NOTE TO EDITORS: The Following Is an Investment Opinion Being Issued by Market Pulse.

Devices are capable of accessing the “white spaces” between airwaves without affecting the adjacent licensed networks under certain power-level limits, the FCC concluded in a detailed report released Friday afternoon. Microsoft (NSDQ: MSFT), Dell, Motorola (NYSE: MOT) and Google (NSDQ: GOOG) are just some of the companies that want unlicensed access to the vacant TV channels for high-speed wireless services, but broadcasters and wireless-microphone manufacturers have fought against any such move along with T-Mobile. The unlicensed, so called “white space” spectrum (or AWS-3 band) was tested for interference with T-Mobile’s AWS-1 network in Seattle recently by the FCC’s Office of Engineering and Technology. T-Mobile’s 3G network, which is currently being rolled out across much of the country is in the 2110-2155 MHz band, and therefore sits adjacent to the proposed unlicensed band in the 2155-2175 range. The report tentatively concluded that AWS-3 devices could operate under certain power level restrictions “without a significant risk of harmful interference…The analysis shows that an AWS-1 and AWS-3 device operating in close proximity does not necessarily result in interference. And when factoring in actual operation under non-static conditions, the situation only improves.” Such action would “be consistent with past practice and would encourage the parties to work together to adopt whatever further measures may be necessary to control interference,” the report continued. The report is now available for comment and a final decision by the FCC is expected before the end of the year. Full Report (pdf).

Devices are capable of accessing the “white spaces” between airwaves without affecting the adjacent licensed networks under certain power-level limits, the FCC concluded in a detailed report released Friday afternoon. Microsoft (NSDQ: MSFT), Dell, Motorola (NYSE: MOT) and Google (NSDQ: GOOG) are just some the companies that want unlicensed access to the vacant TV channels for high-speed wireless services, but broadcasters and wireless-microphone manufacturers have fought against any such move along with T-Mobile. The unlicensed, so called “white space” spectrum (or AWS-3 band) was tested for interference with T-Mobile’s AWS-1 network in Seattle recently by the FCC’s Office of Engineering and Technology. T-Mobile’s 3G network, which is currently being rolled out across much of the country is in the 2110-2155 MHz band, and therefore sits adjacent to the proposed unlicensed band in the 2155-2175 range. The report tentatively concluded that AWS-3 devices could operate under certain power level restrictions “without a significant risk of harmful interference…The analysis shows that an AWS-1 and AWS-3 device operating in close proximity does not necessarily result in interference. And when factoring in actual operation under non-static conditions, the situation only improves.” Such action would “be consistent with past practice and would encourage the parties to work together to adopt whatever further measures may be necessary to control interference,” the report continued. The report is now available for comment and a final decision by the FCC is expected before the end of the year. Full Report (pdf).

The Research In Motion takeover guessing game has returned. With the BlackBerry-maker’s shares having dropped from more than $148 to around $60 in four tumultuous months, cash-rich companies could be readying a takeover bid, Reuters reports. The company is also facing increased pressure from investors due to a slate of expenses related to launching new smartphones that are impacting near-term margins. Meanwhile, RIM’s first new smartphone design in more than a year hasn’t gone off without a hitch. *AT&T* has delayed the Bold’s release multiple times, citing software glitches and network traffic concerns, and UK operator Orange has just suspended all shipments of the device due to software issues as well. The device’s future is uncertain as it stands now. RIM (NSDQ: RIMM) attempted to pre-empt the iPhone 3G launch by announcing details about the device, but has failed to deliver with actual success in the market after numerous delays. Canaccord Adams analyst Peter Misek told Reuters: “RIM is a massive strategic fit” for *Microsoft* and that he’s “fairly certain they have a standing offer to buy them at $50 (a share).” Four months back, such a number would seem ludicrous, but companies throughout the space has seen their market valuation cut in half in a matter of months if not worse, and that could lead to rampant consolidation and mergers in various sectors. Following Microsoft’s failed attempt to acquire *Yahoo *, it’s well known the company is eyeing other opportunities. Microsoft (NSDQ: MSFT) acquired Sidekick-maker Danger last February to boost its mobile business, but hasn’t done anything yet to indicate its plans for the consumer-focused handset firm nor has it refreshed the product line. Still, RIM’s shares would have to drop to at least $40 before a $50 per-share offer gets any legs. Microsoft is one of the most well-equipped companies in the technology arena to make an offer of this magnitude stick without much, if any, dependence on external financing. A stock and cash deal would be the most likely outcome. Finally, the biggest hurdle to any takeover could come from RIM co-CEOs Mike Lazaridis and Jim Balsillie – a deal without their backing would be tough to push through in a hostile fashion.

Updated below: At the rate it is going, $15 per share might sound enticing to Yahoo (NSDQ: YHOO) after a while. A small Yahoo investor Mithras Capital has put out a proposal asking MSFT to rebid for the company at $22 a share, reports Reuters. As part of a proposed deal, Microsoft (NSDQ: MSFT) would unload Yahoo’s Asian assets and non-search businesses, extract $3 billion worth of cost savings and receive $2.8 billion of tax benefits, which means MSFT will pay $10.3 billion for Yahoo’s search business (about $2 billion less than it was willing to pay earlier in the summer for search portion). It also calls for Yahoo to drop its poison pill, while valuing Yahoo’s Asian assets at $7.2 billion and its non-search business at $4.5 billion. Earlier this year Mithras backed Carl Icahn’s stake in the company. Yahoo’s shares hit a five year low yesterday, and today is down about 2 percent today to trade below $13. The Yahoo-Google (NSDQ: GOOG) ad deal is certainly going to be mired in regulatory issues in a while, and any Yahoo-AOL (NYSE: TWX) combination would also face somewhat similar regulatory issues. Update: The shares dipped below $12 today, though they are above that mark now. Staci adds: Meanwhile, according to an SEC filing (pdf), Yahoo investor Capital Research Global Investors has upped its stake to 10.1 percent, using the down market to add its holdings. The fund held 8.6 percent when it reported on June 30. Together with sibling Capital World Investors, the funds have a stake of 22.34 percent. 

AutoVirt joins other storage vendors in the effort to improve the management of files for the mid-market

Filed under: Microsoft (MSFT), Time Warner (TWX), Walt Disney (DIS), Sony Corp ADR (SNE), Electronic Arts (ERTS), Activision Inc (ATVI), Technology

There are some who say that video games will be just fine during the economic crisis. Of course, you have to consider who's spouting this idea when evaluating it. According to this article, gaming giants Microsoft (NASDAQ: MSFT) and Sony (NYSE: SNE) believe that the upcoming holiday season won't be so tough on their PlayStation 3 and Xbox 360 consoles. They agree with some pundits who think that people will look to drop several hundred dollars on a system as opposed to spending even more on bigger-ticket items such as a vacation. If people cocoon in their homes during this terrible time period to save cash, then they may want to play video games. That's one dimension of the argument.

The other is that consumers may turn to escapist fantasies and casual diversions to take their minds off their problems. In this sense, video games are no different than the movie industry, which is supposed to be resistant to recessions. Again, companies like Disney (NYSE: DIS) and Time Warner (NYSE: TWX) make content that can immerse you in worlds that are different (and more fun) than the one you currently exist in.

Both arguments make sense. Many video games are like movies these days, so comparing them to the film industry is important. And video games definitely are cheaper than a trip to Walt Disney World. However, there are a few things to keep in mind when thinking about these concepts and making an investment decision. First, we are arguably in an environment that we've never seen before. The variables are so different these days. Who's to say how recession-proof movies are going to be, let alone video games? An Xbox 360 can be had for $200. So what if it's less than a trip to Mickey Mouse's castle? Consumers will still be aching. At the very least, if parents don't cut back in terms of buying Johnny a system for Christmas (and they may not, since parents oftentimes refuse to disappoint their kids during the season of Santa), then surely the households who already have one system installed will think twice about installing a second system (yes, many households have multiple systems).

Then there's the price of software. I expect a lot of software deflation this holiday season in the form of aggressive sales and price-cuts as things get wildly competitive. And let's think about the companies themselves. Let's say both Sony and Microsoft sell a lot of hardware and software. Would you buy those two stocks just based on that thesis? I say you wouldn't because both of them are a lot more than just video games. Sure, you get exposure to the industry through them, but you've got to consider their other operating divisions as well.

Right now, I think you have to be careful about buying any stock unless you are an extremely long-term thinker. And if you want to play the video-game idea, you may want to consider going straight to the software publishers since they don't have to produce lower-margin consoles. Activision Blizzard (NASDAQ: ATVI) and Electronic Arts (NASDAQ: ERTS) are two names in the space that carry big brand equities and interesting pipelines. Of course, let me repeat that diving into any equity at the moment is an exercise in daredevil antics. With the Dow crossing the 8000 level today, and with indexes around the world ailing, rational pricing of stocks may not be with us for some time. Don't worry, though. Just slip a copy of Halo 3 into the Xbox 360 or Super Mario Galaxy into the Nintendo (OTC: NTDOY) Wii and let your troubles fade away...

Disclosure: I own Activision Blizzard and Disney; positions can change at any time.

 

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Filed under: Microsoft (MSFT), Time Warner (TWX), Walt Disney (DIS), Sony Corp ADR (SNE), Electronic Arts (ERTS), Activision Inc (ATVI), Technology

There are some who say that video games will be just fine during the economic crisis. Of course, you have to consider who's spouting this idea when evaluating it. According to this article, gaming giants Microsoft (NASDAQ: MSFT) and Sony (NYSE: SNE) believe that the upcoming holiday season won't be so tough on their PlayStation 3 and Xbox 360 consoles. They agree with some pundits who think that people will look to drop several hundred dollars on a system as opposed to spending even more on bigger-ticket items such as a vacation. If people cocoon in their homes during this terrible time period to save cash, then they may want to play video games. That's one dimension of the argument.

The other is that consumers may turn to escapist fantasies and casual diversions to take their minds off their problems. In this sense, video games are no different than the movie industry, which is supposed to be resistant to recessions. Again, companies like Disney (NYSE: DIS) and Time Warner (NYSE: TWX) make content that can immerse you in worlds that are different (and more fun) than the one you currently exist in.

Both arguments make sense. Many video games are like movies these days, so comparing them to the film industry is important. And video games definitely are cheaper than a trip to Walt Disney World. However, there are a few things to keep in mind when thinking about these concepts and making an investment decision. First, we are arguably in an environment that we've never seen before. The variables are so different these days. Who's to say how recession-proof movies are going to be, let alone video games? An Xbox 360 can be had for $200. So what if it's less than a trip to Mickey Mouse's castle? Consumers will still be aching. At the very least, if parents don't cut back in terms of buying Johnny a system for Christmas (and they may not, since parents oftentimes refuse to disappoint their kids during the season of Santa), then surely the households who already have one system installed will think twice about installing a second system (yes, many households have multiple systems).

Continue reading Are video games a defensive industry at this point?

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Filed under: Before the bell, International markets, Earnings reports, Analyst reports, Analyst upgrades and downgrades, Deals, Microsoft (MSFT), Apple Inc (AAPL), General Electric (GE), Ford Motor (F), General Motors (GM), Market matters, Citigroup Inc. (C), Research in Motion (RIMM), Morgan Stanley (MS), Amer Intl Group (AIG), Wachovia Corp (WB), Economic data, Wells Fargo (WFC), Financial Crisis

U.S. stock futures were significantly lower Friday morning, a day after the Dow industrials had already plunged 678 points. The Dow dropped 21% in the past 10 days. U.S. stock markets are looking to join the plunge in global markets as Japan's Nikkei 225 fell 9.6%, Hong Kong Hang Seng dropped 7%, London's FTSE 100 declined 5.5% and the German DAX 30 was down 8% to name but a few that have managed to remain open. Some global markets actually had to close today, prompting the name "Black Friday."

Wednesday's coordinated rate cut didn't seem to loosen frozen credit markets as investors seem to completely lose confidence in the world's financial system. Finance officials from the G7 are meeting in Washington Friday to address the financial meltdown. On the economic front, August trade data and September import prices will be released. Oil prices plummeted to a one-year low of $82 a barrel.

General Electric (NYSE: GE) -- meanwhile this morning, GE reported results that met the lowered expectations. GE's profit fell 22% to $4.3 billion, or 43 cents per share, compared with $5.56 billion, or 54 cents, a year earlier. GE's revenue climbed 11% to $47.23 billion. Analysts polled by Thomson Reuters forecast earnings of 45 cents a share on revenue of $47.34 billion. GE recently got a $3 billion infusion from Buffett's Berkshire and raised $12.2 billion through a stock offering. Shares of GE are down about 1% in pre-market trading.

Morgan Stanley (NYSE: MS) shares are dropping again this morning, 3.6% in pre-market action as Moody's Investors Service put it on review for downgrading its credit rating. Also, an analyst slashed his price target and earnings estimates for Morgan Stanley late Thursday, as concerns mount it could become the next big victim of the credit crisis.

Citigroup (NYSE: C) shares are actually a little higher this morning after it announced late Thursday it was withdrawing from its bid to buy Wachovia (NYSE: WB), leaving a clear path for Wells Fargo (NYSE: WFC) to buy the distressed firm. WB shares are gaining 30% in pre-market trade, whily WFC's are down about 1.8%.

General Motors (NYSE: GM) and Ford Motor (NYSE: F) -- S&P put the ratings of both on review for a possible downgrade. Detroit's Big 3 "may be forced into bankruptcy by slowing economies and dwindling auto sales, Standard & Poor's analyst Robert Schulz said today."

AIG (NYSE: AIG) -- The needs of the big insurance company seem insatiable as after the original loan from the government (some of it spent in a spa), it now borrowed $9 billion more, to a total of $70.3 billion. The government had originally planned to lend AIG $85 billion but on Wednesday raised that figure 45% to $122.8 billion. Shares are declining 5% in pre-market trade.

Apple Inc. (NASDAQ: AAPL) -- the concumer tech company is expected to unveil new laptop computers next week, including a low-priced model. The event will be held Tuesday, October 14. Some analysts are expecting the laptops to start at less than $800, compared with $1,099 now, which would bring Apple closer in line with other computer makers.

Research in Motion (NASDAQ: RIMM) -- Reuters analyst Wojtek Dabrowski surmises that the recent plunge in RIM shares "could leave the company vulnerable to a takeover from a well-capitalized buyer such as Microsoft Corp. (NASDAQ: MSFT)." RIMM shares are down another 4.4% in pre-market trading to $56.45.

 

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

One of Yahoo!'s (NASDAQ: YHOO) big shareholders wants the company to sell itself to Microsoft (NASDAQ: MSFT) ASAP for $22. And, it has a plan to make the deal work.

Mithras Capital does not own a big piece of Yahoo!, but it wants to help the portal firm to get a price well above where it trades today. According to Reuters, "Microsoft would unload Yahoo's Asian assets and non-search businesses, extract $3 billion worth of cost savings and receive $2.8 billion of tax benefits, meaning the software giant would pay $10.3 billion for Yahoo's search business."

If wishes were horses all the beggars would ride. Microsoft understands that Yahoo! is in distress as its share of the search market keeps dropping and display advertising revenue growth slows sharply due to a rough economy. Yahoo!'s stock is at $12.65 and has been dropping rapidly.

If Yahoo! reports a weak third quarter and revises its guidance for the fourth quarter and 2009 down, its shares could quickly move well under $10. Microsoft knows that. If it still wants to buy Yahoo! it may only have to wait a few weeks to get a much better deal.

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

 

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Filed under: Forecasts, Industry, Microsoft (MSFT), Yahoo! (YHOO), Time Warner (TWX), Time Warner Cable (TWC)

Time Warner (NYSE: TWX) hit a new 52-week low today at $9.03. Until recently, it has performed better than most of the other media conglomerates, but it now faces two difficult questions.

Before current CEO Jeff Bewkes took over, it was assumed that Time Warner Cable (NYSE: TWC) would be spun out. Bewkes managed to get over $9 billion from the transaction. That may have been priced into the shares when he stepped into the top job. The other major assumption of shareholders was that AOL would be repaired or sold. The internet unit has been divided into two pieces. The ISP operations will probably be sold to another internet service company. The fate of AOL remains unknown. There are rumors that it could be sold to Yahoo! (NASDAQ: YHOO) or Microsoft (NASDAQ: MSFT).

Because internet display advertising is facing a downturn, sales at AOL will almost certainly suffer in the fourth quarter and into 2009. If Yahoo! is a reasonable proxy, the fact that it has lost half of its market cap this year and has been downgraded by several analysts cannot be good news for AOL.

Advertising weakness is bound to catch up to Time Warner's magazine unit. Print advertising may never recover entirely if the newspaper industry is any guide. Analysts have frequently said that the magazine unit should be sold. It is no longer a growth operation.

TWX cable units, like CNN, which rely on TV ads, are also certain to face an unpleasant if not vicious environment heading into the winter.

Investors in Time Warner are troubled for a simple reason: The company still looks too much like it did last year.

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

 

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Schaeffer's Andrea Kramer takes a look at unusual option activity on the Street

Schaeffer's Andrea Kramer takes an in-depth look at the week ahead

Schaeffer's Andrea Kramer takes a look at unusual option activity on the Street

Schaeffer's Investment Research's Colleen S. King takes a look at news on the Street after the market close.

Schaeffer's Andrea Kramer takes a look at unusual option activity on the Street