Most technology stocks are being dragged down again today after a gloomy statement from Advanced Micro Devices Inc. (NYSE: AMD) stirred new worries over the tumbling economy. Novellus Systems Inc. (NASDAQ: NVLS) is joining the market anxiety after issuing a warning related to its earnings numbers. The company slashed its first-quarter earnings outlook, and said it expects revenues at the low end of the earlier expected range.

The semiconductor equipment maker now expects first-quarter earnings in a range between 15 cents and 17 cents per share, down from its previous range of 21 to 24 cents. Quarterly revenues are expected to be at the low end of the previously communicated range of $315 million and $325 million. Analysts were waiting for Novellus Systems show quarterly earnings of 23 cents a share on sales of $319.4 million, according to Reuters Estimates.

Advanced Micro Devices (NYSE: AMD) lowered its outlook for 1Q08 due to lower than expected sales across all business lines.

AMD also indicated it plans to reduce 10% of its headcount by the end of 3Q08.

Jeffries & Co says: "The difficult transition to 45-nanometer geometry and large net debt position cause us to maintain our Hold rating and $7 price target."

Abu Dhabi purchased a $622 million dollar stake in AMD in November 2007.

AMD overall option implied volatility of 73 is above its 26-week average of 67 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Poor Advanced Micro Devices (NYSE: AMD). The company's stock has been a terrible performer as of late, and the chip maker delivered another batch of bad news to shareholders Monday. According to the following article, AMD intends on eliminating 10% of its work force -- this translates to about 1,800 positions.

Also, business is pretty weak; AMD announced that its sales for the recent quarter would come in around 15% lighter than what was reported last year at this time. Adding insult to injury, the top line missed the expectations of analysts; Wall Street was looking for approximately $1.6 billion in net sales -- AMD thinks it will deliver $1.5 billion.

Make no mistake, AMD is suffering. As the article makes clear, the chip maker is having a hard time generating profits. AMD will be trying its best, I'm sure, to restructure its operations so that it will once again be a force to be reckoned with in the near future. But how near is near?

MAJOR PAPERS:

• The Wall Street Journal reported that private loans under the Federal Family Education Loan, or FEEL, program have begun to give way to the federal direct loan program, as private lenders run into subsidy cuts and problems raising capital. To date about 60 colleges and universities have made the switch.
• Carl Icahn, a 6.3% Motorola Inc (NYSE: MOT) shareholder, has sued the company to get board of director documents, turning away offers of two board seats, the Wall Street Journal reported. Icahn wants information about the company's unprofitable handset business.
• Ford Motor Company (NYSE: F) is expected Wednesday to announce an agreement to sell its Jaguar and Land Rover units to India's Tata Motors Limited (NYSE: TTM) for about $2B, the Financial Times reported.

OTHER PAPERS:

• According to the Business Review, New York State Senator Charles Schumer is planning to 'reveal details' of a conversation he had with the CEO of Advanced Micro Devices Inc (NYSE: AMD) on March 21 about the company's plans to build a $3.2B computer chip plant in Saratoga County.

Advanced Micro Devices (NYSE: AMD) closed at $6.34 Friday.

Dell (NASDAQ: DELL) said it has stopped selling most consumer systems that use AMD chips on its web site.

Goldman says: "We do not believe AMD's equity is fully reflecting the risk of an AMD bankruptcy."

Abu Dhabi purchased a $622 million dollar stake in AMD on November 16th, 2007.

AMD March option implied volatility of 79 is above its 26-week average of 60 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

It may be too late, but AMD (NYSE: AMD) is coming out with a product that just might do well. The company will put two of its most powerful chips on one graphics card.

According to The Wall Street Journal, "The company, which has fallen behind Nvidia (NASDAQ: NVDA) lately in high-end personal-computer graphics, says a series of benchmark tests suggest the new ATI Radeon HD 3870 X2 card is the clear speed leader." Of course Nvidia is very likely to come to market with a similar product very soon.

AMD has not had much product success. Its new flagship, the Barcelona chip, was late to market and underpowered. It was set to go up against offerings from larger rival Intel (NASDAQ: INTC). There is no evidence so far that it has picked up any market share from the new product.

Nvidia is also no pushover as a competitor. Its successes have moved its market cap to $14 billion, and it trades at 3.7x sales. AMD's market cap is $4.1 billion and it trades at .7x sales. Nvidia's graphics chips are currently considered state-of-the-art.

A nice press release from AMD. A new product. Hope of better sales and revenue.

Maybe.

Douglas A. McIntyre is an editor at 247wallst.com.

MAJOR PAPERS:

• Liberty Media Corporation (NASDAQ: LCAPA) filed a lawsuit in Delaware against IAC/InterActiveCorp's (NASDAQ: IACI) Barry Diller in an attempt to block Mr. Diller from completing the spinoffs of several units on terms that could dilute Liberty's voting power; the suit follows a suit filed by IAC against Liberty seeking to complete the divestiture on its own terms, the Wall Street Journal said.

OTHER PAPERS:

• The Evening Standard learned that billionaire Wilbur Ross is in takeover talks with AMBAC Financial Group Inc (NYSE: ABK) and that a deal could come within the next two weeks.

WEB SITES:

• According to analysts, TheDeal.com's Dealscape blog reported that the troubles at WellCare Health Plans Inc (NYSE: WCG) could lead to a sale of the company after the departure of the company's three executives.
• Citing a source close to Advanced Micro Devices Inc (NYSE: AMD), CRN.com reported that rumors of a merger between the company and International Business Machines Corporation (NYSE: IBM) "is nothing but speculation." A rumor in Mergermarket, which caused AMD's share price to spike almost 11% on Wednesday, said IBM's microelectronics division could merge with AMD "possibly in the near term."

AMD (NYSE: AMD) reported another lackluster quarter. The lipstick on the pig was that most of the company's fourth quarter losses were writes downs arising from the purchase of graphics chip company ATI.

What AMD spent little time talking about was that revenue was slightly down from a year ago, dipping slightly to $1.77 billion. Gross margins rose to 44% from 36% in the same period a year ago. That is still well below the 58% that Intel (NASDAQ: INTC) reported. After backing out a huge write-off, AMD had a modest loss.

The company also had $95 million in interest expense. Long-term debt is over $5 billion. With shares at $6.34, down from a 52-week high of $18.18 and a price of over $40 less than two years ago, Wall Street has left the company for dead.

There is not much in the current quarterly report to bring money back into the stock.

Douglas A. McIntyre is an editor at 247wallst.com.

It would be hard to do worse for shareholders that AMD (NYSE: AMD) has. The chip maker's shares have fallen from over $42 a little under two years ago to a 52-week low yesterday. It is actually a four year low, but who is counting. Over that last two years, AMD shares are down almost 70%.

The company has made a number of mistakes. The latest one was to have a meeting with securities analysts. What came out of that meeting was that a key product would be delayed. According to The Associated Press "in a note to investors, Citi analyst Glen Yeung said his view of the company was confirmed at the meeting, in which AMD acknowledged delays in key products."

AMD said that it would reach a operating profit in the second half of next year. Based on the drop in the stock over the last several days, it would appear that almost no one believes that.

AMD once had what appeared to many to be a lead in the chip performance department, especially compared to its larger rival Intel (NASDAQ: INTC). AMD picked up market share from Intel in both the server and PC markets. But, Intel made an intensive effort to improve its chip performance and the cut energy consumption in its products. The two companies also went through a price war which cut AMD's gross margin.

Most analysts also think that AMD's purchase of graphics chip company ATI was a mistake. It added a lot of debt to the AMD balance sheet.

As much as any large tech company in America, AMD needs to replace its senior management, starting with CEO Hector Ruiz. His last two years as head of the company have been nothing short of a disaster. AMD has to show Wall St. that it is willing to turn over a new leaf.

Douglas A. McIntyre is an editor at 247wallst.com.

Advanced Micro Devices Inc. (NYSE: AMD) stock is falling this morning after an analyst yesterday expressed concern that microchip producers are falling behind industry leader Intel (NASDAQ: INTC) in product offerings. The Cowen and Co. analyst said that AMD continues to lag behind Intel's new graphics processor offerings while the market is increasingly demanding graphics-intensive applications. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on AMD.

After hitting a one-year high of $23.00 in December, the stock has fallen much of the last year and hit a one-year low today. This morning, AMD opened at $11.15. So far today the stock has hit a low of $10.52 and a high of $11.50. As of 11:45, AMD is trading at $10.65, down $0.63 (-5.6%). The chart for AMD looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

MAJOR PAPERS:

• Google Inc (NASDAQ: GOOG) may have plans for a gPhone, but their real objective is to run their own mobile network, reported the Wall Street Journal. The company is reportedly looking at a $4.6B wireless network bid.
• Abu Dhabi's Mubadala Development may look to take a 9%, or approximately $700M, stake in Advanced Micro Devices Inc (NYSE: AMD), the Financial Times' Alphaville blog noted. An investment may draw the attention of the U.S. committee on foreign investment.

OTHER PAPERS:

• According to Business Week's "Inside Wall Street" column, the patent Biodel Inc (NASDAQ: BIOD) was granted in September for its VIAdel technology was "key," as it opens up markets for products estimated at $2.3B.
• Glass container maker Owens-Illinois Inc (NYSE: OI) is defying the current market tumble due to earnings momentum, reported Business Week's "Inside Wall Street" column.
• According to BW's "Inside Wall Street" column, some money professionals are "snapping up" shares of retailer Staples Inc (NASDAQ: SPLS) despite the housing slump, credit crunch and rising gas prices.

The NYSE released its short interest figures by company. The numbers compare shares sold short in companies listed on the exchange as of October 31 compared to October 15.

No one is likely to be surprised that the short interest in Countrywide (NYSE: CFC) rose very sharply, by 27.1 million shares to 106.9 million as traders bet the stock will drop further.

Shares short in other financial stocks also grew. At Wells Fargo (NYSE: WFC), the figure rose 8.1 million to 47.7 million. At IndyMac Bancorp (NYSE: IMB) the number went up 3.9 milion to 43.2 million.

Short interest in several stocks at troubled companies dropped, indicating that traders believe that the shares may not fall further. The short interest in Sprint (NYSE: S) fell 12.3 million shares to 39 million. Shares short in AMD (NYSE: AMD) dropped 8.8 million to 67.1 million. And, the short interest in Motorola (NYSE: MOT) dropped 4 million to 28.5 million.

The short interest in the Russell 2000 Index moved up over 10%. That is a lot of traders who think the market is headed down.

Source: WSJ

Douglas A. McIntyre is an editor at 247wallst.com.

AMD (NYSE:AMD) had another loss in the third quarter. There was some solace in the fact that it was slightly less than the red ink in the second quarter and that this means that chip price wars may be ending.

Don't count on it. AMD's loss in the third quarter was $396 million, or 71 cents a share. Those figures included costs of acquisition of ATI Technologies of $120 million. Revenue was $1.63 billion, up 23% from the $1.33 billion reported in the year-earlier quarter.

According to The Wall Street Journal "IDC, a market-research firm, estimates AMD accounted in the second quarter for 23.1% of unit sales of x86 microprocessors, the most popular variety of calculating engines for personal computers and server systems -- up from 18.6% in the first period." AMD thinks that those market share numbers got even better in Q3.

And, therein lies the problem. Intel (NASDAQ:INTC) is going to want that market share back. Over the last year, it has indicated that it will use its strong balance sheet to allow it to cut costs on chips to improve its piece of the pie. AMD would have to match those cuts to keep its unit sales high. Gross margins will be hurt.

The news of improvement in AMD's loss may push the stock up, but, at $14.55, its is still down from its 52-week high of $23. With a renewed price war still a real possibility, the share price is not likely to go anywhere.

Douglas A. McIntyre is an editor at 247wallst.com.

National City (NYSE: NCC) operates a banking network in Ohio, Illinois, Indiana, Kentucky, Michigan and Pennsylvania.

• NCC closed at $24.14.
  
• NCC will report EPS on 10/14.
  
• NCC has a dividend yield of 6.79%.
  
• NCC November option implied volatility of 42 is above its 26-week average of 29 according to Track Data, suggesting larger price fluctuations.

Advanced Micro Devices (NYSE: AMD), a global semiconductor company, closed at $13.96.

• AMD is expected to report EPS on 10/18.
  
• AMD October 14 straddle is priced at 90 cents. AMD November option implied volatility of 44 is near its 26-week average of 46 according to Track Data, suggesting non-directional price risks.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

MOST NOTEWORTHY: Advanced Micro Devices, Intel Corporation, Netscout Systems, Guidance Software and Nasdaq were today's noteworthy initiations:

• Morgan Stanley started shares of Advanced Micro Devices Inc (NYSE: AMD) and Intel Corporation (NASDAQ: INTC) with Underweight ratings and a $11 target and $22 target, respectively. The firm recommends selling shares of both as they expect an inventory correction and increasingly aggressive price environment.
  
• Kaufman Brothers initiated shares of Netscout Systems Inc (NASDAQ: NTCT) with a Buy rating and $13.50 target. The firm is positive on the Network General acquisition and believes successful integration as well as continued improvement in sales execution will drive shares higher.
  
• Roth Capital resumed coverage of Guidance Software Inc (NASDAQ: GUID) with a Buy rating and $15 target and said the company is the market leader for digital forensics and that new regulations have accelerated electronic discovery in the forensic market.
  
• Jefferies started shares of The Nasdaq Stock Market Inc (NASDAQ: NDAQ) with a Buy rating and $45 target and believes the company's relative underperformance over the past two years creates an attractive entry point as earnings are poised to accelerate.

OTHER INITIATIONS:

• Credit Suisse initiated the small-cap biotechnology sector, starting shares of Poniard Pharmaceuticals Inc (NASDAQ: PARD), Dyax Corp (NASDAQ: DYAX) and Dynavax Technologies Corporation (NASDAQ: DVAX) with Outperform ratings and targets of $9, $7 and $8, respectively.
  
• Broadpoint initiated Lululemon Athletica Inc (NASDAQ: LULU) with a Neutral rating.
  
• JP Morgan started shares of Vornado Realty Trust (NYSE: VNO) and Douglas Emmett Inc (NYSE: DEI) with Neutral ratings.