Microsoft should just let Yahoo twist in the wind

Yang is basically begging for a deal. And maybe Microsoft would like to own Yahoo. However, Yahoo is very far along on negotiations to merge with AOL. It's their back-up back-up plan. They hate the idea. Time Warner hates the idea. It's the last thing they want to do. But here's the catch. It's exactly what Microsoft should let happen.

If Microsoft said they don't want Yahoo here, the stock would fall apart. And Yahoo would reluctantly merge with AOL. Yahoo stock would implode -- I think $8 would be likely considering all the speculators that are long it here.

I think if Microsoft is patient... and they are patient... they get AOL along with Yahoo for half the price the market wants them to pay for Yahoo.

Cisco (CSCO) 1Q:2009 results (2)

Running it through the model $1.40 might be aggressive. We'll see what analysts say in the morning. A bear like me could use a number like $1.25 but I'm short, I don't want to start painting worst case scenarios for myself.

Cisco (CSCO) - 1Q:2009 results

Current quarter was ok. Orders weaker -- US and UK were both down -- keep in mind, typically they're growth quarters for the company.

The guidance started about 20 minutes before he gave a number. He talked about rapid realignment of costs, of worldwide economic weakness, of Europe starting to roll over, his guidance being unreliable because he's only had visibility worse than this once before... then the bomb. Revenue for next quarter will be down 5-10% year over year. That's approximately 8.9 - 9.35 bil in dollar terms. The street has 10.3 bil modeled but thats a fuzzy number in my mind -- surely I'm not the only one that thought they were having a rough time.

The stock is down 6% after-hours. Now comes the test. Can investors look through this quarter? Is it going to stay bad or did September and October's worldwide market shocks create unsustainably low spending levels?

Unfortunately I think the answers aren't clear and my crystal ball is equally fuzzy. I think its unlikely we see IT spending roar back this year. Cisco did not cut their long-term revenue forecast of 12-17% (which surprised me a bit). I suspect until they capitulate on that the stock isn't going anywhere. Expect numbers to come down for next year. I'd guess $1.40 - $1.50 is the first cut. I'd also say the stock ought to trade at the low end of their long-term forecast with visibility as poor as it is. That'd be a hair under $17 at the low end of where I envision consensus going (12 * 1.40 = $16.80). It's fairly valued here... if you think $1.40 is as low as the numbers for next year are going. My guess is they go lower eventually but it's probably dead money here either way.

Dell: Unpaid vacations or job cuts, you decide.

Dell is asking employees to help them save costs by taking unpaid vacations. They're implementing a hiring freeze, cuts to contract employees and a voluntary severance program. They are buckling down for a tougher year end.

Sticking with Dell short.

Earnings Estimate Cheat Sheet – Nov 3 & Nov 4, 2008

Estimated Reporting Date	Symbol	Revenue Estimate Current Q	Operating Profit Estimate Current Q	EPS Estimate Current Q	EBITDA Estimate Current Q	Revenue Estimate Next Q	Sequential Revenue Growth Estimate, Percent	Operating Profit Estimate Next Q	EPS Estimate Next Q	EBITDA Estimate Next Q	Revenue Estimate Full Year	Operating Profit Estimate Full Year	EPS Estimate Full Year	EBITDA Estimate Full Year	Revenue Estimate Next Year	Operating Profit Estimate Next Year	EPS Estimate Next Year	EBITDA Estimate Next Year
11/3/2008	ALVR	80.6	3.1	0.06	5.8	81.0	0.48%	2.4	0.05	4.6	292.6	5.6	0.16	--	354.4	19.2	0.35	31.5
11/3/2008	AMT	401.6	157.0	0.14	265.6	409.1	1.87%	161.6	0.14	270.7	1,586.8	615.1	0.49	1,055.2	1,702.6	699.3	0.70	1,151.8
11/3/2008	AUDC	46.5	3.9	0.09	--	47.9	2.99%	4.4	0.10	--	183.7	15.1	0.35	--	205.1	19.6	0.42	--
11/3/2008	AXTI	18.0	(0.0)	(0.02)	--	22.0	22.11%	3.1	0.06	--	79.6	7.4	0.13	--	87.0	8.4	0.19	--
11/3/2008	BLKB	83.1	18.2	0.25	--	86.9	4.59%	20.2	0.28	--	312.0	71.1	0.97	--	364.2	82.4	1.13	--
11/3/2008	CRAY	54.3	(1.8)	(0.05)	--	142.6	162.33%	21.0	0.69	--	269.8	2.1	0.19	--	255.0	3.9	0.21	--
11/3/2008	EXTR	92.7	3.3	0.04	4.8	94.5	1.93%	3.6	0.05	5.0	380.1	13.7	0.20	23.1	404.7	23.6	0.30	--
11/3/2008	GLBC	663.5	(22.0)	(1.39)	62.0	661.3	-0.33%	(18.0)	(1.34)	66.3	2,613.5	(94.2)	(5.59)	230.2	2,786.9	(58.3)	(4.81)	291.7
11/3/2008	JCOM	62.9	27.0	0.41	29.5	64.1	1.89%	27.5	0.42	29.9	246.3	104.5	1.61	115.7	270.0	118.3	1.77	126.1
11/3/2008	LOOK	16.3	--	0.00	0.5	18.9	15.98%	--	0.05	1.4	69.8	--	0.10	4.0	78.7	--	0.29	7.1
11/3/2008	MFLX	193.7	12.2	0.37	19.3	206.2	6.44%	14.3	0.39	22.1	709.4	57.0	1.66	83.2	829.1	55.6	1.56	85.7
11/3/2008	MSPD	39.4	2.2	0.07	--	40.0	1.48%	2.6	0.09	--	149.0	6.3	0.18	--	164.2	11.7	0.40	--
11/3/2008	MXWL	20.1	(3.8)	(0.21)	(2.9)	20.8	3.11%	(3.6)	(0.20)	(2.8)	78.0	(14.9)	(0.93)	(10.7)	96.6	(8.2)	(0.46)	(3.8)
11/3/2008	PBI	1,602.3	288.0	0.70	361.0	1,721.4	7.43%	328.0	0.79	401.0	6,493.2	1,168.0	2.85	1,529.3	6,732.9	1,223.6	3.11	1,591.9
11/3/2008	RACK	70.5	(4.3)	(0.07)	0.8	86.0	21.95%	(1.8)	(0.02)	6.1	281.5	(12.3)	(0.15)	4.6	322.5	(4.2)	0.03	--
11/3/2008	RDWR	25.4	(3.7)	(0.14)	--	27.3	7.65%	(1.6)	(0.04)	--	98.9	(18.4)	(0.78)	--	113.1	(6.0)	(0.01)	--
11/3/2008	TKLC	108.9	13.7	0.16	--	123.3	13.23%	19.6	0.23	--	467.5	79.2	0.85	83.2	496.3	86.3	0.95	87.9
11/3/2008	TRID	33.3	(5.7)	(0.11)	(4.3)	30.1	-9.45%	(7.5)	(0.12)	(6.6)	118.0	(30.6)	(0.49)	(35.9)	124.9	(32.7)	(0.57)	(35.3)
11/3/2008	VIA/B	3,318.3	692.5	0.55	788.4	4,409.1	32.87%	1,026.1	0.90	1,132.3	14,669.8	3,082.0	2.51	3,462.5	14,946.1	3,149.1	2.64	3,524.4
11/4/2008	AMSC	41.1	(3.1)	(0.09)	(1.1)	45.7	11.02%	(2.0)	(0.07)	(0.2)	178.5	(8.0)	(0.34)	3.5	255.0	14.3	0.11	19.4
11/4/2008	ACLS	51.3	(22.3)	(0.23)	(17.9)	55.4	7.98%	(20.1)	(0.21)	(15.0)	266.7	(66.8)	(0.73)	(48.8)	240.2	(73.7)	(0.67)	(52.9)
11/4/2008	DMRC	4.7	(3.3)	0.10	0.8	4.6	-2.13%	(0.4)	0.10	0.8	19.5	--	0.63	4.9	21.6	0.7	0.62	5.4
11/4/2008	NILE	68.8	3.2	0.16	4.8	117.7	70.99%	10.7	0.48	12.5	330.8	21.3	1.00	27.2	364.0	23.7	1.13	34.4
11/4/2008	SPSS	74.6	12.1	0.44	--	80.5	7.96%	15.7	0.55	--	309.0	52.5	1.91	72.8	318.2	61.1	2.08	81.6
11/4/2008	VNO	660.6	302.2	0.32	361.6	674.8	2.15%	321.1	0.40	385.4	2,647.0	903.1	3.97	1,498.6	2,737.0	1,118.0	2.18	1,510.7