Microsoft, travel and thinness (updated)

7:48 am (Hawaii) Barnes & Noble is up 61% on Microsoft's play for the Nook tablet. I like visiting B&N locally, but as an investment, it's been a dud for years going back to the war with Amazon. Now BKS is at 22.14, off its high today of 26, after Microsoft's move. 

Whitney Tilson was on Fast Money. He went long BKS last week, says it was 87% short. That's incredible and explains the run today. He says BKS was much less a value play at 26, but is "very attractive" at 22. Total of $605 mil from Microsoft. 

Also surprised by the move in EXPE, up 7.3% on top of last week's gain. All three indices are in the red moderately, and EXPE is up almost 3 bucks to 43.26. 

ZAGG, one of the AAPL plays, is up 6.7% to 13.11. I had my eyes on this last week at 11.99 and 12.29 and opted to wait until today. So even with a down market, ZAGG is rising fast with earnings due Thursday. 

AMZN is up another 2.5% to 232.41. I sold this at 219 last week, and the P/E is outlandish. The questions about the company's accounting maneuvers are not holding this back, it seems. 

AAPL is down 2.5% to 587.92 after one of the New York newspapers blasted the company for its tax strategy. Legal, but chastised anyway. I still would like to see AAPL at 546 (Fibonacci retrace), and with big money chasing other trades, it still might happen. AAPL got down to 555 last week before spiking. 

Light volume overall. No catalyst in the near term. Just a cool morning and an opportunity to sip a beverage, get work done and wait patiently. That would not be Monster energy drink (MNST), though, which is up 10% on rumored buyout talks (Coca-Cola) worth as much as $15 billion.

Update 8:19 am Fib retrace for BKS (based on today's gain off Friday's close) is 21.29. It sold off early in the day off the humongous gain down to 21.75. This was a broke company with negative EPS before this deal. Watching but not touching.

MNST Fib retrace is at 76.56, which it has breached easily. It got down to 71.47 before moving back to its current level at 76+.

Update 11:05 am I liked ZAGG on Friday, but didn't enter because of weekend wackiness worries in the general market. I passed at 11.99. ZAGG, an Apple play, closed up 6% today in a down market. Earnings out on Thursday; anticipation is high. But this run-up might translate into a selloff on the news. Today, ZAGG's intraday high was 13.27. A Fib retrace would've been at 12.89, and sure enough, the stock pulled back to 12.90 mid-day. I entered a half position at 13.02 just before the close.

This comes with some risk, of course. ZAGG has made a massive move from 10.66 at the close last Tuesday. That's a gain of more than 24% to today's high. How much upside is left? If today's modest pullback was a breather and the market takes off tomorrow and/or Wednesday, it would probably be good for ZAGG and other earnings plays. But I don't view this is a long-term hold, though maybe I should. Closing no doors just yet.

Update 11:40 am More info on ZAGG.

P/E 20.68, forward P/E 12.77
Shares outstanding: 30.04M
Float: 21.93M
Short interest: 47.7% (of float)

Tie that together with the Apple relationship and it's no wonder this has been combustible. ZAGG hit a one-year high of 17.10 on Aug 15 last year, just nine days after it had dipped to 11.40. But that's not the one-year low; the low of 6.67 was on Dec 28. This is a radical stock. Question is when to get out, and that answer will be dictated by price action and trading discipline. In other words, a decision would be best determined by stop loss rather than panic and/or greed.

Bust of a day for BBI

Shares of Blockbuster have waned to 39¢ after an in-line earnings report after the closing bell today.

Prior to the earnings report, BBI had run to an intraday high of 0.54 before closing at 0.50 (+15.6%). When I took a look in the morning, BBI was available at 0.46, then bumped to 0.50 and stayed above that threshold most of the day, even with a late selloff in the market.

BBI had been at 0.25 less than two months ago. The buys in a company on the brink of bankruptcy above that level were based on conjecture, rumors, even hope. But today's earnings report revealed no silver lining, nothing new or creative to stem losses. Closing stores is one thing. Coming up with new streams of revenue is another.

Traders wanted something. They got nothing. They bailed.

With a loss of $654 million last quarter, plus debt of $1 beeeeeeeellllion, BBI shares are where they belong. The remote possibility of Carl Icahn strategizing a multi-media conglomerate that would include Blockbuster makes the shares worth considering at, mmmmm ... maybe 25¢. Unless management pulls a rabbit out of its collective arse real soon, that's where BBI is going.

At least one blogger has an idea for Blockbuster — if it doesn't want to file Chapter 11, that is.

On this note, Netflix closed at 110.01, a gain of 2.18 (+2.02%). NFLX hit a high of 119.50 on rumors of a buyout. The CEO was on 60 Minutes a few years back. Struck me as a brilliant thinker and innovator. I should've gotten some shares then.

#22 Microsoft

Frankly, I don't see keeping MSFT at #22 without a compelling reason.


Why would anyone rather own shares of MSFT than GOOG? Or even AAPL? I want to hear the argument.

Nauseous? Watch the road

The nausea caused by the market tide doesn't mean there aren't some prices worth eyeing. Twenty of the 25 stocks I like are worth a look on the recent downturn.


ISRG starting to look attractive. Just a bit.


MasterCard is falling, too, even though the company is making major profits. I like it here below the 100-day SMA.


First Solar isn't cheap, but it's pretty good here. At worst, it's the leader in solar.


Really, McDonald's shouldn't be this cheap, not with its overseas exposure and growth. The honey mustard snack wrap is my fave. Still addicted to their fries.


Crude oil hit $104 a barrel today, but PetroChina shares are still sluggish.


Disney is a stock worth holding for a long time.


Up and down, down and up. Is Steve Jobs and his creative crew out of fresh ideas? I tend to think not. That's more of a key than whether they sell 10 million iPhones or not.


Really, is Google this bad?


RIMM's a bit pricey here.


I'd buy on these crazy dips if I could. Goldman Sachs at 165, didn't expect it, but it was always a possibility.


Focus Media hasn't proven its potential just yet and it's a bit expensive here.


CNOOC Ltd. is doing fairly well, while its cousin PetroChina is a slug. Go figure. Could be CNOOC's natural gas segment is getting a boost from rising demand.


Crashing hard. Where it bottoms out, who knows?


On discount lately. The CEO says they'll bounce back, just like last year.


Baidu and other China leaders can't get any traction here. Just a matter of time, perhaps, until the Beijing Olympics has an effect.


Nike trading in a range. Spooky here.


Just watching Mr. Softee for now.


China Life Insurance finally leveling out. What do the technical junkies call it? An ascending triangle ... which means it may break out. Or not.


Suntech Power is appealing right here.


There are probably dozens of better stocks than Chipotle right now. But I'm still watching.

Google tossing a wrench into MicroHoo

Michael Arrington loves the rumor mill. Can't blame him. I mean, Google buying a chunk of Yahoo? How gossipy and unlikely is that?

Two wrongs don't make a Yang right

Roger Ehrenberg explains why a Yahoo-News Corp. deal would suck royally for YHOO shareholders. Frankly, I wouldn't mind having YHOO shares, even though I emptied out yesterday with a small profit (5%). But Ehrenberg has valid points, and clearly believes that Microsoft will swoop in via YHOO longs.

I can't help thinking that Jerry Yang is putting forth a front about fighting for Yahoo's independence. I can't help thinking that he has to do this to get shareholders their best price point from MSFT. Maybe $34. Maybe $35. And I can't help but think that he has to save face with his underling Yahoos in light of recent layoffs. I don't think he wants the ship to go down, and that's what will eventually happen if MSFT doesn't take over. It could happen even if MSFT takes over.

What I'm saying is, Google is king of the world.

Yahoo board splits into camps

Oh, the civil war within Yahoo is fierce. I'm glad to be out of YHOO, but the drama ... I am moth to light on this soap opera.

>> New York Post: Board Bucks Jerry

Yahoo-MySpace makes little sense

A logical breakdown of the Yahoo-News Corp. talks (et al MySpace) by Hammerin' Hank Blodget.

>> Yahoo-MySpace: A Microsoft Alternative, But A Bad Deal

Tough to argue with his line of reasoning. I'm still holding my YHOO shares ... but antsy for Jerry Yang to do something already.

Microsoft still holds trump card

Michael Arrington (Tech Crunch) says a News Corp.-Yahoo spooning would not be so smooth.

One major snag - it is widely believed that, even with a News Corp. deal, Yahoo would need to outsource search marketing to Google to make the numbers work. While Google is likely happy to do that deal, it’s unlikely U.S. regulatory agencies would approve it...

Top 25: #24 Microsoft

I'm not a fan of any company that has flat growth, but for a short-term trade, MSFT could be ready for a serious bounce.

A boost for the Yahoo troops

Gotta hand it to Yahoo and CEO Jerry Yang. As Henry Blodget notes, Yang's newest e-mail to employees spells out the horizon (somewhat) and drives a flag into the company's turf. Cemented, perhaps. Or maybe just temporary, until Microsoft hikes that takeover price to $35 per share.

>> Grading Jerry's Latest Email to the Yahoo Troops: "A-"

The e-mail alone may have been the best reason why YHOO shares bumped over 30 after hours. It certainly didn't hurt YHOO longs that Steve Ballmer swore over his pirate ancestors' graves that he will continue to push for a takeover. OK, I made up the pirate stuff. But he's just as carnivorous.

MSFT offered $35?

So, Microsoft's previous offer for Yahoo was $35. Or so says Henry Blodget. This would explain why YHOO is up more than 2% so far ($29.82). The Nasdaq is up 13 points (0.56%) and 19 of my Top 25 are in the green. I expected Yahoo to be down today after its board rejected MSFT's offer and countered with a $40 demand.

>> Yahoo's "AOL Talks"--More Smart Smoke From Yahoo's Advisors

The "smokescreeen" talk may or may not be helping. Something's helping. MSFT is down 1.6% to 28.08.

Yahoo counters with $40 demand

It's a big-time poker game and Yahoo has responded to Microsoft's move. Silicon Alley Insider's Henry Blodget has another astute analysis.

>> How Will MSFT Respond To YHOO's Counter?

Our current guess, therefore, is that Microsoft will respond to Yahoo's counter-offer by trying to win over Yahoo's big shareholders and biding its time.

Paul Kedrowsky, however, has a higher value on Yahoo than Blodget does.

>> Yahoo: Rejecting Microsoft; Entering the Bargaining Stage

Is Yahoo right to bargain? Sure. Most sum-of-parts analysis of Yahoo -- my own included -- puts Yahoo's breakup value somewhere between $35 and $42, depending on how much you want to trust the valuations of Alibaba and Yahoo Japan. That's materially over Microsoft's offer, doubly so if you consider that Microsoft has a legitimate strategic interest in owning Yahoo, making this more than a purely valuation-driven exercise.

Why Yahoo + Google would be a nightmare

Michael Arrington breaks down the illogical long-term consequences of a possible Yahoo-Google agreement. He makes it simple enough that, well, even a Yahoo loyalist would have to agree.

>> Yahoo Board to Decide Fate of Company Today

Blodget's proposal has common cents

Like him or not, Henry Blodget is churning out insights and even solutions for the Microsoft-Yahoo bizarro circus.

>> Here's a Better Deal

So, what's the answer? Jerry and Steve hammer out a deal in which Microsoft trades its Internet division plus $10-$15 billion of cash for half of a stand-alone Yahoo (the exact percentage, board seats, etc. depending on the amount of cash). Steve can be chairman. The new board can agree on the management team.

Top 25: #24 Microsoft

With growth at less than 1%, what did shareholders expect Bollmer to do? At this stage, he was going to try something. Anything. The stock is down big since the hostile bid for Yahoo was unleashed.

Such a strange love triangle

The Yahoo Love Triangle pushed YHOO shares to 29.50 mid-day (now at 29.33 in after hours), quite impressive for a Co that simply doesn't know how to monetize properly. Don't get me wrong. I have my YHOO shares for trading purposes because, whether the Co likes it or not, it is in the sweet spot. It is the apple (no pun intended) in Mr. Softee's eye. It is also being lusted after by the search gods of Google.

It's all enough to make a man quit watching As the World Turns permanently. Not that I watch soaps. (Does Lost count as one?)

Fred Wilson speaks of Google's impending and complete dominance of search and advertising, and it is nearly impossible to counter his argument. I was late to the Google search world. Think it was 2001 or '02 when I finally started using their technology and I haven't wavered since. I mean, who uses Yahoo search when Google's is superior?

Wilson lays out a plan (I've seen a similar idea at Silicon Alley Insider by Henry Blodget) that would keep Yahoo independent. Either way, I think my shares of Yahoo will climb a bit more. I'm holding for now.

Saturday afternoon

Some productive reading this afternoon: Chris Perruna (particularly Trading Mistakes: Avoid At All Costs), Silicon Alley Insider and Seeking Alpha. The observations about Microsoft-Yahoo never fail to be interesting.

He who fight and run away ...

Just like Robert Nesta Marley once said, "He who fight and run away lives to fight another day." I gave up on the Google trade. I still think the stock will recover from the selloff, but today's Microsoft-Yahoo news is too powerful. The kicker came at about 15 minutes before the close when CNBC quoted Mark Cuban saying (paraphrasing) that this move by MSFT is brilliant and creates a dominant player in everything online except search. For Google, Cuban adds, it leaves only search as a dominant niche.

I got out at 521, took my loss and moved on. GOOG is now at 516.

I moved into YHOO at 28.39 — a buck higher than it was early in the day. I saw it at 27.40 or so and thought it was too simple and easy. Something had to be wrong with a stock hovering there after receiving an offer of 31.

Since overthinking that non-trade, I'm now in a stock I normally dislike. I use Yahoo Finance and Yahoo Fantasy Sports, like tens of millions of people, but that has nothing to do with the performance of the stock.

(No different from Starbucks. I go there often, but don't want the stock.)

With Terry Semel's resignation yesterday, I think Jerry Yang will give this deal his blessing and spare Yahoo the torturous road to ruin.

Yang has his beeellions. I'll be content to make a few bones when YHOO hits 30.50.

> > > Microsoft's letter to the Yahoo board

Moving targets

No kidding. Volatile doesn't begin to describe today's session. Hoku Scientific was up more than 10%, then retraced. Google traded down to 510, climbed back up to 529 and is hovering at 525 now. I picked up GOOG at 529, pondered getting more at 512, but was gun-shy. Then I got more at 526.

I emptied out of RIMM and AAPL. No catalyst ahead for either, and RIMM is among the most abused of all high-growth stocks. For short-term trading, there was no point in being in either anymore. I even sold my NTDOY.PK, which seasonally trades down between January and March.

Microsoft's bid to buy Yahoo has kept today's market slightly positive when it probably was going to sell off. Yahoo could hold out for more than $31 per share, but that would be ballsy on their part. Leverage belongs to MSFT. Yahoo opened at 28-plus, came down to 27-plus, and then returned to 28.32. Is Yahoo a good trade here? Seems that it should be.

Intuitive Surgical has kicked arse today on great earnings, and so has Flowserve. Too pricey now, of course. PetroChina and CNOOC and upstanding today with gains of about 5%. Still trading cheap relative to their moving averages.

Goldman Sachs was hovering at 200 before I took a nap (6 a.m. Hawaii time). Now GS is at 207. Boy, talk about what coulda been easy money. China Mobile is up even though Cramer panned it yesterday. Of my Top 25, only six are in negatoid territory: RIMM, AAPL, BIDU, AMZN, MSFT and GOOG. I still hold on to Google. Good chance it can rebound as it did last July after that earnings report disappointed the street. I don't plan to wait two months, though, for a run.