First, the bad news for Yahoo. According to findings by online advertising company the Rubicon Project, the price of display ads fell by 20% to 30% during the first quarter of 2009 vs. the fourth quarter of 2008. Ouch. Rubicon also found that  online display ad inventory soared by 150% between the two quarters, further depressing display ad prices. The vast majority of Yahoo's revenues come from display ads. This would seem to spell serious trouble for Bartz.

But hold the phone, folks. Digg just rolled out a new advertising system that holds tremendous promise. Digg, like Yahoo, has largely relied on display ads for revenues. So to make its display advertising more effective, Digg created a system that allows users to vote on the ads. Popular ads pay less to get on Digg, Unpopular ads pay more.

This system holds a lot of promise for two reasons First, it effectively mimics the wildly successful Google AdWords auction system that is the backbone of Google's lucrative pay-per-click revenue model. Second, evidence has started to pile up that users who are involved in the selection ads to be displayed on sites they view are more likely to pay attention to those ads and click on those same ads.

Yahoo has long been fighting the losing battle against plunging click-through rates on display ads. By moving towards a more social model of advertising which involves the audience, Yahoo could easily improve its advertising performance enough to give revenues a serious boost. Piqqem Sentiment on Yahoo has risen by 100 basis points since March 31.

That could happen through better pricing ability, higher click-through rates on banners, or both. In any case, watch this Digg system as Yahoo! could quite easily roll it out for large chunks of its network. It won't replicate Digg or Yahoo! own version Buzz, but it could easily be close enough to matter. And it might be all the more important should Microsoft's Bing sustain momentum and grab the number two search spot from Yahoo.

Disclosure: Long GOOG, no position in YHOO

On the news Shares fell $1.88 to $34.70 in after-hours trading. For HP,  second-quarter net income declined to $1.72 billion, or 70 cents a share, from $2.06 billion, or 80 cents, from a year earlier. A litany of grim numbers came with the quarter including a 19% decline in PC sales revenue, a 23% decline in printer supplies and sales revenues, and a 28% decline in sales of at the storage and server unit. The company cautioned that sales would decline further in the current quarter. The Piqqem Sentiment on HP is running at neutra. Has the much praised CEO Mark Hurd lost his golden touch? No doubt, he's gettting hammered but now is an interesting time to think about whether HP is a good portfolio addition. Here are three reasons why the future may not be as dire as the markets perceive.

1) Server and storage business is highly leveraged to any economic recovery. HP has very solid sales teams in these areas and its consulting arm does an excellent job of pushing HP enterprise hardware. In the fall of 2009, as the economy starts to recover, sales at this unit will serioiusly perk up. Storage, in particular, is a non-negotiable buy in the era of HIPAA, Sarbox, heavy medial loads, and mandatory system archiviing.

2) EDS has not yet been fully digested. Mark Hurd is an excellent operator but it takes some time to digest a very large purchase like EDS. For that reason, HP is not showing the true synergies off the buy. That will happen later this year, again, as HP, now having lowered expectations, has room to manuveur and more tightly integrate the EDS unit.

3) PC Sales declines are relevants but not fatal. PC sales declines definitely hurting HP more than other players. That because HP still has a significant legacy desktop business for corporate customers, something that is rapidly shrinking. But HP is quickly moving away from desktops and also moving its prices down towards more competitive levels. HP also will perform well in netbooks, as it has a superior retail sales channel as compared to competitors. We don't think Windows 7 really matters much in the short term but consumers will become more frustrated with their machines as broadband connections speed up and multimedia and TV continues to move the PC. That will fuel some upgrade cycles.

HP is still generating plenty of cash. The company has a nice wad of cash on its books and is among the best managed technology companies in the world. Shares in HP have barely budged all year, as compared to rocket rides up for Dell, Apple, and a host of others. As a potential long-term play, HP will likely catch up to its brethren in a hurry as soon as sign of a turnaround start to show up.

Disclosure: Author has no position in HPQ

Sub-Crowd Breakdown of Apple Piqqem Sentiment

In the age-specific sub-crowds, sentiment increased most strongly among 18-to-29 year olds (5.5%) and 44-to-59 year olds (13%). In the regional sub-crowds, sentiment increased markedly in the Northeast (18.5%), the Midwest (16.5%) and the South (12%) but less so in the West (4%) where Piqqem has the largest user-base. Broken down by profession, sub-crowd sentiments increased the most for management (10%) and software engineers and financials professionals (4.5% for each group) while declining for salespeople (-7.5%) and students (-6%). Curiously, Apple sentiment optimists grew more pessimistic in terms of Piqqem Sentiment (-16.5%) and pessimists grew more optimistic (25%). Women’s sentiment for Apple improved by a dramatic 54.5% (women represent a minority sub-set of users so have less impact on overall sentiment swings.

Piqqem Sentiment: Apple Vs. PC Related Companies

User sentiment on Apple’s future share price movements has remained positive above the 1.5-2.5 band that marks neutral sentiment. However, sentiment has trended downwards in aggregate over the three-month period shown here. Sentiment has begun to track upwards again in the past month, a movement that is likely due to Apple’s strong first quarter earnings report for 2009 and to consistent rumors about the release of a new iPhone and new computing device likely to come this June at Apple’s World Wide Developers Conference.

Apple sentiment compares favorably to sentiments for other PC related companies, Dell (DELL), Hewlett-Packard (HPQ), and Microsoft (MSFT). During that same period Piqqem Sentiment fell by 19.5% for Microsoft, by 10% for HP, and by 20.5% for Dell. (HP’s earnings are largely driven by the enterprise and printing side of business so the comparison is not pure in terms of business lines). In contrast, Apple sentiment fell by only 9%, more comparable to that of HP, a company that is perceived to have excellent management and strategy under CEO Mark Hurd.

Piqqem Sentiment : Apple Vs. Smartphone Makers

Sentiment for Apple shares remains significantly higher than sentiment for competing smartphone makers. Apple’s Piqqem Sentiment is 2.78, above the 1.5-to-2.5 neutral sentiment band. Nokia’s (NOK) sentiment is 2.53, Palm’s (PALM) sentiment is 1.71, and Research in Motion’s (RIMM) sentiment is 2.22.  However, Apple’s trendline is showing negative, down 9% in the past three months.

In comparison, the sentiment trendline for Nokia is up 15% over that period and the sentiment trendline for Palm is up 32% during that period. Of the quartet, only RIM is showing more significant sentiment erosion with a decline of 16.5%. That said, Apple’s sentiment graph has rebounded off bottoms near the 2.6 level and have begun recovering in the past month as rumors about Steve Job’s departure have been dispelled and hope for new devices in June, paired with the release of a new software platform for the iPhone, have given Apple sentiments a lift.

Amazon's decidedly cautious forward looking earnings projections likely have exerted downward pressure on the stock, as the company forecast a steep decline in operating margins in the upcoming year. The Piqqem Sentiment number movement implies the market is not yet a believer in the ability of Kindle to provide a meaningful revenue boost to Amazon's top and bottom lines in the near term. This despite the fact that the Kindle is even outpacing the iPod in terms of device sales during its first year. It's possible the market has already priced Kindle earnings into Amazon shares but how many Kindle's Amazon will actually sell could represent a significant upside surprise not so much with immediate bottom line implications as much as future profitability implications for Amazon.

McDonalds Corp (MCD ) reports its earnings for Q1 2009 before markets open on April 22. Piqqem Sentiment for shares of MCD has dropped from a six-month high of 2.82 (on a 0-to-4 scale with 0 as lowest) to 2.64, a significant drop of 18 basis points. In comparison, according to First Call analyst sentiment for the fast food chain has dropped roughly 6 basis points, from a rating of 2.06 (on a 1-5 point scale with 1 as highest) to 2.0 over the course of the last 120 days. Analysts appear to be more bullish than the general crowd at Piqqem. However, sell side analyst sentiment has been shifting to meet the general crowd sentiment.

There are clearly some challenges facing McDonalds. Key competitor Burger King (BKC) reported weak March sales. Starbucks is mounting a sustained effort to stem any market share losses in the premium coffee markets to counter McDonalds' successful McCafe push. Additionally, further increases in the value of the U.S. dollar relative to other currencies could hurt McDonalds due to is relatively greater reliance on growth from outside the U.S. McDonalds executives have restated optimism for 2009, saying that sales in January and February have been solid and international markets such as Brazil and China are performing strongly. The company has an exceptionally strong track record. However, if McDonalds misses whisper estimates share holders may punish the company due to higher expectations expressed in the recent upward momentum in the stock, as it rose from the $51 range to the $56 range.

Disclosure: No positions in either stock mentioned here.