Wall Street's optimism in last week's preview about the earnings of tech stocks wasn't misplaced, as there were many more positive surprises than negative ones among the stocks we looked at. This week will bring plenty more data for investors in and watchers of the sector to mull over. Apple Inc. (NASDAQ: AAPL), AT&T Inc. (NYSE: T), and Microsoft Corp. (NASDAQ: MSFT), for example, are expected by analysts surveyed by Thomson Financial to post modest earnings gains from a year ago, to $1.11 per share (on $8.1 billion in sales), $0.72 per share (on $31.3 billion in sales), and $0.47 per share (on $14.8 billion in sales) respectively. All three of these companies ended the week closer to their 52-week lows than highs, and analysts on average consider them each a buy.
Here's a look at some of the week's biggest expected earnings gainers and decliners in the sector:
Baidu.com Inc. (NASDAQ: BIDU): $1.25 per share (+44.0%) on revenues of $134.7 million (+103.2%)
Broadcom Corp. (NASDAQ: BRCM): $0.44 per share (+38.6%) on revenues of $1.3 billion (+33.8%)
QLogic Corp. (NASDAQ: QLGC): $0.31 per share (+29.0%) on revenues of $170.0 million (+21.2%)
FLIR Systems Inc. (NASDAQ: FLIR): $0.32 per share (+28.1%) on revenues of $275.2 million (+44.0%)
Juniper Networks Inc. (NASDAQ: JNPR): $0.30 per share (+26.7%) on revenues of $927.4 million (+26.2%)
Waters Corp. (NYSE: WAT): $0.75 per share (+17.3%) on revenues of $391.6 million (+11.1%)
Minyanville's top dog, Todd Harrison, dares to ask in public what Wall Street types quietly consider in private. For more insight and ideas, visit www.Minyanville.com.
If S&P 1340 doesn't hold, you're going to hear a lot of chatter regarding the March lows (S&P 1275) in a hurry. Be prepared. Be very prepared.
One very savvy soothsayer, who I just got off the phone with, doesn't think we get there. He's looking for S&P 1320-ish as a long side opportunity. Just so you're hearing what I'm hearing as heck, we don't call him "As Good As It Gets" for nothing.
Moi? Are you talking to me? You know my drill: I've got a pretty sizable ratio bet on (short crude, long oil), which I'm trading around as a function of price, along with some tertiary trading exposure, including Goldman (GS) calls.
Speaking of taxi drivers, how long do you think it'll be before cabs are allowed to pick up multiple passengers in the Big Apple? That should help with societal acrimony!
If you looked up "Where there's smoke, there's fire," you'd probably find a picture of Lehman Brothers (LEH)., this thing trades funky.
I'm seeing a lot of stocks trade "wide," which is to say they're jumping around. That's a recipe for smaller size. Adapt, don't conform.
Given the amount of typing I do on any given day, do you think I should get finger insurance?
Baidu (NYSE: BIDU) is recently up $2.28 to $351.94 in pre-open trading.
BIDU is scheduled to report Q1 results after the market close tonight.
RBC Capital has a $361 price target on BIDU.
BIDU May option implied volatility is at 81, September is at 68. BIDU average option implied volatility over the last 26-weeks is 70 according to Track Data, suggesting larger near term price fluctuations.
Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
By some measures, China-based search engine Baidu (NASDAQ: BIDU) has 60% of the search engine market in that country, which now has more internet users than the U.S. Google (NASDAQ: GOOG) is a distant second.
According to Reuters, "Lee Kai-Fu, Google's president for Greater China, said in an interview that the Silicon Valley company intends to add 200 staffers in 2008 to its existing 600 employees and to keep up that level of hiring for the next three to five years."
All of the effort may not help. The Chinese may prefer to use the services of a company that was founded in their own country and where the search technology was originally based on their language. China has watched U.S. tech efforts from Microsoft (NASDAQ: MSFT) to Hewlett-Packard (NASDAQ: HPQ) come into the country and dominate market share. The capital from those efforts makes it way back to the U.S.
Baidu is one of the few Chinese tech companies that has a huge lead on its Western competition. Many people there prefer it that way.
Douglas A. McIntyre is an editor at 247wallst.com.
Jarrett Lilien, E-Trade Financial Corporation's (NASDAQ: ETFC) president and COO, who lost out on the CEO job last month to Donald Layton, is going to resign from the online brokerage firm, the Wall Street Journal reported; Layton doesn't plan to fill the position.
Chinese Internet search firm Baidu.com Inc (NASDAQ: BIDU) is poised for aggressive growth but must also confront a number of obstacles, according to the Wall Street Journal's "Heard in Asia," including a number of lawsuits regarding its music services and a vacancy in the CFO position.
Alibaba Group, a Chinese Internet company , is in advanced talks with investors to finance its acquisition of Yahoo! Inc's (NASDAQ: YHOO) stake to expand its management independence, the Wall Street Journal reported.
OTHER PAPERS:
According to inside sources, the New York Post reported that billionaire Joseph Lewis and former Bear Stearns Companies Inc (NYSE: BSC) CEO Jimmy Cayne are looking for a white knight that could surpass JPMorgan Chase & Co's (NYSE: JPM) takeover offer for Bear Lewis and Cayne have reportedly reached out to several private equity firms and overseas banks, including Barclays Plc (NYSE: BCS) and Credit Suisse Group (NYSE: CS).
WEB SITES:
Medical supplies boss Michael Mastromarino, accused of stealing the body parts of around 1,000 corpses, has pleaded guilty to several charges in a deal with prosecutors. The BBC News reported that the Biomedical Tissue Services company shipped bones, skin and tendons to tissue-processing companies such as LifeCell Corporation (NASDAQ: LIFC) and Tutogen Medical Inc (AMEX: TTG), which are in turn facing hundreds of civil lawsuits.
With investor interest high in China, this hasn't been lost on corporate investment. Companies must face the decision about how to address the Chinese juggernaut: essentially, to build, buy, or partner.
PaidContent.org has a story this morning that the Internet giant, Google (NASDAQ: GOOG), is close to launching a joint venture to offer free music downloads in the Chinese market.
According to PaidContent, "Google is in the late planning stages of a JV with Chinese online music company Top100.cn, a Beijing-based site that currently sells licensed music downloads. The new service would permit Google's search engine in China to provide free and licensed music downloads, reports WSJ, citing sources."
This is significant in Google's push to counter leading Chinese search engine, Baidu.com (NASDAQ: BIDU), which already provides links to download sites.
This move may help Google position itself vis-a-vis locally-favored Baidu.
Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund. Author owns a long-term position in Google stock.
Battling Baidu.com Inc (NASDAQ: BIDU) in China with little success, Google Inc (NASDAQ: GOOG) is working with a Chinese company to offer free licensed music downloads, the Wall Street Journal reported. The new service is expected to be launched in several weeks.
OTHER PAPERS:
BHP Billiton Limited (NYSE: BHP) raised its bid for mining company Rio Tinto Plc (NYSE: RTP) to more than GBP70B. Meanwhile, the UK Times reported that Rio's new Chinese shareholder was preparing a counter bid for Rio.
The Washington Post reported that Time Warner Inc (NYSE: TWX) CEO Jeffrey Bewkes is expected to announce a plan today to sell or spin off Time Warner Cable Inc (NYSE: TWC). Bewkes also is likely to signal plans to break up AOL in the coming year.
China is beginning to admit that slow growth in the U.S. would be a significant enough drag to badly damage its exports and hurt its economy. "If U.S. consumption really comes down, that's bad news for us. That will have a pretty severe impact on our exports," Zhang Tao, deputy head of the international department of the People's Bank of China, told a group including Reuters.
Any slowdown is likely to hit the Chinese stock markets hard. Despite a recent pullback, the Hang Seng Index is up over 60% in the last two years while the S&P has barely risen. The Shanghai Composite is up over 300% during that period.
Downward pressure on China shares could affect many stocks listed in the U.S. Among the most vulnerable are probably those that have risen the fastest. That would include Baidu (NASDAQ: BIDU), which is up about 130% in the last year, and China Mobile (NYSE: CHL), which is up over 70%.
If a U.S. recession hits China, the markets there may have seen their best days.
Online auctioneer Mercadolibre (NASDAQ: MELI)'s business is doing pretty well, but that's not the reason why the stock is up nearly 50% in the past few weeks. No, Mercadolibre is surging because its story is a wet dream for the financial media, and that's important for investors and the stock's many short sellers.
After all, when the company reported solid earnings back in early November, the stock only rose $10/share on negligible trading volume; now, after being dubbed "The Latin American eBay" by Investor's Business Daily and "The Next Baidu" by the Cramer-TheStreet.com-CNBC axis, the stock has surged nearly $20/share within a few days on huge volume. A shining example of the power of the press!
Baidu(NASDAQ:BIDU) will be added to the NASDAQ-100 this morning. BIDU, a Chinese language internet search provider, is recently up $9.79 to $394.77. BIDU December option implied volatility of 79 is above its 26-week average of 60 according to Track Data, suggesting larger price fluctuations.
NutriSystem(NYSE:NTRI) volatility Elevated as shares near two-year low. NTRI closed at $25.37. NTRI over all option implied volatility of 72 is above its 26-week average of 51 according to Track Data, suggesting larger price risk.
Daily Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Google (NASDAQ: GOOG) is not making the kind of headway it would like to in China. It still runs far behind local search engine Baidu (NASDAQ: BIDU) in market share. Reuters thinks it has the road-map for the US company and it involves Google "linking up with local partners, navigating draconian regulations and understanding Chinese tastes."
Easily said.
Google is not allowed to bring in its Google News product and use it to any effect due to censorship regulations. In the meantime, Baidu has been allowed to start its own news service. Local copyright rules do not allow the US company to offer its free music search function.
Companies like China Mobile (NYSE: CHL) are controlled by government regulators and the large cellular provider can pick which search functions it allows on its handsets. It can also set fees for software providers like Google and set them very high.
Reuters points out that the Microsoft (NASDAQ: MSFT) MSN product in China is part of a joint venture that is run by the son of a former Chinese president.
All of this seems a bit sordid, and perhaps it is. Google, however, has to decide if it is willing to go to extraordinary lengths to move into the big market, or keep some of its dignity and take what market share it can get through normal business practices.
Douglas A. McIntyre is an editor at 247wallst.com.
Imagine wanting to be the No.10 search engine in China, or at least something along those lines. Over the next couple of years, IAC/InterActiveCorp (NASDAQ: IACI) will spend $100 million [subscription required] to get more of the market in the world's most populated country.
The Wall Street Journal reports that though plans for the new venture aren't yet decided, Barry Diller said that "We've certainly got enough capital to do damage." IAC's new investment will be somewhat of a gamble.
The gamble part may be putting it lightly. Mr. Diller, the IACI CEO, will be up against established companies in the online travel, ticketing, and search business. Some of these companies are Chinese, but in the critical search market, Google (NASDAQ: GOOG) and Yahoo! (NASDAQ: YHOO) are throwing dollars and troops into battle against market leader Baidu.com (NASDAQ: BIDU).
For a large US online company to say it is moving into China is probably necessary to make shareholders think the firm is not overlooking one of the great expansion opportunities. For IACI, however, it is a little late and the dollar investment is a little light.
Douglas A. McIntyre is an editor at 247wallst.com.
Wall Street's optimism in last week's preview about the earnings of tech stocks wasn't misplaced, as there were many more positive surprises than negative ones among the stocks we looked at. This week will bring plenty more data for investors in and watchers of the sector to mull over. Apple Inc. (NASDAQ: AAPL), AT&T Inc. (NYSE: T), and Microsoft Corp. (NASDAQ: MSFT), for example, are expected by analysts surveyed by Thomson Financial to post modest earnings gains from a year ago, to $1.11 per share (on $8.1 billion in sales), $0.72 per share (on $31.3 billion in sales), and $0.47 per share (on $14.8 billion in sales) respectively. All three of these companies ended the week closer to their 52-week lows than highs, and analysts on average consider them each a buy. 
Minyanville's top dog, Todd Harrison, dares to ask in public what Wall Street types quietly consider in private. For more insight and ideas, visit 
Here are some highlights from this past week's 
Baidu
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Baidu
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Online auctioneer 
Baidu
Best & Worst in Money 2008: Most shocking financial collapse
Closing Bell: Stocks slump as AMD, AT&T, GM and Merck decline
Global Q&A: A rocky road, but profits ahead
