s plans said it would sell a server bundled with networking hardware and virtualization software from both Cisco and VMware. Rather than working as a general purpose system, the Cisco product will cater just to virtual applications. (Cisco owns close to 2 percent of VMware, a public company that is majority-owned by EMC, a maker of computer storage systems.) Cisco’s diversification into the server market is fraught with risk. Cisco boasts gross profit margins of close to 65 percent, while companies selling basic servers tend toward gross margins closer to 25 percent on those products. Ms. Warrior maintained that by bundling various hardware components with software, Cisco would earn higher profits than are typical for servers. But Wall Street remains skeptical. “It will certainly be a challenge for Cisco to get the new products to the same margin levels as its current products,” an analyst with Signal Hill, Erik Suppiger, said. At best, analysts estimate, Cisco could obtain 50 percent gross margins with the server product. Such a figure, combined with Cisco’s probable modest start in this new business, would not affect its bottom line in the near term. Eventually, however, Mr. Suppiger and others say the move could lower Cisco’s overall profitability and change how investors view the company. Perhaps more significant over the long term is the alteration of Cisco’s relationship with its longtime allies. Mr. Bracelin expects I.B.M. and H.P. to consider acquiring networking start-ups and begin developing products similar to Cisco’s forthcoming system. They are also likely to direct business to other networking companies, like Juniper Networks and Brocade. However, Cisco may have little choice other than to invade its rivals’ turf. Its core business is slowing, and for the company to meet Wall Street’s demands for growth, it must look to new lines of business. Besides, its competitors are eyeing Cisco’s lucrative networking business for themselves. When Carleton S. Fiorina was chief executive of H.P., she sat on Cisco’s board, and her executive team encouraged H.P.’s sales force to promote Cisco products ahead of H.P.’s own ProCurve networking gear. Under H.P.’s chief executive, Mark Hurd, that strategy ended. H.P. has made ProCurve a crucial piece of its growth strategy, priding itself on undercutting Cisco’s prices. With gross margins of close to 50 percent, ProCurve stands as one of H.P.’s most profitable businesses, second only to printer ink. I.B.M., meanwhile, has long had a strong relationship with Brocade around storage networking products, and I.B.M.’s labs are working on their own networking hardware projects. H.P. and I.B.M. declined to comment for this article. Cisco dismisses the suggestion that it is fomenting war with longtime partners. The company is merely adjusting to a change in technology, and the other companies will do so as well, according to Ms. Warrior. Cisco already battles Microsoft, another longtime partner, in the market for collaboration software that helps workers communicate on projects. In addition, Cisco sees opportunities in the consumer realm, playing off the home networking products it acquired through the purchases of Linksys and the set-top box maker Scientific Atlanta. With close to $27 billion in cash on hand, Cisco could buy its way deeper into the data center as well, perhaps through an acquisition of VMware or even all of EMC, analysts say. “Everybody is trying to get to the same point in the future,” said James Staten, an analyst at the research firm Forrester. “It’s inevitable that as they all get larger, they start crossing over into each others’ territory more and more.” Copyright 2009 The New York Times Company

To: Uncle Frank who wrote (2531)	1/20/2009 4:55:43 PM
From: stockman_scott	1 Recommendation Respond to of 2955

IBM Profit Climbs 12%; Forecast Exceeds Estimates (Update1) By Katie Hoffmann Jan. 20 (Bloomberg) -- International Business Machines Corp., the world’s biggest computer-services company, posted profit and released a forecast that topped analysts’ estimates, sending the shares higher in late trading. The stock climbed 4 percent after IBM posted fourth-quarter earnings of $3.28 a share, exceeding the $3.02 average of estimates compiled by Bloomberg. Profit this year will climb to at least $9.20 a share, also beating projections. IBM squeezed out a profit increase even as sales fell in all units save the software division. IBM’s strategy of focusing on more profitable businesses, such as software, helped the company overcome “an extremely difficult economic environment,” Chief Executive Officer Samuel Palmisano said today in a statement. “They’re being opportunistic,” said New York-based UBS analyst Maynard Um, who has a “neutral” rating on the stock and doesn’t own it. “I continue to be surprised as to how they can grow” software sales. IBM, based in Armonk, New York, rose $3.35 to $85.33 in extended trading after closing at $81.98 on the New York Stock Exchange. The stock has dropped 21 percent in the past year. Net income climbed to $4.43 billion from $3.95 billion, or $2.80 a share, a year earlier, IBM said in the statement. Total sales fell 6.4 percent to $27 billion, compared with the $28.2 billion average of estimates compiled by Bloomberg. Revenue in the software unit climbed 2.6 percent to $6.42 billion. IBM has spent more than $5 billion in the past year on acquisitions to bolster its software unit, the company’s most profitable business. Gross margin, or the percentage of sales left after production costs, widened to 87.7 percent from 87.1 percent a year ago. Corporate Earnings IBM bought at least six software companies last year, adding new products to take on larger Microsoft Corp. The biggest of those was the purchase of Cognos Inc. for $4.9 billion, giving IBM programs that track corporate performance. Corporate earnings have slumped as the first simultaneous recessions in the U.S., Japan and Europe since World War II tighten credit markets and curb spending. This month Intel Corp., the world’s largest chipmaker, said profit in the fourth quarter fell 90 percent as demand for computers ebbed. Sales of computer services, which account for more than half of total revenue, fell 4 percent to $14.3 billion. The company is trying to woo users away from Microsoft programs by offering its Lotus Notes software for free, making money instead from related technology and services. It adapted the software for use with Apple Inc.’s Macintosh computers and the Linux operating system in November. To contact the reporter on this story: Katie Hoffmann in New York at khoffmann4@bloomberg.net Last Updated: January 20, 2009 16:33 EST

To: Uncle Frank who wrote (2531)	1/21/2009 3:51:42 PM
From: stockman_scott	Respond to of 2955

Cisco to Target IBM and Hewlett-Packard With New Server (Update1) By Rochelle Garner Jan. 21 (Bloomberg) -- Cisco Systems Inc. plans to sell a computer server that combines storage and networking functions, a challenge to International Business Machines Corp. and Hewlett- Packard Co., a Pacific Crest Securities analyst said. The product will make it easier for companies to move information and applications among data centers using so-called virtualization software, said Pacific Crest’s Brent Bracelin, who is based in Portland, Oregon. Companies use virtualization software to run multiple operating systems on a single server, saving hardware and energy costs. “We are calling this the clash of the technology titans,” Bracelin said in an interview. “Cisco is reinventing what was the mainframe, with a whole new category of server that emphasizes the network.” Chief Executive Officer John Chambers has said that penetrating further into data centers, the vast rooms of computers that store company files and run applications, will fuel Cisco’s growth. Hewlett-Packard, IBM, Dell Inc. and Sun Microsystems Inc. control the computer-server market, which was valued at $12.6 billion in the third quarter, according to researcher IDC in Framingham, Massachusetts. Cisco, the world’s largest maker of networking equipment, is working on more ways to simplify how clients shift information among networked computers, according to an e-mailed statement from the San Jose, California-based company. Cisco said it doesn’t comment on unannounced products. Virtual Networks “Right now, we have virtualized local area networks, virtualized storage and virtualized servers,” Cisco said. “The challenge is integrating the management of those systems so they all work seamlessly. We think the network is the logical place to solve that challenge.” Cisco rose 39 cents, or 2.6 percent, to $15.40 in Nasdaq Stock Market trading at 9:34 a.m. New York time. The shares lost 40 percent last year. Emma McCulloch, a spokeswoman for Palo Alto, California- based Hewlett-Packard, declined to comment. Tim Breuer, a spokesman for IBM in Armonk, New York, didn’t return a call after hours seeking comment. Cisco’s product should be available in the next few months, Bracelin said. The device could be a so-called blade server, said Samuel Wilson, an analyst with JMP Securities in San Francisco. A blade server would allow customers to slide hard-disk drives and other components into a Cisco-made chassis. Cisco said in November that first-quarter sales rose at the slowest pace in three years as the global economic crisis crimped customers’ budgets. The company leads the market for routers and switches, which direct information on company networks. Cisco already offers a combination network switch and data-storage product. Untapped Market Servers are “one of the few, big untapped markets for Cisco,” Wilson said. “They already have all of the market share in routers and switches that they can get, so they have to look at adjacent markets. It’s the only way to grow at the rates they want to grow.” Chambers, 59, said in December that he’s “comfortable” with a projection of long-term annual sales growth of 12 percent to 17 percent. That goal means Cisco must go after new markets, said Nikos Theodosopoulos, an analyst at UBS AG in New York. “They will enter the blade-server market and increase their competitive position against IBM and H-P,” Theodosopoulos said. To contact the reporter on this story: Rochelle Garner in San Francisco at rgarner4@bloomberg.net Last Updated: January 21, 2009 09:36 EST

To: Uncle Frank who wrote (2531)	1/21/2009 4:40:17 PM
From: stockman_scott	Respond to of 2955

Big gains from IBM Corp. boosted the tech sector Wednesday as enthusiasm over the company's earnings results and outlook helped spur a broad rally that made up for nearly all of the previous session's losses... marketwatch.com

To: Uncle Frank who wrote (2531)	1/22/2009 4:03:46 PM
From: stockman_scott	Respond to of 2955

Steve Ballmer’s Entire Memo to the Microsoft Troops About Layoffs and Weak Results: Posted at 6:23 AM PT on January 22, 2009 From: Steve Ballmer To: All Microsoft FTE Subject: Realigning Resources and Reducing Costs In response to the realities of a deteriorating economy, we’re taking important steps to realign Microsoft’s business. I want to tell you about what we’re doing and why. Today we announced second quarter revenue of $16.6 billion. This number is an increase of just 2 percent compared with the second quarter of last year and it is approximately $900 million below our earlier expectations. The fact that we are growing at all during the worst recession in two generations reflects our strong business fundamentals and is a testament to your hard work. Our products provide great value to our customers. Our financial position is solid. We have made long-term investments that continue to pay off. But it is also clear that we are not immune to the effects of the economy. Consumers and businesses have reined in spending, which is affecting PC shipments and IT expenditures. Our response to this environment must combine a commitment to long-term investments in innovation with prompt action to reduce our costs. During the second quarter we started down the right path. As the economy deteriorated, we acted quickly. As a result, we reduced operating expenses during the quarter by $600 million. I appreciate the agility you have shown in enabling us to achieve this result. Now we need to do more. We must make adjustments to ensure that our investments are tightly aligned with current and future revenue opportunities. The current environment requires that we continue to increase our efficiency. As part of the process of adjustments, we will eliminate up to 5,000 positions in R&D, marketing, sales, finance, LCA, HR, and IT over the next 18 months, of which 1,400 will occur today. We’ll also open new positions to support key investment areas during this same period of time. Our net headcount in these functions will decline by 2,000 to 3,000 over the next 18 months. In addition, our workforce in support, consulting, operations, billing, manufacturing, and data center operations will continue to change in direct response to customer needs. Our leaders all have specific goals to manage costs prudently and thoughtfully. They have the flexibility to adjust the size of their teams so they are appropriately matched to revenue potential, to add headcount where they need to increase investments in order to ensure future success, and to drive efficiency. To increase efficiency, we’re taking a series of aggressive steps. We’ll cut travel expenditures 20 percent and make significant reductions in spending on vendors and contingent staff. We’ve scaled back Puget Sound campus expansion and reduced marketing budgets. We’ll also reduce costs by eliminating merit increases for FY10 that would have taken effect in September of this calendar year. Each of these steps will be difficult. Our priority remains doing right by our customers and our employees. For employees who are directly affected, I know this will be a difficult time for you and I want to assure you that we will provide help and support during this transition. We have established an outplacement center in the Puget Sound region and we’ll provide outplacement services in many other locations to help you find new jobs. Some of you may find jobs internally. For those who don’t, we will also offer severance pay and other benefits. The decision to eliminate jobs is a very difficult one. Our people are the foundation of everything we have achieved and we place the highest value on the commitment and hard work that you have dedicated to building this company. But we believe these job eliminations are crucial to our ability to adjust the company’s cost structure so that we have the resources to drive future profitable growth. I encourage you to attend tomorrow’s Town Hall at 9am PST in Café 34 or watch the webcast. While this is the most challenging economic climate we have ever faced, I want to reiterate my confidence in the strength of our competitive position and soundness of our approach. With these changes in place, I feel confident that we will have the resources we need to continue to invest in long-term computing trends that offer the greatest opportunity to deliver value to our customers and shareholders, benefit to society, and growth for Microsoft. With our approach to investing for the long term and managing our expenses, I know Microsoft will emerge an even stronger industry leader than it is today. Thank you for your continued commitment and hard work. Steve

To: Uncle Frank who wrote (2531)	1/23/2009 7:45:04 PM
From: stockman_scott	Respond to of 2955

Q&A: McAndrews on Google vs. Microsoft, and surviving a downturn techflash.com By John Cook on January 23, 2009 at 2:23 PST Former aQuantive Chief Executive and outgoing Microsoft senior vice president Brian McAndrews said he wouldn't rule out starting a new company in online advertising -- even in today's rocky climate -- but he has no serious plans to do so at the moment. "I'd really like to stay here and find a role in another company, a growth opportunity, and I imagine in the technology sector, so if you hear of things, please let me know," said McAndrews, the keynote speaker at the inaugural TechFlash Live event last night in Seattle. McAndrews also explained how aQuantive survived the last downturn and discussed Microsoft's long-term prospects against Google. A partial transcript of the Q&A follows: John Cook: Brian, I think a lot of people in this room know you as the CEO of aQuantive, a company that was sold to Microsoft for $6 billion. But aQuantive wasn't always in good shape. It was troubled at times. The stock was below a dollar at one point if I remember correctly, in the 2002 period. I think you even got a delisting notice at one point. McAndrews: We did. JC: I think a lot of people in this audience would like to hear from you. How did you manage during that period, and what tips do you have for people in this audience in terms of managing through bad times? What I think got us through the challenging times at aQuantive was, one, that we had a vision we believed in as a company, and we had values that we ran the company by, and those stayed consistent even through the downturn. We still continued to believe that we were on the right path even if had to make changes to our execution or even tweaks to our strategy. We believed overall that we were on the right path and people continued to believe in that. ...We also had a core set of values that we stuck to and the reason I think that was critical is it helped us retain a lot of talented and capable people who could have easily bailed out during tough times, but they continued to believe. That was the key thing. Second thing, we did have a relatively senior team. During the dot-com bubble, as you know, a lot of companies were founded by very young, talented people, and some of them had young teams. That doesn't mean that they wouldn't succeed, but we had the benefit of having people who had been through downturns before, myself included. Not that it's ever easy, or a formula, but we had some sense of the kinds of hard decisions you have to make. And then I think, within those decisions, a key is -- and I think it forces you to do what you should be doing anyway -- which is to prioritize and make hard trade-offs about what you ought to be doing as a company. One of the biggest challenges a lot of companies have is they want to do more than they really should be doing. You need to focus, and this forces you to make those hard trade-offs, to cut back on your expenses and to, in many cases, unfortunately, eliminate people and focus them on the right priorities. That's critically important and obviously at times like this you want to focus on, what are the things that are going to make us profitable or keep us profitable during this downturn. And take some comfort in knowing your competitors are all going through the exact same thing. But the one positive is it does force you to focus. Todd Bishop: Brian, you're obviously a neutral industry observer at this point, having left Microsoft, so I want to ask you, in that neutral role, what's it going to take for Microsoft to catch Google over the next decade? Let's give them a decade. McAndrews: He said I'm a neutral observer, but Brad Smith, the general counsel of Microsoft is in the audience. I have a feeling he's here just to make sure I say the right thing. (Laughter.) Microsoft and Google are both trying to build an ad platform, and I think both of them have roughly the right set of assets today. Obviously that will change over time to do that. An ad platform that helps advertisers buy more efficiently on the Web, and publishers sell more efficiently and make more money. And through the acquisition of aQuantive in the case of Microsoft, and the acquisition of DoubleClick in the case of Google, and investments organically in emerging media and other areas, and assets that Microsoft and Google already had, I think both players really have all the assets for an ad platform. Google is obviously stronger in some areas, namely search. Microsoft is stronger than Google in some areas, such as display, and I think has made some more investments through acquisitions in some emerging media areas like mobile and gaming. Over time, Microsoft's made some significant investments in television, as well. So I think the key is going to be, clearly scale matters in the whole business, and Microsoft needs to get more scale in its search business, there's no question about that. And that's either through acquisition or organic or both. And I think Microsoft is clearly making a bet there, and clearly investing, obviously bringing in Xi Lu from Yahoo with all the search experience that he has, is a big bet in that direction, and you've got to make significant investments there. That's key, and then I think also not losing site of display, which I think is also critically important. It's suffering now more during the downturn, but I think it's a strength that Microsoft has that's stronger than Google right now, and Microsoft needs to exploit that. I think over time there will be two major players in terms of ad platform. There will be other players. Yahoo will exist. AOL will exist. But they will not, in my view, have all the components that you will need for a full ad platform. They will play in parts of that world. I think Microsoft and Google both will, and I think there'll be two players. I wouldn't predict 10 years from now who will be No. 1 and who will be No. 2, but even if Microsoft is No. 2 at that point, it would still be a very healthy business. JC: You're quite a tennis player, I've heard, and so, just to boil that down, if it were a tennis match right now between Microsoft and Google in the search business, would it be 40-Love, 40-15, Deuce, where's it at? (Laughter) McAndrews: Certainly Google is ahead. It is early. I don't know if it's early in the first game. It's certainly early in the first set. And in terms of search, Google is clearly ahead. But again, Microsoft has shown an ability to invest and come from behind in different business areas, and from Steve on down, the commitment is clearly there. But Google has a significant advantage, they've built a better mousetrap, and it is a wonderful business for them in terms of the network effect that makes it hard for a second player to get in. The things that Google does feed on itself, and the fact that Google has become a verb is real advantage and Microsoft needs to create a brand that stands for something in search, where people say, I'm not going to go Google this time, I'm going to go to 'x', and the reason I'm going to go to 'x' is Cashback or some other advantage. Microsoft has done Cashback, which I think is a great asset, but I think Microsoft would also agree, it hasn't marketed it strongly yet. A lot of people don't even know it exists. But it's a real benefit. You get money back on buying things. So Microsoft needs to have a brand that stands for something, that's differentiated, and then invest behind it. JC: I wanted to ask the crowd just for a second, how many entrepreneurs out there have some sort of online ad revenue built into their business. Dave Schappell, I see you, I know you guys do. ... So there's several entrepreneurs out here obviously that are wondering what's going to happen in 2009 with the ad market. What's your outlook on what's going to happen there? Excluding, of course, niche online technology publications, like TechFlash, which we think are going to be an enormous success. McAndrews: Obviously we all have crystal balls, and do the best we can to predict. the analysts have everything from flat to slightly up to slightly down. It's clearly going to be a challenging year in 2009. I think obviously the economy is the primary driver of that, which hurts all advertising. I think the other thing is the fact that a lot of the players hurt in advertising are financial sector and autos, which of course are big spenders, or have been, on the Internet. And even when finance comes back, there will be fewer players, so I think that impact will be felt longer. The other trend that I think slows things down a little bit online is that a lot of the growth in usage online is coming in social networks and video, which in the long run is a great thing -- people are online more, and it will be monetized, but in the short run those are undermonetized areas, so I think all those things are negative factors for the online space in the short run. On the other hand on the positive side, online will continue to steal share from offline and I think over time, more sophisticated targeting -- which is what Microsoft and Google and others are investing in significantly -- that will make CPMs go up again. They're going down now but they could go up again with better targeting. Video, once people figure out that model, is a huge opportunity, and emerging media in general -- moving into digital media and television. Long term still looks very good. 2009, I think is going to be very challenging. TB: Brian, there are a lot of venture capitalists in the audience who will be very interested in the answer to this question: You've now left Microsoft. You haven't yet said what you plan to do. Can you give us a hint? Or actually can you give us an announcement, that would be even better. (Laughter). McAndrews: No, no announcement. Basically, I figure coming here and talking to you is one big job interview, so I hope I'm making a good impression. I do want to take a little bit of time off, I haven't really done that before in my career. Rich Barton has advised me to take a whole lot of time off, and leave the country. I don't know if that's as a friend or he wants me out of the country for other reasons. Probably won't do that, but take some time off, and then we are as a family committed to the Seattle area for the foreseeable future, and so I'd really like to stay here and find a role in another company, a growth opportunity, and I imagine in the technology sector, so if you hear of things, please let me know. JC: Would you consider starting a new company? McAndrews: With the right idea, I would, with the right partners, I would, yes. I don't personally currently have an idea that I think is compelling enough, but for the right idea, I would never say never, but that's not probably my first guess at what I would do. TB: If you were to start a new company, would you base it on an advertising model? McAndrews: I certainly wouldn't be averse to doing that at all. But again, I've had a career that's been varied. I started in packaged goods at General Mills. I worked in media at ABC. I obviously ran an online advertising business, now spent some time at Microsoft. So I'm not wed to any particular model. I get excited about different kinds of businesses that I find interesting, where I feel I can personally contribute, learn and grow in the job.

To: Uncle Frank who wrote (2531)	1/26/2009 10:04:17 PM
From: stockman_scott	Respond to of 2955

The Cook Doctrine at Apple gowest.blogs.fortune.cnn.com

To: Uncle Frank who wrote (2531)	2/9/2009 7:22:02 PM
From: stockman_scott	Respond to of 2955

Cheapest Stocks Since 1990 Reduce U.S. Short Selling (Update3) By Lynn Thomasson Feb. 9 (Bloomberg) -- The biggest bears in U.S. stocks are losing their conviction after the steepest decline in the Standard & Poor’s 500 Index since the Great Depression. The number of shares borrowed and sold short on the New York Stock Exchange fell 28 percent last month from the peak in July. Companies in the S&P 500 trade at the lowest multiples of earnings in 18 years. President Barack Obama is working with Congress on a spending and tax-cut plan of about $800 billion to revive the economy, and regulators are imposing stiffer oversight on speculators. While Seabreeze Partners Management Inc.’s Douglas Kass and David Tice at Federated Investors Inc. say there’s still money to be made betting that food and computer makers will fall, even Marc Faber, who publishes the “Gloom, Boom & Doom Report,” abandoned his so-called short positions. Bill Fleckenstein, who warned of the housing bubble in 2005, closed his 13-year-old bear market fund and bought shares of Microsoft Corp. “It’d be easier for me to find five stocks I think are going to go up than five stocks I think are going to go down,” said Fleckenstein, who is based in Seattle. “Being short right now just feels like the wrong strategy.” Most U.S. stocks fell today, snapping a two-day gain, as concern President Barack Obama’s stimulus package won’t be enough to pull the nation out of a recession outweighed a rally in financial and industrial shares. 28% Gain Last Year Short sellers, who borrow stock and sell it on hopes of capturing a profit by replacing the shares after prices fall, had the most success among hedge funds last year, gaining 28 percent on average, according to Chicago-based Hedge Fund Research Inc. The S&P 500’s 38 percent decline last year was the biggest drop since 1937. Only 24 shares in the index rose. Short interest, the number of shares sold short, totaled 13.4 billion on Jan. 15, down from 18.6 billion in July, based on data compiled by New York-based NYSE Euronext. U.S. stocks trade at an average 15.23 times earnings after falling as low as 15.20 in November, the cheapest since 1990, based on an analysis by Robert Shiller, the Yale University professor whose 2000 book “Irrational Exuberance” predicted the market’s collapse. His analysis uses a decade of earnings to smooth out short-term fluctuations. “I would be very cautious about being short this market right now,” said Dan Veru, who manages about $2.4 billion and can bet on gains and declines in equities as chief investment officer of Palisade Capital Management LLC in Fort Lee, New Jersey. “It’s very dicey.” Kraft, Colgate Kass still expects to profit from betting cash-strapped consumers will switch to generic products and drive down shares of Northfield, Illinois-based Kraft Foods Inc., New York-based Colgate-Palmolive Co. and Kellogg Co. in Battle Creek, Michigan. Kraft, the maker of Kool-Aid drink mixes and Jell-O desserts, fell 9.2 percent Feb. 4, the steepest drop since 2003, after saying earnings will be less than its earlier forecast. The median company in the S&P 500 index of food producers, tobacco growers and grocery stores trades for an average 13.1 times earnings, the highest level among 10 industries in the gauge. So-called consumer staples companies, which posted the smallest drop in the S&P 500 last year, are down 5.8 percent in 2009, underperforming the benchmark index by 1.9 percentage points. Colgate dropped 4.2 percent this year, while Kellogg, the biggest cereal maker, slid 0.6 percent. ‘More Creative’ “You’ve got to be a little more creative,” said Kass, who oversaw $200 million as of October for Palm Beach, Florida-based hedge-fund firm Seabreeze. “These are companies that face long- term challenges to their business model. Investors are going to see that.” Tice, the Dallas-based strategist for the $1.1 billion Federated Prudent Bear Fund, anticipates a 50 percent drop in the S&P 500 this year and says technology stocks and retailers will retreat. The fund, which increased 27 percent in 2008, beat 96 percent of its peers in the past five years, according to data compiled by Bloomberg. Intel Corp., the world’s largest chipmaker, may report a first-quarter loss, Chief Executive Officer Paul Otellini wrote in an internal memo last month. That would end a 21-year run of profits for the Santa Clara, California, company. Technology stocks are the third most costly in the S&P 500, with the median company trading at 12.4 times profit. ‘Coming Down’ “There are a lot of people feeling as if technology earnings are going to be OK,” Tice said in a Feb. 5 Bloomberg Television interview. “We think they’re going to be coming down a lot.” Profits for S&P 500 companies fell 39 percent in the fourth- quarter, the steepest decline since Bloomberg began tracking the data in 1998. The recession, forecast to last for another five months, will drag earnings down an average 30 percent this quarter and 25 percent the next, according to estimates from analysts and economists surveyed by Bloomberg. The S&P 500 began recovering an average five months before recessions ended in 1975, 1982, and 1991, data compiled by Bloomberg show. Declines that erased almost $29 trillion from global equity markets last year convinced Fleckenstein to close his short fund in December after falling valuations made it “too dangerous” to bet on more losses. He said the fund had a “great” year in 2008 and declined to comment further on its performance. Fleckenstein plans to start a fund this year that both buys and bets against stocks. Technology Bubble Fleckenstein bought shares of Redmond, Washington-based Microsoft, which traded at 9 times earnings last month, the cheapest since at least 1987. At the height of the technology bubble in March 2000, the world’s largest software maker traded at 69.8 times profit. Faber, who is purchasing Asian stocks with some of the $300 million he oversees, told Bloomberg Radio Feb. 6 that he bought back the shares he shorted because investors speculating on an economic rebound may push the S&P 500 up 19 percent by May to 1,037. The index closed at 868.6 on Feb. 6 and rose 5.2 percent for the week. “Short selling is down because prices are down and because some regulation came in that made it very difficult,” Faber said. “You could make a case that in the U.S. that some equities have come down a lot and are inexpensive. Resource-related shares have totally imploded.” Short Squeeze Metals and chemicals stocks in the S&P 500 dropped 47 percent in 2008, the second-worst performance behind financial companies, which plunged 57 percent. Both annual returns were the worst since Bloomberg began tracking the data in 1990. Should the S&P 500 rally, losses for investors who wager on declines could be magnified by a short squeeze, a rally caused by investors closing out bearish bets. The U.S. stock benchmark gained 15 percent since reaching an 11-year low Nov. 20 on the prospect that record low interest rates and Obama’s spending plan will jumpstart economic growth. Short sellers face more scrutiny from governments in the U.K., Japan and Australia after the FTSE 100 Index, Topix and S&P/ASX 200 suffered their worst year on record with losses exceeding 31 percent. Regulators are requiring speculators disclose more information about their bets, enabling rival funds to exploit them for their own profit. Britain’s financial regulator plans to require investors list short positions on more than 3,000 shares traded on U.K. exchanges, it said Feb. 6. ‘No Rational Basis’ The U.S. government banned investors from shorting financial companies in September after executives complained bearish traders were spreading rumors to drive down prices. The rule, which affected more than 900 companies, expired Oct. 8. Morgan Stanley Chief Executive Officer John Mack told employees in a September memo that management was acting to stop “irresponsible action in the market,” and said there was “no rational basis” for the depth of the share-price declines. The New York-based bank tumbled 44 percent that month, the most since Bloomberg started compiling the data in 1993. “It’s a little more difficult now,” said Tice. “There are still lots of possibilities, but we have to be a little more judicious.” To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net. Last Updated: February 9, 2009 16:45 EST

To: Uncle Frank who wrote (2531)	2/11/2009 10:16:21 AM
From: stockman_scott	Respond to of 2955

A rumor has been circulating that Cisco may be interested in acquiring VMW: us.rd.yahoo.com*http://www.reuters.com/legacyArticle?duid=mtfh06689_2009-02-11_14-39-01_n11327141_newsml&rpc=44&type=marketsNews RPT-DEALTALK-VMware a compelling pursuit for Cisco Wed Feb 11, 2009 9:39am EST By Anupreeta Das NEW YORK, Feb 11 (Reuters) - Cisco System Inc's (CSCO.O: Quote, Profile, Research, Stock Buzz) pursuit of virtualization software maker VMware Inc (VMW.N: Quote, Profile, Research, Stock Buzz) could be more serious than many on Wall Street believed, as the network equipment maker searches for new sources of growth. Cisco has long coveted VMware, whose software helps computer servers run more efficiently and frees companies from having to maintain huge data centers. It went so far as to hold informal talks last summer to buy VMware's parent EMC Corp (EMC.N: Quote, Profile, Research, Stock Buzz) according to a person familiar with the matter. The companies did not move into formal negotiations, and tight credit markets make financing the purchase of a $25 billion company difficult these days. But things could change quickly if EMC decides to put VMware on the market. "This is a logical deal to do," said a West Coast technology banker. "The question is, is it strategically compelling enough in this environment?" Spokesmen for Cisco and EMC declined comment. Virtualization is considered a hot technology that is changing the way companies store and manage their data. For Cisco, VMware could bring in a new source of revenue as the maker of switches, routers and other equipment -- the plumbing that manages much of Internet traffic -- faces maturing markets across its products and services. VMware has a market value of $10 billion, a far easier sum for Cisco shareholders to swallow than a bid for the whole of EMC, the world's largest maker of corporate data storage gear. Cisco already owns 1.7 percent of VMware's common stock. EMC previously said it had no plans to sell or spin off its 84 percent stake in VMware, but executives are expected to give an update on their strategy at a Mar 10 investor meeting. Cisco Chief Executive John Chambers has said he plans to be acquisitive through the economic downturn. The company has about $29 billion of cash and securities, and on Monday launched a surprisingly large $4 billion debt sale. Analysts speculated that Cisco could be building a war chest for a large acquisition such as EMC, but a person familiar with the network gear maker's thinking said Cisco was just being "opportunistic" in tapping capital markets. "They're taking advantage of low interest rates, and figuring they might as well get the money while it's there," this person said, adding that it was unlikely the debt issue is tied directly to any plan for EMC. The source was not authorized to speak publicly on the matter. Rumors that Cisco could be interested in buying EMC to get its hands on VMware pushed EMC shares up 6 percent to $14.92 on July 30. The stock has since fallen amid concerns about global technology spending. It closed at $11.92 on Tuesday. It is unclear whether EMC and Cisco discussed a price or terms during their conversations last summer, the person familiar with the matter said. CISCO, EMC AND VMWARE: LOVE TRIANGLE EMC bought VMware in 2003 for $635 million, and owns 84 percent of the software maker after spinning the remainder out into a public company in 2007. VMware was the hottest technology stock that year. It has since lost its shine due to slowing growth rates and increased competition from lower-cost products from Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz) and Citrix Systems Inc (CTXS.O: Quote, Profile, Research, Stock Buzz). That could be one concern for Cisco if it goes after VMware or EMC, because the network equipment maker would be entering into competition with companies that traditionally have been among its biggest customers and partners. Cisco, which supplies networking services for large enterprises, collaborates with software companies and other big technology players including Hewlett-Packard Co (HPQ.N: Quote, Profile, Research, Stock Buzz) and International Business Machines Corp (IBM.N: Quote, Profile, Research, Stock Buzz). "If Cisco buys just VMware, it's declaring war on Microsoft," said the West Coast technology banker. "If Cisco buys EMC, then they're declaring war in a very big way with HP and IBM." With Cisco's debt issue this week fueling deal speculation, the person familiar with Cisco's thinking said the company has plans for small and medium-sized acquisitions. Cisco has launched a debt offering only one other time in its history: in 2006, to finance its $7 billion acquisition of television set-top box maker Scientific-Atlanta. "Could it happen in 2009? Possible," said another technology banker of a Cisco-VMware deal. "But you'd have to see greater comfort that the economy is turning, and VMware would have to be separate from EMC so that it's not a $30 billion plus acquisition." (Additional reporting by Ritsuko Ando and Jim Finkle in Boston; Editing by Derek Caney)

To: Uncle Frank who wrote (2531)	2/13/2009 12:28:59 AM
From: stockman_scott	Respond to of 2955

Microsoft follows Apple into the retail business news.cnet.com

To: Uncle Frank who wrote (2531)	2/17/2009 9:13:21 PM
From: ggamer	1 Recommendation Read Replies (1) \| Respond to of 2955

I really miss those good old days when people were talking about 800 pound gorillas . . . I wonder what you and Mike think about the prospect of QCOM becoming the gorilla of All Gs JP Morgan report. Breaking into Nokia is one of the few ways Qualcomm can gain increased 3G chip share, since Qualcomm has approx. 35-40% 3G chip share and Nokia has 40% market share in phones. • JPM expects very limited impact to QCOM in FY’10 but could benefit FY'11 by $0.05 if Nokia can get 35% share of the US 3G smartphone market in FY’2011 assuming approx. 25-30M of the 90M handsets JPM estimates could ship into AT&T and TMO in 2011 are smartphones and that Nokia ships roughly 10M of those. • This agreement could be tip of the iceberg; Qcom could capture Nokia’s business in other regions, especially in the low end where BRCM could have a difficulty delivering on its new 3G supply agreement to Nokia. • QCOM could possibly obtain $800M in additional revenue and up to $0.20 of EPS if Qcom captures just 25% share of Nokia's total 3G volume by 2011/12 – which could double to 160M by then from ~80M today – equating to roughly 40M chips, assuming a $20 ASP and an incremental GM of 40%. • JPM does not believe this agreement includes Snapdragon wireless data chipset, based on conversations in Barcelona. • JPM believes "this is a strategic error by Nokia despite helping it break into the US as we believe it 'starves' other erstwhile chip providers of business, and thereby R&D dollars, helping QCOM, the 800-pound GORILLA in the market, to further distance its products from the competition leading Nokia eventually back to a single-source situation similar to what Nokia was in with supplier TI for GSM." (JPM doesn't explain why this is bad for Nokia; it just assumes that principal reliance on one company is not good. It could obviously be good for Qcom so long as Nokia doesn't demand too low prices.)