“Despite increasing smartphone competition, Palm can maintain differentiation and remains well-positioned to launch its products with multiple new Tier-1 carriers in early 2010 by which time it should have a robust apps catalog,” Arya wrote. “While we expect the stock to remain volatile, the recent sell-off creates an interesting buying opportunity, in our opinion, for a company with an attractive platform, selling into a high-growth market, and at a compelling valuation.”

Interestingly, Arya notes that Palm’s webOS application ecosystem, initially something of a disappointment, is growing a bit more rapidly these days with between 50 and 100 apps being added to Palm’s App Catalog each week. He expects growth to continue with the debut of a new feature enabling customers to download apps simply by clicking on a URL. Arya believes this will dramatically improve discovery of apps and attract more attention from developers. His conclusion: With a more robust App Catalog and two attractive handsets, Palm is well-positioned to launch its webOS line with multiple new Tier-1 carriers like Verizon (VZ) in early 2010.

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.

Much has changed at Yahoo since May 17, 2006, the last time the company held an investor day gathering. In May 2006, Yahoo’s shares traded at about $30 and the company claimed 28.98 percent of the U.S. search market. Today, its stock is worth a little over $16 and its share of the search market has fallen to 18.8 percent.

Ugly declines, both of them. Fitting then, that Yahoo CEO Carol Bartz, speaking at the company’s first investor day gathering in three-and-a-half years, would describe the company’s future as “a journey back to respect.” “We are not here to wow you today,” Bartz said “We are here to intrigue you.”

What follows is a brief historical overview of Yahoo (YHOO)–“Yahoo was the big shining star, then wasn’t”–and then a redefinition of the company as that more intriguing entity to which Bartz referred earlier. “We are not a search company, we are not a display company,” she said. “We are a broad-based Internet company….We are the largest communications engine in the world.”

Communications engine? Sounds like a sneaky way of avoiding comparisons with Google (GOOG). Not that anyone makes them anymore.

Anyway, Bartz continues, playing up Yahoo’s scale, diversity of content and technology. “We combine amazing editorial with very sophisticated machine-learning,” she says. But what makes Yahoo most unique, says Bartz, is the company’s ability to learn from its mistakes. “We have fallen and we really want to get back up. If you haven’t had good times and bad times, you don’t know what you’re doing. We prefer the good times. We have passion to get back there. Today is the start of that.”

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.”

Now, $500 a share isn’t in the same stratospheric price range at which Google’s stock once traded–certainly it’s not the $707 and $713 it reached in 2007. But it’s a psychological milestone nonetheless, and that’s worth noting because Google’s shares have risen more than 50 percent over the past six months, and Wall Street seems to be growing increasingly more positive on the stock.

Sadly, the same cannot be said for Yahoo (YHOO), which hasn’t elicited the same sort of response. But then why should it? As Yahoo CEO Carol Bartz said earlier today, “Yahoo and Google are different companies. They are in different businesses….They aren’t us and we aren’t them.”

Clearly. Yahoo shares are trading at what, $16?

“The compensation committee recognizes that Mr. Ellison has a significant equity interest in Oracle, but believes he should still receive annual compensation because Mr. Ellison plays an active and vital role in our operations, strategy and growth,” Oracle said in the filing. “Nevertheless, during fiscal 2010, Mr. Ellison agreed to decrease his annual salary to $1.”

A wise gesture from Ellison, who took a bit of flak at Oracle’s annual meeting last October after he made $543.8 million by exercising 36 million stock options. But still, a gesture only. Ellison is the fourth wealthiest person in the world, according to Forbes. He is also Oracle’s largest shareholder, with 23.4 percent of stock outstanding, as of July 21. That stake is valued at more than $25 billion today.

So as long as Oracle (ORCL) continues to outperform the market, Larry will be just fine.

Why? A few reasons. First, there’s the government’s “cash for clunkers” program, which will likely stimulate new car sales and new Sirius subscriptions thanks to the satellite radio trials often packaged with new cars.

Then there are rumors of new iPod-related hardware that may or may not debut at the company’s holiday gift-guide event next week. Scheduled for Wednesday, that gathering promises “a new line-up of accessories…for the home, office, vehicle and beyond.” This has led some folks to speculate that we’ll soon see a Sirius dock for the iPod/iPhone.

From XMFan, which claims to have insider details on the device.

The XM SkyDock is a docking station for your iPod Touch or iPhone that turns it into a SATELLITE XM Radio receiver! Included is an XM antenna, power cord (also featuring the new transmitter technology), and docking station that turns your iPod/iPhone into an actual XM Satellite Radio receiver using the SiriusXM app.

XMFan says the dock is expected to retail for under $100 and speculates that it could drive a lot of new subscriptions. I suppose we’ll find out next week–if the device is actually announced.

[Image Credit: XMfan]

That’s the word from Deutsche Bank analyst Jonathan Goldberg, who says the smartphone is doing just fine.

“Palm’s stock has underperformed since their earnings announcement last month in the absence of any hard news,” Goldberg wrote in a research note Friday. “We think market fears about return rates, weekly order trends and applications development are off the mark. Our checks continue to point to solid demand and carrier interest.”

According to Goldberg, his checks also indicate that “…Palm has become a healthy momentum stock adding to volatility. Sifting through the noise, however, we believe the key trends are healthy. The August quarter is tracking ahead of our estimates. We think the Street is still underestimating the company’s improved execution and long-term operating leverage.”

That’s certainly possible, given the wide disagreement among analysts over sales and satisfaction. Perhaps when Palm (PALM) next reports earnings, it will release some hard sales numbers and put an end to this speculation once and for all.

In a research note issued Monday, Jesup and Lamont analyst Kevin Dede says as much, arguing that the company’s shares are overvalued, particularly in light of Pre returns.

“We stood just as the Street now stands, completely enamored with Palm’s highly innovative new device; however, our checks now lead us to believe that while initial sales could almost be categorized as ‘gangbusters’ and perhaps above initial assumptions, we think there are engineering complications that are driving a higher level of returned devices than otherwise expected.

“From a hardware perspective,” Dede continues, “the Pre includes the features expected in a cutting-edge smartphone, including a large touch screen, one of the most powerful processors designed for a handset, and a slide-out keyboard; we understand that a great many returns are on account of an unsatisfactory experience with the keyboard operation and dead pixels in the screen. Fixing these issues shouldn’t pose a problem, but we think the timing risk and severity should be reflected in the shares.”

Dede notes that his impromptu survey of local retail outlets–Sprint (S), Best Buy (BBY) and Radio Shack–revealed that about one in three devices is being returned. He cites, as well, a survey on Pre Central that suggests roughly 40 percent of initial Pre sales are exchanged.

Now, to be fair, this is anecdotal evidence at best. The Pre Central survey, which at present has only 615 respondents, is hardly statistically relevant. That said, Pre Central is a top Pre fan site, and Palm’s own forum has quite a few complaints, as does SprintUsers. So clearly, something’s going on here.

Reached for comment on the issue, Palm had this to say: “We think the Palm Pre is the best product we’ve ever shipped. While we haven’t seen anything out of the ordinary we will continue to closely monitor both Palm and Sprint customer service channels.”

Despite concerns about the Pre’s build quality and Dede’s contention that the company’s stock is overvalued, the analyst sees good things ahead for Palm. “In light of the overwhelming evidence supporting continued growth of converged devices, we believe Palm addresses the most enchanting segment of the mobile device market and should experience at least market growth over the longer term.

“Shorter term is obviously more interesting, and we believe Palm’s technology positions it to gain share at the expense of those companies offering less attractive, less functional devices,” Dede adds, concluding, “The competitive technology race boils down to ease of use across an increasingly complex technical environment.”

UPDATE: Concerned that its survey has been taken out of context, Pre Central is running another poll on Pre build quality, this one on its blog, rather than its forums. And while it’s no more statistically relevant than the original, it’s worth noting. Because with more than twice the number of respondents, it shows just 18 percent of initial Pre sales being exchanged.