Gadget Stock Watch: Black-and-Blue Handset Stocks, More

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Includes: AAPL, BB, DELL, GOOG, GRMN, HPQ, IBM, INTC, SIRI
by: Steven Towns

1. An Apple a day not so good in 2008. Shares of Apple (NASDAQ:AAPL) dipped further Wednesday to a two-month low, -5.6% to $159.64, now down around 20% ytd. RBC Capital Markets: "Investors were underwhelmed, possibly on unrealistic iPhone speculation and the lack of a killer product similar to the iPhone launch. But [it was] mostly general market pressure." Another issue is Intel's (NASDAQ:INTC) sharp decline on its disappointing outlook -- Apple exclusively uses Intel's chips. Jim Cramer of "Mad Money" says Apple's latest drop is because it did not preannounce to the upside. In the wake of the selling exists a buying opportunity, says Barron's.

2. IBM a threat to RIM? JP Morgan Securities analyst Paul Coster told clients IBM's (NYSE:IBM) plans to develop email software for Apple's (AAPL) iPhone and iPod Touch "introduces a threat to RIM." Mr. Coster hedged his bet by saying RIM investors need not worry too much given the Blackberry's proven popularity and reliability. Nevertheless, Research in Motion (RIM) lost 1.8% to $89.30 (trading as low as $85.10 intra-day) on Wed., slipping below $90/share for the first time in about four months.

3. Garmin SOS. Garmin (NASDAQ:GRMN) (-5.7%, $61.90) is off more than 50% from its peak of $125/share in Oct. Analysts are concerned over rising competition and falling ASPs. TheStreet.com asked nine analysts and industry executives for potential start-up acquisitions which could help steer GRMN in the right direction.

4. When in doubt, sell Motorola. Shares of Motorola (MOT) fell 2.1% to $14.01 on Wed., to a new multi-year low. Matthew Hoffman of Cowen & Co. maintained his "outperform" rating and raised MOT's earnings estimates. However, his comments that MOT "may eke out profitability" in Q4, but suffering "another quarter of market share loss will further entrench the company as the number-three original equipment manufacturer globally," clearly didn't paint a bullish picture. Mr. Hoffman is eying a second-half turnaround on MOT's continued restructuring.

5. No news is bad news for SIRI-XMSR. Still no word from the DOJ or FCC regarding the proposed merger of Sirius Satellite Radio (NASDAQ:SIRI) and XM Satellite Radio (XMSR). The FCC says it hopes to make a decision during Q1, pending the DOJ's decision. In the meantime, SIRI (-26%) and XMSR (-31%) have taken a beating amidst the uncertainty of a deal a Bear Stearns' analyst report called "imminent" in late November.

6. IDC: PC sales healthy, but outlook not Research firm IDC said Wednesday that Q4 global PC sales rose a "healthy" 15.5%, but missed its target of 16.7%. U.S. PC sales of +8.8% beat estimates of +6.9%. IDC forecast 2008 global sales growth of 12.2%, but warned of potential challenges from an economic slowdown. Separately, Gartner reported HP's (NYSE:HPQ) global market share of PC sales increased to 18.2% on a 30% y/y increase in shipments in 2007. Dell (DELL) was 2nd at 14.3% (with only 1.7% y/y shipment growth), with Acer, Lenovo (OTCPK:LNVGY) and Toshiba (OTCPK:TOSBF) rounding out the top-5. Still, Dell reportedly expanded its U.S. market share over the past three quarters to nearly a two-year high of 33%.

7. Gadget put options. AP reports of services two firms are offering to help cash in on older gadgets, which is of particular importance for frequent upgraders. TechForward Inc. offers the equivalent of a gadget put option: for an upfront fee at the time of purchase, the consumer then has the right to sell the gadget for a predetermined price based on duration. NEW Corp., which operates Best Buy's (NYSE:BBY) and Wal-Mart's (NYSE:WMT) extended warranty programs, plans to launch a free gadget trade-in service in Q2 for in-store credit.