30 September, 2008

Apple in the Bargain Bin around $100

Tumultuous turmoil in the marketplace has left Traders and Investors on a selling spree as the US Financial crisis spreads through the credit markets and begins to lurk in the nooks and crannies of Main Street economy. While several incredibly leveraged and debt-ridden names deserve to be under the knife of their own implosion other great companies are just being swept into the sandstorm of negativity. Apple (AAPL) is surely one of those names!

Granted, Apple was and may still be a high P/E stock and as markets contracted of late, Apple's multiples have moved in kind, despite the company's growth outlook. The supplementing downgrades near this latest bottom offer a hope that this is a bargain basement price for this still solid growth company. When analysts start piling up the downgrades like Morgan Stanley and RBC did against Apple yesterday, during the Market's worse point loss, its time to reconsider that this may in fact be a bottom.

Coupled with the White House push to get some sort of Bailout Plan passed through Congress and you've got a recipe for a potentially big turnaround. Let's take a quick look at the Apple "downgrades". The RBC analyst cut his Mac sales estimate from 3.0Million to 2.9Million units, which all things considered is still a stunning sales pace when a year ago the company shipped just over 2.1Million Macs. iPhones sales estimates, well RBC actually rose those from 5Million units to 6Million units in the quarter.

As the 3rd iPhone rollout begins, which in early October should include Russia there is very little, if any, doubt now that Apple will blow past its own goal of selling 10Million iPhones this year. It's also poised to be a 10Million Mac year, which of course will be a record for the company, not to mention the 10+Million iPods shipped every 3 months. With Apple holding an iPod event earlier this month to announce new Nanos and reduced pricing on iPod Touches the company wants to place itself within a comfortable range of consumer spending, even as that spending starts to deteriorate.

While its true a new computer favourite with consumers is the "net-book", the small screened sub $500 machines for the budget-conscious shopper on the go, but even as Apple gets more mainstream with its computer business it is still a premium niche design brand. Tiffany's doesn't suddenly start selling cubics does it? Brand recognition and popularity especially among the youth market is critical to businesses in a consumer downturn and Apple has it. All signs earlier in the quarter have pointed to a record back-to-school shopping season despite economic perils. Not to mention Apple's own claims of margin-cutting new devices coming soon, which likely include either lower priced entry laptops or the ever-rumored Tablet device.

The iPhone is the next big growth phase for Apple, as iPod users upgrade/replace existing iPods with new models or iPhones, the company will continue to see the incremental revenue from not only those device sales, their booming iTunes online music business, but now also from the sharply growing Application download business. The latter of which, providing $30Million in revenue on its first 100Million downloads in the first 2 months of operation.

As Apple's quarter comes to a close, earnings are right around the corner and as always analysts will be looking towards guidance more than anything. This is where Apple's biggest problem may be. Given the current economic climate Apple's typical lowered and comfortable guidance may hurt more now than it would help later. The important thing to remember with Apple's upcoming results is that its future is sound, with 10s of Billions in cash and deferred revenue from iPhone sales the company isn't looking at any debt, has the flexibility to still innovate and negotiate tough economic climates, especially as it captures the press in another "Steve-note" later in October to unveil new lowered price MacBook and MacBook Pro laptops (as the rumors go).

But consider this. After this quarter, cumulative iPhone sales will likely be close to 11Million units, and at $400/device on average (pre-subsidy) that's close to $4.5Billion in revenue of which an 8th will show up on this quarter's books, $550Million. When you consider a year ago Apple had total sales of $6.2Billion for the quarter, the iPhone piece is becoming ever more significant. And when Investors think about the additional $4Billion that will be padding Apple's cash horde in the upcoming quarters it will certainly make them breathe easy even in the most crimped economic spending scenarios.

Apple's cheap, it's a steal, and there are very real catalysts in the next few months (Earnings, Mac Event, Christmas Sales, MacWorld, Christmas earnings). This is a stock that could climb 50-60% from here in the next half-year.

Disclosure: Author is long AAPL

29 September, 2008

US House defeats Bailout Bill. Markets plunge.

The controversial $700Billion bailout plan being pushed into the House today was to be the tipping point for the US economy and financial markets. With optimism swirling on the weekend that agreements had been finally reached on the bill, the one thing left to do was the most important. Vote on it.

The vote they did, the elected House narrowly defeated the bill, sending markets into a selling frenzy by mid-day. As traders learned of the tallying votes against the bill, sellers rushed through the electronic order desks and buyers were heading for the exits. The Dow fell 700 points during the early afternoon while the Nasdaq led all decliners (off about 7% at the bottom of the session).

With politicians on both sides of the spectrum resonating the importance of the bailout package with regards to the fragile nature of the US economy, it is crucial lawmakers do something substantial soon. President George W. Bush urged for the passing of the bill, as did Federal Reserve Chairman Ben Bernanke, but their pleas fell on a deaf House. Democrats did not get the overwhelming show of support they needed and Republicans held firm with their ideas and showed virtually little support even when implored by their President and House leaders. The final tally stood at about 60% of Democratics voting to pass the bill, along with about 30% of Republicans. Pitting the vote at 228 against, 205 for. Ending a tumultuous debating session in Washington that will surely leave politicians scrambling to draft a more "commonly-acceptable" solution soon.

The key is of course, that chances to rescue the financial system in America are few, and with another bank on the bubble, having to sell its banking assets, the focus has shifted from Bailout optimism to, who is next on the chopping block.

JP Morgan Chase (JPM) salvaged Washington Mutual in what became the biggest banking failure in US history, and today Citigroup (C) bought the banking assets of Wachovia (WB). Citigroup has insurance from the FDIC against Wachovia losses if they exceed $42Billion. A truly remarkable number, that will stretch Citi's already thin resources in the coming quarters. The company had to issue another set of preferred shares to the FDIC, as well as slash its own dividend down to $0.16/share.

As the day drew up a close the Dow continued to drift lower falling over 600 points just after 3pm. The Nasdaq continued to be the biggest decliner of over 160 points and the S&P followed suit down 90 points.

25 September, 2008

US looking to President and Nominees to push bailout plan

Dire times call precisely for dire measures, and the proposed US Government bailout of the Financial Crisis is certainly one of those times. A crisis which has been called one of, if not the worst financial implosions in history. President George W. Bush went on Television to reassure Americans and to pledge support of the historic $700Billion plan to rescue the financial system and the markets.

Bush, also planned meetings with candidates Barack Obama and John McCain to detail, not only the urgent need for passing the proposed bill, but also to outline a strategy for moving forward to sustain economic activity. And furthermore to appeal to the American people that such a drastic monetary package is necessary to avoid a long and likely complete economic slowdown, the likes of which not seen in decades. The word collapse has been thrown around far to often in these discussions but it strikes an important chord as the emphasis on the swift approval of a bailout is seen as vital for market recovery.

Treasury Secretary Henry Paulson, a former Goldman Sachs (GS) chief, was the driving force behind the broad outline of the bailout plan and negotiations with lawmakers on Capitol Hill have been ongoing for days now. As these talks languish, in turn so do the buying trigger fingers of the investor community. President Bush speaking to the population is a direct result of the waning attitude towards the bailout package and its needed swift passing.

While the Dow experienced a two day gain of nearly 1000 points following the announcement of the Bailout proposal, the sentiment has been mixed since. The old adage of 'When government gets to talking the whole process stalls' had been floating around, while it may be unfair to pigeonhole that complaint here, it still provides the media a talking point. Something this drastic and this complex needs to be thoroughly discussed and with issues ranging from individual consumer tax protection, executive compensation, and specific borrowing terms there is bound to be differences of opinion in any Congressional discussion on these topics.

Today's news brings with it the optimism that the bailout package is just about complete, and all major details have been worked out. To that end, the Dow and the other majors are seeing Bullish activity. This morning, the Dow averaged stood higher by almost 200 points (1.8%), with equal percentage gains also present in the Nasdaq and S&P.

18 September, 2008

Markets eye huge open as SEC bans Short Selling Financials

Following Thursday afternoon rally, which led the Dow to a 400 point gain, the US SEC stepped in announcing a temporary ban on short selling 799 Financial stocks. A move that had been called for by Investors and members of the industry for the last few days. A move that is certainly seen by Investors as curbing the tide of massive profiteering by manipulators betting with the Financial collapse.

The news, along with the Federal Reserve's talking points about a sweeping plan to fix things in the tumbling financial sector, gave traders a renewed optimism. On this day the bull wins in the morning. The usual finance suspects are making the most waves as buyers are coming back in full force in pre-market trading.

Before the open some of the big names in the sector were looking well up.
Citigroup (C) up 34%
Goldman Sachs (GS) up 32%
Bank Of America (BAC) up 26%
Morgan Stanley (MS) up 49%
JP Morgan Chase (JPM) up 19%
Wachovia (WB) up 65%
Washington Mutual (WM) up 58%

An incredible buying turnaround from where these companies were just a few days ago.

Uncertainty remains within Brokers Morgan & Goldman

Last of a dying breed? Morgan Stanley (MS) & Goldman Sachs (GS) remain Wall Street's 2 independent brokerage houses, and for that fact, their shares are being sold off heavily day in and day out. Despite the fact that both companies beat reduced earnings expectations for the quarter, they are being lumped into the same selling frenzy as their industry com padres due to their heavy reliance on leveraged investments.

Goldman profit fell 70% year-over year but the company still managed to make ends meat. The yearly comparisons are not pretty considering Goldman's record 2007 financial year. $810Million in profit ($1.81/share) vs. $2.81Billion ($6.13/share) last year. Overall revenue was down also from $12.3Billion to $6.04Billion.

Morgan Stanley, which had its own set of difficulties over the year reported profit that fell 3% year over year, $1.43Billion vs $1.47Billion, which translates into $1.32/share this quarter. With net revenue reaching $8Billion, a 1% year over year increase, Morgan showed it can still deliver results, however the pressure on the company to make a deal with a bank is staggering.

The old leverage issue again, as Investors feel the only way to shore up capital and assure broker survival is to pair up with a bank and the giant vault of deposits that go along with it. When Merrill Lynch (MER) made the deal with Bank Of America (BAC), followed by Lehman Brothers (LEH) bankruptcy, both of which followed JP Morgan Chase (JPM) rescue of Bear Stearns the Street was down to 2 stand-alone investment houses.

The rumor-mill has run wild of late regarding Morgan, with reports of conversations with Citigroup (C), Wachovia (WB) and China Investment Corporation, which if done would leave Goldman Sachs as the sole big name brokerage left on Wall Street. Investor publications have held a positive opinion so far on BAC's deal for Merrill, so for Citigroup or Wachovia picking up Morgan Stanley on the cheap would also feel like a win.

However, in the turbulent times that are continuing, with a financial crisis unseen in most Investors lifetimes, the "Let's make a deal" talks are very cautious to say the least. If Morgan does join with a bank, and signs are pointing more likely recently that they will, Goldman will find itself in a unique position, having its main competitors under the corporate shells of some of the largest financial institutions in the country. The optimist finds that this will allow Goldman to thrive as the economy strengthens and underwriting and M&A advisory work become more prevalent, but the pessimist finds a single brokerage model struggling to survive in these economic tidal waves.

As Markets see-saw between down 400 point and up 400 point days, the successful trade is being on the optimist/pessimist part of the see-saw on the correct day. Lately though, the pessimism has run rampant.

Disclosure: Author owns GS, C

15 September, 2008

Finance Fails Again! Dow Drops 500 points

Monday started poorly and ended worse for Markets as the weekend turmoil of Lehman Brothers (LEH) and AIG (AIG) weighed heavily on the financial sector and stocks as a whole. As hope for a bailout of Lehman, or at least heavy asset sales dwindled Sunday, leading suitors heading for the exits, the company had no choice but to file for the bankruptcy protection.

Still standing, but sharing the negative spotlight is AIG, the insurance giant, which said that it may need $40Billion to keep moving forward. A remarkable number, when considering the company is reportedly backing nearly $60Billion ($57.8Billion according to Bloomberg) in sub-prime mortgages. AIG is looking to raise about $20Billion in capital and sell off another $20Billion in assets. New York has allowed the company special permission to access $20Billion in an effort to shore up some liquidty. The mathematics are still working heavily against AIG as shares plunged 60%, cutting half of AIG's market cap. Still not as bad as Lehman though, which lost 95% of its value due to its bankruptcy plans.

As Bank Of America (BAC) and Barclays (BCS) walked away from Lehman bailout talks on the weekend, BAC was busy getting another deal done as it agreed to purchase Merrill Lynch (MER) for about $50Billion, valuing the firm at $29/share. While Merrill jumped at the open the market's selling sentiment dragged it down to $17 from a high of $22.

And the rest of the financial doghouse followed:

Citigroup (C): down 13%
Bank Of America: down 21%
Wachovia (WB): down 25%
Washington Mutual (WM): down 26%
JP Morgan Chase (JPM): down 10%
Goldman Sachs (GS): down 12%
Morgan Stanley (MS): down 13%

The markets have seen down days like this before, albeit not to this extent, and many traders start talking themselves into the so-called bargains, but as former Fed chariman Alan Greenspan put it, and I paraphrase, 'This is the worst economic situation I've ever seen'.

Even the strongest of financials can still go lower from here, but for the ones who can ride it out, show they can stay afloat and show they can stay profitable, bargain basement prices wont be around for that long. That's a big reason why the Street will be looking so closely at Morgan and Goldman earnings.

Disclosure: Author owns C, GS

11 September, 2008

Marvel Entertainment holding up well in Turbulent Markets

It's been a hum-drum year for the Entertainment business as the US economy sputters along, dealing with high oil, housing prices, unemployment and inflation. Even though the big Summer Box Office totals were in line with records set last year, the higher average ticket price was what kept up the pace. There's only so much a Man of Iron and a Dark Knight can do!

One company that has gone against the trend this year has been Marvel Entertainment (MVL). Year-to-date the stock has risen almost 30% on the strength of its first independently financed films. Marvel took a big gamble financing its own movies and so far the endeavor has gone about as well as the company and shareholders could have hoped. The success of the first Iron Man movie, which has now grossed over $570Million at the worldwide box office, has prompted a quick sequel scheduled for 2010, along with a film about another hero, Thor, the same year. Marvel also planned 2 films thus far in 2011, including a Captain America story and a cross-over super hero film about The Avengers, a team which will likely include Iron Man, Thor, Captain America and the star of Marvel's second summer bow The Incredible Hulk.

While Marvel's Hulk didn't capture the same movie-goer enthusiasm as Iron Man, the stigma of the previously panned Hulk film was a tough hurdle to overcome. Nonetheless the film is nearing $250Million at the worldwide box office, and poised to get a 3 version treatment on DVD and Blu-Ray.

While the Christmas season is typically a sales boom for most industry, Marvel is well positioned to capitalize on its fan base, with not only DVD releases of Iron Man and The Incredible Hulk, but also updates to their respective toy lines along with the staple of the company, the comic book publishing and video game licensing business. Marvel has also recently entered into an agreement with Japanese anime studio Madhouse to create a version of the Iron Man story within the anime design guise. This push into International markets, with films and comics, with Marvel at the helm instead of other Licensees, will draw in a much wider fan-base than ever in the company's storied history.

The characters that make up the Marvel Universe are compelling enough to draw interest from Millions around the world, and as Marvel seeks to control more of its own creative domain it also stands to reap the benefits. Marvel's rise over the past year was a direct result of its move into the film business, and with its success established along with 4 other films planned the resulting revenue growth will lead the stock higher in the years to come.

Marvel will become a dramatic growth story and with a P/E of 17 and a forward P/E of 17 based on next year's earnings of $2/share the stock is certainly not overpriced. Not to mention that these estimates do not yet included the guaranteed success of DVD and Blu-Ray sales for Iron Man and to a lesser extent The Incredible Hulk. With it's main comic book rival DC Comics sitting as a subsidy of Time Warner (TWX), Marvel stands as a pure-play stock in the comic-book publishing and film licensing business. Marvel's only a $2.7Billion market cap company right now, which provides it an attractive platform for growth investors in the coming years as the expansion opportunities ahead of it come to fruition.

But what about 2009? Marvel isn't releasing anything itself! What happens then? The company will continue to ride DVD sales in a manner similar to Dreamworks Animation or Pixar during their 1 film per year business models. Oh and of course the company still sells a lot of comic books and related toys, along with licensing its characters to big movie studios for upcoming pictures such as Lions Gate's Punisher and next year's blockbuster Fox's X-Men: Wolverine. As if the whispers of Spider Man Parts 4 and 5 coming down the pipeline in the coming years wasn't enough.

Are you sold yet?

Disclosure: Author owns MVL

10 September, 2008

Lehman Bros losses put it at the edge of Massive Asset sale Cliff (Update)

Less than 24 hours after losing nearly half of its Market Cap, Lehman Brothers (LEH) gave Wall St. another reason to be somber about the future and health of the investing house. The whispers that Lehman was in dire financial straits have been resonating for some time, but as they grew louder so did the negotiations with Korea Development Bank, which eventually halted.

The end of those negotiations was the prologue of Lehman's 40% sell-off on Tuesday, and the announcement of a $3.9Billion quarterly loss is another driving stake into Investors spirits regarding the firm. Write-downs totaled $5.6Billion, causing the massive loss, which was even worse than analysts had expected ($2.2Billion). The company is also trying to shore up capital by auctioning off over half of its asset management group, cutting its dividend and setting up a spin-off of real estate holdings.

While all that looks dire, and Investors are still licking their wounds from the end of talks with KDB, Lehman has bought itself a little time by outlining this strategic plan on the heels of massive losses. Investors are willing right now to give the company a little bit of rope, but the first sign of additional trouble, in the form of further losses, an uneventful auction process or whispers of unattractive sale prices for some of its assets, will see traders and investors alike moving swiftly to other companies and other sectors.

A tough task is facing management these days; as headlines mount clients and employees are more likely to leave, which would make an already unstable liquidity position all that more turbulent. However some deals have already been outlined by Lehman, including a $4Billion formal engagement with BlackRock Inc. to sell UK based residential mortgage holdings and the spin-off of a commercial real estate public company named Real Estate Investments Global in the first quarter of 2009.

Oh and Lehman also slashed the dividend from $0.68 to $0.05, and the market's history with banks cutting their dividends and their correlated market performance over the last year has been well known. But in trying times for the financial industry, drastic measures must be taken to keep liquidity at somewhat reasonable levels.

It wasn't that long ago that with the help of the Fed, Bear Stearns had to be saved, but now it is closer than ever that Lehman stands near that same edge. I think Lehman will be alright as the market rights itself eventually, given it survives the fire sale, but with it being in this sector with these problems it'll still be able to be gotten for cheaper than $8/share.

Update: Sept 11/08 correction to Bear Stearns rescue details.
Disclosure: Author holds no position in LEH

08 September, 2008

Fannie and Freddie plunge as Government takeover confirmed

US Treasury Secretary Henry Paulson announced Sunday that both Fannie Mae (FNM) and Freddie Mac (FRE) were being placed under government-operated conservatorship.  The executive branch was ousted and dividends eliminated.  Not good news for the embattled mortgage dealers whose hands are tied into about half of the nation's $12Trillion in mortgage debt.

The news sent stock soaring this morning, led by the Financial sector, as investors saw this as the "beginning of the end" of mortgage related turmoil in the US. While the banks led the Dow to an over 200 point gain out of the gate, the Tech-heavy Nasdaq lagged behind, by midday being up only a third of a percent.

While banks like Citigroup (C), and Bank Of America (BAC) were enjoying gains of 4 or 5% the same could not be said for Fannie and Freddie. The selling off was swift, and very ruthless with Fannie dropping 83% and Freddie following closely behind down 79% by midday.

While Investors assumed the worst case scenario for F & F, even the US Treasury was unable to put a price tag on the bailouts. Paulson came on television earlier Monday and admitted that the final cost is an unknown and will depend on several factors including the ultimate turnaround of the housing market. At least one estimate by William Poole (St. Louis Federal Reserve Bank President) has the bailout costing about $300Billion, according to Forbes.

A hefty price tag indeed, but certainly not something any Investor of the F & F twins surely will be to happy about.

Disclosure: Author does not own FRE or FNM

05 September, 2008

Markets continue slide as Jobs data weighs

North American markets continued to sell off in the beginning of the end of a week that has seen Politics at the forefront of American minds and Employment at the forefront of Wall Street. Today's news, not surprising in the least, continued the slide. America's unemployment rate rose to 6.1% in August as payrolls were cut yet again by businesses.

That marks the 8th straight month of job losses and a 5 year high rate of unemployment in the United States. August's numbers, and those of the previous months paint a fading picture for American workers. Job losses in August are estimated at 84,000, compared to economist projections of 75,000. Adding fuel to the fire, estimates for June and July were revised up to 100,000 and 60,000 in losses.

While talk of a "deteriorating economy" is flying through economic and investing circles, the emphasis continues to be on the Federal Reserve to keep Interest Rates steady and low for longer than the organization would probably like.

Off, another 100 points before the lunch bell even sounds, the Dow has run up its losses in this shortened Labor Day weekend to about 700 points (about 6% in the red for the week). The other majors were hit even harder with the Nasdaq off almost 200 points (around 8%) and the S&P off 80 points (6%).

While the economy continues to fizzle into the holiday season, businesses will have to do more to lure customers, putting the squeeze on margins. So far the Bears have had their way, and with no clear signs of turnaround Bulls have to pick their spots carefully.

02 September, 2008

Google throws its hat in the Browser & OS ring with shiny Chrome

Joining a "war" is neither a decision taken easily or for that matter lightly, especially one that historically has seen incumbents muscle and push out thriving rivals, (see Microsoft (MSFT) and Netscape) but Google (GOOG) is not just any company, and it hopes that in the future of web computing Chrome wont just be any browser. And with it perhaps change completely the role of the browser from presenting web pages, to managing web applications in the computers of tomorrow.

Lofty ambitions I know, but this is the same company that has plans to index the entire web, present a photographic view of the entire world, create renewable energy cheaper than coal, and house the complete archive of human information since the start of the written age. Google's getting well compensated for the lucrative advertising network it pioneered in Search and with that comes radically thinking about ways to out-innovate, out-maneuver, and out-class anything offered by main competitors.

Google's newly released "Beta" Chrome web browser is another hat in the ring that contains Microsoft's Internet Explorer (70% market share), Mozilla's Firefox (20% share) and Apple's (AAPL) Safari (6% share). However it has the potential to avoid the also-ran results of other browser efforts and truly usher in an age of web-computing. If this sounds like techno-babble, that's because it is, and Chrome is definitely not any sort of catalyst for Google's ailing stock right now.

Unfortunately only blowout quarterly reports can do that for this richly valued company. The company is down significantly from all-time highs and Chrome will not get them back there anytime soon. This is an evolutionary step that just might end up being revolutionary when all is said and down.

Google's cash cow of serving up targeted advertising works now because it can collect information on users, their web habits and their searches. The more people who have Google Accounts and the more searches they do, helps Google tailor all those ads. Throw in the popular Google toolbar collecting user information and viola you've got an incredible breadth of information in which to base ad serving decisions on. However, browsers are evolving, not only from a functionality perspective but from a privacy perspective as well. Microsoft's newest browser will incorporate an InPrivate feature which will not store anything users do on the web if they choose to use it. If Google can't know what you've been doing on the web for the last 6 months those ads could start looking less and less attractive and Google will have to only rely on what users search for, assuming of course they use Google for search. Chrome has a similar feature but getting users on the Google experience is priority number 1 for the company.

While the above is a minor detail for browser technology, it is the main driver of Google profitability. The next driver of profitability, Google hopes, will be Web Applications, and their Google Apps suite which is shaping up with constant improvements to become a true Microsoft Office competitor. The difference of course is that Office you install on your own computer, whereas Google Apps, and the online suite of Productivity software, can be accessed from anywhere and collaborated on in real-time.

Industry people believe the browser will become the Operating System of the future!

Considering Microsoft's Windows is on 90% of computers, it is almost an impossible mountain to climb for someone new to create an Operating System. For Google, and looking into the future of web based applications the most logical step to creating an Operating System would be to create the Web Browser of the future. And in a matter of speaking they did.

Where previous browser were a single application that served up web pages and ran applications within itself, Chrome spawns processes for each web page or web application, and includes a task manager to manage them. If something crashed on one web page, only that web page would fail while others would remain perfectly isolated. Process Task Management, Individual Processes for each web application sounds a lot like an Operating System to me. If Google wants to get serious about challenging Microsoft in the OS and Business Software games in the years to come it needs to control how users will access their web applications. A Web Browser that controls each web application individually, and even each component of each web application individually, is exactly the steps Google has to take.

By creating Chrome they've started this journey, and by making the entire project open-source and given out for free, they can quickly and nimbly adapt suggestions, improvements and changes from the developer community at large. As with a first release there will always be kinks to iron out, however the prognosis looks really good, and with a feature set comparable to the fastest growing browsers, in terms of popularity, Firefox and Safari, Google has the brand power and the clout to make a real dent in this industry. It is hard gaining market share in anything, and in the browser-war it is notoriously difficult so by throwing its hat into thing ring, Google's also throwing caution to the wind and hoping they'll be early enough for the web revolution.

Just don't expect the revolution to happen overnight Traders!

Disclosure: Author owns GOOG

Markets start hot after Gustav potential negated, gains can't hold

Hurricane Gustav came and went through the US Gulf region without anywhere near the devastation of Katrina three years ago. On this news, commodities fell, led of course by oil, dropping around $7 in the early going, before oil settled at around $110 a barrel.

The Dow led the majors with a morning gain of over 200 points (1.7%), followed closely behind by Nasdaq and the S&P. Sector-wise the morning rally was broad, except of course for Energy and Materials. Energy as a sector was down almost 5% at the end of the day.

A fall in the Supply Management Manufacturing index to 49.9, which below 50 means contraction, added to the skittish nature of nervous trading on the day. From the morning highs, the downslope of the US majors (Dow, Nasdaq and S&P) mirrored one another leading to a day filled with red quote boards. The Dow finished down 26 points, the Nasdaq down 18 and the S&P down 5.