The dust is settling after the withdrawn purchase offer of Yahoo Inc. (NASDAQ: YHOO) by Microsoft Corporation (NASDAQ: MSFT). During that fascinating process, speculation ran high as to why Steve Ballmer chose the strategy that he did. People were asking what the probable outcomes could be and what would possibly be created by the acquisition. What I have found to be lacking in the realm of the public keyboard is a synopsis of what exactly Steve Ballmer has accomplished through this seemingly fruitless process.

Industrial progressive rock band Nine Inch Nails have made another album available to fans and listeners for free this morning. The Slip, the band's first new album in two months, and third in the past year, was posted on a new website for fans to download free of charge. The move comes directly from front man Trent Reznor as a thank you to fans for their "continued and loyal support over the years."

Billboard called the release "a surprise move" but given Reznor's stance in the last year about the music industry and dislike of overpricing it is not all that surprising. It's also not the first time he has released an album this way. In March, Ghosts I-IV was released nearly identically as The Slip. The new album will also only initially be available from the band's website, but will see a future "traditional" physical release on CD and vinyl. Ghosts I-IV was released on CD and other physical formats about a month after it was first released in early March.

I have to say once again (like so many of the other recent Internet only album releases) that this is another great thing for the music industry. Although Reznor and NIN are essentially independent artists now without the backing of a major labor group, it does show that music does not have to be about making as much money as possible. At the end of the day though, neither Reznor nor NIN are probably going to suffer financially from the move, but that might just show us how much the music industry does not have to lose.

Once again investors get left holding the bag.

Microsoft (NASDAQ: MSFT) shareholders should breathe a sigh of relief for not overpaying for an internet search company, Yahoo (NASDAQ: YHOO) where CEO Jerry Yang let his ego get in the way of handsome profits. Yang rejected the $47.5 billion offer that Microsoft put on the table. Why? Because he thought the company is worth more than $50 billion. As reported by the AP: "Clearly there's frustration," said Darren Chervitz, co-manager of the Jacob Internet Fund, which owns Yahoo stock. "I am not even sure if Yahoo cares about its shareholders because they didn't show much regard for shareholders' best interests in this process."

Yang actually thinks that a more sophisticated advertising platform is the secret sauce needed to produce a spike in revenue growth. Keep in mind that revenue grew by only 12% last year, and there is no indication that that number is going to be much higher in '08. Yang thinks that he will be able to grow revenue's by 25 percent in 2009 and 2010. Uh Huh!

I think that today's selloff in Yahoo stock will be an indication of what the public thinks of Yang's plan.

Could it be that in the long run he will be proved correct? I doubt it but only time will tell.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 5/5/08.

Microsoft (NASDAQ: MSFT) may be much better off by not overpaying for Yahoo! (NASDAQ: YHOO). To pay almost $45 billion for a company that's really struggling seems extreme -- especially since I think Time Warner (NYSE: TWX) will spin out AOL in a few months. Microsoft could buy AOL much, much cheaper than Yahoo.

AOL brings to the table both traffic and many properties, including BloggingStocks! The problem is that revenue is declining and so are unique visitors, down from 110 million average unique visitors in the fourth quarter, to 109 million in Q1.

I think that with Microsoft's focused management, it could achieve the same turnaround at AOL that it is anticipating achieving with Yahoo, only it would not have to spend $45 billion.

Some analysts have said that AOL is a consolation prize for the loser in the Yahoo! battle. I think Yahoo! is the booby prize and AOL might just be the better deal.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 5/1/08

The recently reported three day e-mail blackout experienced by the consumer internet customers of Hughes Communications Inc. (NASDAQ: HUGH) has ended. Although the system has not swung over to its new enhanced version, it appears that Hughes technical staff has opted to reawaken the previous e-mail application to restore that service to its customers. Personal comment from the company regarding this situation was unavailable as of this writing.

What little preview I received of the attempted e-mail upgrade by HughesNet was enticing. It looked streamlined, intuitive and was definitely appealing to the eye. When the company completes its adjustments and makes the hoped for upgrade available, I'll provide my full assessment of the new service for our readers.

A simple 24 hour email outage for a system upgrade has turned into a 3 day technical nightmare for Hughes Communications Inc. (NASDAQ: HUGH). Initially, the company informed customers that email service would be suspended for a 24 hour period, from 6pm Saturday, April 26 through 6pm Sunday, April 27. As of this writing, HughesNet email service is still down.

I guess one can live without email for a few more days, even though some might have important data to transmit via email. It's data which could affect one's career advancement. I guess in my case I could hand it off to my ground based mail carrier. However, because I have become quite accustomed to lackluster performance from Hughes Communications, I'm glad I'm not invested in it.

[Note from the author: Hughes email service fully restored in original format as of 04-30-08]

Discretion is the better part of valor -- that's what I was always taught. Perhaps the time for a strategic withdrawal has come in the battle of Microsoft Corp. (NASDAQ: MSFT) vs Yahoo Inc. (NASDAQ: YHOO). Somehow, though, I can't imagine it will take that turn, as I read the analysts, strategists and pundits. How could it have become so adversarial? Surely something ugly may be at hand.

Did Steve Ballmer envision this type of scenario when launching his original bid for Yahoo? Did he ever imagine the attempted synergy would become a battle of wills as much as money? To what degree does pride factor into this pending recipe for disaster? I dare say that is what it has all come down to now. Pride goes before a fall, they say.

Does Steve Ballmer have the grace within him to fold his tents and quietly withdraw? Or shall his siege works be lain against the walls of Yahoo in an attempt to forcibly take it? Already he has warned that he will appeal to the sensibilities of Yahoo's investor rank and file. It's a tactic which has been used in many a war. However, attempting to romance the populace away from their leaders seldom, if ever, has worked. In the meantime, Microsoft's own shares are on the decline, diluting the strength of its acceptable offer.

I submit to you that at this time Microsoft should disengage from the situation entirely. Giving Yahoo some time to fully digest the reality of what it is facing might be a worthwhile strategy. To force the matter any further right now may only lead to the degradation of the reputations of both companies. That is something that no one desires.

The powerful silence emanating from an adversary which has quietly withdrawn places nothing but unanswerable questions on the horizon.

Gary Sattler is a freelance blogger. He does not knowingly have interest in the companies mentioned in this blog post.

Would you like a couple of failed Internet page loads? I have a bucketful of them for you. Would you like your e-mail tied in knots? I can help you out there also. It's all compliments of my new HughesNet DSL connection. If it was a new car, I'd take it back to the dealer. If it was a dish rag, I'd have thrown it out by now.

And it appears that I'm not alone in my assessment of this consumer internet service from Hughes Communications Inc. (NASDAQ: HUGH). I blogged about it previously on one of our sister blogs. I've received feedback there from other Hughes customers who are as unhappy as I am with the Hughes service. Yet not one comment came to their defense. No, not one good thing have I heard.

Overall, the company's stock is doing well, and analysts are calling it a strong buy. Oscillating in a range between $48 an $55, it's holding the middle ground between its 52 week high and low. The company has made some major upgrades for its commercial customers as of late, but honestly, what is it doing for me, the little guy?

If this is the way that Hughes serves its consumer clientele, it's a good thing that it has a commercial division. Because from the way I see it, the company isn't long in the private sector. Someone needs to remind Hughes that word of mouth travels quite fast on the Internet. We're not happy out here with Hughes, and someone might find that out. In the mean time though, its stock is holding its ground.

Gary Sattler is a freelance blogger. He does not knowingly have interest in Hughes Communications, (except for the two year contract they're going to have to ride out with him.)

AT&T said it will cut about 4,600 jobs, or roughly 1.5% of its work force, as it integrates several businesses and streamlines operations, The Associated Press reported Friday.

AT&T (NYSE: T) also said it plans to take a $374 million first quarter, pre-tax charge in connection with the job cuts, The AP reported. The company added that, longer-term, the jobs cuts will be offset by staff additions as it invests in growth areas. The company had about 309,000 employees as of December 2007.

Shares of AT&T rose 31 cents to $37.88 in mid-day Friday trading on the news.

AT&T, which posted Q4 2007 EPS of 71 cents, in-line with the Reuters Q4 2007 consensus estimate, has made several acquisitions in recent years, including SBC Communications and BellSouth, as part of its business model revision for the digital age.

With everything from call centers to web site design being outsourced, the clear trend in the business world is to outsource almost any task that can be done cheaper and quicker somewhere else. Reports that CBS (NYSE: CBS) and cable news pioneer CNN, owned by Time Warner (NYSE: TWX) are in talks about outsourcing the news, should come as no surprise.

According to a story in The New York Times, "Broadly speaking, the executives described conversations about reducing CBS's news-gathering capacity while keeping its frontline personalities, like Katie Couric, the CBS Evening News anchor, and paying a fee to CNN to buy the cable network's news feeds. "

With CBS stuck in third place among major networks for years, and general viewership of the evening news falling due to alternative news outlets such as cable news, blogs and internet sites, this tie-up would make economic sense. CBS would be able to keep its brand name and substantially cut costs, as they would be able to take CNN news feeds from around the country.

Back in January, Scrabble makers Mattel (NYSE: MAT) and Hasbro (NYSE: HAS) sent cease and desist notices to four parties involved with the production and distribution of Scrabulous, a popular Facebook application based on Scrabble.

The company has since reportedly entered into negotiations with the creators of Scrabulous, aimed at working out some kind of licensing deal, but now it seems that Mattel may be deciding to do it without them.

"Scrabble by Mattel" has appeared on Facebook in Beta mode, although it is technically only available to players outside of North America, where Hasbro owns the rights.

According to the New York Times, the official version of Scrabble has received mixed reviews so far: "Facebook Scrabble takes a long time to load, does not always quickly update to show recent moves, and the words the game will accept do not reflect standard Scrabble dictionaries, or even the English language."

Given how popular and functional the Scrabulous app is, pairing up with its Calcutta-based creators seems like the best solution for Mattel and Hasbro -- by agreeing not to sue them for past copyright infringement, they could probably get them to run the game for a cut of the substantial advertising revenue it generates.

Tens of thousands of Scrabulous players threatened to boycott Mattel products if Scrabulous is shut down.

Readers of this space know that one of the preferred plays is a utility company with a demonstrated business model, solid balance sheet, ample cash, decent dividend, and with an extra revenue stream / business that could provide additional growth. Verizon is one such company.

Verizon is not your typical, former AT&T (NYSE: T) unit. Verizon Communications (NYSE: VZ) is a modern, diverse telecom provider for the early digital age.

Verizon has three impressive divisions: landline, wireless, and business services. And the numbers speak for themselves: the landline unit has an astounding 41.4 million subscribers in 28 states, Verizon Wireless is the U.S.'s second largest wireless provider, and business services is making inroads on medium/large enterprise customers and government agencies.

Further, the company's fiber optic broadband/video service, FiOS emerged as a competitor to comparable cable broadband/video services: look for VZ to continue to grab market share in key markets, as the service is rolled-out in the years ahead. The Reuters F2008/F2009 EPS consensus estimates for VZ are $2.65/$2.92.

Well that was fast -- in August 2004 Google Inc. (NASDAQ: GOOG) went public at $80 a share and the stock climbed as high as $742 in November 2007, an 828% rise. But since then it's lost 37% of its value and some executives have bailed. The New York Times reports that Google's VP of Engineering, Douglas Merrill, just bolted for a position as president digital at record company, EMI.

But this is not the first of its executive departures. Google has also lost the following:

• In March, Sheryl Sandberg, who was VP for global sales and operations, left to become chief operating officer at Facebook
• CFO George Reyes announced last August that he would retire. At the time, Google said it hoped to find a replacement for him by the end of the year but has yet to appoint a new CFO

Meanwhile, Sys-Con reports that Google's U.S. growth is slowing. In 2007 its click-through rate grew between 25% and 40% but in January 2008 click-through growth was flat and in February click-throughs grew a mere 3%. And it gets worse --plain old Google searches that have nothing to do with paid clicks are also down 5% or 6%. Google attributed the January slowdown to its attempts to improve the quality of clicks and tighten up on accidental clicks.

Generally, one would not list a tech stock as a defensive play. Cisco Systems may be an exception.

Two fundamentals warrant the advocacy of Cisco Systems (NASDAQ: CSCO) as a defensive play: 1) the company is the world's largest supplier of computer internet-network systems, and 2) emerging market growth. So long as the internet remains intrinsic to business processes in emerging and developed markets and so long as emerging markets continue to grow, Cisco will benefit in the years head. Analysts project a roughly 12-15% annual revenue growth rate for CSCO for 2008-2009. Another positive: look for CSCO's advanced technologies unit to continue to contribute impressively to the company's revenue, on video system business.

Further, skip (for now) the debate regarding the possible 'broadband shortage' and focus instead on the counterargument. Assume deteriorating conditions in the U.S., perpetually high energy prices slowing global growth, and increased protectionist sentiment. The impact on Cisco? Most likely, CSCO keeps growing, albeit at a slower rate, but it will grow, nonetheless. The Reuters F2008/F2009 EPS consensus estimates for CSCO are $1.52/$1.69.

I've focused some of my writing and research on these pages on the hype surrounding WiMAX, an emerging telecommunications technology that could make broadband wireless access a reality. Some of the best WiMAX technology in being developed in Israel by firms like Alvarion (NASDAQ: ALVR) and Ceragon (NASDAQ: CRNT). In spite of on-again, off-again news coming out of big players like Sprint Nextel (NYSE: S), my thesis has always been that we can debate all we want as to whether WiMAX will hit in the U.S. The truth is that WiMAX is already happening in the rest of the world.

MarketWatch is out with a story this morning about some of the action happening in the telecommunications space surrounding WiMAX. In Big investments rumored for wireless technology, MarketWatch reporter, Therese Poletti takes the usual tack by pointing out both sides of the argument that WiMAX "is full of potential to drive cheaper, high-speed wireless data, voice and video communications, or a dismal failure, depending on who you talk to."

The same article cites a spokesperson for chip-giant, Intel (Nasdaq: INTC), as saying that Intel "remains bullish on WiMAX, saying the technology is definitely 'ready for prime time.'"
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