Filed under: Products and services, Google (GOOG), Microsoft (MSFT)

Microsoft Corp. (NASDAQ: MSFT) will soon further into the world of on the internet video as it has introduced software that’ll grant customers to watch on the web videos and chat about them in real-time. Called Messenger TV, the new service will combine Microsoft’s Windows Live instant messaging program with an integrated video player. Windows Live Messenger, though, still is not the world’s largest instant messaging platform. That honor belongs to AIM, one of AOL’s more successful products ever.

Microsoft’s goal in introducing the new instant messaging program with integrated video is to get its customers speaking about the videos they are watching, as well as allowing them to watch and share clips from such companies as MTV, Sony BMG and EMI Group, some of the largest music companies on the planet.

Is this yet another attempt by Microsoft to try and “catch the wave” of online video usage? If that’s its thought, it’s already missed the boat. Google, Inc. (NASDAQ: GOOG)’s YouTube is where on the web video is already at, so this new Messenger TV product needs to offer something new and compelling. Microsoft will be rolling out this new service in Europe first, though, as there are 95 million users of Windows Live on that continent already — the lion’s share of the company’s total base of 240 million customers.

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Filed under: Google (GOOG), Sprint Nextel Corp (S)

As Tom mentioned earlier, Sprint Nextel Corp. (NYSE: S) is merging its next-generation wireless assets with Clearwire Corp. (NASDAQ: CLWR) to form a new joint partnership that — finally — will create a high-speed wireless world wide web network that covers most of the U.S. Even though Sprint’s Xohm service has been decried by investors as a “non-core” asset weighing down Sprint’s pocketbook, it still has enormous potential in the near future. Sprint’s not in terribly good shape — but it does have vision. Of course, vision and execution are two different things.

So, it is amusing to think that if the new Sprint-Clearwire venture can build out is national presence successfully and capture customers exhausted of limited high-speed world wide web service, the world will be its oyster. Of course, other companies are contributing to the venture as well, including Google, Inc. (NASDAQ: GOOG). Why would Google want to put money into this? Because this could be Google’s most important investment ever.

Bypassing the telephone and cable companies that have a stranglehold on most of the high-speed internet business in the U.S. has long been the dream of Google. It doesn’t want a middleman in the way of it connecting consumers and businesses with the information they seek. Even though Google wasn’t successful in the current FCC radio auctions (maybe by design), finding a way to provide internet service directly to its customer base would give Google on a much more powerful perch than it has even this day. Google could even buy the new Clearwire partnership outright once it’s established.

I think they’re starting to get giddy in the Google board room.

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Filed under: Newspapers, Magazines, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Intel (INTC), Sprint Nextel Corp (S), Comcast Cl’A’ (CMCSA), Wachovia Corp (WB)

MAJOR PAPERS:

• The Wall Street Journal reported that an alliance of cable, World wide web and chip titans will announce plans to invest $3.2B in a company that’ll deliver Web access for laptops and cellphones using WiMax. The venture, valued at over $12B, includes Sprint Nextel Corporation (NYSE: S) and Clearwire Corporation (NASDAQ: CLWR) and will be backed by Comcast Corporation (NASDAQ: CMCSA), Time Warner Cable Inc (NYSE: TWC), Intel Corporation (NASDAQ: INTC) and Google Inc (NASDAQ: GOOG).
• According to people familiar with the matter, Robert Verrone, one of the most zealous commercial real-estate lenders during the industry’s boom, will leave Wachovia Corporation (NYSE: WB) within the next week, the Wall Street Journal reported.

WEB SITES:

• Bloomberg reported that the Department of Justice is probing whether UBS AG (NYSE: UBS) helped clients evade American taxes. In an e-mailed statement, the firm stated one senior bank employee was “briefly detained” by authorities.
• Bloomberg also reported that Vallejo, California’s city council voted to go into bankruptcy. Officials stated that after talks with labor unions failed to win salary concessions from police and fire fighters, the city does not have enough money to pay its bills.
• According to a rumor, TechCrunch reported that the Yahoo Inc (NASDAQ: YHOO) board of directors yesterday authorized Yahoo chairman Roy Bostock, rather than CEO Jerry Yang, to call Microsoft Corporation (NASDAQ: MSFT) CEO Steve Ballmer about re-starting negotiations.

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Filed under: Before the bell, Earnings reports, Deals, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), General Motors (GM), Employees, Market matters, Citigroup Inc. (C), Amer Intl Group (AIG), Economic data

Stock futures were once again lower this morning, setting up stocks for a sharp decline after AIG reported a massive $7.8 billion loss and oil set a record above $125 a barrel. With credit crunch concerns resurfacing and inflation worries on investors’ minds, futures point to heavy losses this day.

On Thursday, U.S. stocks ended higher despite another surge in oil prices following better-than-expected April sales reports from many retailers including Wal-Mart and Costco. The Dow industrials ended 52 points, or 0.41%, higher, the S&P 500 rose 5 points, or 0.37% and the Nasdaq Composite rose 12 points, or 0.52%.

Without much economic news set for this day except for the March U.S. trade gap, investors will focus on AIG’s results and their implication on the financial and credit market as well as on oil prices.

American International Group (NYSE: AIG) reported a quarterly $7.8 billion loss after the market close Thursday. AIG also stated it will raise $12.5 billion in the coming months as its capital base has deteriorated due to the crisis in the credit markets. Shares of AIG have declined over 7.2% in premarket trading, but the real affect of its results can seen across the financials as fears have resurfaced once again about the impact of the credit crunch on financial firms.

As if that was not enough, adding to the negative sentiment is oil. Crude oil for June delivery climbed as much as $1.43, or 1.3%, to $125.12 a barrel. While prices have retreated somewhat, they remained near $125 at around $124.8 a barrel. For the week, oil has risen 7.4%, making Wall Street nervous about inflation. Mind you, 55%of 372 petroleum industry executives surveyed by KPMG LLP stated they think the price of a barrel of crude will drop below $100 by the end of the year.

Among news headlines today is Citigroup (NYSE: C) and its CEO Vikram Pandit who is set to reveal a strategic plan to turnaround Citigroup from the damage it suffered due to the subprime crisis.

And after a bitter, 10-week strike at auto parts supplier American Axle and Manufacturing Holdings Inc., General Motors Corp. (NYSE: GM) has concurred to kick in up to $200 million to help settle the dispute.

And returning for a moment to the Microsoft, Yahoo! saga, the former is no longer expected to reverse its decision regarding the Yahoo! acquisition and is seen growing its own advertising and Internet search business. Meanwhile, Google has proposed an advertising partnership with Yahoo following a two-week test program between the firms that apparently succeeded.

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Filed under: Launches, Industry, Consumer experience, Microsoft (MSFT), Yahoo! (YHOO), Apple Inc (AAPL)

Microsoft (NASDAQ: MSFT) can’t sell any Zunes, so it has come up with a plan so that it will continue to do badly in the business. According to The Wall Street Journal, Redmond “is introducing a new technology that’ll let users of its Zune portable devices legally share portions of their song libraries with other Zune users.” To take full advantage of the new product users will have to purchase a $14.99 a month service called Microsoft’s Zune Pass.

None of that is going to help get share from the Apple (NASDAQ: AAPL) iPod. Not only is it the largest music download service in the US, the iPod has almost 80% of the market. Zune owners can’t share music with other Zune owners because there are so few of them. Perhaps Microsoft could start a “Zune-user location service” and charge money to help people find the two or three other Zune customers in their town.

There have been hopes that the Zune would do for Microsoft in the portable music device business what the Xbox did for it in gaming. But, Apple’s footprint is too big and it is adding services, like video downloads and rentals, too swiftly.

Microsoft should stick to trying to buy Yahoo! (NASDAQ: YHOO).

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

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Filed under: Before the bell, Analyst upgrades and downgrades, Google (GOOG), Microsoft (MSFT)

Kaufman initated Google (NASDAQ:GOOG) with a “buy” and set a $680 price target according to Briefing.com. The news service also reports that Lehman resumed coverage of Microsoft (NASDAQ:MSFT) with an “equal-weght” rating and a price target of $34.

Thomas Weisel maintained at “overweight” rating on Cephalon (NASDAQ:CEPH) although the FDA rejected broader use of its pain drug Fentora according to the AP.

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

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Filed under: Google (GOOG), Apple Inc (AAPL), Berkshire Hathaway (BRK.A), Bargain stocks, Stocks to Sell, Garmin Ltd (GRMN)

While researching GPS maker Garmin Ltd (NASDAQ: GRMN) — whose stock has lost two-thirds of its value in the last six months — I can’t help but pity those long-term shareholders who reject trend following and technical analysis in favor of investing for the long term. To them, it seemed like only yesterday that GPS was one of the hottest technologies around and this industry leader could do no wrong.

Well, that’s usually the time to sell, just as I posted on Apple Inc (NASDAQ: AAPL) in January this year and on Google Inc (NASDAQ: GOOG) in November last year, both before they each dropped 40% in just a few months. Because the truth is these popular technology stocks are all expectations. We’re not talking Berkshire Hathaway (NYSE: BRK.A)-type value investing here.

Sure, GPS is still hot, somewhat, but due to intense competition, margins have been evaporating, forcing analysts to lower their earnings estimates. In their latest quarter, Garmin further strengthened the bear case with spiking inventories and accounts receivable. None of that looks to change anytime soon, and even though it’s got a P/E of 10, book value is all the way down near $11 per share!

I couldn’t help but wonder where I’d seen this 2-year chart pattern before and then it hit me. Garmin’s downfall is eerily exact-not just similar-to the Nasdaq’s 2-year chart of 1999-2001, before it tanked another 50%. Obviously, that’s comparing apples and oranges, but with so many stocks out there, why would you ever put yourself into one with such a reliably bearish pattern?

Basically this stock has nothing going for it. I hate buying into margin-battling companies with tons of bitter shareholders who are willing to sell into any bounce. I hate gradual downtrenders-for buying at least-and I hate people asking me what to do when they are down so much already. Not because I’m mean, but because as I stress on my blog every day-and what’s helped me earn 47% over the past 6 months-is that investors need to cut their losses quickly.

Sure this stock could always come back-miracles have been known to happen–but given all these nasty variables, the odds of a big rebound anytime soon aren’t there.

Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund

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Filed under: Before the bell, Microsoft (MSFT), Yahoo! (YHOO), Apple Inc (AAPL), PepsiCo (PEP), Ford Motor (F), Toyota Motor Corp. (TM), AT and T (T), News Corp’B’ (NWS)

Before the bell: Futures lower ahead of data

News Corp (NYSE: NWS) is scheduled to report earning Wednesday and is estimated to post a profit of 31 cents a share in the fiscal third quarter.

In its attempt to answer consumer demand, Ford Motor Co. (NYSE: F) stated Wednesday it plans to greatly increase the use of more fuel-efficient six-speed automatic transmissions. The six-speed automatic transmission, which offers 4-6% better fuel economy, will be in 98% of its North American cars by 2012.

Seems that after the current dealing with Yahoo! Inc. (NASDAQ: YHOO), Microsoft Corp. (NASDAQ: MSFT) Chairman Bill Gates has had enough. He stated the company isn’t pursuing other deals for now and that Microsoft and Yahoo! should pursue “independent paths.” Microsoft still has to show shareholders improvement in Vista and its struggling internet business.

PepsiCo Inc. (NYSE: PEP) on Wednesday increased its annual dividend by 20 cents to $1.70.

Toyota Motor Corp. (NYSE: TM) is raising its prices on some U.S. models later this month. As some concerns were raised about its profit growth in the American market, the carmaker may be able to afford raising prices while demand for its automobiles is high.

The blogosphere and iPhone and gadget lovers are in an uproar. The Boy Genius brought an internal memo from AT&T (NYSE: T) showing a freeze in vacation starting June 15-July 12. Last year, before Apple (NASDAQ: AAPL)’s iPhone was launched, a similar memo announcing a vacation freeze was sent. The Boy Genius surmised that perhaps the 3G iPhone might be launched sooner than anticipated.

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Filed under: Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO)

After Microsoft Corp. (NASDAQ: MSFT) announced it was withdrawing its offer for Yahoo! (NASDAQ: YHOO) I thought that Yahoo stock would end today at $19 — which is where it traded before the deal was announced. But Yahoo is currently trading over $24.

Here are three reasons that Yahoo may be trading $5 above where it was pre-Microsoft:

• Google Inc. (NASDAQ: GOOG) deal. Investors are ascribing some value to the possibility that Google will sell some of Yahoo’s search advertising;
• Short covering. Investors who bet on the deal falling apart may be covering their short positions in Yahoo — keeping a floor beneath its stock price;
• Still in play. Microsoft may buy up a control position in Yahoo at the current market price and return to negotiate a Yahoo takeover at a lower price.

One thing seems likely to me — investors are not piling into the stock because they believe that Yahoo has some money making strategy up its sleeve that will accelerate its earnings growth. But I hope for Yahoo shareholder’s sake that I’m wrong.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter . He has no financial interest in the securities mentioned.

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