You've heard of the Monday blues, right? Monday is a depressing day, while Friday is supposed to be the best day of the week. Unfortunately, that's not the case with chip maker Advanced Micro Devices (NYSE: AMD). The stock closed down over 7% on extremely high volume.

According to Reuters coverage, AMD, which issued results yesterday after the bell, beat estimates on both the top and bottom lines. In fact, the bottom line was particularly impressive. AMD lost 18 cents per share. The belief was that the company would lose as much as 42 cents per share.

The chip sector is pretty hot. Intel (NASDAQ: INTC) reported a respectable quarter this week, and the stock is near a 52-week high. Also close to their highs of the year are Texas Instruments (NYSE: TXN) and Advanced Micro Devices (NYSE: AMD).

Well, you can add Xilinx (NASDAQ: XLNX) to the list. The company, an expert on programmable logic, reported an earnings-beating quarter yesterday after the bell, according to Reuters. Xilinx made 23 cents per share in Q2, a penny ahead of analyst expectations. Revenue likewise was slightly ahead of the projections.

Analyst upgrades:

• Citigroup upgraded Advanced Micro (NYSE: AMD) to Buy from Hold and raised its target to $5.50 from $4.25 citing valuation and expectations for the company's competitive position and gross margins to improve.
• Barclays upgraded American Express (NYSE: AXP) to Overweight from Equal Weight citing long-term earnings growth as the company benefits from declining charge-offs and credit costs. The firm has a $38 target on the stock.
• JPMorgan upgraded Arch Coal (NYSE: ACI) to Overweight from Neutral and raised its target to $22 from $19 citing the FTC approval for the acquisition of Jacobs Ranch mine and valuation.
• Bebe Stores (NASDAQ: BEBE) was upgraded to Overweight from Equal Weight at Stephens.
• Cheesecake Factory (NASDAQ: CAKE) was upgraded to Neutral from Underweight at Piper Jaffray.
• Ashland (NYSE: ASH) was upgraded to Buy from Hold at KeyBanc.

Advanced Micro Devices, Inc. (NYSE: AMD) could be in for a rough session following the release of its second-quarter results. Last night, AMD confessed to a quarterly loss of $335 million, or 49 cents per share; excluding items, the loss widened to 62 cents per share. While this is certainly an improvement from AMD's year-ago loss of $1.16 per share, the results were notably worse than analysts expected -- consensus estimates called for a loss of just 53 cents per share.

Meanwhile, revenue for the period contracted 13% on a year-over-year basis, dwindling to $1.18 billion. This figure actually managed to exceed consensus estimates, which predicted quarterly sales of $1.13 billion. Unfortunately, margins for the quarter fell sharply from first-quarter levels, dropping from 43% to 37%.

Texas Instruments (NYSE: TXN), whose peers include Qualcomm (NASDAQ: QCOM), Advanced Micro Devices (NYSE: AMD), and Intel (NASDAQ: INTC), reported results for the second quarter after the bell on Monday. As can be expected, the statistics weren't great. However, there were a couple silver linings.

Revenues declined 27%. Earnings per share dropped a whopping 55%, coming in at 20 cents. Excluding items, Texas Instruments made 25 cents per share. Reuters says this is two pennies above analyst expectations.

As expected, chip maker National Semiconductor (NYSE: NSM), whose colleagues include Advanced Micro Devices (NYSE: AMD), Intel (NASDAQ: INTC), and Texas Instruments (NYSE: TXN), lost money during its fourth quarter.

However, the loss wasn't as bad as feared. According to Trey Thoelcke's earnings preview, National Semiconductor could have lost up to 42 cents per share. Thankfully, according to the company's press release posted on Thursday after the bell, the business only lost 28 cents per share.

How thankful should we be? I must point out that the company earned 34 cents per share in last year's Q4 period. Also, sales dropped 39% during the past three months. Not only that, but cash from operations from the full fiscal year was down, as was the gross margin on a year-over-year basis (the gross margin increased, however, on a sequential basis compared to the third quarter, so that was a bright spot).

Texas Instruments (NYSE: TXN), whose colleagues include Qualcomm (NASDAQ: QCOM), Advanced Micro Devices (NYSE: AMD), and Intel (NASDAQ: INTC), gave shareholders quite a boost in morale on Monday. The chip company issued a nice outlook for the bottom line.

Here are the stats. Net sales in Q2 should come in between $2.3 billion and $2.5 billion versus the old guidance of between $1.95 billion and $2.4 billion. The bottom line should come in between 14 cents per share and 22 cents per share, versus previous estimates of between 1 cent per share and 15 cents per share.

Advanced Micro Devices (NYSE: AMD), the arch competitor of fellow chip maker Intel (NASDAQ: INTC), continues to be nothing more than a short-sale candidate. Its Q4 was horrible. Net sales nosedived 33% on a year-over-year basis, coming in at roughly $1.2 billion. On a GAAP basis, the net loss from continuing operations was $2.32 per diluted share versus $2.24 per diluted share in Q4 2007. According to this source, on an adjusted basis (which excludes write-downs related to the ATI transaction), the loss was $0.69 per share, and that missed Wall Street's expectations by a wide amount. The call was for a loss of $0.54 per share.

AMD is in a terrible state. Sure, it's not necessarily all management's fault. What can they do about the sinking economy? Not much. Demand is down and everyone is going to have to live with it. The press release talks about lack of visibility and concentration on restructuring. That translates to "we're doing everything we can just to make it through the tough times." Gross margins, both on a GAAP and a non-GAAP basis, have been challenged. Considering the bad news recently reported by both Intel and Microsoft (NASDAQ: MSFT), it's not a stretch to say that shares of AMD are heading lower.

Although I alluded to shorting AMD at the top of this piece, I should point out that shorting is a risky proposition and not for everyone. My main point in saying this is that I believe the situation is so dark right now in this sector of tech that 52-week lows may certainly be retested. And then there is the price war between AMD and Intel that this article mentions. That's an important issue to consider when thinking about both of those companies. The worst of times brings out the fiercest of competitive natures. Since AMD's brand is arguably not as strong as the Intel name, one can see why it would be best to avoid AMD's stock at all costs.

Disclosure: I don't own any company mentioned; positions can change at any time.

Microsoft Corporation (NASDAQ: MSFT) will report Q2 earnings on Thursday, January 22, after the bell. It's a busy week for tech reports. Apple, Inc. (NASDAQ: AAPL), International Business Machines Corp. (NYSE: IBM), and Advanced Micro Devices (NYSE: AMD) are all trying to tell us how the economy is doing. But Microsoft is of particular significance. It really is one of the more anticipated releases since so many institutions and retail investors count the equity as a portfolio member. And I have to tell you, deciding whether to buy ahead of it or not has been one heck of an internal debate for me this week, since I sort of want to own Microsoft for reasons other than its potential as a pure earnings trade.

According to this source, Mr. Softy might do $0.50 per share. Unfortunately, that would represent not much in the way of bottom-line growth, since the source says that the software giant did the exact same amount in the previous year. That, of course, isn't surprising. PC sales have been challenged, and businesses are in turmoil. It's no wonder the company won't be growing like a weed. Cutbacks in software investments are to be expected. But there will be a couple of key things to look for in this particular earnings missive. First, how is Microsoft's Xbox 360 division doing? Did it have a good holiday-selling season? I know, for many, this won't be the segment of most importance, but I want to see if the company is on track to truly grow this brand. It will be proof that Microsoft can make waves in terms of influencing the media culture of the living room, and it will show that it can successfully propagate a big business in a very competitive space that it doesn't monopolize. Second, with the talk about potential job cuts, I want to see exactly how the company plans to reign in costs and what their plans are for the future in the context of the financial mess.

Besides earnings, I'll be focusing on cash flows and any new thoughts from management on how to reward shareholders for their patience. Now, I alluded to my thoughts about buying Microsoft ahead of earnings. In the end, I decided not to do it. With the talk of job cuts, and with some headlines out there expecting a miss from the tech icon, I don't think it would be wise to play this one. I do want to do a quick trade on Microsoft at some point because I like its price action as of late. It seems as if you could make a fast $0.50/$1.00 on it if you buy on weakness. For now, though, I'll sit on the sidelines, and hope that, if Microsoft does sell off on its earnings news, it doesn't go past the 52-week low. That would be a terrible sign of weakness, and might stop me from thinking of the company as a potential trading vehicle.

Disclosure: I don't own any company mentioned; positions can change without notice.

Yesterday no fewer than 20 companies around the world announced 40,000 layoffs. As I posted, that's the flip side of the great inflation report that came out this week. And those 40,000 are among the first of 2.1 million U.S. jobs that are forecast to disappear in 2009 -- particularly if the $825 billion stimulus plan does not pass.

Here are some of yesterday's cuts from the U.S. companies:

• Circuit City Stores is liquidating and taking 30,000 jobs along for the ride
• Hertz Global Holdings Inc. (NYSE: HTZ) is eliminating 4,000 jobs worldwide due to a drop in travel demand.
• WellPoint (NYSE: WLP) the second-largest U.S. health insurer, will end 1,500 jobs, which include 600 workers and 900 open positions.
• Clear Channel (NYSE: CCO) -- the largest U.S. radio broadcaster -- will lay off 1,500 employees on January 20.

Intel (NASDAQ: INTC), the arch rival to chip competitor Advanced Micro Devices (NYSE: AMD), released its Q4 earnings report on Thursday after the bell. The good news is that everything went according to plan and Intel reported earnings of 4 cents per share as was indeed expected. The bad news is it was a drop of 89%. Big ouch. Revenues took a dive of 23%, coming in at $8.2 billion and also meeting expectations.

This is always an odd situation. A company at least has the decency to meet expectations, but how can an investor get too happy when revenues and profits are on the decline? We already know what's up with the chip maker's situation: demand for its products are down, for obvious macro reasons. Plus, lower-margin netbooks are exerting an effect.

One thing to note is that a $1 billion write-down related to an investment in Clearwire really influenced the net income picture in the fourth quarter. The press release does point out that Intel delivered $11 billion in operational cash flow for the whole year, so fans of cash flow can at least be cheered up by that result. That amount more than covered capital-expenditure needs and dividend obligations.

Proving the rule that large mergers rarely work out as planned, computer chip giant Advanced Micro Devices (NYSE: AMD) will write down $880 million of the purchase cost of graphic chip giant ATI, the company AMD bought over a year ago. Add that to the fact that AMD's product delays have cost it market share, and you can be sure that competitor Intel Corp. (NASDAQ: INTC) has been singing a happy tune lately.

AMD is expected to take $32 million in restructuring costs due to employee severance costs resulting from last September's job cuts, and record a loss of $0.52 per share on revenue of $1.45 billion come tomorrow's earnings release. This would be in line with analyst expectations, but at the same time, may not please investors much. AMD management is also expected to give conservative guidance for the current quarter due to soft seasonality and the overall U.S. economic environment, since so many of its products are consumed here.

AMD really needs to get out a price competitive, cutting-edge processing chip for the laptop PC that can compete with Intel's Core 2 Duo product and the Centrino wireless offering. Laptops are the hottest PC category and AMD is letting Intel have all the fun. Its current dual-core chip lineup just can't compete and requires too much energy to operate. I hope analysts nail down AMD's exact road map and time lines for these products, which it needs if it expects to be competitive at all during the remainder of 2008. Right now, it's not even close.

MAJOR PAPERS:

• People familiar with the issue said that European regulators are gearing up to file new antitrust charges against Intel Corporation (NASDAQ: INTC). The charges, the Wall Street Journal reported, would allege Intel gave major European retailers an incentive not to sell computers that use Advanced Micro Devices Inc (NYSE: AMD) chips.

OTHER PAPERS:

• The New York Times reported that News Corporation's (NYSE: NWS) New York Post and The Daily News, owned by Mortimer Zuckerman, are exploring a print pact and have been in talks to find ways to combine some business functions of the papers, according to people briefed on the matter.
• According to sources, the San Francisco Business Times reported that Washington Mutual Incorporated (NYSE: WM) may be planning more layoffs in September. It is unclear how many employees will be affected and from which departments.

WEB SITES:

• In an effort to preserve capital, data compiled by Bloomberg showed that troubled mortgage companies Federal National Mortgage Association (NYSE: FNM), or Fannie Mae, and Federal Home Loan Mortgage Corporation (NYSE: FRE), or Freddie Mac, may cut dividends after more than $11B in combined losses since last year.
• Three people familiar with the matter said that the SEC subpoenaed Wall Street investment banks including The Goldman Sachs Group Inc (NYSE: GS), Deutsche Bank AG (NYSE: DB) and Merrill Lynch & Co Inc (NYSE: MER) in its hunt and crack down on suspected manipulation of Bear Stearns and Lehman Brothers Holdings Inc (NYSE: LEH) shares. Bloomberg reported that two of the people said the SEC, which yesterday curtailed short selling in financial stocks, is looking for e-mails and trading records and is also examining whether securities firms have "adequate controls" to deal properly with misconduct.

As the second quarter earnings crunch begins in earnest this week, the bear market has investors jittery and prognosticators spinning out dire warnings. In the wake of mixed results from Alcoa (NYSE: AA) and General Electric (NYSE: GE) kicking things off last week, here's a look at what Wall Street is expecting from many of the companies scheduled to report this coming week.

Analysts surveyed by Thomson Financial are expecting the following companies to report a rise in earnings when compared to the same period of the previous year.

• Nucor Corp. (NYSE: NUE): $1.80 EPS (36.6%) on sales of $6.4 billion (+53.0%)
• Google Inc. (NASDAQ: GOOG): $4.74 EPS (24.9%) on sales of $3.9 billion (+41.6%)
• Nokia Corp. (NYSE: NOK): 56 cents EPS (23.2%) on sales of $19.9 billion (+17.8%)
• CSX Corp. (NYSE: CSX): 90 cents EPS (21.1%) on sales of $2.9 billion (+12.8%)
• Altera Corp. (NASDAQ: ALTR): 27 cents EPS (18.5%) on sales of $346.7 million (+8.4%)
• IBM (NYSE: IBM): $1.82 EPS (+17.6%) on sales of $25.9 billion (+9.0%)
• eBay Inc. (NASDAQ: EBAY): 41 cents EPS (17.1%) on sales of $2.2 billion (+18.0%)
• W.W. Grainger Inc. (NYSE: GWW): $1.46 EPS (17.1%) on sales of $1.7 billion (+8.0%)
• Microsoft Corp. (NASDAQ: MSFT): 47 cents EPS (17.0%) on sales of $15.7 billion (+17.0%)
• Honeywell International Inc. (NYSE: HON): 94 cents EPS (17.0%) on sales of $9.2 billion (+7.9%)

MAJOR PAPERS:

• Investors are taking their money out of hedge funds more now that at any time over the past 10 years, according to the Wall Street Journal. Firms are bracing for the end of June when the next big wave will hit.
• First it was a demand for management changes, and now shareholders, including one time director Eli Broad and fund managers Shelby Davis of Davis Selected Advisors and Bill Miller of Legg Mason Inc (NYSE: LM), are again upset with American International Group Inc (NYSE: AIG) and want changes in the boardroom as well, the Wall Street Journal reported.
• The Wall Street Journal reported that Citigroup Incorporated (NYSE: C) will close Old Lane Partners, a hedge fund co-founded by CEO Vikram Pandit.

OTHER PAPERS:

• Spotlight Capital is increasing pressure on Chico's FAS Inc (NYSE: CHS) and said it has been in touch with 25 major shareholders in order to oust CEO Scott Edmonds and unseat board member John Burden, who are accused of having a conflict of interest, the New York Post reported.

WEB SITES:

• Advanced Micro Devices Inc (NYSE: AMD) denied reports certain of its new dual-core chip, code-named Kuma, have been canceled, according to CNet. A spokesman for the company said that the launch of Kuma, scheduled for the second half of 2008, remains on track.