Analyst Upgrades

• Wells Fargo (WFC) to conviction buy from neutral at Goldman.
• Adobe (ADBE) to buy from neutral at UBS.
• Fifth Third Bancorp (FITB) to outperform from market perform at FBR Capital.
• Vail Resorts (MTN) and Goldcorp (GG) to buy from hold at Deutsche Bank.
• OmniVision (OVTI) to overweight from neutral at JPMorgan.
• Penn Virginia (PVA) to hold from sell at Canaccord.
• Hub Group (HUBG) to outperform from market perform at Morgan Keegan.

With all the gloom in the global economy, I got to wondering whether there is anything else going on in the world of business. I'm looking for growth because I think that's what will ultimately bring the economy out of the doldrums. Not surprisingly, that growth is coming from technology companies. In Growth Matters, I look at consumer technology companies that point the way to growth trends -- and in the process introduce services and products you may want to explore.

If you're thinking of having a party, it might not be a bad idea to use Evite to send out the invitations and plan the event. As Evite's Vice-President of Marketing and Public Relations Lariayn Payne told me, "Evite is the leading online service on the Web for invitations and party planning. Evite is free and easy-to-use and offers hundreds of stylish invitation designs for almost any occasion. Evite also offers fun and creative party ideas, planning checklists, and other tools, which save party hosts both time and money."

Monday, March 10

• Google Inc. (NASDAQ: GOOG) and InterActive Corp. (NASDAQ: IACI) to present at Bear Stearns Media Conference.
• Texas Instruments Inc. (NYSE: TXN) to hold mid-quarter update conference call at 5:00 pm.

Tuesday, March 11

• Foot Locker Inc. (NYSE: FL) to report Q4 earnings; conference call at 9:00 am.
• Chevron Corp. (NYSE: CVX) to hold analyst meeting at 9:00 am.
• Kroger Co. (NYSE: KR) to report Q4 earnings; conference call at 10 am.

Wednesday, March 12

• FDA Oncologic Drugs Advisory Committee Meeting on Schering-Plough Corp.'s (NYSE: SGP) sBLA for Pegintronfor treatment of melanoma at 8:00 am.
• Freddie Mac (NYSE: FRE) to host analyst/investor meeting at 8:30 am.
• Hot Topic (NASDAQ: HOTT) to report Q4 earnings; conference call at 4:30 pm.

MAJOR PAPERS:

• With regulators, politicians and rating firms biting at their heels, Countrywide Financial Corporation (NYSE: CFC) believed that it had no choice but to approach Bank of America Corporation (NYSE: BAC) last month about a merger, reported the Wall Street Journal. That fear led to BAC's $4B takeover of Countrywide, the Wall Street Journal reported.
• The Wall Street Journal reported that John Malone's Liberty Media Corporation (NASDAQ: LCAPA) moved to take control of IAC/InterActiveCorp (NASDAQ: IACI) from Barry Diller, nominating a series of directors for board members it is looking to replace.
• According to the Financial Times, European public health specialists have found "significant resistance" to Roche Holding Ltd's (OTC: RHHBY) widely purchased influenza antiviral medicine Tamiflu.

OTHER PAPERS:

• Shares of Britain's third-largest drug maker, Shire Plc (NASDAQ: SHPGY) plummeted yesterday to a two-year low on concerns about demand for its attention deficit hyperactivity disorder treatment for children, Vyvanse, the Telegraph reported.

Lots more quarterly reports rolled out this past week, and here are some highlights of earnings coverage from BloggingStocks:

• Alcatel-Lucent (NYSE: ALU) reported more losses and more job cuts.
• Alvarion Ltd.'s (NASDAQ: ALVR) record quarter fuels speculation of a Cisco (NYSE: CSCO) buyout.
• Avon Products Inc.'s (NYSE: AVP) profit rose 61%, buoyed by strength in emerging markets.
• Chevron Corp. (NYSE: CVX) fell short of expectations due to tighter margins.
• CIGNA Corp. (NYSE: CI) had a solid quarter but warned about 2008 earnings.
• Clorox Co. (NYSE: CLX) blamed profit loss on materals costs, and announced acquistion of Burt's Bees.
• Colgate-Palmolive Co. (NYSE: CL) beat estimates by a penny and had strong sales overseas.
• Crocs Inc. (NASDAQ: CROX) beat earnings estimates and revised its full-year forecast.
• Dell Inc. (NASDAQ: DELL) announced it would restate revenues, ahead of its November quarterly report.
• Exxon Mobil Corp. (NYSE: XOM) missed expectations, also due to tighter margins.
• Given Imaging Ltd. (NASDAQ: GIVN) cited FDA approval delays for disappointing results.
• Hertz Global Holdings Inc. (NYSE: HTZ) posted record revenues and appointed a new CFO.
• Humana Inc.'s (NYSE: HUM) positive surprise lifted the share price to a new all-time high.

MAJOR PAPERS:

• According to a person briefed on the situation, Merrill Lynch & Co Inc's (NYSE: MER) CEO Stan O'Neal was negotiating the terms of his forced departure on Sunday and the departure is expected to be announced on Monday. The top contenders for the CEO position are said to be BlackRock Inc's (NYSE: BLK) CEO Laurence Fink and NYSE Euronext Inc's (NYSE: NYX) CEO John Thain, the Wall Street Journal reported.
• The WSJ also reported that Alibaba.com raised $1.5B after the company priced its IPO at HK$13.50, at the top-end of the HK$12-$HK13.50 range. Yahoo! Inc (NASDAQ: YHOO) holds a 39% stake in Alibaba Group.

OTHER PAPERS:

• Ness Technologies Inc (NASDAQ: NSTC) was awarded a contract worth NIS 5 Million to convert the pension fund data managed by Opal Future Technologies, Globes reported.
• Indian company Dr. Reddy's Laboratories Limited (NYSE: RDY) is set to attempt to raise its share of the U.S. over the counter drug market by partnering with at least six more U.S. retail chains; the company plans to launch up to 10 drugs over the next 12 months that could become OTC offerings in the U.S., the Economic Times reported.

WEB SITES:

• According to TechCrunch, IAC/InterActiveCorp (NASDAQ: IACI) may have submitted a letter of intent to acquire movie-centered social network Flixter over the last week or so.

MAJOR PAPERS:

• Bank of America Corporation (NYSE: BAC) is making a $2 billion equity investment in Countrywide Financial Corporation (NYSE: CFC), people familiar with the situation told the Wall Street Journal (subscription required).
• Ticket seller Ticketmaster, which is owned by IAC/InterActiveCorp (NASDAQ: IACI), has halted talks with concert promoter Live Nation Inc (NYSE: LYV), failing to reach a new, long-term agreement. The talks have "grown acrimonious" over the last year and a half, say people close to the situation, with Live Nation CEO Michael Rapino threatening to start his own ticketing company rather than renewing with Ticketmaster, according to the Wall Street Journal.
• Home Depot Inc's (NYSE: HD) sale of its wholesale supply division to a group of private equity firms is in doubt, due to uncertainty about the willingness of three investment banks to fund the deal, reported the Financial Times (subscription required).
  
• The Financial Times reported that Motorola Inc (NYSE: MOT) lost more than 7% of market share in the handset market in Q2, according to new figures.

OTHER PAPERS:

• Private equity firm Kohlberg Kravis Roberts has reportedly postponed its $1.25B initial public offering, after investors showed little interest in the IPO, reported the U.K. Times.

Yesterday, comScore released the July market share data for the search engine industry. The results were not pretty for Yahoo Inc (NASDAQ: YHOO), with its share standing at just 23.5% for the month, way behind Google Inc's (NASDAQ: GOOG) 55.2% share of the market. Microsoft Corporation (NASDAQ: MSFT) stood at 12%, IAC/InterActiveCorp's (NASDAQ: IACI) Ask.com at 4.7% and Time Warner Inc (NYSE: TWX) at 4.4%.

While the market share data was being released, Microsoft CEO Steve Ballmer was telling Bloomberg that Yahoo would be an expensive acquisition. However, Ballmer may be positioning Microsoft to once again approach the No. 2 search engine company. Earlier this year, news reports circulated that Microsoft and Yahoo were in partnership discussions.

By combining its own sites with that of Yahoo's, Microsoft's market share would quickly jump to 36% market share -- not too bad. With the Internet just over ten years old, paying $50 billion for that much market share may be the best money Microsoft can spent. To date, the PC-centric software giant has had a tough time with most of its Internet initiatives. Conversely, Yahoo CEO, Jerry Yang, has to realistically assess its ability to catch up to the Google machine.

At the end of the day, the Silicon Valley-based search company may have to swallow its pride and hook up with the much despised Washington-based software giant. Microsoft would get to utilize its deep bench of software engineers with a powerful and underutilized portal, while Yahoo would get to move away from its foray into the media business and move back to being a technology driven company.

It may be their last chance to survive and thrive in the Internet era before having their lunches completely eaten by Google.

Every time you look at your children and wish they would grow up and stop being so immature, remember that the two are not synonomous. Case in point -- eBay Inc (NASDAQ: EBAY). The market-leading auction website left Google Inc's (NASDAQ: GOOG) AdWords advertising system because it was miffed that Google planned a party the same day as eBay's annual user celebration in Boston.

Well after crying at its party, eBay came crawling back, apparently realizing that although it has other options -- Yahoo Inc (NASDAQ: YHOO), IAC/InterActiveCorp's (NASDAQ: IACI) Ask.com, and Microsoft Corporation's (NASDAQ: MSFT) MSN.com -- none are nearly as good as AdWords. EBay's inability to stay away serves as an example of Google's strength in the Internet advertising market.

Of course, this is not what eBay is claiming. EBay spokesman Hani Durzy said, "Overall the takeaway for us was that we weren't as dependent on AdWords as some out there may have thought... Other partners -- Yahoo and AOL and MSN -- really stepped up and provided a lot of value. And natural search continues to drive a lot of valuable traffic to the site."

Empty words, since the actions don't coincide.

Yahoo Inc (NASDAQ: YHOO), once again, did little to impress investors with last night's earnings release. Revenue came in a little light, EBITDA beat by a bit, and EPS came in a penny shy.

What was more worrisome was EBITDA guidance just simply wasn't good. EBITDA is forecast to come in at $440 to $500 million, a wide range, although still in the range of the consensus estimate of $490. However, just barely hitting analysts' targets is not a sign of a quality growth company.

Terry Semel's language continued to be broad and continues to target old-time media partners such as Viacom inc (NYSE: VIA) and newspapers.

As we have been blogging ad infinitum, Yahoo's future is dependent on the success of its new Project Panama advertising platform. While one would expect some period of transition, it appears the transition is proving more difficult than investors would have expected. Analysts' estimate increases during the past week appear to be misplaced.

Whether it was coincidence or not, it was interesting how on the morning Yahoo came out with uneventful results, news reports are saying Time Warner Inc (NYSE: TWX) is getting ready to do a large Internet acquisition. Could it be Yahoo? Merge one struggling Internet company with Time Warner's AOL struggling unit.

If Yahoo is going to do it right, let Barry Diller of IAC/ Interactive Corp (NASDAQ: IACI) take it over. Barry always succeeds. He could easiily succeed at buying and turning Yahoo around.

I'd stay with Yahoo -- its position on the web is too powerful to pass up. Someone at some point will come along and right this wrong.

MAJOR PAPERS:

• The Wall Street Journal's (subscription required) "Heard on the Street" column suggested that Deere and Company (NYSE: DE), which has risen 40% since lsat September, may be about to level off as analysts believe the positive outlook is already baked in to the stock price.
• The Wall Street Journal reported that Sanofi-Aventis ADS's (NYSE: SNY) Acomplia, a "miracle weight loss pill", is looking less like a miracle among repeated FDA delays and European restrictions.
• Barclays plc ADS (NYSE: BCS) says it would walk away rather than overpay for ABN Amro Holdings (NYSE: ABN), and rejected suggestions that it might then be vulnerable to a takeover itself, according to the Financial Times (subscription required).
• The Financial Times reported that Sony Corporation's (NYSE: SNE) PlayStation 3 video game console has had a record-breaking launch in Europe, selling about 600,000 consoles in its first two days.
• The Financial Times reported that U.S. drugmaker Merck & Company Inc (NYSE: MRK) won a restatement of its patent for once-weekly Fosamax treatment from the European Patent Office.
• The Financial Times interviewed Barry Diller, the CEO of InterActiveCorp (NASDAQ: IACI), who believes corporate governance may be pushing U.S. companies to go private.

OTHER PAPERS:

• The New York Times reported that billionaires Eli Broad and Ronald Burkle may be back in the running to buy The Tribune Company (NYSE: TRB), which has responded to a request for additional financial information about the company from the pair.
• The Economic Times reported that Indian telecom operator Hutchison Essar is looking at outsourcing its IT operations to International Business Machines Corporation (NYSE: IBM), in a deal that would be worth $1.4B to $1.6B, according to sources.

Numbers are Actual vs. Estimate

Excellent Reports

• InterActiveCorp (NASDAQ: IACI) 67c vs. 53c
• Retailing revenue increased to offset a lower price point average, and a higher average return rate. International revenue increased slightly, but profits were hurt by higher operating expenses. Ticketing volume increased as ticket sales rose 4% on 7% higher overall revenue per ticket.
  

• National-OilWell Varco Inc (NYSE: NOV) $1.35 vs. $1.06
• High energy prices stirred demand for drilling equipment which created a backlog of capital equipment orders for the Rig Technology segment.
  

• Electronic Data Systems Corporation (NYSE: EDS) 47c vs. 36c
• "On balance," said chairman and CEO Mike Jordan, "This was the strongest quarter... since I joined the company in 2003." Performance was driven by $7.6B in fourth quarter contracts, up 43% from the previous year.

Yahoo! Inc.'s (NASDAQ: YHOO) stock has been rallying nicely in 2007, up over 10%. There has not been too much news to drive the stock and most news that came in late 2006 was simply awful. It almost is trading as though an offer is about to be made for the company.

Who could buy Yahoo!? Possibly IAC/Interactive Corp. (NASDAQ: IACI) whose stock has been on a huge rally, hitting a new high yesterday. IAC has both the stock and a lot of cash on its balance sheet to finance a deal. Interactive also owns Ask.com, so Barry Diller has been learning about the search business. Further, Diller has a long history of making smart acquisitions in growth areas.

With investors not pleased with Yahoo management and failed attempts to revamp its business, the action in 2007 has to make you wonder why is this stock rallying.

In August, theflyonthewall suggested that investors should take a look at InterActiveCorp (NASDAQ:IACI) stock. Today, the stock is at $37, up 50%.

CEO Barry Diller said during a mid-summer conference call that the company reported seven good quarters in a row and got "no respect."

Yesterday, InterActive launched www.zwinky.com, a customizable social avatar that helps people create and express their online brand or persona. According to the company, since its beta introduction in June 2006, Zwinky has become one of the fastest-growing sites on the Internet with more than two million unique users.

Diller is a master programmer. InterActive's Ask.com, although not about to take on Google (NASDAQ: GOOG), improves its content monthly. Also, InterActive owns LendingTree.com, which offers a low-cost way for consumers to get home loans.

It appears Diller has gotten his stock going in the right direction.

Google shmoogle. Don't waste your time or your money! Consider the following as I ramble on about investor speculation.

1.  It's overvalued by almost every metric you can think of; price-to-earnings, price-to-sales, price-to-book value, price-to-cash flow. It can only hold up if you think its gross margins and profitability will continue unabated regardless of competition, R&D costs, new unprofitable enterprises, and its size.

2.  Too many shareholders are momentum investors and will run for the doors in panic with their feet on fire when momentum shifts downward.

3.  Expanding into China will be difficult no matter how many compromises management makes. The Chinese will do everything in their power (which is a lot), to make sure it is a Chinese company that eventually rules this space.

4.  Competition from Microsoft (MSFT), Yahoo (YHOO), eBay (EBAY), Amazon (AMZN), Time Warner - AOL  (TWX) , News Corp. (NWS), InterActiveCorp (IACI), and a multitude of others is substantial and growing. They are not standing still and will create obstacles to Google at every turn.

5.  Management insiders are selling shares. Yes, it makes sense for them to diversify. But if they are playing it safe, shouldn't you? By the way, Warren Buffett has never sold any appreciable shares in his company Berkshire Hathaway since he thinks it's the best thing you could possibly invest in.

6. Google had a great idea, it paid off, now what? All the added features are just that, features. It has no incremental value at a scale that will expand the company at the rate of the initial search concept.

7. Almost every highflyer in the Internet age has had to get real or get out. We may still be playing a game of quick buck traders hanging on until the first sign of weakness and thinking they will be smart enough to beat the rush to the door. If so, than see item #2.

8.  Market history over the past 80 years has favored small cap stocks over large, dividend paying companies over non-dividend paying companies and, low price-to-sales (P/S) value investments over growth.

9. Trees don't grow to the sky. See my post, "Google me this, Batman."

10. Does not pass the equivalence test. Google closed today with a capitalization of approximately $122 billion. To give you some perspective, that is the equivalent of Anheuser Busch (BUD) $35B + Federal Express (FDX) $34.5B + Starbucks (SBUX) $28B + Harley Davidson (HDI) $14.5B + Black & Decker (BKD) $6.5B and Intuitive Surgical (ISRG) $3.5B combined. In my opinion, if someone offered you all six of these companies for all your shares in Google and you told them to take a hike than you are nuts. (Disclosure: I own many of these stocks. Read more about me here.)

I'm sure you could come up with your own equivalence test but these are time tested, well managed, valuable enterprises with strong brands and to me owning Google instead is folly. I can't say it in any simpler language than that.