We were not fully prepared for the sharp sell-off in Baidu (BIDU) stock on Tuesday when BIDU opened up in the $360 range, down from the $430 level where it closed on Monday. As the Google (GGOG) of China, the stock has a short and compelling positioning that many would say make it a “must own” kind of name. Of course it trades at a high valuation based on conventional metrics.

This was a perfect time to put our Intrinsic Value (IV) model to work. Our IV for 2010 came to $496 which is what we tend to use to capture a one year return view on a stock. With current trading around our 2009 value of $372, it was a perfect opportunity to add shares to the model portfolio.

I’ve been a happy customer (and frequent stockholder) of Apple (AAPL) for a few years now. Apple has had a substantial lead in design, technology and platforms like iTunes. They leveraged this in a spectacular way with the iPhone. But there have been some nagging issues along the way like the proprietary nature of their products, their great reluctance to admit to any mistakes or shortcomings and relatively high prices which generate high returns but also fund increasingly swanky store locations.

There’s no reason to get down on Apple. But at the same time I’m getting a bit tired of them and even their products. It’s been years since I was thrilled by my first installation of iTunes (AAPL was around $19 I think) and then my first Mac laptop, then desktop, and so on. I didn’t move to the iPhone due to my heavy use of a keyboard and longtime Blackberry orientation. But still an iPhone might have been in my future if it were not for Android. Apple has proven to be less-than-helpful at really making things like iTunes, AppleTV and even the Touch and iPhone work in the way that I want them to. At the same time there are not many third party solutions to turn to.

Back in December of 2008, we posted our conclusions on why Nokia (NOK) would yet again fail to gain any traction in the smartphone market. (See Five Reasons why the new Nokia N97 doesn’t matter.) Since then the mobile Internet has continued to be dominated by Apple (AAPL), Google (GOOG) Android, and Research in Motion (RIMM). Recently we added Motorola (MOT) to our list of winners in this space because their Android-based strategy appears very solid to us. Palm (PALM) continues to be in the group but a high valuation coupled with concerns we have on long-term operating margin push it lower on our priority list.

The meta issue for Nokia seems to be the fact that they see the world through their own lens of “leadership” and believe they are actually ahead of companies like Apple and Research in Motion. Obviously this isn’t a good place to start if you plan on improving. Nokia measures things like their total number of different phones and their rank as a global brand. So they can succeed on their terms and fail on ours at the same time. Recently it came to light that the Nokia “Comes With Music” promotion has garnered just over 100,000 users after nine months in the market. Given the vast resources Nokia can wield, their abject failures in new markets are simply stunning.

Wednesday we published an updated research snapshot on Microsoft, which is going into a decent product cycle on the OS (finally!) which should be followed by a another with Office 10 and possibly even a Windows Mobile that isn’t an embarrassment.

Looking at the recent search market share, we couldn’t help wonder what Microsoft can do better to gain share in search. For the record, we know that success is about more than search and in some ways that might even be “yesterday’s market”, but it is closely watched and some decent sustained share gains by Microsoft would no doubt translate into higher stock value for them, possibly by a large amount.

It took me some time to reach a conclusion on gold because I kept getting stuck on that “where’s the inflation?” thing. Also many of the proponents of gold seem like conspiracy theorists and altogether odd ducks that are tough to take seriously. I did notice over the last year that some fundamental investors had reported large positions in gold call options. That struck me as odd but without knowing their entire portfolio strategy I couldn’t tell if this was a real position or a just hedge of some kind. But gold has shifted its role in the past decade and appears to be ready to continue that trend.

Gold is basically being crowd-sourced by the rich into a global standard without anyone “officially” having to do anything. We can thank governments again for their short-sighted zeal in going after more revenue rich people for creating this shift. Besides printing lots of paper money the governments have finally penetrated the “safe havens” that were used to keep money - secretive Switzerland and hidden offshore accounts are no longer easy, stress free ways to keep money safe and hidden from the governments of the world.

We’re listening to the latest economic and market analysis from the smart gents at GaveKal research and during the talk we were reminded of some conditions that existed during the most intense phase of the technology bubble of 1999 and 2000.

It’s obvious that China has been financing US consumption so that they could enjoy the growth that has helped to propel their economy. Equally true but less obvious is that Germany has been doing the same thing for weaker countries in Europe to the tune of a few percentage points of GDP.

NVIDIA's (NVDA) stock has been quite a roller coaster this year since we published our original research report on January 29th. (See our February 10 Seeking Alpha article here). At the time we noted that the growth in

1. mobile computing,
2. visualization and
3. higher end processing all fed directly into the growth prospects for NVIDIA.

Since then we have seen the company continually expand their market share in these segments though design wins, product launches and new offerings. As we noted, Intel (INTC) has yet to show up at the party and when they do, they will have the wrong product. AMD/ATI has done well and some niche firms like Imagination Technologies [LSE: IMG] are in a very good position. However NVIDIA remains the company best positioned in these three markets.

We’ve had a focused Mobile Internet theme for the last two years or so and the initial focus has been on Apple (AAPL), Research in Motion (RIMM), Google (GOOG) and even Palm (PALM) as a “special situation.” Needless to say these stocks and this theme have been on center stage for some time.

After looking at the first new products from Motorola based on Android, we have officially put them on the list. Motorola is a major global player despite stumbling very badly in the years following the introduction of the hit Razr phone. (We still have one for pre-paid cards in strange places and it remains an excellent phone even by modern standards.)

Much has been made of the news that Kai-Fu Lee has left Google (GOOG) China to start his own venture to capitalize more directly and more personally on the massive opportunity there.

Like most Western firms, Google is positioned there and will use all resources possible to ensure that it gets a good share of that market. Howeve,r at the current 20-30% share, it’s a far cry from what Google enjoys in the US.

It’s been a long time since we took a serious look at (or even thought much about) Sony stock (NYSE: SNE - $26.51). We know they have bit of a history as a “value trap” but there is certainly some potential for valuation improvement and higher stock prices if the company can start doing some things right and maybe even innovate again. A few recent things have coalesced in our mind after walking through a fairly large retail computer store here in Paris.

1. They have recognized and seem to be ready to embrace a consumer revolution in 3D computing that will demand new displays and media centers. Sony hasn’t been a technology leader in consumer entertainment for some time but they may have a chance to at least catch up a bit if they apply themselves to the right areas. We think 3D is one such area and the new CEO of Sony has recently gone on record as saying they were committed to mainstream consumer 3D displays by the end of 2010.
2. Moving away from “crapware.” Recently Sony did a deal with Google (GOOG) to pre-load their Chrome browser on their Vaio laptop line. We don’t yet know what the resulting software footprint will look on the Vaio post-Windows 7 but in the past Sony laptops were so full of “free extras” that the machines could barely be used and hours would be spent removing and disabling all these extra “features.” Combined with a very high price relative to other brands, most people stopped even considering a Sony Vaio a few years ago.

During a quick survey of laptops on offer at the FNAC La Defense, we were surprised how well positioned the new Sony Vaio line was relative to the myriad competitive offerings on display. In fact, within the standard laptop lineup, there were no competitive offerings that were close. Most vendors, including HP (HPQ), are using the same ugly and uninspired design one would find three or four years ago. (No wonder Apple (AAPL) keeps gaining share in laptops.) The Sony Vaio line, however, had the design, keyboards, size ranges and quality features at the same (or very close) pricing of the generic, pretty mediocre competition.

It’s nearly impossible these days not to be personally touched by cancer. The disease has to be on the top of everyone’s list for finding new, more effective treatments.

Putting our personal feelings aside for the moment, we also recognize that any company fielding a valuable new treatment in this area will deliver strong investment returns. However, even the best scientists in the world have differing opinions of what may or may not ultimately work. So we have to be careful in doing our research and limiting our risk in this area.

The deal to acquire Zappos marks an important strategy shift for Amazon (AMZN). Amazon has thrived on selling things that require little human touch beyond user-generated reviews. Products like music, movies, electronics and many hard goods sell this way. Customers essentially buy based on features, price, user reviews and delivery - all things that Amazon is great at.

However, products like shoes and clothes are much harder to sell this way. Here, selection, fit and service around returns become far more critical. Zappos is obviously all about selling online but in contrast to Amazon, they excel at talking to customers over the phone - helping them make selections and dealing with their inevitable returns. It’s often the case that things don’t fit or simply don’t look right. Zappos allows customers to send items back for 12 months and includes return postage.

Of course the short answer is no but there are some very troubling trends in place right now. Strategists refer to this as “U.S. policy risk” and it is on the rise. Here are a few points:

The first is the minimum wage increase. On July 24th it will step up to $7.25/hour which is up a full 41% in two years. We’re not sure about inflation prospects but 20% annual increases in wage costs can’t be good. The real issue is that it further raises the hurdle for creating jobs, especially entry-level positions.

Recent inputs regarding investor interest in Shanghai property shows it’s again running very high. There are some key structural reasons this is probably a good time to be considering taking some positions here:

1. The Chinese are now making it easier to buy property. A recent offering calls for investors to come up with a 30% downpayment to receive a 4% loan for the remaining 70%. The 3% deed tax and 0.05% stamp duty is now very low. The capital gain tax has been reduced (for resales within 2 years) to 5% of the gain versus what had been 5% of the entire amount.
2. Recent policy changes to allow the local currency to appreciate gradually adds an additional kicker to returns to external investors that makes this even more attractive. Although exchange rates are unpredictable, most feel that the RMB has been kept down structurally and will tend to trend up over time versus other major currencies.

Caution on China is always a good idea and we know that there is still inventory to be worked off in a number of major cities there. However, the global investor appetite for this asset class looks like it will be aided and abetted by changes in deal terms and exchange rates.

The U.S. stock market has been described as “painful” by many of our colleagues. The recent rally left many on the sidelines. The move up came because “things stopped getting worse at a faster rate” but now it may start to feel that the next stage of “things actually not getting worse and likely to improve” isn’t quite clear enough to support a further rally.

Unfortunately there is no way to predict the short and medium term moves in the market. We’d love to ignore them but no matter how narrow our stock selection process, they get caught up in the tide of market ebbs and flows.

Unfortunately for current OpenTable investors, the company is worth about 65% less than it’s currently trading at in the market.

This is explained in good part by the fact that you can’t short the stock and there are no options as yet since they just came public. But all this does is delay the inevitable decline to much lower prices before new long-term investors can buy shares.

Since we published our report on Nvidia (NVDA) back on January 29th, the shares have vaulted to $12 then sunk back to near $8 and are now sitting in the middle at $10.50. Our intrinsic value (IV) estimate remains $15, which is a level we think the stock will see this year. But the story is filled with drama, so the levels on the stock are likely to continue to be all over the place.

These two *adjacent* Twitter messages illustrate the situation in a nutshell:

One can’t help but notice a major revenue upside ($664M vs. $514M consensus) along with a major inventory reduction. The revenue upside didn’t show up much on the bottom line, which was only ahead of consensus by 2 cents.

The call focused beyond GPU market share and talked about the increasing adoption of PhyX technology to develop the market for Nvidia (NVDA) products into mobile and gaming markets. It touted that GPU computing will be incorporated into the OS with the next releases of MacOS and Windows.