Google Shows Off Chrome OS in Technical Preview

Google's (GOOG) entry into the Operating System space is at least a year away, but the Internet and Search behemoth showed off a technical preview of what they've been tinkering with to an audience of journalists and "techies".

Expanding on the browser that Google released called Chrome, and its currently advertised 40Million user install base, the operating system advanced by Google is a means to the future of cloud computing. All applications on Chrome OS will be web apps and all data is in sync with the cloud at all times. Basically a user would be able to log into any Chrome OS computer and treat it like your own. The Browser is the key.

Major targets for Google with this system are speed and security. With all major components of the OS, either incredibly lightweight or in the cloud, the time to get a computer up and running will be drastically reduced. The demo netbook that Google showed off was ready to go in 7 seconds. The security model Google is working on with Chrome OS is also designed for the Internet age. Building specific locks to the core of the system from applications will allow Chrome to remain unharmed by viral and malicious programs. The Internet connected self-update and synchronization system will essentially allow Chrome users to always have the most current and safest version of the operation system. If something does go wrong, Chrome can re-install a clean version right on the spot and re-sync all the user's data, almost transparently. Some advanced thinking from a company with a lot of advanced thinkers.

But, how will it all work, what about the powerful desktop applications the computing public has grown accustomed to? Well, initially Chrome is situated for a secondary computer, Internet connected for on the go work, like the netbooks and smart-phones of today. As users get more accustomed to living in the "cloud", it is Google's hope that Chrome can grow into larger and more advanced hardware. Internet technologies have also come a long way in the last couple of years, allowing for far richer web applications than in years past. That alone makes the web app only Chrome a solution to think about, as increasingly more work, social and play is done online.

So, what's in it for Google, and more specifically Google's investors? Well, the long-term battle on several fronts between Google and Microsoft (MSFT) just got a lot more interesting with today's demonstration. Netbooks are the fastest growing computer segment, according to several analyst and consumer measurement reports, and it is a field now dominated by Microsoft, first with Windows XP, and now, or so the hope is, Windows 7. Since Chrome OS is open-source and will be free to manufactures, the Zero price point will put a lot of pressure on the folks from Seattle. But to Google, this is the start of a next generation of cloud-only computing users, a part of the business, where from an infrastructure stand-point Google is dominant. The company can afford to guide development here making nothing from it, but enabling a generation of faster, and more secure web surfers, who'll in turn be more trusting of the cloud, and in turn more receptive to tailored Google advertisements .

There's that buzzword again, the cloud. Google, like other giants in the tech space, want to be the big fish in the cloud business. There are other companies that would focus on the corporate market first and get tangible business that way. A lucrative business that will be as well, but Amazon (AMZN), IBM (IBM), Microsoft and HP (HPQ) are all in competition to provide the infrastructure and cloud services for business. Google's reach has always been about advertising to the consumer, and by providing products and services for free, it's building a trust with the consumer that companies rarely have an opportunity to experience. Granted, user data in the cloud brings up many privacy concerns, but Google seems to be able to side-step its way around most issues in that realm, all the while gathering more tailored information about the surfing and shopping habits of its users.

Google's mantra is clearly changing, of course they are still behind the well publicized "Don't Be Evil" but in the new age of computing and business, Google's really striving to serve up "The Perfect Ad". Because the most lucrative ad, is the one that's as tailored as it can possibly be, because it gives the highest potential of a sale, and after all its the sale that drives business. Chrome OS is the next step towards that potential sale.

Disclosure: Author owns GOOG

Drop In Jobless Claims Fails To Ignite Market

In what by most is seen as good news the job market showcased another data point in its long march towards stability. Jobless claims fell by about 20,000 to 530,000, which was slightly better than the 550,000 expected by economists and analysts.

Another rather important metric, continuous jobless claims (people making claims for longer than a week) fell by 123,000 to 6.14Million. These data points are giving economists positive signals that the job market is getting better, but cautious optimism aside, it also shows how much further there is to go.

The major benchmarks in the US opened slightly positive on the news but have since turned negative with the Nasdaq leading with a 1% decline.

In other news, some technology companies might to ready to appear more attractive to investors as what some call the "Apple rule" has been reversed. The required method of subscription accounting when dealing with hardware and software sales, most notably put into practice by Apple (AAPL) with its iPhone, will no longer be so as part of Generally Accepted Accounting Principles. This change allows Apple to record Revenue and Profit from iPhone sales in real-time as opposed to being force to account for each unit sold over a 2 year period. Amazon (AMZN) uses the same method of accounting for its Kindle e-book reading device and Palm (PALM) had adopted the method for its flagship Pre smartphone.

Why Apple is most noted for this change is relatively simple, it moves a staggering amount of iPhone units, at high margins, fueling renewed growth rates. Under the new standards, Apple is expected to report profitability that is 35-40% higher than it is currently allowed to. Fundamentally, there should be no change to the value of the company, simply a change in the accounting books, but for many P/E based traders and quantitative computer P/E based models, Apple will appear more attractive under these ratios. Amazon, Palm and other companies dealing with this change will not have their metrics altered nearly as much as Apple is expected to.

Disclosure: Author owns AAPL

Earnings season continues, Markets head higher Thursday

As the earnings numbers continued to be reported, several bell-weather names were in focus Thursday. The markets shrugged off early selling by turning into "mid-day rally mode" before closing the day with between .6% and 1% gains for the major indices.

North of the border, the selling in commodities and industrials was somewhat offset by a rally in the banking sector but the TSX found itself lower by 3 quarters of a percentage point.

Starbucks (SBUX) was slashed after-hours Wednesday after coming out and lowering full year profit expectations, the company lost over 10% as a weakening US economy is plaguing sales of its gourmet coffees.

Amazon (AMZN) reported another strong quarter, with over 30% earnings growth, but the stock was lower by 4%, as expectations for growth going forward were highly over-valued. The company sits with a 35 Forward P/E for 2009 earnings, at 51 Forward P/E for 2008 and an almost 70 trailing P/E ratio. The company is poised to deliver significant growth still, but Investors needed to for the moment, pause the momentum.

Biggest news of the trading day however, was Ford's (F) shocking profitable quarter. Automotive sales were strong worldwide, and the turnaround plans for the automotive giant seem to be going ahead of schedule. Analysts were expecting another quarterly loss, and as such Ford shares rose almost 12% on the posted $100Million profit.

Disclosure: Author owns SBUX

Internet Giants Falling on Guidance, Eyes Turn to Google

Earnings season for technology, especially growth technology stocks, such as the Internet sector, is typically very volatile as results speak in one language and guidance speaks another. Many companies offer guidance for future results in an effort to be more transparent to investors, but one poster-child of the Internet, Google (GOOG), does not.

The guidance game has hurt the big Internet players over the past weeks as Yahoo (YHOO), Ebay (EBAY) and now Amazon (AMZN) posted decent to good results but cut outlooks, or provided outlooks below Analyst expectations. In fact VMware (VMW) saw its valuation cut by 30% in the aftermath of its results and guidance. The growth game is a volatile one to be sure as with growth comes outsized Price-to-Earnings ratios which can contract quickly and violently when economic factors come to the forefront.

With the Federal Reserve doing all it can with Interest Rates and the Government passing through the House an economic package bill of about $150Billion it seems like the US can find its footing in the 2nd half of the year without slipping into no-growth economics. The big recession that Traders feared for months can be averted. Until then, every executive seems to be taking the cautious approach, which is making things uneasy for Investors.

Eyes will focus on Google next as the Internet giant reports its earnings after the bell today.
Analysts expect another stellar quarter with about 50% year over year growth. Google is notorious for not giving guidance and being very tight lipped about its future expectations and projects. With this company, traders only hear one voice and depending on which ear you're hearing with, that could be a good thing or a bad thing come Friday morning.

Disclosure: Author is long GOOG

Markets Continue Slide. Economic Worries Standout in Dow's 300 Point Loss

Slowing US Economics have pushed sellers to the forefront this entire week, and today's 300 point Dow tumble was another straw in the year to date tumbling market house. S&P stands down 9% year to date, while the Nasdaq is off 11%.

The Nasdaq was hit hard this week as technology sold off on those very same economic fears. The winners heading into the tail end of 2007 were those being bid up to ever higher 52-week and all-time highs and soon of these companies are feeling the financial fallout as their P/E ratios get slashed worst than Real Estate on Elm St.

It didn't help this week that Intel (INTC) missed numbers, by a couple cents, and came in on the low end of revenue guidance, even though business is just fine (Revenue guidance of up to $10Billion for next quarter versus the estimated $10.1Billion). The stock took a 12% hit that day, putting it under $20/share.

Apple's (AAPL) marquee event MacWorld, was deemed a failure this year as everything announced was expected and it included nothing as revolutionary as last year's iPhone. A Router/Storage hub, an iTunes movie rental service, new iPhone software and the new thin laptop that has been criticized by many as not hitting any particular market. Only time will tell whether the super thin Mac Book Air will sell decently well at its $1800 price point. Sony (SNE) has their ultra-thin laptop line well over the $2000 price point for years. Apple shares have fallen from their $202 record and now sit just over the $160 mark, with expected quarterly blow-out earnings numbers coming next week. A troubling fall for a company built on Steve Jobs hype, which now has analysts falling over themselves reiterating its cheapness/value opportunity.

These are troubling economic times nonetheless, as investors look for safer havens, seeing their financial, consumer and technology faithful stocks being sold off in great numbers.
The Googles (GOOG), Baidus (BIDU) and Amazons (AMZN) are all down significantly as the high P/E ratio game of Internet companies is shrinking due to recessionary economic factors and fears. The banks are steeped in mortgage losses and more potential dividend cuts are luring Investors away. Even hot commodities of late like Oil and Gold have cooled quickly and abruptly by the sell triggers.

All eyes now shift to the Federal Reserve and Chairman Ben Bernanke. Traders expect at least a .5% Interest Rate cut at the next meeting, and Bernanke has pledged the Fed will be aggressive in trying to fend off recession. We'll see at the end of the month how it all plays out, but till then expect the same volatility and uneasiness when choosing the right things to buy, or in fact short sell.

Disclosure: Author owns AAPL, GOOG

Amazon's Strongest Holiday Ever, Company on fire, Stock still Pricey

A couple high profile Technology names have been making waves over the last couple of days. Amazon (AMZN) and Apple Inc. (AAPL) have both been in the news for the better, with the former seeing record retail sales, and the latter hitting record highs. Christmas has been very good for web-retailer Amazon, as it came out saying that it in fact had its biggest and strongest sales season ever.

For a company that's been an Internet giant for more than 10 years, it definitely seems like Amazon has hit a new stride and is once again riding an optimistic wave. The numbers though are just staggering, but more on that in a second. Yes more and more shoppers are comfortable online, yes there's more product available online than ever, yes Internet penetration is rolling out further worldwide, but still, Amazon's surge in shopping can majorly be credited to its own internal innovations, and with that the simplest form of advertising, word of mouth.

The busiest day this year saw more than 5.4Million items being bought. Highlighted specifically by strong demand for Nintendo's popular Wii game console, the refreshed line of Apple's iPods and Mac computers, GPS systems and HDTVs. Comparing to last year, this was about a 35% increase! Now yes this is a "peak" numeric, but I think it is safe to say that Amazon's on the retail uptrend, rather than just simply enjoying seasonal consumer increases. Even the company's own Kindle e-book reader is reportedly selling well in its early stages. It is news like this that will really boost the company back to its triple digit share price highs, as the retail business is very low margin while the electronics game is something else entirely.

A $40Billion market cap based on a triple digit P/E ratio is still too rich for my liking but the strongest companies have a knack for slowly molding from inflated P/Es and before you know it they even seem cheap. To say that Amazon is growing again would be a tragic understatement, the company is better than its ever been, now if only they can judge that Wall Street expectations game as well as ever, shareholders can rejoice alongside with staff.

Disclosure: Author does not own AMZN

Amazon unveils Kindle E-Book Reader, Will it Hit with Customers and Shareholders?

Amazon (AMZN) has seen a resurgence on Wall Street this year as the company has tried to change the way it does business with an influx of technology spending. Financial results has been excellent but technology results have been mixed, with the difficult to manage and use Unbox Video Service and the new and promising MP3 store. The latest offering from the Tech department at Amazon in the Kindle E-Book Reader.

It's official unveiling was today, but technology blogs and news sites have been after the device for sometime. Popular spots; Engadget (Link) and Gizmodo (Link) were on top of this latest gadget all morning. CEO Jeff Bezos claimed that he hoped Kindle would do for books what the iPod did for music online. Amazon shareholders certainly hope he's right. The stock has been bid up considerably this year but has since fallen over 20% from highs of $101/share. With a share price just under $80 the company seems like a potential strong buy, but even these discounted levels are coming from loftier highs. Amazon sports a P/E of over 90 and a trailing P/E of over 50. Even poster children for growth, Apple (AAPL) and Google (GOOG), sport ratios that are half of Amazon's.

If Kindle becomes even half of what iPod is, shareholders will have plenty to cheer about, but that is certainly a big IF. The Kindle sports some very nice features, looks small and sleek enough to justify a slight Cool factor. It's obvious Amazon techies spent a long time making sure the thing didn't look like it was beaten with an ugly stick while they shoved all sorts of hardware inside. The Kindle in essence is an electronic book reader, and any one with any sort of personal library could use one on the go for reading. So first let's take a look at the positives.

Amazon's got the content (in this case books) to support this venture, and in time I'm sure a vast majority of the Amazon library will be available for purchase for $9.99 or less. The device works with all sorts of formats but converts them to Amazon's proprietary reader format. The battery will last about 30 hours and a consumer will be able to automatically get subscribed newspapers and blogs sent to the device. That's right, the bright minds at Amazon decided to make this a wireless device that works on the cellular network for free through Amazon's covert WhisperNet. No word yet if WhisperNet is self-aware and may malfunction like its more famous cousin SkyNet. All jokes aside, the technology here is a big selling point. EVDO based cellular Internet will allow users to download books, newspapers and blogs that they have paid for, automatically and without a computer connection. So you're not killing your eyes staring at a screen the whole time the Kindle sports an e-ink screen that isn't back-lit to make reading easier. A definite plus there.

Now some negatives. It's pricey at $400 but compares relatively well to the Sony (SNE) E-Book Reader. Stylistics is a subjective game and rarely are devices or products uniformly praised for their elegance. So there's a fair chance that the public will think it is in fact a pointy, clunky ugly device, but I disagree. By no means is the thing gorgeous but it isn't bad, even if the slanted keyboard keys seem quite awkward. It's difficult to say at this point how the distribution and downloading of content will work but horror and wonder stories should trickle in as the device gets into the hands of the consumers. The real problem I see with the claim that the Kindle will be the "iPod for books" is the fact that one's personal library is as sacred as anything else in the household. The book-reading and book-owning population loves to fill shelves with books as it instills a sense of pride much more than a music collection does.

So the average song is somewhere between 3 and 4 minutes while the average book 300-400 pages. Reading a page a minute requires more than 5 hours of reading for the average book. Music is simply consumed and changed much faster than books. While carrying an entire CD collection during a trip makes little sense, carrying one book isn't all that bad. You can't exactly switch the Kindle to random and read pages from one book than another. Also, it's a well known fact that every iPod is not filled with music from the iTunes store. Majority of this music comes from CD collections that users had purchased throughout the years than ripped to the device for portable use. This process is simply not feasible with books, for obvious reasons, so to be able to take your favourites with you on the Kindle you'll have to buy them again digitally. Something I'm guessing most consumers will not want to do.

While I have serious doubts about the Kindle becoming some kind of iconic reading device, it is a very strong step in the right direction from a company that is also turning itself in that direction. While I think shares are overpriced today, a slide back towards $70 or under would make things very attractive considering there is upside to analysts estimates of $1.78/share in earnings for next year. Provided the economy in the United States stays relatively strong, and is not brought to its knees by the credit crisis and weakening dollar I would have no problem paying 35 times 2008 earnings, with upside to nearly $2/share, for Amazon and its future growth prospects.

To be as ubiquitous as the iPod, the Kindle has a long way to go but the youth of today are living in a digital age and the old adage of being able to hold on to, and feel what you buy is slowing fading away. Content will be king, content will be digital, and Amazon hopes that content will be on your Kindle.

Disclosure: Author currently does not own AMZN

Markets continue slide Monday, Technology leads selloff

The Dow Jones now stands at a 4% loss over the previous 5 sessions. The Nasdaq 7.5% lower and the S&P 4%. In Canada the TSX index slid 6% in total the past week and 2% during Monday's trading session. Technology was the main culprit for the sell-off. Investors were looking for safer havens as the financial sector was rattled again with more credit losses, and the economic outlook seemed to worsen for the United States.

Those hit hardest have been the best performers over the last couple of months, since market lows in mid August. Technology stocks were on a roll for over 2 months as the latest round of earnings for the September quarter provided buying catalysts. Many of these names have come crashing down over the span of a week and a half as the markets have turned negative and traders locked it profits. Just a sampling of the fallen momentum players that were so successful in the run from August lows to October highs.

All Percentages are based on recent highs in these stocks.
Apple (AAPL): Down 20%
Google (GOOG): Down 15%
Baidu (BIDU): Down 30%
Amazon (AMZN): Down 24%
Las Vegas Sands (LVS): Down 23%
Wynn Resorts (WYNN): Down 27%
Research In Motion (RIMM): Down 25%
China Petroleum (SNP): Down 30%

All these names had tremendous runs over a 1 year time frame, many more than doubling in value and as market lore teaches every trader, it's not a profit unless its on the books. Now some Financial names have fallen much further than the above mentioned stocks but they weren't the ones leading the Tech and Growth charge into October. Money and the markets are cyclical in nature and money will return to Technology, but the market outlook these days is very hazy as talks of economic fears and recessions fill trading floors. Traders and Investors alike must be cautious here as the Credit Crisis spills over further than most expected. In times like these valuations and fundamentals play a bigger role in selecting winners for the next 6 month-1 year time frame.

Disclosure: Author is long AAPL, GOOG

Market Musings Oct 24, S&P Changes add NYX, and Facebook news

The Markets came back strong to the close on Wednesday after being down fairly significantly mid-day. News of the struggling Housing sector and brokerage house Merrill Lynch (MER) writing down over $8Billion due to the Credit Crunch rattled investors and traders. A not so earth shattering outlook from high flier Amazon (AMZN) didn't help Technology stocks either.

The economic news on Existing Home Sales hurt stocks at the start as sales fell 8% year over year, which was worse than most economists had expected. Lots of talk about this "not yet being the bottom" led to further fears and thus more selling. Stocks seemed to bottom out however mid-day and recovered to be only flat or slightly lower. Technology was hurt by Amazon's perception of next quarter margins, which had investors heading for the profit taking fence.

NYSE Euronext (NYX) was up again today, hitting a recent high of $92, before settling at $90/share at the close, on news that it is about to be inserted into the S&P 500 and S&P 100 indices. This news was confirmed earlier in the week but today marked the last trading day before the company was to be officially recognized. Shares of NYX have rallied almost 9% since the announcement. The sheer number of money managers and funds that now have to own the company will likely continue to drive the shares higher going into its earnings report in early November. The stock is still off of its $112/share 52-week high but with a strong report and continued buying demand it may be sooner rather than later that the stock breaks into that territory.

Facebook, everybody's new favourite uber-growth social network, made more headlines today with a couple major announcements by big technology companies. Research In Motion (RIMM) announced a new application for its popular BlackBerry devices that ties in with Facebook, further promoting Rim's plans to nip at the heels of the consumer market segment. Microsoft (MSFT) threw its name into the social network hat as it agreed to purchase a 1.6% stake in Facebook for $240Million. The transaction gives Microsoft better leverage against its main Internet advertising competitors; Google (GOOG) and Yahoo (YHOO), and values Facebook at a lofty $15Billion.

Disclosure: Author is long NYX, GOOG

Markets start October with a Bang as Dow hits All Time High

The rally continues in the wake of the Fed Rate Cut last month and stocks extended gains as the calendar changed from September to October. The Dow hit an all time intra-day high of 14,115 points as the index gained over 190 points. The Nasdaq followed suit with an almost 40 point gain and the S&P held up a 20 point gain. Canadian markets ended with about half the gains of its US counterparts as investors bought stocks across the board bidding the TSX up 100 points. The advance was broad and spanned every sector. Volume was also much heavier than the week prior as investors on the sidelines during the end of the quarter jumped back into the markets to fuel the rally.

Citigroup (C) drifted off its highs late but was up over 3% in the afternoon as it provided an optimistic outlook for the remainder of the year. The financial heavyweight announced that profit fell 60% due to loses in credit and mortgage securities totalled almost $6Billion. Guess the big bank guys weren't as smart of those Goldman Sachs (GS) traders who shorted such monstrous amounts of mortgage investments to cover up and make up hefty losses. Nonetheless investors were pleased as Citigroup told the markets they expect a calendar 4th quarter that would return things to the norm. Goldman gained another 3% to close at $223.

Nokia (NOK) also made headlines, and started the day well down, as it announced the purchase of Navteq (NVT), the navigation software company, for over $8Billion. Nokia shook off the early heavy drop before the market opened and managed to close the day in the green and even hit a 52-week high above $38/share. Nokia hopes to leverage Navteq's expertise in maps and navigation into its future lineup of mobile phones. The loser here apparently was Garmin (GRMN) as its shares fell 10% on investor speculation that it lost the bid for Navteq's service and now faces stiffer competition from Nokia.

New highs were aplenty in Tech stocks as Ebay (EBAY), Apple (AAPL), IBM (IBM), Hewlett-Packard (HPQ) and Google (GOOG) all hit new marks, while Research In Motion (RIMM) and Amazon (AMZN) came oh so close. Google continued its sharp rise adding $15 and crossing the $580/share price mark for the first time in its young public history. As major techs get set to report earnings in the coming weeks it'll be increasing difficult to judge which of those companies are too inflated for their own growth prospects. But now, while the rally is in full swing, investors are coming back into play and buying Technology ahead of earnings and the seasonally strong holiday quarter.

Disclosure: Author is long AAPL, GOOG, GS, C

Markets up Wednesday, Dow gains 99 led by General Motors

American Markets enjoyed another positive day with the Dow Jones finishing to the plus side by 99 points. The big push was provided by General Motors (GM) as it enjoyed a 9% gain. GM and the United Auto Workers Union reached a deal to renew auto worker contracts and restructure GM obligations to workers and the union. The threat of a long-term strike was lifted from the shoulders of GM and the stock jumped accordingly.

Also enjoying positive sentiment were the Investment Banks as Bear Stearns (BSC) jumped over 7% on reports that the big man himself, Warren Buffett is eyeing a stake in the company. These reports went on to say that several big banks are also interested in purchasing as much as 20% of the company. This news had investors feeling pretty good about the potential for these companies, specifically the investment banks, to overcome the losses and the mistakes that were made during the sub-prime credit situation.

In technology stocks, momentum for Research In Motion (RIMM) kept going strong as the company continues to defy gravity and bloated P/E valuations. The rule of 80-leads-to-100 was in full effect for the BlackBerry maker as it hit a high of $100.75 before settling to close at $99/share. Apple (AAPL) this morning opened to an all-time high and continued to $155 before drifting down and closing slightly lower just under $153. The recently opened Amazon (AMZN) DRM-Free MP3 store is making its rounds and while there hasn't been much of an effect on Apple's stock yet the consensus has been that this can emerge as a true competitor to iTunes.

With the quarter coming to a close investors will be keen to be placed in the right companies as the earnings season kicks into high gear.

Disclosure: Author is long AAPL

Major Techs hit 52-Week Highs, Can the Rally Continue?

Post Fed Meeting, stocks have been on the upswing with new highs seemingly being made daily. While the market has rallied broadly, will we see a pause or can the ride continue? The Dow still sits about 200 points from its highs, Nasdaq 50 and the S&P about 30. In other words, there are still gains to be made towards the end of the year.

Technology has been on fire lately, as early earnings reports have been positive and multi-national companies are cashing in overseas as the US dollar weakens against other major currencies. Oracle (ORCL) had a great quarter and hit a 52 week high of $22.17 on Friday. It wasn't alone as many major tech players were just at or set new highs at the end of trading on Friday. Those companies included Google (GOOG) at $560, Ebay (EBAY) at $39, Cisco (CSCO) at $32, Amazon (AMZN) at $91, Research In Motion (RIMM) at $93, BIDU (BIDU) at $285.

So what's the trade for Monday and the rest of the year? Success will come to those companies that are getting a majority of their revenue in International currencies. Due to the US Dollar's record decline against the Euro, European business will drive profits this quarter and next. Big Tech is in good shape to continue to rally into the next round of earnings numbers due to and increasing dependence on Worldwide business for accelerated growth.

It's seemed lately that you can toss money into any tech stock and watch it rise, however, to truly pick a winner into the end of the year it's important to stand back and pick apart the business and the stock's valuation and determine which bet is best. It's vital to look at growth projections and current valuations to see that AMZN with a P/E in the 120s and a forward P/E of 51, is a much shakier bet than high growth GOOG or RIMM who sport forward P/E's in the 30 as the latter companies can seemingly growth into P/E's in the 40s and 50s. Steady Oracle and Cisco, who are experiencing revitalized business growth sport forward P/E's around 18, and a strong case can be made that these companies deserve P/E's in the 20s going into next year.

Technology has gotten its spark with the market rally over the last week and this sector will be a good one to be in come Christmas and the last calendar quarter of the year. Investors should take heed and come up with a criteria of which Technology companies should become the best investments. Here's a primer of things to look for when evaluating potential technology investments this holiday season.

1) Which companies will create, advertise, sell or re-sell the upcoming must-have gadgets or be involved in the back end of another record online-shopping season.

2) Determine which companies sport the largest percentage of International business.

3) Determine which companies have the ability to mold into their inflated P/E ratios so that any downside risk can be minimized with strong growth.

Disclosure: Author is long GOOG

Amazon Rewarded for Earnings Beat, but is the Party Over Now?

Amazon (AMZN) has stepped back into the good books of Wall St. with a run of increasing profitability that's making all those short sellers very nervous and is leading the stock to highs it hasn't seen since the Internet boom. Prior to yesterday's post-market-close earnings results, Amazon held an outrageous P/E in the 140s. Now that's paying for growth! But the company is delivering on this growth promise as it reported $0.19/share vs. the estimate of $0.16/share, and handily topping last year earnings of $0.05/share during the same quarter.

Current year-end estimates, which are bound to be raised by analysts soon enough put earnings just north of $1/share, which at current levels has Amazon sporting a P/E in the 80s when it reports for the December quarter. Do growth prospects continue to justify this valuation or is this a classic example of a tightly held company in a sudden short squeeze after a solid quarter. About 15% of outstanding shares were shorted as of mid June and it seems like that has something to do with today's 25% spike northwards. There has been contention over the last couple of years that the company is spending too much on internal technologies and off-shoot ventures like the UnBox movie downloads and the ever-popular music store in development rumors. A deal with TiVo to stream movie downloads to owners of the popular DVR device in tow and consecutive blowout quarters with ever increasing guidance has certainly silenced the critics.

Back in April when the company blew earnings out of the water it upped guidance to $13.40-14 billion in revenue for the year, and with the latest results lifted guidance to yearly revenue of $13.80-14.30 billion. Notice the pattern here? Everything seems rosy here doesn't it, but as any growth company can attest to, playing the ever increasing expectation game can be like walking a tightrope with a safety net made out of razor wire. Not only would the fall hurt, but the landing would as well.

Amazon's Prime service seems to be a big hit, it allows customers to pay a yearly fee for free shipping, and it is ideas like this that will eventually drive margins higher as Amazon cuts prices to sell more goods. The brick and mortar retailers, especially on electronics have been pushing these high-margin extended service/care warranties for years. Best Buy and Apple, through the ProCare program, love the revenue these services bring their respective companies.

All in all, while a compelling story, I for one think the Amazon boat has sailed for now and needs to dock before I would board. There was a great opportunity here for stock and option players and it should be time to profit take as I can surely see a downward spike coming before another one happens that would continue the climb. The market stays irrational for much longer than people usually think and while there might still be something here, I don't like the odds at these levels with a P/E that can seemingly only come down. If Amazon were to double profitability next year to $2/share you're still looking at a company with a forward P/E right now of almost 50. Now with Analyst estimates, likely to rise for 2008 from $1.30 per share the company has a lot of work to do to justify its price tag.

Disclosure: Author holds no position in AMZN