At $12.34, Palm (PALM) is up well over seven percent as I write this, a nice gain that more than offset the four percent drop the company’s shares suffered last week. Clearly, the market is expecting a lot of the Pixi, and according to some analysts, it may get it. In a note to clients Friday, RBC analysts said they “expect positive consumer reception and healthy sell-through,” for the Pixi.

But not everyone agrees with RBC’s cheery assessment. Ashok Kumar, an analyst at Northeast Securities, has a much dimmer view of Palm’s prospects in the months ahead. He says his sell-through checks show a “substantial decline” in recent Pre sales.

“As a fading brand, carriers are likely to see better returns on their promotional and advertising dollars with other vendors,” Kumar writes. “WebOS has negligible smartphone OS share, 0.2 percent per Gartner estimates, and is unlikely to attract any meaningful third-party application support. Palm has bet the farm on webOS and there is a real possibility that they may not achieve critical mass.”

Perhaps. Perhaps not. We’ll see in the months ahead.

According to Oracle (ORCL) CEO Larry Ellison, Sun (JAVA) is already losing $100 million a month as it waits for regulatory approval, and judging from the price of the company’s stock today, it may be losing even more than that. Shares in Sun slid to $8.11–about 15 percent below Oracle’s offer price and a far cry from the $9.18 they hit in mid-October.

Clearly, investors are alarmed by this latest turn of events, though industry observers say there’s little reason for them to be. Morgan Stanley, for example, believes Oracle’s acquisition of Sun will win EU approval with few, if any, modifications to the MySQL database software about which regulators are so concerned.

“Based on our diligence, we believe the EC is likely to approve the deal with no remedies or remedies pertaining to MySQL’s licensing,” the research house said in a note to clients today. “It is highly unlikely that Oracle restructures the deal (e.g. spins MySQL) or walks away.”

Morgan Stanley’s call: The deal will go through and at $9.50 per share. As the firm notes, the EU hasn’t blocked a U.S.-based transaction since GE/Honeywell in 2001.

Earlier this week, analysts at Citigroup (C) and CL King voiced their concerns about the company in the wake of another ugly quarter from carrier partner Sprint (S). Now Standard & Poor’s is doing so as well. In a note to investors today, analyst James Moorman whacked down his price target on the company’s shares to $10 from $12 and reiterated his “Strong Sell rating.

“We believe the upcoming holiday selling season will be very competitive for handset vendors and think Palm could see competitive pressures,” he wrote. “We believe the small price difference between the Pre handset (especially when on sale at third party vendors) and the new lower-end Pixie could limit Pixie sales and confuse consumers during the launch.”
 
Indeed. As I noted here last week the $99 price Sprint has set for the Pixi is identical to the Pre’s on Amazon (AMZN). And the Pre has a faster processor, a better screen, and Wi-Fi support as well.

Not the most desirable circumstances for heading into the holiday season.

Shares in the handset maker fell some 23 percent last week amid concerns about increased competition from Google’s (GOOG) Android operating system, which is being rolled out on a number of devices at a variety of carriers, including Palm partner Sprint (S).

This morning, analysts at Citigroup (C) cut their recommendations to sell from hold on Palm (PALM) while simultaneously raising their rating on Motorola (MOT) because of its “compelling” new Android handset, Droid.

“Motorola is launching of one of the most compelling offerings at [a] time when many investors have given up on the company’s handsets,” Citigroup analyst Jim Suva wrote in a research note.

“The revolution of product and application service offerings,” Suva added, “is going to start to crack open the enterprise door and could pose a risk for BlackBerry. Major shifts in promotion support creating a promotion commotion in the months ahead favor Motorola and post a challenge for RIMM and PALM.”

Over at CL King, analyst Lawrence Harris is similarly dubious of Palm’s prospects in the months ahead. Noting that Sprint executive David Owens said last week that the carrier plans to peddle a number of new Android devices from HTC next year, Harris sees unfavorable implications for Palm.

“Historically, Sprint has been Palm’s largest customer. Indeed, in the August quarter Sprint accounted for 85 percent of Palm’s revenues,” Harris wrote in a note to investors. “In FY09 (May) Sprint represented 43 percent of total Palm sales. Sprint has a U.S. exclusive on both the Pre and the Pixi through calendar year end. The Pixi will be launched at Sprint on November 15 for $99.99. The Pixi is fairly similar to the $149.99 Pre. Verizon has stated that it will begin offering the Pre in early CY10.”

Expounding on his analysis, Harris notes that “According to a report on Mobile Today, a U.K.-based publication, initial sales of the Pre through Telefonica’s O2 unit in the U.K. have been slow. If this report is correct, than the bulk of Palm’s sales over the next few months will probably continue to be generated through Sprint.”

That Sprint will soon add some slick new Android handsets to its lineup is worrisome, then, indeed. For Palm, it seems, driving conditions on the road to recovery are looking increasingly hazardous.

Google is moving into your market.

For tech companies, few words are more frightening, and yesterday we saw why. The mere announcement of Google Maps Navigation sent shares of established GPS device makers like Garmin (GRMN) and TomTom into an ugly downward spiral.

Shares of Garmin lost 16 percent of their value and shares of TomTom plummeted more than 20 percent to a new 52-week low. This, despite the fact that Google’s (GOOG) new turn-by-turn mapping service is currently only available for Android 2.0 smart phones like the Droid from Motorola (MOT).

Clearly, investors already see where this is headed. Who will pay for a Garmin or TomTom unit when they’ve got an Internet-connected smart phone that offers turn-by-turn voice guidance for free? It might be a bit slow coming out of the gate given the current paucity of Android-based smart phones, but once more handsets arrive at market, Google Maps Navigation will undoubtedly have a significant impact on sales of dedicated GPS units.

And if Google brings the service to Apple’s (AAPL) iPhone, as the company hopes to, it’s going to be even worse.

“With this product, Google injects itself into a new market and has the potential to cause serious pain for the existing players, like Garmin and TomTom, while giving potential customers one more solid reason to switch to a Google-powered phone,” said Gabriel Consulting Group analyst Dan Olds. “It’s a lot easier to justify the switch to a new device if it takes the place of two devices, like a phone and a navigation device, and if it does the job better.”

Which is saying something. Because as you might recall, in 1999, Nasdaq was soaring on the back of the dot-com bubble to levels never before seen.

And here we are amid the worst recession since the 1930s. Haven’t even entered that “all important holiday shopping season” yet, either.

Things are looking pretty good for Amazon (AMZN) right now. Sure, there’s renewed competition from retailers like Wal-Mart (WMT). There are potential sales tax issues and income tax liabilities and a raft of Kindle-killers headed to market. But Amazon’s stock is up 131 percent this year, brokerage firms are upgrading their ratings on the company, and analysts are saying it’s only going to go higher.

Said Citigroup analyst Mark Mahaney: “Near-term outlook very positive as AMZN heads into holiday season fully armed against shrinking/de-stocking offline retailers, with one of the must-have gadgets of the season (Kindle), a significantly strengthening International presence, and soon-to-be closed Zappos acquisition.”

Yeah. Things are looking pretty good right now. But we said that back in ‘99 too–when Amazon had a similar P/E.

Posting fiscal 2010 first-quarter financials before market opening this morning, Microsoft (MSFT) said it earned 40 cents a share on revenue of $12.92 billion.

And while net income per share was down 17 percent from a year earlier thanks to declining revenue in all but one of the company’s businesses, it still bested analysts’ estimates, which called for a profit of 32 cents a share.

And although sales fell for the third consecutive quarter, dropping 14 percent to $12.9 billion, they too topped forecasts of $12.4 billion.

The software giant attributed the performance to strong Windows and Xbox demand and to cost discipline.

Shares in the company spiked more than 10 percent in premarket stock trading.

(You can peruse slides of the financial results here and a liveblog of the conference call here.)

“We are very pleased with our performance this quarter and particularly by the strong consumer demand for Windows,” said Chris Liddell, CFO at Microsoft. “We also maintained our cost discipline, which allowed us to drive strong earnings performance despite continued tough overall economic conditions.”

Here is the press release on the Q1 results (without performance tables, which you can see here):

Microsoft Reports First-Quarter Results

Windows and Xbox exceed expectations due to strong consumer demand; cost discipline drives earnings per share growth.

REDMOND, Wash.–Oct. 23, 2009–Microsoft Corp. today announced revenue of $12.92 billion for the first quarter ended Sept. 30, 2009, a 14% decline from the same period of the prior year. Operating income, net income and diluted earnings per share for the quarter were $4.48 billion, $3.57 billion and $0.40 per share, which represented declines of 25%, 18% and 17%, respectively, when compared with the prior year period.

These financial results reflect the deferral of $1.47 billion of revenue, an impact of $0.12 of diluted earnings per share, relating to the Windows 7 Upgrade Option program and sales of Windows 7 to OEMs and retailers before general availability. Adding back the deferred revenue, revenue totaled $14.39 billion, a 4% year-over-year decline, and EPS totaled $0.52 per share, an increase of 8% over the same period of the prior year.

“We are very pleased with our performance this quarter and particularly by the strong consumer demand for Windows,” said Chris Liddell, chief financial officer at Microsoft. “We also maintained our cost discipline, which allowed us to drive strong earnings performance despite continued tough overall economic conditions.”

Windows 7 and Windows Server 2008 R2 launched globally on Oct. 22 as anticipated. Also during October, Microsoft released Microsoft Exchange Server 2010 to manufacturing and in July announced a strategic partnership with Yahoo! Inc. to provide search results for their global properties.

“The worldwide launches of Windows 7, Exchange Server 2010 and Windows Server 2008 R2 are exciting milestones for Microsoft, our partners and customers,” said Kevin Turner, chief operating officer at Microsoft. “We are pleased by the early positive response we are receiving for these products.”

Business Outlook

Microsoft is reducing operating expense guidance to $26.2 billion to $26.5 billion, for the full year ending June 30, 2010.

Management will discuss first-quarter results and the company’s business outlook on a conference call and webcast at 7:30 a.m. PDT (10:30 a.m. EDT) today.

The online auctioneer reported revenue of $2.23 billion, up six percent from a year ago, while net income fell 29 percent to $350 million or 27 cents per share. Excluding some items, earnings were 38 cents a share. Analysts who follow eBay expected the company to turn in a gain of 37 cents per share on sales of $2.14 billion.

Gross merchandise volume–the value of all goods sold via eBay–rose seven percent from the same period last year. Analysts had believed it would drop between five and 10 percent.

EBay said it sees fourth-quarter earnings of 38 cents to 40 cents a share, on revenue of $2.2 billion to $2.3 billion.

“Our third quarter results were strong, with PayPal gaining momentum and market share worldwide and our core eBay business showing positive trends,” John J. Donahoe, eBay’s chief executive, said in a statement.

NOTES FROM THE EARNINGS CALL

On business overall:
eBay CEO John Donahoe: “These are strong results for a strong company….We’re seeing our turnaround efforts begin to pay off.”

On the economy:
Donahoe: “The economy as we see it is stable, and we’re cautiously optimistic about consumer spending going into the holiday.”

On the Skype lawsuit:
eBay CFO Bob Swan: “We’re highly confident in our position.”

“We are very impressed by Apple’s ability to post a record profit quarter during difficult macro spending conditions,” Canaccord Adams analyst Peter Misek said in a note to clients this morning. “A host of new product introductions and continued traction with the iPhone give us confidence in the sustainability of Apple’s operating model.”

Suffice it to say, Misek wasn’t the only the analyst lauding Apple’s (AAPL) fourth-quarter performance. Below a selection of commentary from other Apple watchers:

Gene Munster, Piper Jaffray
“September results were strong despite headwinds of iPhone production constraints and a Mac desktop offering in need of a refresh. We expect these headwinds to become tailwinds in the December quarter, which we believe will be positive for AAPL shares in the coming months.”

Mike Abramsky, RBC Capital Markets
“With strong financial performance and product uptake amidst recession, and further catalysts (iPhone in China, Tablet, refreshed iMacs, iPhone share gains/momentum), we foresee further upside for the shares.”

Maynard Um, UBS
“Upside to virtually every metric in the qtr backs our positive view on Apple. We continue expect greater “recurring” iPhone hardware revenue (growing installed base & stickiness of the App Store), which should drive more visibility into iPhone sales (20%+ of our FY10 iPhone shipments), as well as iPhone expansion driven by new partnerships (& end of exclusivities). Longer term, we believe a service to provide seamless access & mobility of digital content across all products may be the draw (halo) that drives additional future Apple product sales.”

Tavis McCourt, Morgan Keegan
“Overall, Q4:09 was a strong quarter for Apple, as the Mac is nearly becoming the de facto computer for the back-to-school season. Additionally, iPhone trends remain remarkably strong, with unit economics holding up at unheard of levels in the wireless industry.”

Yair Rainer, Oppenheimer
“As usual, Apple appears to be leaving plenty of room for upside surprises to both revenue and margins. On the revenue side, Apple should benefit from continued Mac momentum (particularly in Europe), higher recognized iPhone revenue, and some channel fill for both Mac and iPhone. Gross margin upside is likely to come from a higher proportion of recognized, high-margin iPhone revenue.”

This morning, Goldman Sachs (GS) and Bernstein both had good things to say about the company, noting that investors may have underestimated its potential for growth. “Discussions with advertising agencies, including a dinner we hosted with senior agency executives, point to rising spending on Google since June, led by travel, clothing and home improvement advertisers,” Goldman said in a research note issued this morning.

Bernstein analyst Jeffrey Lindsay was similarly bullish. “We expect Google’s results to show some signs of cyclical improvement in Q3, as easier comparisons and more favorable currencies should benefit topline trends,” he wrote in a research note. “Paid search is an early cycle advertising format given the immediacy of keyword auctions, and Google has maintained its dominant position within the category.”

Also bolstering Google (GOOG) shares today are the recent comments of company CEO Eric Schmidt, who told journalists at a roundtable discussion last week that the economy is starting to turn around. “The worst is behind us and we clearly see aspects of recovery, and what is notable is we’re seeing aspects of recovery not just in the United States but also in Europe,” Schmidt said. “We are increasing our hiring rate and our investment rate in anticipation of a recovery.”

Earlier this week, people familiar with the matter claimed that Brocade (BRCD) is seeking a buyer and that both Hewlett-Packard (HPQ) and Oracle (ORCL) are among its potential suitors. They said no deal is imminent, but rumor that one might be coming drove Brocade’s shares up some 15 percent.

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