Tag - T

The construction industry suffered a massive downturn during the latest recession. Part of this huge industry, housing, remains depressed. Recent numbers from February suggest sales of previously owned homes fell by 9.6 percent - not exactly encouraging numbers for homebuilders that are hoping for lower inventory numbers to help boost demand for new homes.

t's not easy for large institutions to reinvent themselves. Look at Blockbuster (BLOAQ.PK) - the video rental outlet was asleep at the wheel while Netflix (Nasdaq: NFLX) and Coinstar (Nasdaq: CSTR) zipped right past it to grab market share. Blockbuster soon crumbled into bankruptcy.

Even mega-cap multinationals like International Business Machines (NYSE: IBM) have faced similar challenges. The need to innovate in a complex and rapidly developing competitive landscape means nothing is assured.

Millions of Americans are going mobile with their Internet access. We're increasingly relying on mobile devices for all sorts of activities, but growth in Internet access is downright staggering.

Last spring, a survey by the Pew Internet and American Life Center found that 40 percent of adults used their mobile phones to access the Internet, e-mail or instant messaging. This represents an 8 percent increase over the prior year.

Sure, the Russell 2000 index gained around 25 percent last year, and the S&P 500 was up roughly 15 percent. But despite the strong performance of these indexes, single stocks are still, in my opinion, the best place to seek outsized returns. And by looking to an often-overlooked index I've found a stock that could rush much higher in the coming months.

Small-cap stocks unraveled in the final hour of trading as the weight of crumbling commodity stocks, a raft of sloppy profit reports and another batch of dreary economic data countered a sturdy performance in retail, homebuilder and bank stocks. The Russell 2000 (NYSE:IWM) closed down 14.23, or 3.14%, at 439.53, the sixth lowest daily close in more than five years. For 2008, the Russell is off 43%, while the Dow is down 37% and the S&P 500 is down 42%.

Energy shares were a major drag on the market today, with crude oil prices tumbling to the lowest level in nearly four years as energy traders fretted about a global recession which would continue to destroy the demand side of the equation. The Energy Select Sector SPDR Fund tumbled nearly 7%.

The story in commodities ran deeper than just the energy market, however. Copper prices – which are considered a key industrial metal and a proxy for economic health – slumped to the lowest closing price in more than three years, losing 5% during U.S. trading. The Commodity Research Bureau Index of 19 physical markets slipped 3.7% and made new bear market lows, a troubling development when stock market watchers are eagerly trying to find a bottom in equities. The CRB Index is now down 54% from the July peak and is at the lowest point in more than six years.

The market started out the day on shaky footing, as several prominent companies either missed profit projections or lowered guidance. In addition, several firms announced plans for sizable layoffs, a chilling thought heading into Friday’s monthly employment report. DuPont (NYSE:DD) missed the forecast badly, and said it would cut 2,500 jobs, while AT&T (NYSE:T) said it would slash 12,000 jobs. Those sobering jobs reductions came into the teeth of today’s weekly report on unemployment claims. Even though the weekly figure was below projections, the number of Americans who are out of work and forced to file for extended unemployment benefits rose to the highest point in 26 years.

Despite all the dreary news afloat, small-cap stocks actually spent much of the session in positive territory before the final hour meltdown. Homebuilder stocks, retailers and financial issues staged solid rallies most of the day, which . . .

Small-cap stocks started out Thursday’s trading session in the red, but quickly bounded back into positive territory showing similar resilience to “bad” news that was seen during Wednesday’s rise. So far today, investors were juggling a raft of disappointing profit reports against the bullish scenario from a fresh batch of rate cuts around the world. At 10:03 a.m. ET, the Russell 2000 (NYSE:IWM) was up 7.20, or 1.59%, at 460.96.

Several big companies announced plans to reduce workforce numbers this morning, reinforcing the concept that the jobs picture will get uglier before it gets better -- a numbing thought ahead of Friday’s big monthly employment release. There was a bevy of companies that either missed the profit forecast this morning, or lowered the outlook, but the one that seemed to spark the biggest response in pre-market trading was E I du Pont de Nemours and Co. (NYSE:DD), as chemical manufacturer DuPont said it now expects to lose money this quarter versus a previous projection for a profit. In addition, DuPont said it would cut 2,500 jobs. AT&T (NYSE:T) said it would slash some 12,000 jobs.

Economic data on weekly unemployment claims came in better than feared, but the expectations were so terrible that the upside surprise on claims didn’t have much kick. After all, the headline figure still came in above 500,000, which is a big number historically. What’s more, the number of Americans extending unemployment insurance because they can’t find a job rose to the highest point in 26 years. Simply put, firms are laying off employees and they can’t find work. The factory orders report this morning came in at minus 5.1%, which was worse than the forecast for a drop of 3.8% and which was the biggest decline in more than eight years.

In overnight action, central bankers around the world were busy slashing interest rates to help bolster sagging economic activity. The European Central Bank sliced 100 basis points off their benchmark rate, bringing it down to 2%. Meanwhile, . . .

The Russell 2000 (NYSE:IWM) started out the week with a whimper, unable to build on initial enthusiasm about a big stimulus plan out of China. Today’s small-cap gainers are Centennial Communications (Nasdaq:CYCL), American International Group (NYSE:AFF) and Wavecom SA (Nasdaq:WVCM).

Other Market Watch highlights today included:

• Coal, agriculture products, aluminum, gold, metals and mining stocks and oil and gas drillers are top performers today.
• Anything REITS was getting hammered, as were automakers, wireless telecoms and investment bank stocks.
• Energy traders continue to be ultra sensitive to declines in equities, fearing a troubled economy will squash demand. 
• Copper jumped 8% in Asia, gold was on a roll and crude oil climbed 4% into the U.S. open.
• Crude oil futures eventually closed up about $1 a barrel for the day.

Small Cap Gainers:

• Centennial Communications Corp. soared 103% on unusually brisk volume on news that AT&T (NYSE:T) would buy the rural phone company for $944 million. See (Nasdaq:CYCL).
• U.S. plans more aid for AIG; shares closed up 62%. See (NYSE:AFF). 
• Wavecom SA jumped 23% on news that a hostile takeover of the firm was underway for the embedded wireless technology maker. See (Nasdaq:WVCM).

Small Cap Losers:

• Allied Capital Corp. tumbled some 43% today, as third quarter results did not impress investors. See (NYSE:ALD).
• Clear Channel Outdoor Holdings Inc. was off 37% as the outdoor advertising firm also get a thumbs down on earnings news. See (NYSE:CCO).
• Southwest Water Company dropped 37% as the water, wastewater and public works firm announced it will delay third quarter 10-Q filings (SEC quarterly . . .

Small-cap stocks started out the week with a whimper, unable to build on initial enthusiasm about a big stimulus plan out of China. In the end, worries about the economy, sagging financial shares and a belly flop in REITS was too much to overcome and the Russell 2000 (NYSE:IWM) lost 12.69, or 2.51%, to 493.10. Small caps remained soft relative to large-caps, consistent with investor paranoia about risk right now. The Russell finished the day down 36% for the year, while the Dow is off 33% and the S&P 500 is down 37%.

The market came in on a high after China announced plans overnight to unleash a $586-billion stimulus package, aimed primarily at infrastructure improvements. The news sparked a 7% rally in Chinese stocks, a 5.8% surge in Japan equities and a 2% jump in European shares heading into the U.S. open.  Investors here in America seemed willing at first to carry the baton, with the Russell climbing nearly 2% right off the bat before hitting a wall.

Part of that wall was likely tied to concern about just how China would really funnel money into these projects and how much they were already going to do anyhow. Fair or not, there is a general sense that getting exact numbers out of China is a very inexact science. Still, extra money to pump life into the world’s fourth largest economy is clearly a good thing, and there are other worries to deal with, which also snuffed out some of the initial buying spark.

Commodities came into today’s session on fire overseas, eager to see the China stimulus plan as a bedrock for demand for physical goods. Copper jumped 8% in Asia, gold was on a roll and crude oil climbed 4% into the U.S. open. Although commodities remained a point of strength today for equities (the Commodity Research Bureau Index rose 1.7%), even those overnight gains were difficult to sustain. Crude oil futures eventually closed up about $1 a barrel for the day.

Financial stocks clearly struggled today, and an early lift from a G20 weekend statement supporting coordinated global plans to attack the financial crisis had a very short shelf life. Citigroup Inc. (NYSE:C) climbed nearly 4% on the open, . . .

Small-cap stocks jumped higher on the opening, lifted by news of a large fiscal stimulus plan out of China, and by a surge in commodity-related shares. At 9:54 a.m. ET, the Russell 2000 (NYSE:IWM) was up 5.81, or 1.15%, at 511.60.

China, which houses the world’s fourth-largest economy and which single-handedly accounted for 27% of global growth last year took an aggressive stance to stir up business activity, announcing plans for a fiscal stimulus package of $586 billion, primarily for infrastructure purposes. Traders saw the news as a good sign to help counter global slowing, and to perk up demand for commodities.

Crude oil prices were up nearly $4 a barrel, gold jumped 4% and copper prices surged about 8% overnight. BHP Billiton, the world’s largest mining company, soared some 13% ahead of the opening. In fact, metals and mining stocks were the top early performers today. Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) was up 11%, while Titanium Metals Corp. (NYSE:TIE) was up 4.2% and Newmont Mining Corp. (NYSE:NEW) was up 6.3%

In a research report this morning, analysts at Goldman Sachs said the China stimulus plan was “a major measure that signals the government's commitment to address the gathering signs of economic weakness in China. While the total size of the stimulus is still unclear (the headline total appears to rely on a smaller federal government commitment and may include some spending that would have occurred anyway), there is no doubt that this is a large and positive step … as we have argued before, more aggressive stimulus outside the US is a necessary and welcome development in dealing with the current broad-based global slowdown. Alongside European monetary easing last week (and the United Kingdom's particularly large move), we seem to be heading more firmly in the right direction on this front.”

Financial shares got a lift from a G20 statement over the weekend saying that “coordinated” action was needed to fight the global financial crisis, which spurred hope for further central bank rate cuts around the world. Citigroup Inc. (NYSE:C) was up 3.3%, while JP Morgan Chase and Co. (NYSE:JPM) was up 1%.

Some traders were still debating the impact of last Friday’s employment . . .

With its stock price trading for approximately its cash value and a new CEO at the helm, it may be worth taking a flier on shares of telecommunications equipment company Westell Technologies Inc. (Nasdaq:WSTL).

Following several quarters in a row of disappointing financial results and missed guidance, on July 8 Westell announced the resignation of CEO Thomas Mader. New interim Westell CEO Bernard Sergesketter, a former Westell director, has his work cut out for him. At a recent price of just $0.80 a share, Westell’s shares are down over 40% since the start of the year and 60% since mid-February. At current stock price levels, and with over $0.80 a share in net cash on hand, investors are clearly indicating that they have meager confidence in Westell’s future.

Founded nearly three decades ago, Aurora, Ill.-based Westell operates in three segments: customer networking equipment, outside plant systems, and conferencing services. The customer networking equipment segment provides broadband digital subscriber line (DSL), fiber-to-the-home (FTTH), voice-over-Internet protocol (VoIP) and Internet protocol television (IPTV) products for telecom carriers and cable companies. Last year, Westell outsourced its networking equipment manufacturing to China. Operating under the name OSPlant Systems, the outside plant systems segment provides outdoor cabinets, enclosures, remote monitoring and related network protection solutions.The conferencing services segment, called ConferencePlus, manages and hosts voice, video, IP applications and back-office services for corporate clients...

Small-cap stocks spent most of the day in the green, but closed well off the intraday highs as a slide in crude oil prices was countered by mixed returns on the earnings front. The Russell 2000 (NYSE:IWM) edged up 2.36, or 0.33%, to 719.19, the highest close in four weeks.

The market also may have been ripe for a little bit of a consolidation “breather” session today as the Russell has rallied 12% off the July 15 lows in just seven sessions. Short-term intraday momentum readings were overdone coming into today’s action, which could easily have sparked some long profit-taking from traders who caught the recent bounce. Also, it’s a little easier to find the silver lining in the news when the market is oversold.

In recent days, the dominant upside theme has been the financial story. Big-name banks have had a string of upside earnings surprises, and that momentum easily spilled over into the small- and mid-cap financial names as well. While GSEs were a strong performer today, the overall financial landscape was a little more cautious, with the Financial Select Sector SPDR hovering near breakeven levels late in the session.

Large-cap stocks that dominated the picture today included McDonald’s (NYSE:MCD), Pfizer (NYSE:PFE), Boeing (NYSE:BA), AT&T (NYSE:T) and Washington Mutual (NYSE:WM). Those stocks reflected the mixed signals investors had to navigate when trying to read through earnings results to get a feel for consumer spending, economic turmoil and macro trends. Washington Mutual was clobbered 19%, which took some of the wind out of the financial sails, but was countered by optimism on the GSE horizon, as hope for a quick passage of the Treasury rescue plan lifted both Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE). As for the aforementioned names, MCD was down about 0.9% after reporting earnings, PFE was up over 3%, BA was down nearly 4% and T . . .

Special delivery to investors from Premiere Global Services (NYSE:PGI): an undervalued growth stock that has the wind beneath its wings. With a bevy of business communications applications and a selling model that makes accessing them easy, Premiere is gliding along in a sector fraught with missed connections.  

The company’s fortunes are tied to its Premiere Global Communications Operating System (PGiCOS), which offers business clients handy access to a number of applications from the Internet. Premiere provides a range of technology to automate and simplify everyday corporate needs including conferencing (both web and audio), document delivery, desktop fax, e-marketing and notifications.

Considering the economic drag on telecommunications, Premiere’s performance has been surprisingly strong. The telecommunications services sector, of which Premiere is a member, was down 15.8% year to date through July 15, 2008. At the same time, Premiere was up 5% on the year. Other telecommunications companies considered peers include AT&T (NYSE:T), down 21%, and Verizon Communications (NYSE:VZ), down 19%.

Founded in 1991 and headquartered in Atlanta, Ga., Premiere’s business may seem mundane but its results are anything but. Its flock of business applications pits it against various competitors depending on need, and provides a competitive advantage compared to single-product vendors. None of Premiere’s rivals has a similarly comprehensive on-demand platform, nor — Premiere says — a similar drive to directly integrate and embed their technologies into a customer’s business . . .

Small-cap stocks are expected to open mildly higher after a strong recovery Tuesday afternoon from bear market territory. Stock index futures pulled higher in after-hours trading but gains were trimmed briefly when the ADP payroll report came in weak. The Russell 2000 (NYSE:IWM) was expected to open about 0.3% higher, which would translate to an opening near 693.

European shares were higher overnight, boosted by a bounce in financial shares, spurred by comments from Deutsche Bank that the company does not need to raise additional capital. Analysts at JP Morgan also said that the worst is over for European banks on the capital raising front.

The ADP National Employment Report showed a decline of 79,000 in payrolls, which marked the largest decline since November 2002. In addition, ADP revised last month’s gain downward. The ADP report sparked a bounce in Treasury futures, trimmed overnight gains in the dollar against the yen and sparked a pullback in overnight gains in stock index futures. The weak ADP figures were troubling ahead of the . . .

Small-cap stocks are rallying in Wednesday midday trading, as oil futures declined sharply after the Energy Department said oil and fuel supplies are larger than expected. Investors are waiting for news from the Federal Reserve’s rate committee, which wraps up a two-day meeting this afternoon. The Fed is widely expected to end the rate cut cycle and talk tough on inflation. At 2:01 p.m. ET, the Russell 2000 (NYSE:IWM) was up 7.88, or 1.11%, at 715.80.

Crude oil prices are sharply lower in afternoon trading. The Energy Department said in its weekly inventory report that crude oil supplies rose, while Wall Street expected a 1.7 million barrel decline. The supply increase gave investors reason to believe that skyrocketing gas prices have lowered demand. Crude is down 3% to $132.73 a barrel in recent trading.

The new home sales report clocked in at minus 2.5% and the inventory of new homes was at 10.9 months, which was a mild rise over the previous report. Although the home sales data was weak, it didn’t deter the stock market, which is already focused on the Fed later today.

“Set the snooze button for 2:15 ET PM today for the FOMC decision and we'll all be tearing apart the text for nuances on what to expect going forward. Market has 50 basis points of tightening priced in for Fed Funds by the end of December,” Andy Busch, global foreign exchange strategist for BMO Capital Markets, said in an email. “The U.S. Treasury's auction of two-year notes Tuesday showed a big surge in demand with the bid to cover ratio at 2.64, up from 2.28 last and an indirect foreign bids of 27.7% that show Treasury market participants believe the Fed tightening . . .

Small-cap stocks opened higher Wednesday, providing a welcome respite to the bulls who endured a slide to two-month lows in the Russell 2000 the previous session. The market was underpinned by short-covering amid oversold conditions ahead of this afternoon’s FOMC meeting announcement and by a bounce in financial stocks. At 10:02 a.m. ET, the Russell 2000 (NYSE:IWM) was up 4.67, or 0.66%, at 712.59.

The new home sales report came in at minus 2.5% and the inventory of new homes was at 10.9 months, which was a mild rise over the previous report. Although the home sales data was weak, it didn’t deter the stock market, which is already focused on the FOMC later today.

Earlier this morning, orders for May durable goods came in unchanged, which was slightly softer than the forecast for a rise of 0.1%. Although durables missed the median forecast, it was close enough to have very little impact on stock market trading.

Also on the data front, the MBA mortgage application survey came in at minus 9.3%, which was the lowest level since July 2001. In addition, the report showed that the purchasing index fell 7.4% to the lowest point since February 2003. Also, the refinance index tumbled 12.1% to the lowest level since July 2001. With the housing market still soft and rates firming, mortgage activity has slowed to a crawl.

Crude oil prices were lower this morning, which allowed some breathing room for this morning’s bounce in U.S. equities. However, stocks remain extremely sensitive to intraday gyrations in energy prices, and any rise in black gold during the session could endanger the early bounce in stocks. The weekly inventory report is slated . . .

Investors who follow the money may find their search leads them to TNS Inc. (NYSE:TNS), which helps move data from Point A to Point B without detouring through a hacker’s computer.

The Reston, Va.-based company, also known as Transaction Network Services, provides clients with business-critical communications in the United States and 26 other countries through a suite of secure voice and data services. Customers include processors of ATM, credit card and debit card transactions.

TNS also offers secure voice and data network services to the financial-services industry, via its own network and alliances with other telecommunications carriers. Other bits of data crossing its networks include information from lotteries and the gaming industry.

But for investors considering TNS, the question remains: is buying the stock a secure deal, or no deal?

The fallout from the subprime mortgage crisis continues to litter the financial-services industry and ancillary fields including communications services. Analysts covering TNS generally have a fairly positive outlook, despite the tumultuous conditions amid the recession fears. Of the six analysts tracked by Thomson Financial, one rated TNS a “strong buy,” another placed it at “buy,” and the others have it at “hold.”

Since its founding in 1990 to provide services to the point-of-sale industry, TNS has traveled a long and winding road marked by methodical growth and, at times, tempestuous ownership. The company operates in . . .

Shares of AirTran Holdings, Inc. (NYSE: AAI) are losing altitude following news before the start of trading that the low fare airline has signed a two-year $4 million contract with telecommunications giant AT&T Inc. (NYSE: T). The deal extends a previous agreement that gives Orlando-based AirTran network and calling services covering all of its 45 locations nationwide.

At 3:46 p.m. ET, shares were down $0.24, or 4%, to $5.87.

As a business analyst and investment editor, John Christy III, CFA, has long been recognized as one of the advisory community's leading experts on global investing.

Although he offers global coverage in his Forbes International Investment Report, the stocks he recommends are typically those that can easily be bought, such as ADRs and ETFs, by U.S. investors on domestic exchanges.

Attesting to the diversity of his recommendations Christy looks at two new small-cap positions — an "outsourcing" play based in the Philippines and an advertising company in China — as well as a small-cap fund play on Japan.

"India is not the only game in town when it comes to outsourcing," says Christy, noting that the Philippines has been "quietly" developing its own outsourcing industry. And within this sector, he says, eTelecare Global Solutions, Inc. (Nasdaq: ETEL) is a leading player.

The $200-million-market-cap company is based in Manila, but also has 3,000 employees in the United States. He says that customers include Sprint Nextel Corp. (NYSE: S) and AT&T Inc. (NYSE: T). Its 2007 revenue, he says, should be about $250 million.

Christy says that ETEL went public last March at $13.50, but has since slumped.

"Investors have been nervous about ETEL's exposure to Vonage, one of its key customers. But at less than 11 times estimated 2008 earnings, the market appears to be pricing in a lot of bad news and ignoring ETEL's strong growth potential," Christy says.

Over the next three to five years, he says, analysts expect 20% annualized earnings growth. In time, he says, ETEL should sign up more customers who can offset the Vonage exposure.

Palm, Inc. (Nasdaq: PALM) shares are rising in early trading after investment bank JPMorgan Chase & Co. (NYSE: JPM) upgraded the Sunnyvale, Calif.-based smartphone maker to “overweight” from “underweight.” In a note to investors, JPMorgan said it expects Palm to introduce several new phone models during 2008 and stronger-than-projected sales of its Centro smartphone.

Sprint Nextel Corporation’s (NYSE: S) exclusive Centro deal is ending and JPMorgan projects that Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T) will introduce their own version of the Windows-based mobile phone. The investment bank also said that a new operating system will be released in late 2008, which will prompt increased product activity in early 2009.

JPMorgan projects a fiscal 2008 loss of $0.38 a share, and a loss of $0.09 per share during fiscal 2009. Wall Street analysts, on average, expect a 2008 loss of $0.17 per share and a 2009 loss of $0.05 per share.

In other news, Palm’s CFO Andrew Brown is scheduled to make a presentation at Thomas Weisel Partners Technology, Telecom & Internet Conference 2008 at 7:25 p.m. ET.

Cell phone-maker stocks rose during Friday’s trading after Motorola, Inc. (NYSE: MOT) said it is contemplating selling or spinning off its struggling handset business.

In morning trading, PALM shares are up 5.48%, or $0.33, at $6.35. Over the last 52 weeks, shares have ranged from $4.25 to $9.93.

MasTec Inc. (NYSE: MTZ), which builds and maintains infrastructure — telephone, Internet, electric, water, sewer and natural gas — as well as providing installation and maintenance services for satellite and cable television services, will get off to a slow start in 2008, according to a research report by investment bank ThinkEquity Partners.

Coral Gables, Fla.-based MasTec is experiencing “still-deliberate” demand from wireless company Verizon Communications Inc. (NYSE: VZ) and has been slow to reduce its legal expenses, according to a research report by Eric Kainer, an analyst with investment bank ThinkEquity Partners.

“We are cautious on 2008 revenues,” Kainer wrote, adding that he is reducing his profit estimates for the fourth-quarter ended Dec. 31, 2007, to $0.15 per share, compared with a previous forecast of $0.16 per share. The revenue forecast has been lowered to $258 million from a previously forecasted $262 million.

The consensus estimate on Wall Street is for net income of $0.15 per share and revenues of $260.7 million, according to a poll of seven analysts by Thomson Financial.

In the fourth quarter of 2006, MasTec had earnings of $0.14 per share on revenue of $241.1 million.

The Russell 2000 (NYSE: IWM) is higher as investors anticipate the U.S. Federal Reserve will lower its target interest rate.
 
At 10:41 a.m. ET, the small-cap index had climbed 1.86 points, or 0.24%, to 793.06. The Dow Jones Industrial Average (INDU) had declined 20.64 points, or 0.15%, to 13,706.39.

Small-cap stocks are posting modest gains as investors focus their attention on the U.S. Federal Reserve, which is meeting today to decide on monetary policy. Financial markets have recently taken the view that a 0.25% cut in the federal funds rate, the rate at which commercial banks make overnight loans to each other, is a sure bet.

The target interest rate currently stands at 4.5%. The U.S. central bank will announce its decision at 2:15 p.m. ET.

A cut will help boost the economy, which some economists say could fall into recession due to the ongoing slump in the housing sector and the credit squeeze.

Also helping the bulls are solid earnings news from major players.

Telecommunications giant AT&T Inc. (NYSE: T) said that it will buy back up to $15.2 billion of shares. The San Antonia, Texas-based company also said that it expects to see growth in fiscal 2008 earnings.

News of strong third-quarter earnings lifted the Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) to a second consecutive positive close. The small-cap index added 8.45 points, or 1.04%, to 818.53. The Dow gained 109.26 points, or 0.81%, to 13,676.23.

On a year-to-date basis, the Russell 2000 has increased 3.95%, while the Dow has added 9.63%.

With no major news on the economic front, investors turned to earnings.

The bullish mood was set after the close on Monday when Apple Inc. (Nasdaq: AAPL) reported a 67% increase in third-quarter revenue, partially driven by strong demand for Macintosh computers.

More good news came this morning when New York-based card issuer American Express Co. (NYSE: AXP) announced that third-quarter profit rose 10%, while telecommunications giant AT&T Inc. (NYSE: T) said that its third-quarter net income increased 41% due to its acquisition of BellSouth Corp.

Among small-cap companies, jet engine components maker EDAC Technologies Corp. (Nasdaq: EDAC) posted a 500% rise in third-quarter profit. Similarly, newspaper publishing company Journal Communications, Inc. (NYSE: JRN) also saw its third-quarter net income climb.

The Russell 2000 (NYSE: IWM) has trimmed its earlier gains and slipped into the red in midday trading, while the Dow Jones Industrial Average (INDU) is holding on to slim gains. At 1:44 p.m. ET, the small-cap index had shed 0.45 points, or 0.06%, to 809.63. The Dow had risen 43.82 points, or 0.32%, to 13,610.79.

Stocks have lost their momentum this afternoon, which came following news of strong third-quarter earnings.

Apple Inc. (Nasdaq: AAPL) set the bullish tone after the close on Monday when it reported a 67% increase in third-quarter revenue, partially driven by strong demand for Macintosh computers.

Also contributing were credit card issuer American Express Co. (NYSE: AXP), which reported before the opening that third-quarter profit rose 10%, and telecommunications giant AT&T Inc. (NYSE: T), which announced that its third-quarter net income increased 41% due to its acquisition of BellSouth Corp.

Futures were pointing north and all indices opened in positive territory. But the enthusiasm from the morning’s earnings reports started to wane around noon, with the bears gaining strength after retailer Target Corp. (NYSE: TGT) lowered its same-store sales forecast for October and Wal-Mart Stores Inc. (NYSE: WMT) said that it now plans less capital expenditures in fiscal 2007 compared with a previous forecast made in June.

The Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) are posting solid gains this morning on news of better-than-expected third-quarter earnings.

At 10:33 a.m. ET, the small-cap index rose 3.79 points, or 0.47%, to 813.87. The Dow was up 75.28 points, or 0.55%, to 13,642.25.

The bulls are roaming Wall Street this morning in reaction to upbeat earnings news from major corporate players.

Apple Inc. (Nasdaq: AAPL) got the party started after the close on Monday when it reported a 67% increase in third-quarter revenue, partially driven by strong demand for Macintosh computers.

Helping set the positive tone is AT&T Inc. (NYSE: T), the largest U.S. telecommunications company, which announced that its third-quarter net income increased 41%, mostly due to its acquisition of BellSouth Corp.

Also contributing is credit card issuer American Express Co. (NYSE: AXP), which reported this morning that third-quarter profit rose 10% while revenue added 11%.

Global economic growth, low inflation and interest rates, and a surge in transnational investing are creating an ideal market for big financial deals. Mergers, buyouts and IPOs are occurring in record numbers and unprecedented sizes. Goldman Sachs officers indicate their company’s IPO pipeline is bigger than any time since the Internet boom, while Carlyle Group executives predict the market will soon see $100 billion in private equity deals. In 2007, the value of global mergers and acquisitions could reach $2.9 trillion, its highest level since 2000. The value of U.S. mutual funds could exceed $10 trillion, a 66% increase in four years. 

The M&A boom is creating exceptional growth opportunities for boutique investment banking firms such as Evercore Partners Inc. (NYSE: EVR). Evercore Partners is primarily in the consulting business, helping large multinational corporations negotiate and complete mergers, acquisitions and spin-offs. This firm is successfully positioned as a boutique investment bank and a viable alternative to Wall Street’s major banks. These larger banks typically pitch clients on a variety of services such as loans and private equity deals in addition to consulting, sometimes creating conflicts of interest that make their advice appear less than objective. Corporate boardrooms, eager to avoid regulatory scrutiny and allegations of conflicts of interest, are increasingly hiring specialized firms such as Evercore Partners to avoid these bias issues. 

While small compared to mainstream investment banks such as Goldman Sachs or Lehman Brothers, Evercore Partners has won many major M&A deals. Last year, the company advised AT&T Inc. (NYSE: T) on its BellSouth acquisition, Credit Suisse Group (NYSE: CS) on its sale of a business unit to AXA (NYSE: AXA), General Motors Corp. (NYSE: GM) on its sale of a 51% interest in GMAC and CVS Caremark Corp. (NYSE: CVS) on its Caremark acquisition. Deals announced during the March quarter include U.K. engineering company Smiths Group PLC’s sale of its aerospace division to General Electric Co. (NYSE: GE), IronPort Systems sale to Cisco Systems Inc. (Nasdaq: CSCO), Novalis’ sale to Hindalco and Aquila Inc.'s (NYSE: ILA) sale to Great Plains Energy Inc. (NYSE: GXP) and Black Hills Power.

Whenever a giant, well-funded corporation jumps into a market dominated by a small company, executives at the smaller business always sing the same tune – something along the lines of: “We welcome the competition. It legitimizes our market.”

Unfortunately, the little guys are usually whistling past the graveyard – or on their way to it.

Smith Micro Software Inc. (SMSI) would seem, at first glance, to be in exactly that position. The company’s big money-maker is software that sounds familiar to anyone who has ever heard of the iPod: its Music Essentials program allows people to download music from the Internet onto their PCs and then zip those tunes over to a handheld device for easy on-the-road listening. The big difference: the portable device is a cell phone, not an iPod.

Now Apple, Inc. (Nasdaq: AAPL) is turning up the volume. On June 29, it is planning to unveil its long-awaited iPhone, first announced back in January. It’s an impressive piece of engineering. The iPhone uses wi-fi to connect to the Internet, and includes a Web browser and Google Maps. iPhone can play video on a high-resolution screen, and can download music just like an iPod. These features, along with Apple’s famously elegant design prowess, make Smith Micro’s software look like last year’s technology – which it is. It was first introduced in January 2006.

But there are two problems with the iPhone. It comes with a hefty price of $500 to $600, and will be available only to people using AT&T Inc.’s (NYSE: T) cellular service.

That leaves space for Smith to grow. SMSI is “the only offer that counters AT&T and the iPhone,” says Amit Dayal, an analyst with Rodman & Renshaw. Last November, Verizon Communications Inc.'s Verizon Wireless (NYSE: VZ) became the first to release phones with Smith Micro’s music software. Since then, Music Essentials has become Smith Micro’s biggest product line. The company reported $17.7 million in revenues in the first quarter, up 79% from a year ago, with pro-forma net income up 114% to $6.2 million ($0.21 per share.) On a GAAP basis, earnings were $1.84 million, compared with $1.81 million a year ago. Sprint signed up for the service early this year (that service has not yet been started).

If smart phones like Palm’s Treo have arrived, could broadband wireless be far behind? Smart phones can support data-intensive applications such as Voice-over-IP, video gaming, video conferences and movies, all of which need much bigger pipes to transport data than cellular phone networks can provide. Consumers and businesses want to have the same experience with the broadband Internet on their mobile phones as they have at home or in the office.

People on the move are still tethered to hotspots when it comes to gaining access to the Internet; their-WiFi enabled connections do not reach beyond 100-300 feet. On their cellular phones, interrupted service is sometimes a problem with voice calls, and Internet capabilities are mostly out of the question.

Telecommunications companies such as Verizon Communications Inc. (NYSE: VZ), Sprint Nextel Corp. (NYSE: S) and AT&T Inc.’s (NYSE: T) Cingular revived their mobile Internet data services by investing in broadband wireless networks, which commonly go by the moniker 3G. These third-generation networks are capable of transporting more data, equivalent to broadband connections available in homes and offices, but are concentrated in densely populated metropolitan centers. Their signals cannot reach the entire area of a city, let alone rural regions.