Search results matching tag 'Yahoo'

Say nyet to the pay czar

Minyanville — Tue, 06 Oct 2009 15:51:00 GMT

This article is written by Minyanville's Jeff Macke

We should have known this would end horribly. The first "red" flag was the administration inventing a job called Pay Czar.

There's a reason the communists whacked the last legitimate Czar and got away with it. The Red Army's horrifying power and sadism helped, but the real reason was the public figuring that Romanov's idiocy made it likely anyone else would be better.

Nicholas Romanov sent Russian troops to the front in World War I unarmed with instructions to use the guns of the dead Russian troops ahead of them. Pay Czar
Kenneth Feinberg is apparently set on fixing the markets by forcing banks to take half their pay in stock options.

You may remember stock options from the bubble days when everyone at Yahoo (YHOO) from the chief to the company chefs became zillionaires and retired in their 20s. That was about $300 in Yahoo share price ago.

So, in an allegedly coordinated effort, the administration has openly rigged the stock market, bought General Motors (MTLQQ), used taxpayer dollars to fund Cash for Clunkers (a program which curiously labeled cars like my Hummer and other toxic fog machine SUVs as "efficient"), and is now mandating stock options instead of cash for highly paid executives at firms that willingly or unwillingly took the low interest loans -- which were largely responsible for killing anything resembling a free market in the US.

Professional short sellers have, in effect, been sent to the front unarmed.

Perhaps most appalling is that the stock option lunacy of the Internet bubble fixed itself. That's how free markets are supposed to work -- when appalling policies are standard, artificial value is created.

The inevitable crash of the phony values forces companies to self-correct. In the case of options, the public revolted, new hires weren't willing to accept scrip pay when previous hires were 80% underwater on their options and the boards were forced to make the companies grow up.

Any first-year business school student could explain the lunacy of stock options instead of cash. They dilute shareholders and lead to absurd excesses and unintended consequences like the first receptionist hired being worth $50 million.

The business world regards options as a dangerous experiment gone horribly wrong. The non-business world charged with creating Czars of all sorts (apparently "Militant Dictator" was trademarked) regards mandating an insane dilution level of option pay as a panacea for a market collapse which already happened.

If I had taxation with representation, I'd use it to pay for business people, or at least economists, placed in the role of aiding stock markets. Czar Feinberg was probably an excellent lawyer, but law is an entirely different field than business.

"Smart" isn't fungible, which is why you wouldn't let a brilliant waiter perform your brain surgery.

The administration hired a lawyer who doesn't remember business history less than a decade old, labeled him a Czar, and gave him free rein over pay levels in businesses for which he has never worked.

Spoiler Alert: This policy will end horribly unless it's somehow shoved in the crib by the lawyers we elect as senators, congressmen, and president.

How do I know? Because I actually worked in business and traded my way through the last options bubble.

No positions in stocks mentioned.

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What if Twitter folds?

Douglas McIntyre — Wed, 12 Aug 2009 10:54:00 GMT

Twitter had another hacker attack yesterday. Several media outlets reported the micro-blogging system was down periodically though the early morning and afternoon. The service had more severe problems last week. There have been rumors that the target of the attacks is a blogger in Georgia who has been critical of neighboring state Russia.

It is difficult to see what advantage the Russians gain by upsetting the tens of millions of people outside Georgia by shutting Twitter down, many of whom may actually think well of Mr. Putin and his fellow comrades.

The Twitter outage introduces the concept of whether anyone would really miss the service if it went away. Financial experts have argued that Twitter is not worth much even with its 30 million or so unique visitors, a number that varies wildly depending on the source. The press has carried stories over the last few months reporting that the service is growing 1,400%, 500%, and, in some cases, is barely growing at all.

Ars Technica recently reviewed Twitter research done by HubSpot. The tech website reported that “HubSpot’s analysis of Twitter’s 4.5 million accounts revealed that 54.9% of users have never tweeted and 52.7% have no followers whatsoever.” Put more simply, many of the people who sign up for Twitter accounts never use them.

It is not hard to understand what people would lose if CNN.com closed down. The same is true of Yahoo (YHOO). Facebook and MySpace also appear to have a tremendous value to many of their members who seem to use the sites to keep their entire lives online. These users reveal more than everything the world needs to know about them. Many have social network online identities that are decorated with songs, videos, games, messages and great volumes of information of little interest to anyone but the holder of that social network spot.

Twitter, with its 140 character per message limitation, is no match for the capacity to put a lifetime online the way a member of Facebook can or the ability to watch the Michael Jackson funeral online the way viewers of CNN.com can.

It would probably be hard to get the average user of Twitter to say much about what he or she would lose if the service disappeared. Obviously, research shows that many of these people are Twitter members in name only. Many others seem to use the service infrequently.

That leaves some number of “hardcore” people who spend a substantial part of their time sending each other Tweets for the better part of some or, in unfortunate cases, most days. Twitter is for them, a cell phone without a voice. Based on that analogy most of the time spent on Twitter has no redeeming social or economic value, unless it connects the agoraphobic or the desperately lonely.

Destroying the handsets of most Americans would result in lower phone bills, but would hardly disrupt the world otherwise. Certain businesspeople rely on wireless communications for much of their productivity. People would miss being able to talk about where to meet family or friends.

The most important feature of the cell phone that would disappear would be its use during emergencies, which can hardly be matched by any other device. Once those useful features are disregarded, most cell phone use is simply for random conversation with very little redeeming value. In fact, its overuse is a serious problem for productivity in the workplace and an annoyance in most civilized social situations. After all, who is so important that they can not visit the doctor without tweeting or talking throughout the consultation? This happens all the time.

Twitter’s value in emergencies is almost certainly non-existent, particularly for anyone who has a phone, landline, wireless, or other communication device. No one has been able to prove that the service has any commercial value or use for businesses to communicate with other businesses or their employees.

Twitter readily admits it is trying to find a way to make money on the service it has created. A number of businesses have raised money to create companies that will add value to the Twitter service and make money by making twitter a way to pay bills or a way to get people to go to retail outlets to buy merchandise that has just gone on sale.

It may be old fashioned to look at the value of a business based on whether it provides any real service to the people who are its “customers.” The best way to evaluate that may simply be to ask what would happen if Twitter suddenly went away. In the case of McDonald’s (MCD), Google (GOOG), Microsoft (MSFT), or Wal-Mart (WMT) a sudden disappearance would be a really big problem for its customers.

If Twitter closes, or ceases to operate because its service is constantly interrupted, no one would be really affected.

Top Stocks blogger Douglas A. McIntyre is an editor at 24/7 Wall St.

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Why EA should take THQ

Minyanville — Fri, 10 Jul 2009 17:48:00 GMT

Since we hit the credit crunch, Wall Street has seen a number of busted deals -- ranging from the aborted Harman (HAR) merger to Microsoft's (MSFT) attempted acquisition of Yahoo (YHOO). But as an avid follower of the video-game industry, the failure of Electronic Arts (ERTS) and Take-Two Interactive (TTWO) to achieve wedded bliss was the one that caught my attention.

What did EA have to gain with Take-Two? It's simple: mature-rated content in the form of Grand Theft Auto, and increased market share in sports. But there's another potential target that would give EA what it wanted with Take-Two, and that's THQ Inc. (THQI).

THQ is best known for its World Wrestling Entertainment (WWE) games and other licensed fare from the likes of Nickelodeon (VIA) and Walt Disney's (DIS) Pixar. The company also has some solid fully owned properties including Company of Heroes and Red Faction.

THQ was riding high a couple of years ago on the backs of hits like Saints Row and Cars, but the effects of tough competition and some product-management missteps have the stock down about 80% from its April 2007 highs.

Saints Row, a Grand Theft Auto-style, open-world action title, would certainly help EA build share in the mature-rated games market. But the real kicker would be THQ's Ultimate Fighting Championship (UFC) license. The UFC is the leading brand in mixed martial arts -- a sport combining fighting disciplines such as boxing, wrestling, and jiu-jitsu. Once derided as human cockfighting by John McCain, the sport has become increasingly mainstream to the point that Bud Light (BUD) and Harley-Davidson (HOG) grace the UFC's famous octagonal cage.

Luckily for THQ, the 18- to 34-year-old male demographic that makes up a great deal of the UFC fan base likes video games. A whopping 2 million units of UFC 2009 Undisputed were shipped within 2 weeks of its May 19 release. And since this sport is still illegal in New York and Massachusetts, there's still plenty of room for growth.

EA is planning a rival title comprised mostly of non-UFC fighters. But according to a Sports Illustrated report, UFC president Dana White put the word out that fighters considering signing with EA had better think twice -- an ominous warning given the company's virtual monopoly on the sport in North America.

The solution? EA should just buy THQ. EA is sitting on $2 billion-plus in cash that isn't generating much in interest; buying THQ makes a heck of a lot more sense than leaving all that money in the bank.

EA would be partnered with the UFC -- the best promotion in the world. It would also own the development house that put together the critically acclaimed and top-selling Undisputed, which would take a lot of the risk out of the equation.

Could EA make a hit MMA game? Yes. Is that guaranteed? No.

THQ has an enterprise value of about $335 million, so EA could offer THQ shareholders a significant premium -- 50% or more -- and the deal would still make sense from a financial standpoint. For $600 million or so, EA would be getting its hands on an incredibly hot sports franchise with room for significant growth in coming years.

In fact, an extremely conservative free-cash-flow model indicates that the UFC license alone is easily worth hundreds of millions of dollars over the long term. Moreover, EA would be getting its hands on other THQ licenses -- including the cash cow WWE, and some valuable intellectual properties such as Company of Heroes. Anything that loses money or competes with an existing EA property could simply be eliminated.

The industry's only going to keep consolidating -- EA buying THQ is the next logical step.

Top Stocks blogging partner Todd Harrison is founder & CEO of Minyanville.com. This post was written by Minyanville Contributor Michael Comeau.

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In Google we trust -- but should we?

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James Dlugosch — Wed, 08 Jul 2009 22:11:00 GMT

So I visited www.bing.com searching the words, “operating system”. At the top of the results page I find a story on Google’s plan to launch its own operating system in direct competition with Bing owner Microsoft's most critical product.

Now that is good humor. I suppose if I went to www.google.com and typed in the word, “search”, I would get a story on Microsoft’s Bing. (Editor's note: Microsoft publishes MSN Money.)

Watching this latest competition between Microsoft (MSFT) and Google (GOOG) (Read "Will Google's Chrome Chip Away at Microsoft"s Veneer?" for my take on the details) will provide amusing story lines for years to come. Most interesting is that the stakes here are so huge.

Microsoft’s death grip on operating systems has been in place since the birth of the personal computer. Google, the upstart, dominates the search category has helped redefine Internet use and advertising.

As is typical of Microsoft, it has been incredibly envious of Google’s effort and success. Millions of dollars have been spent in efforts to better compete in search, including a failed attempt to purchase Yahoo (YHOO).

At the same time, Google and its open system environment made clear its intentions to be more than just search. While being subtle about strategy, there was no doubt that the upstart planned to compete directly with Microsoft on its home turf.

Now we learn just how real those plans are. In a blog announcement last night, Google stated that it would launch an operating system in the near future. Targeting low priced notebook computers, the company said it would make the software available to customers in the second half of 2010.

Look past the sensational headline and I see desperation here. This Hail Mary move is directly correlated to the surprising success Microsoft is having with the launch of its search engine, Bing.

While it is a big deal that Google will compete head to head with Microsoft's OS, the launch of the product is still a year away or more. In technology terms, that is a lifetime. Anything can happen between now and then.

The reason for the release now is that Google is rightly petrified that Bing is making some serious inroads. I suspect there is plenty of inside information to suggest that Bing is doing better than anyone could have ever guessed.

Any sane person would recognize the vulnerability of Google. With very few barriers to entry, competition could be expected. Where Google excelled was with branding and simplicity.

The customer is used to using Google and not likely to change. Or so we thought. Perhaps a change to Bing is easier than expected.

What investors in Google counted on was the ineptitude of Microsoft, but that ineptitude looks to be replaced by fortitude and persistence. Bing is a nice product, and I would be worried if I were Google.

As for operating systems, we have seen this game before. Microsoft has destroyed others that have encroached on its space. It is easier for me to see success competing in search than it is competing in operating systems.

Since Bing was launched, shares of Google have dropped hard. They saw a very small bump on the news of the operating system. Microsoft shares, on the other hand, have been appreciating nicely.

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Going forward, I expect that trend to continue. This is setting up to be a great pair trade: Go long Microsoft and short Google. This Google announcement smells like panic to me. At a minimum, it should raise your eyebrows too.

If you are interested in speculating on low-priced stocks, I launched a new service called, Penny Stock Winners. Please check it out.

Editors Note: Microsoft publishes MSN Money.

Cybercrime on Facebook

Douglas McIntyre — Tue, 30 Jun 2009 10:49:00 GMT

Facebook is becoming one of the most dangerous places on the Internet. According to Reuters, “scammers break into accounts posing as friends of users, sending spam that directs them to Web sites that steal personal information and spread viruses.”

Since Facebook has, by some measures, more than 200 million members, the problem is extremely serious and could undermine the growth of the social network and cut into the time that current members spend on the site.

The cybercrime issue could also damage Facebook’s reputation with marketers, a reputation is just beginning to build in the hope of increasing its modest revenue by bringing in large national advertisers. Industry sources suppose that Facebook will lose a modest sum of money on $500 million of revenue this year, a tiny sum compared to the size of its audience.

Facebook is already struggling to get advertisers to pay attention. It is hard for marketers to target discrete demographics and behavior patterns, which is what large companies have grown accustomed to being able to do on Web portals like MSN, AOL and Yahoo! (YHOO). Facebook’s tens of millions for friends are often leery about giving out private information, and the cybercrime attacks are likely to increase concerns, making their behavior patterns even more impenetrable for advertisers.

Facebook’s success may lead to its failure. A huge collection of unruly people, some of whom have sinister intentions, is not the place that major marketers want to build or maintain their valuable brands.

MSN is a service of Microsoft.

Top Stocks blogger Douglas A. McIntyre is an editor at 24/7 Wall St.

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Big company CEOs on Facebook

Douglas McIntyre — Thu, 25 Jun 2009 10:45:00 GMT

A public relations executive recently evaluated the number of Fortune 100 CEOs who had presences on social network sites including LinkedIn, Twitter, Facebook and online information site Wikipedia. Almost none of the chief executives were involved with the Internet destinations, which should not have been a surprise to anyone.

The question raised by the PR person is why executives do such a poor job managing their images online. A better question is why a CEO would want to be involved with the Web sites at all.

Social network advocates have reached the point where they believe that the sun rises and sets on the interactions among their members. Facebook has more than 200 million visitors, by one measure. Wikipedia is one of the 10 most visited sites in the U.S. The frenzy of activity around having multiple and well-managed online presences has become a mania without a purpose.

Facebook and MySpace, the two largest social networks, are widely used by agoraphobics and people in state prisons. Almost no one else would have the time to “manage” identities all day long. As a matter of fact, a number of people with identities on the sites are impostors. One of the things these properties have not been able to do is eliminate the activities of pedophiles and other miscreants.

CEOs would be mobbed with requests from other Facebook and MySpace members who want to connect with them as “friends” as they are known on the sites. These people could be sacked employees or unhappy shareholders. The only large company CEO who could build a positive presence on a social network is one running a company with one shareholder and lifetime employment for all workers.

Wikipedia is another place executives should avoid. Many of the entries are written by people who distort the public’s view about some person, historical movement, product, or service. The entry on one long-time GM CEO, one of the great managers of the last century, has a notation: “This section contains weasel words, vague phrasing that often accompanies biased or unverifiable information. Such statements should be clarified or removed.”

Most corporate image makers do not know what a “weasel word” is and are probably not willing to find out. Alfred P. Sloan had and still has a sterling reputation and is known worldwide for his management prowess. The fact that he cannot get a complete and accurate portrait in Wikipedia should disturb any CEO who hopes to burnish his image or that of his company at this online information repository.

The general conviction among people who use social networks and Web sites that pretend to share accurate information is that this is the wave of the future when it comes to sharing information, both personal and public. Simply looking for facts and figures on search engines like Yahoo! (YHOO), Google (GOOG), and Microsoft’s (MSFT) Bing is not enough. Facts lack flavor and social networks are all about flavor, impression, and the intuitive world.

No doubt, corporate communications executives all over America are attending seminars, paid for by their companies, about how to manage a reputation online. Experts who know nothing beyond what they can discover by having “friends” at Facebook and MySpace come and lecture about the marvel of the new age of impressionistic information. That is simply another way of saying no information at all.

Social networks are meant to be like Boy Scout Jamborees where young people and their troop leaders mass by the tens of thousands on hundreds of acres of land. The scouts set up tents, communications facilities, and crude means of survival. There are no amenities, the bars and private jets that CEOs are used to. Everyone at the Jamboree is kindly regarded by his fellows, even if he is, in real life, a thug or an accountant. It is not the sort of environment the ruler of a large business could survive in. It is also a place and an event that has no utility for him.

CEOs will never come to the social networks in any numbers. Most have enough reputation problems and they do not need those magnified by people who have nothing better to do than go online and insult one another.

Top Stocks blogger Douglas A. McIntyre is an editor at 24/7 Wall St.

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Five reasons why Abercrombie's stock looks pumped

Minyanville — Mon, 22 Jun 2009 17:12:00 GMT

Here's what I’m focused on this fine Monday morning:

Abercrombie & Fitch (ANF):
Those of you that actively follow Ticker Shock know I’m sweet on retail stocks for the long run. This is simply because I believe there's a huge amount of upside potential to be had, as Americans are generally big spenders.

In spite of my longer-term bullish outlook, I haven’t been so crazy about Abercrombie & Fitch, as of late. After all, its first-quarter results left a lot to be desired. Additionally, its stock has seen better days.

However, there was some positive news that deserved a little more attention than it got. The news came out last week that it's going to close its Ruehl stores.

My thoughts:

1. The idea of closing the concept is a good one, if for no other reason than its recent comp-store results were awful, making the overall company look bad. In May, the concept’s comps (Ruehl’s) were down 33%. In April, they were off 30%.

2. This move sends a message to the Street that it’s not going to sit idly by and accept such underperformance.

3. If this economy gets fired up, this is one retailer that could really smoke. I’m particularly taken in because it seems the Street’s overall expectations are very low.

4. I wouldn’t mind seeing executives try the stock on for size. That would impress the Street and give existing shareholders a bit more confidence.

5. I’m wondering if we could start to see the estimates for next year ratchet higher?

These guys have my attention and are on my watch list. Stay tuned.

Yahoo (YHOO):
A couple of quick comments here on news that was being circulated after the bell on Friday:

“Yahoo Inc. said it will incur $22 million to $27 million in restructuring charges in the current quarter to account for previously announced layoffs of 5% of its staff. The Internet company detailed the charges in a regulatory filing on Friday, 2 months after CEO Carol Bartz announced plans to cut nearly 700 jobs.”

My thoughts:

1. Nobody likes when the word “charge” is thrown around, but I think the move is a good thing. I’m glad Bartz seems to be getting off the dime, and I expect more from her on the cost-cutting front (and in other areas) going forward.

2. I know I’ve said it previously, but I'm going to offer it again: I wouldn’t count out the possibility that Microsoft (MSFT) and Yahoo could still end up in a warm embrace. I’m a bull, what can I say?

Goodyear Tire (GT):
Per the Associated Press:

“The Goodyear Tire & Rubber Co. is offering buyout packages to 550 workers at its tire plant in Union City, Tennessee, as the company reduces costs due to weak demand. Goodyear, the biggest US tiremaker, said the downsizing will result in an after-tax restructuring charge of approximately $60 million primarily in the second quarter of 2009.”

My thoughts on the overall situation:

1. The news doesn’t affect my long-term feel that this stock is a great play. My big-picture thinking is as stupidly simple as this: Over time, populations will likely increase. Therefore, the number of all types of vehicles will go up, increasing the demand for tires. Unless, of course, I’m totally wrong and the Flintstone mobile finally becomes a reality.

2. Obviously, I’m not too crazy about the loss that analysts are predicting this year. But if it can hit the $1.21 estimate for 2010, the stock could have some nice upside from these current levels.

Walgreen Co. (WAG):
I certainly don’t think the big-name drug store’s earnings results are going to be a cure-all. But they weren’t all that bad, either.

In the period, it earned $0.53; analysts were looking for $0.56. Meanwhile, its sales line came in a bit north of $16.2 billion, which did appear to be better than expected.

My thoughts:

1. I'd hoped the bottom line would've come in a little better, and I’m guessing investors did, too.

2. With the larger market looking like it could take a hit at the open and these not-so-terrific numbers, it may take a hit in early trading.

3. I'd view a sell-off as an opportunity. Ideally I’d like to pop open this prescription bottle in the mid $20s.

4. It's going to need a few quarters of beating expectations for investors to really warm up to this story again.

Merck (MRK):
There was some news out this morning that deserves a look.

According to the Associated Press:

“Drugmakers Merck and Co. and Schering-Plough Corp. (SGP), which are in the process of a $41.1 billion tie-up, said Monday the Federal Trade Commission has asked for more information about the deal. Merck of Whitehouse Station, NJ, and Schering-Plough, Kenilworth, NJ, said they expected the request, which was made under federal antitrust law. The companies intend to cooperate with the request.”

I'm not reading into this news one way or the other. That said, if something happens and the deal gets nixed, I think the shares of both companies get battered like a screen door in a hurricane. I think both Merck and Schering need this combination to happen.

Have a great day!

Top Stocks blogging partner Todd Harrison is founder & CEO of Minyanville.com. This post was written by Minyanville Contributor Glenn Curtis.

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Bing is barking up Google's tree

Minyanville — Tue, 16 Jun 2009 15:06:00 GMT

Is it possible that Microsoft (MSFT), the company that geeks love to hate, has done something right with Bing?

Early chatter suggests that Bing could become a credible challenger to Google’s (GOOG) long-held position as king of Internet searches.

“(Google) co-founder Sergey Brin is so rattled by the launch of Microsoft’s rival search engine that he has assembled a team of top engineers to work on urgent upgrades to his Web service,” the New York Post reports.

Google won’t comment on the alleged panic swirling through its headquarters in Mountain View, California and simply notes that it always has a team of engineers working to improve its search engine.

If Microsoft has developed a credible challenger to Google, where does this leave Yahoo (YHOO)? Google now grabs about 60% of the lucrative search market compared with Yahoo’s 20% and Microsoft’s 8%.

In 2008, Yahoo co-founder Jerry Yang turned down a $47.5 billion takeover bid from Microsoft. Yahoo CEO Carol Bartz, who took over in January, has said that every aspect of her company is under review in an effort to spur growth. She’s also open to discussion with Microsoft about a search partnership.

But if Bing can compete with Google, does Microsoft need Yahoo -- especially if the new search engine can grab and hold significant market share?

Microsoft launched Bing earlier this month as an upgrade to its clunky default search engine. According to press reports, Microsoft is spending $80 million to $100 million in advertising on Bing. Last year, Google spent about $25 million on all of its advertising, according to AdAge.

Google harrumphs that Bing is nothing new. “It’s not the first entry for Microsoft,” Google CEO Eric Schmidt told the Fox Business Network. “They do this about once a year.”

Maybe. But unless Yahoo gets on the stick, it could be kicked to the number-3 search engine in the hearts of web surfers. That wouldn’t be the best of all possible worlds for the struggling company. Could it be that Yahoo is headed the way of Alta Vista, Lycos, or Excite: search engines from the past now relegated to oblivion?

It’s hard to imagine that Bing will dethrone Google, but at least Google would have a real competitor. And hey, maybe the geeks of the world would stop throwing bricks at Microsoft.

Top Stocks blogging partner Todd Harrison is founder & CEO of Minyanville.com. This post was written by Minyanville Contributor Scott Reeves.

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Has Microsoft passed Yahoo! in search share?

Douglas McIntyre — Fri, 05 Jun 2009 16:30:00 GMT

Microsoft (MSFT) has been fighting for years to be taken seriously in the online search engine business. But its plans for a strong foothold have been undermined with each new measurement of U.S. search market share. Most research services show Google (GOOG) with about 65% of the market, Yahoo (YHOO) with 20% and Microsoft with as little as 8%.

Redmond hopes its new Bing search engine will change its bad fortune. New research shows the quality of Bing search results and the size of the Microsoft marketing campaign may have worked.

Figures from StatCounter, reported by TechCrunch, show Bing’s share in the U.S. as 16.28% Thursday. Yahoo!’s share dropped to 10.22%. Google’s figure was 71.47%. StatCounter monitors the activity of 2 million online surfers.

If the data is even close to true, the big question is why Microsoft’s visits have spiked and whether the spike is at least partially permanent. Yahoo chief executive Carol Bartz said she expected some initial fascination with Bing, but her concern about the new product is so low that she believes Yahoo doesn't need Microsoft as a partner to give her company a brighter future. The market has assumed that Microsoft and Yahoo would come to some agreement to merger their search business, a move that would save Yahoo engineering and research costs and improve the portal company’s revenue.

Whether Microsoft can keep even a modest part of its gain will obviously depend on what will in many cases be the first and sometimes only impression people have when they test it. It would not be out of the question if the world’s largest software company could come close to parity with Yahoo. If so, the Yahoo board will once again rue the day that they did not take a buy-out offer from Redmond or at least form a search alliance to challenge market leader Google.

An improvement in Microsoft’s position would send Yahoo shares back to $10. Yahoo's shares are trading down.

Note: MSN is owned by Microsoft.

Top Stocks blogger Douglas A. McIntyre is an editor at 24/7 Wall St.

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Which Tech Stocks Will Lead the Way in This Recovery

Louis Navellier — Mon, 20 Apr 2009 00:10:00 GMT

Wall Street does a fantastic job of making the simple complex. The more Wall Street can confuse investors, the more dependent investors become on Wall Street for products and services. But the stock market is not really that complicated. If companies are growing, you can profit.

The key is to look at the business cycle. When the economy grows, business grows. That growth translates into stock values that go up. Now I like to find stocks that can make money even when their sectors aren't typically fueled by economic growth, like my 5 Hot Stocks in Ice-Cold Sectors.

But it's equally as profitable to look to sectors that get a tailwind from economic activity. Technology is one of those sectors right now.

Why? When an economy slows during a recession, demand for goods and services is put on the back burner. It may seem like demand disappears, but in fact demand is still there. That demand builds over time and ultimately fuels the economy when times are good again.

At the same time, difficult times spur innovation. The primary objective of that innovation is to improve productivity. Improved productivity is the lifeblood of any recovery. As such, productivity allows companies to get more out of less. That benefit then fuels more investment that, in turn, results in job growth and expansion of the economy.

The question then for investors is, what segment of the market is at the heart of innovation? The answer is obviously technology.

It is technology that has led the industrial economies to superior growth time and time again. It will continue to do so in the future. The ability to innovate and enhance productivity explains why technology stocks perform well during an economic recovery.

There is a reason the Nasdaq is in positive territory this year while the other major indexes remain below water. Will that trend continue?

The business cycle suggests that technology will, indeed, be the leader of this recovery. A handful of technology leaders release earnings this week, which will give us an idea of how technology is faring at this stage of the cycle.

IBM Should Beat Analysts' Expectations

First up to the plate was International Business Machines (IBM). IBM missed on revenue, but beat analysts' expectations on earnings. In recent months, IBM has demonstrated strength in its service business, despite weakness in the economy.

I rate IBM a B, or Buy.

Yahoo Not Worthy of Investment Now

Following IBM is Yahoo (YHOO) on April 21. With the company undergoing transition to new leadership, I do not have robust expectations for the second tier search and internet portal.

Google (GOOG) is the leader here, and I see nothing that happened in first quarter to show that YHOO has improved its status here. The only real reason to own YHOO lies in hope for a sale of the company or a joint partnership with Microsoft.

Pinning your investments on such hope is a mistake. I rate the stock a D or Sell.

Apple Has Bright Prospects

On April 22 the real superstar in technology, Apple Computer (AAPL), steps to the plate with its earnings report. The nonsense regarding the health of Steve Jobs has finally dissipated, and the stock has rallied hard in the last month.

That rally will continue with a strong earnings report. I rate AAPL a B or Buy.

Closing out the week on April 23 is Microsoft (MSFT). Slowly, but surely MSFT is changing its ways. The dominant position in operating software has been challenged by Google (GOOG).

Nothing fuels innovation like competition. I like what I am seeing from the company with respect to efforts in search and a willingness to cut its expense structure. This period’s earnings report will help shed some light on the effectiveness of those changes.

I rate MSFT a C or hold.

Investors can make profits by following the business cycle. Historically, technology is at the center of any economic recovery from recession. I don’t expect anything different this time around.