• Revenues for the quarter grew 50% over the same period last year. The company's third quarter 2008 net income was $57.6 million, up 41% from $40.9 million reported for the third quarter of 2007. Earnings per share increased to $1.44 from $1.04 in the prior-year comparable quarter. Eleven analysts polled by First Call/Thomson Financial expected the company to earn $1.27 per share for the quarter.

My favorite company, Intuitive Surgical Inc. (NASDAQ: ISRG), the maker of the da Vinci Surgical System reported earnings Tuesday afternoon that creamed Street guesstimates by 10 cents per share. Intuitive posted earnings per share of $1.28 versus analyst consensus of $1.18.

For the 23rd quarter in a row, just like clockwork and without missing a beat, Intuitive's top and bottom line growth simply ignored the global economy, blazing its own trail. I wonder how ISRG would have done if the economy was not in the dumps?

Overall, second quarter revenue shot up 56% from $142.2 million to $219.2 million. Instruments and accessories revenue increased 61% to $73.6 million from $45.8 million. Training revenue increased 44% to $29.4 million from $20.3 million during the second quarter of 2007.

Lonnie Smith, Chairman and CEO of Intuitive Surgical, said, "We are pleased with our second quarter revenue and earnings growth. These results reflect the continued adoption of the da Vinci Surgical System platform across a broadening group of surgical procedures."

Last night Intuitive Surgical (NASDAQ: ISRG )reached a historic milestone in its meteoric company life when Standard & Poors decided to add it to the S&P 500 index. It will be replacing Bear Stearns (NYSE: BSC) after J.P. Morgan Chase (NYSE: JPM) completes it's acquisition in the next couple of months.

After a tough day yesterday Chasing Value: Intuitive Surgical confounds Wall Street and closed down to a recent low of $274.75. It opened up today on the news and is currently trading up about 4% to $285 per share, in a market that is trading down across the board.

The following five-year chart illustrates the rapid rise of this highly specialized company that produces a robotic surgical device called the "da Vinci System". They own all the patents for the hardware, software, replacement parts, and service contracts too. That is one big moat around this company.

If you were following my post last year you might have read Serious Money: You asked about Intuitive Surgical? when ISRG was trading in the low $120's. Since that time it has reached $359.59 -- not a bad return. I have been following ISRG since the beginning and own shares at $7.70 the lowest entry point possible post IPO.

The irony of this story is that I also recommended Bear Stearns last year so my best stock pick ever is replacing one of my worst. Intuitive Surgical belongs on your watch list, and if it dips again during the sumer doldrums perhaps there might be another buying opportunity.

UPDATE: ISRG finished the day at $284.77 up $10.02 (+3.65%)

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of ISRG.

Intuitive Surgical (NASDAQ: ISRG) is recently up $11.30 to $286.05 in pre-open trading.

ISRG will be added to the S&P 500 Index on May 30, replacing Bear Stearns (NYSE: BSC).

ISRG uses advanced robotics and computerized visualization technology for invasive surgeries. Cowen has an Outperform rating on ISRG.

ISRG overall option implied volatility of 48 is below its 26-week average of 53 according to Track Data, suggesting decreasing price movement.

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

It was reported today that robotic surgery company Intuitive Surgical, Inc. (NASDAQ: ISRG) may not meet analysts average revenue expectations for 2008 and this is driving shares down $7.00 hovering around $281 per share.

Although the company guidance discussed figures around $850 million while the analysts were GUESSING $873 million temporary disappointment is affecting trading. Despite this, Eli Kammerman of Cowen & Co is maintaining his "Outperform" rating saying that he expects Intuitive to beat Wall Street expectations, and that the shares will outpace the market by 15 percent to 20 percent over the next 12 months.

So earnings might be in question, the stock is bouncing, the outperform rating is intact, and everybody still loves Intuitive -- but the stock is down so far on what is an up day. It was only a month ago I posted something similar Chasing Value: Intuitive Surgical drops on analyst disappointment after ISRG report actual earnings. If not for the analysts where would we find opportunity?

Is this a buying opportunity or signs of a week market? That answer involves more guessing, but if the stock trends down more, than it is more of an opportunity, which means you should have this world class medical device company on your watch list.

UPDATE: closing price $274.75 ,-$13.90 (-4.82%)

EXTENDED HOURS: $289.00, +14.25 (5.18%) on news that ISRG will replace Bear Stearns in the S&P 500.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of ISRG.

While analysts have proven over and over again that they are human (can't be more polite than that) the impact that they have on short-term stock values is clear. Intuitive Surgical Inc. (NASDAQ: ISRG), which closed yesterday at $348.50, dropped to $310.54 at the opening bell and is now trading at $292.00 as I type away. I will report the closing price in an update, but for now the stock has been hit hard -- down over 16%.

ISRG the maker of the da Vinci system, which uses robotic equipment and computers to do minimally invasive surgical procedures disappointed analysts and the stock was punished. Interestingly ISRG reported strong growth and even a positive outlook, however, that outlook was not as glowing as analysts expected and the result is not pretty. Does this mean that the company is not doing very well -- no. Does this mean that the stock price will not be higher next year than it is today -- the answer is no again.

What it does mean is that like other stocks with nosebleed valuations, such as Intuitive's with a trailing P/E of 80, they remain hypersensitive to the slightest deviation from expectations, reasonable or not. This happens even when Intuitive Surgical Q1 profit almost doubled.

MOST NOTEWORTHY:

• Keefe Bruyette resumed coverage of Old Republic (NYSE:ORI), MGIC Investment (NYSE:MTG), PMI Group (NYSE:PMI) and Radian (NYSE:RDN) with Market Perform ratings and a $16 target, $13 target, $7 target and $6.50 target, respectively, as they expect increased capital needs to generate operational headwinds in the near-term.
  
• JMP Securities expects FDA approval of Thoratec's (NASDAQ:THOR) next generation HeartMate II VAD any day now and for the company to meet/beat 2008 sales guidance. Shares were started with an Outperform rating and $20 target.
  
• Callaway Golf (NYSE:ELY) was assumed at Stephens with an Overweight rating and $19 target. The firm is positive on Callaway's leadership position, strong balance sheet, new products and international opportunity.

• Kaufman Bros. initiated Bancscares of Florida (NASDAQ:BOFL) with a Buy rating and $15.50 target.
  
• Raymond James started Dialysis Corp of America (NASDAQ:DCAI) with a Strong Buy rating and $9 target.
  
• Intuitive Surgical (NASDAQ:ISRG) was initiated at Lazard with a Buy rating and $420 target.

MOST NOTEWORTHY:

• RBC Capital thinks Durect's (NASDAQ: DRRX) overall portfolio is very attractive and started shares with an Outperform rating and $7 target.
  
• Red Robin Gourmet (NASDAQ: RRGB) was initiated at Jefferies with a Buy rating and $40 target. The firm believes the company has one of the few stable earnings stories in the sector, which should warrant a valuation premium in the current environment.
  
• JMP Securities believes ViroPharma's (NASDAQ: VPHM) valuation reflects several negative scenarios and notes that earnings will likely remain positive and that the company has a strong balance sheet; shares were initiated with an Outperform rating and $12 target.

• Harmonic (NASDAQ: HLIT) was assumed with an Overweight rating and $14 target at Stephens.
  
• ThinkEquity initiated Intuitive Surgical (NASDAQ: ISRG) with a Buy rating and $360 target.
  
• Broadpoint started Salesforce.com (NYSE: CRM) with a Buy rating.

When the notorious Henry Bloggett proclaimed that GOOG was destined to reach $2,000 I do not think there was a dry eye in the house, either laughing at this ridiculous comment, which by the way offered no time frame or reference point, or crying for the shame of it all -- that was the kiss of death.

When I read about this I could not resist tempering the madness and posted Serious Money: Google (GOOG) $2,000? No way, it's too high now! The madness produced many interesting metrics to prove a point, including that you could have traded Google for both Berkshire Hathaway (NYSE: BRK.A) and Intuitive Surgical (NASDAQ: ISRG), two of my favorites, as an even swap (in capitalization only). That would be a heck of deal don't you think?!

Earlier in the week I posted about finding the market bottom using that age-old handheld calculator, a white paper napkin. So, unfortunately it looks like I may be right again. Not exactly something I was hoping for, but if it has to be, it has to be. I wonder if my old napkin can outperform Wall Street super computers?

Is this an auction to the bottom? Are investors bidding things down instead of up? Looks like it from all the negative sentiment. Consumer sentiment is down, and short sellers are all excited, increasing their negative positions to new highs every day.

And here is the all-telling sign of capitulation: the ever-lying overly optimistic government is starting to admit how bad things are and throwing hundreds of billions of dollars at the problem. When does the turnaround come?

We spend a considerable amount of time trying to figure out where value lies in the market. A lot of last years' favorite high flyers have come back down to earth. Some of them are starting to resemble bank stocks. However, I have read nothing of Google Inc. (NASDAQ: GOOG) dabbling in sub-prime mortgages or CDO's. Intuitive Surgical, Inc. (NASDAQ: ISRG) has not reported any bad news -- and both are down but showing signs of some upside again.

Regardless, the price on any given day is a myth, a story, speculation based on a few truths and many unknowns. There is a lot of huffing and puffing about current and future valuations.

Apple Inc. (NASDAQ: AAPL) one of our most inventive, progressive and dynamically promoted companies is down over 35% in one month. Apple euphoria pushed it too high in December, and I think it could be argued that it has become a value play now. My colleague Georges Yared is on record forecasting a one-year price for AAPL shares of $300...10.5 to go. Beltway Greg, one of our frequent AAPL enthusiasts has thrown out a price target of $260, and I am on record with a $225 as the top end. Apple closed at $145.46 $125.48 on Friday.

What is the truth? There is none, until we are looking back at facts instead of forward with best guesses. As of today Apple might even be too high. Hey George, what do you think now?

Don't even get me started on Amazon.com (NASDAQ: AMZN) My last post on the subject was Amazon is not worth a penny over $60 - and I think even less! It closed Friday at $73.50 with a P/E around 66. So in case the math is tough for you, AMZN has to increase its net earnings by 100% to achieve a P/E of 33 twelve months out and would then be 22% higher than Apple is today -- go figure. There have been times that AMZN was on sale but for most of it's existence I have thought it was over priced and I do today as well. As best as I have been able to learn AMZN's price is greatly affected by the limited number of shares: Who owns Amazon.com - really?

January and so far February has been a tough month in the stock market but I have positioned for the long term with many value propositions. In the short run I have been the "price is right" winner on a few things like GOOG and ISRG and I don't share many peoples pessimism for the stock market. We have been net buyers in January and February looks to be the same. Who knows, I might even get crazy and buy some Amazon some day.

Sheldon Liber is the CEO of a small private investment company and the design and research principal for an architecture & planning firm. To find potential opportunities and verify my track record read Chasing Value or Serious Money. Disclosure: I own shares of ISRG.

By definition a high tech stock is a stock in a technology sector, such as software, semiconductors, networking, or biotechnology according to Investorwords.com. That covers companies like Apple Inc. (NASDAQ: AAPL), Cisco Inc. (NASDAQ: CSCO), Google Inc. (NASDAQ: GOOG), Intel Corporation (NASDAQ: INTC) and Microsoft Corporation (NASDAQ: MSFT) that are all household names.

For some reason companies that are equally if not more tech focused are not thought of as tech stocks. However, can anything be more high tech than Intuitive Surgical, Inc. (NASDAQ: ISRG) that makes robotic surgical equipment, including the required software? I understand that ISRG is in the medical products industry but it is every bit a tech company. Why does that disqualify it from being discussed as a tech stock?

I would think Apple is becomming more and more a consumer products company with a retail component. It is the new Sony Corporation (ADR) (NYSE: SNE). Maybe it should switch to the NYSE?

Thursday marked the end of the first month of the new year ... and what a market. Investors have been through the proverbial ringer from January 2 right through January 31. The market ended up 200 points Thursday to wrap up the craziest January I have seen in my 30 years! So what happened and where do we go from here?

Superb growth stocks of 2006/ 2007 have seen the foam come off the top of their superb performance. Names like Intuitive Surgical (NASDAQ: ISRG), Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG), First Solar (NASDAQ: FSLR) and others have seen valuation reductions of up to 30-35%. Bad businesses? No. Changing business models? No. Tough environment? Yes. Think of the example of a Major League baseball team winning its division one year by garnering 96 victories, but the next year winning 93 games to capture the same division title. Bad team? No, just a different environment, and still winning its division.

The economy has taken a step back and said to these companies, "if you thought you could have 30% growth ... think again, it's going to be 25% instead this year." The growth bar gets re-set and so do the valuations. The important point is that many terrific companies weather through these periods and when economic times improve, they go back and capture even higher valuations than before the slow down.