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Yahoo! (NASDAQ: YHOO) yesterday posted its lowest price in nearly five years. The stock moved to $17.75, down from a 52-week high of $34.08.

The Wall Street Journal pushed the idea that this was an options play. "Trading in Yahoo options leapt to four times the normal level as investors picked up 168,000 calls that allow them to buy the company's stock." In other words, some traders are willing to gamble that the shares will go up.

But, they won't go up. There is growing evidence that marketers prefer search internet ads to display advertising. Yahoo!'s sells a great deal of display inventory and is is distant second to Google (NASDAQ: GOOG) in search. Some of that may change as Yahoo! begins to use the Google system to create its search results.That may not offset the fact that Yahoo! probably has as much display advertising availability as any company in the world.

Because Yahoo! has shown it is unwilling to make major cost cuts, a flattening of its revenue growth would be a disaster for its investors. The firm's year-over-year sales improvement is already barely above 10%. What had been a growth stock three or four years ago has now become a buyout gamble. Investors still hang on to some hope that Microsoft (NASDAQ: MSFT) or a large media company will make an offer for the portal company.

That means that Yahoo! still carries a "takeover" premium, which begs the question of where the shares might trade at the end of the year, if there are no offers. Investors are gambling that there is a 30% chance that Yahoo! will be bought, if it is not the stock heads toward $13.

Douglas A. McIntyre is an editor at 247wallst.com.

Bill Gross of Pimco, one of the most respected bond investors in the world, thinks the credit crisis is about to get much, much worse. He also believes that the federal government is the only entity that can save the markets.

Gross's biggest concern is that financial companies will have to keep selling assets to raise cash. With home prices falling, he does not see an early end to this, and that troubles him. According to Reuters, Gross wrote "Unchecked, it can turn a campfire into a forest fire, a mild asset bear market into a destructive financial tsunami."

Gross may be right, but his suggested solution is wrong. He wants the U.S. Treasury to start buying distressed assets to help build a floor for their values. Of course, the funding source for Treasury is the U.S. taxpayer.

Solving one problem by creating a larger one is rarely a good program. There is a great deal of evidence supporting the fact that taxpayers are already stretched to the limit. Job losses are up. Easy credit is gone. Gas, oil, and food cost much more than they did a year ago. The average person, who may already be unable to handle his own financial burdens, can hardly be asked to help support the purchase of assets being sold by large financial institutions.

If Gross's vision about the future of the credit markets is right, the financial system is only at the beginning of a growing disaster. But, turning to the U.S. citizen for cash is like looking through a man's pockets for a spare change. All the more valuable paper money has been spent.

Douglas A. McIntyre is an editor at 247wallst.com.

Dell (NASDAQ: DELL) wants out of the business of owning factories that make PCs. According to The Wall Street Journal, "Dell has approached contract computer manufacturers with offers to sell the plants." Owning the manufacturing facilities cuts Dell's margins.

Analysts believe that in the current environment, where laptops have taken the lead in PC market share, owning facilities that pump out massive numbers of desktops is no longer practical.

Dell could be making a huge mistake in the name of short-term profitability. The company is particularly good at delivering "custom-made" computers quickly. Dell customers can configure the PCs with a large number of special features.

More importantly, Dell will lose some level of quality control if its manufacturing is owned by outside interests. Dell cannot afford to fall behind Hewlett-Packard (NASDAQ: HPQ) and Apple (NASDAQ: AAPL) in terms of the consumer's perception of product quality. Owning factories may hurt profits a bit, but Dell's reputation as a first class provider of PCs is priceless.

Douglas A. McIntyre is an editor at 247wallst.com.

New evidence shows that online advertisers are building their search engine marketing and moving away from big display ad investments. According to The Wall Street Journal, "Faced with a slowing economy, advertisers are sticking to what they view as the safest way to reach online customers directly: the plain text ads that appear on search-result pages."

To state the obvious, the news seems to be bad for Yahoo! (NASDAQ: YHOO), Microsoft (NASDAQ: MSFT), and AOL. These portals rely heavily on display ads for their revenue and have modest search income.

The data is much, much worse for newspapers. Companies like The New York Times (NYSE: NYT) are counting on online advertising to take the place of falling print revenue. A great deal of the advertising that runs at newspaper sites is retail and national display. Total ad revenue at The New York Times dropped more than 16% in July. Internet advertising was up less than 1%. Clearly, at that rate, online ads can do little to help that nation's big dailies.

The portals will struggle to keep their display growth intact. They have the lion's share of the market, so scale is on their side. They will almost certainly have the best chance of picking up the marketing dollars from the largest online advertisers. Even if the market keep slowing, their sales should be steady to modestly up.

Newspapers will not be so lucky.

Douglas A. McIntyre is an editor at 247wallst.com.

Boeing (NYSE: BA) has been gambling that its machinist union would back down from further wage and benefit demands. Instead, according to The Wall Street Journal, the aircraft company's largest labor union "voted to strike Wednesday night, but the union agreed to postpone a walkout for 48 hours after federal mediators urged both sides to return to the bargaining table."

If the employees walk, the delays in delivering the company's new Dreamliner flagship product could be pushed back again. The launch has already been postponed three times. Airline customers are mad enough that some are asking for compensation because Boeing has not hit its schedules.

Boeing's argument is that it cannot be saddled with high future labor costs. If its business slows down, its margins could be hurt. But the union members can read Boeing press releases. The company has a substantial back order of planes which should feed earnings for the next decade. Boeing is also saying that growth in the Chinese market could help support its business for the next twenty years.

Boeing can afford to pay the union members a bit more. It can't afford a strike.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Intel (NASDAQ: INTC) has been building new chips for "netbooks," a product that is much smaller than most laptops and significantly less powerful. Dell (NASDAQ: DELL) has decided to drink that water and bring out a netbook of its own.

According to The Wall Street Journal, "One person familiar with the matter said the new device will likely sell for less than $400."

The launch is a waste of time and money. The smallest laptops now weigh under two pounds and have modest processors. That means the price points for them will keep dropping.

Over in the smartphone industry, companies like Apple (NASDAQ: AAPL) and Research in Motion (NASDAQ: RIMM) are putting out more "computer-like" products each year. Larger handset companies are working to get into the same business because the higher price points of these handsets yield a better margin.

Dell should stick to what it does well. The "netbook" has too much competition and no future.

Douglas A. McIntyre is an editor at 247wallst.com.

Rupert Murdoch, CEO of News Corp (NYSE: NWS) and king of all he surveys, wants to buy The New York Times. At least that is what he told Vanity Fair according to a Reuters report.

It is hard to see why Murdoch would even bother to dream that dream. Based on the most recent quarterly earnings report and monthly figures reported by The New York Times Co. (NYSE: NYT), the paper probably loses money when the results of its online business are backed out. If ad lineage at the print product keeps falling, and it will, even NYTimes.com will not be able to save the bottom line.

While The New York Times is a trophy, it would almost certainly be an expensive one. The parent company has a market cap of about $2 billion, and the paper might go for more than that because of its unique position as the most respected news outlet in the US.

Murdoch is probably already struggling with The Wall Street Journal. He has to be. Newspaper ad revenue is simply dropping too fast for the Journal to be immune.

Owning another paper is just asking for more losses which would need to be offset by other businesses at News Corp.

Douglas A. McIntyre is an editor at 247wallst.com.

Lehman Brothers (NYSE: LEH) is a dog of a brokerage house and a broken company. Yet, every time Wall Street turns around, some other financial company is considering investing in it. According to Reuters, "HSBC and the Chinese bank, along with top U.S. hedge funds, are competing with Korea Development Bank."

The fascination with Lehman is fascinating. While it may have a strong money management arm, the value of its commercial property portfolio is falling apart. It has the same kind of toxic mortgage-backed paper on its balance sheet as the one that plagues the balance of the financial industry. If they have any sense, top managers at Lehman will be getting out.

If investors are right about Lehman, the company may not make it. The stock trades at $16, down from a 52-week high of almost $68. With a market cap of only $11 billion, a $5 billion investment could push shares to below $9.

Credit markets are supposed to get worse this year. At least that is what the newspapers say. Lehman is as likely to be further damaged by that as any other large financial firm.

A few outside investors see something in Lehman that the markets don't. Perhaps they would be willing to share that with the rest of the world.

Douglas A. McIntyre is an editor at 247wallst.com.

Rumors are all over the place that Apple (NASDAQ: AAPL) will upgrade the iPod to a home entertainment device, cut prices, or simply offer the product in more colors.

The company is expected to comment on the music player's future at a conference on September 9.

According to The New York Times, "An analyst at American Technology Research, Shaw Wu, said the iPod line needed to be refreshed and the price of its iPod Touch models needed to be cut because they have a higher starting price than the iPhone."

It is too bad that it is not that simple. Price cuts are not going to cause a big rise in iPod sales. It would be wrong to say that the number the digital music players sold is not growing at all, Apple moves about 10 million iPods a quarter but that is not likely to spike up because of a modest addition of new features. With over 150 million units already sold, the iPod is reaching a point of saturation.

Dropping prices is always a way to stimulate sales, but it also does big damage to margins, something that Apple shareholders do not want to hear. As for upgrading the product so that it can help manage home entertainment systems, that would put it in competition with a dozen other big companies trying to do the same thing.

The iPod's best years are behind it. Apple has to manage those expectations on Wall St. and hope that the iPhone sells like hot cakes.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Today was supposed to be the day of days for stocks. Oil collapsed by $6 on news that Hurricane Gustav had done relatively little damage to oil facilities. The major indexes opened up nearly 2%. Stocks tied to fuel prices, especially airlines and auto shares, spiked.

A little after midway through the afternoon, it began to dawn on traders that less expensive oil does not solve the problems of falling employment and weak spending by consumers and businesses. Suddenly, the numbers on Wall Street turned red.

Dow: 11,515.46 (-.24%)

NASDAQ: 2,349.39 (-.77%)

S&P 500 1,277.35 (-.43%)

10-Year Note 2.7460 (-.0670)

52-Week Lows

Despite rumors of a large investment from the Korea Development Bank, Lehman (NYSE: LEH) moved from a big gain to trading flat to down at the close. Investors must still think the mortgage and credit crisis has a long way to go. Merrill Lynch (NYSE: MER) dropped 3%. Ambac (NYSE: ABK), which has recovered from its lows of a month ago, also sold down 1%.

Just a few weeks back, tech was the one sector that was going to hold its own. Consumer electronics spending and IT investment by companies were not going to be undercut by slowing GDP. That was true until Dell (NASDAQ: DELL) reported weak numbers last week. It sold off 3% and mega-cap techs Apple (NASDAQ: AAPL), Cisco (NASDAQ: CSCO), and Intel (NASDAQ: INTC) all dropped.

It will be interesting to see what happens on a day when oil goes back up.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Google (NASDAQ: GOOG) appears to be moving in the direction of having a new product launch every day. Over the weekend it said it would bring out its own internet browser. It also announced the launch of a video-sharing product for businesses.

According to Reuters, "Unlike YouTube, which is aimed at consumers, Google Video for business is designed to be shared among designated users within an organization's own Web domain, protecting executive speeches, product training, sales meetings or other employee video messages from unauthorized disclosure outside the company."

Because Flash video, the most widely used format, can already be put in password protected sections behind a company's firewall, it is hard to see why the new product would have much appeal.

Google has not had much success with its enterprise software. There is little evidence that the Google Apps desktop software is selling well. That may be because the company offers good free versions of the product. Most of Google's other productivity software including GMail, Google Calendar and Google Talk can be used without charge.

One of Wall Street's only criticisms of Google is that its move into enterprise products is not making any money. If that comment is fair, Google just dug itself a deeper hole.

Douglas A. McIntyre is an editor at 247wallst.com.

With fuel prices coming down some, it was easy to think that the airline industry would be fine. But then one of the largest airlines in Europe went under.

According to the AP, "Alitalia has been losing some $3 million a day - hurt by labor unrest, competition from budget airlines and high fuel prices." That does not sound entirely unlike some U.S. airlines.

Oil is still above $115 a barrel and that is probably going to go higher, at least in the short term. Airlines would have been slaughtered at $140, but they may still have trouble surviving with crude at its current levels.

Coupled with rising fuel, Alitalia was brought down by a heavy debt load, another factor which is not foreign to U.S. carriers. Add that to a recession that is cutting passenger demand and Alitalia may not be the last big carrier to bite the dust.

Douglas A. McIntyre is an editor at 247wallst.com.

Boeing (NYSE: BA) can't take a strike. It has too much depending on the launch of its new Dreamliner. That launch has been delayed three times and carriers are already asking for compensation for their costs due to the fuel-efficient plane being behind schedule.

Boeing has been going at it with its large machinists union and it looks like the two sides have made no progress. According to Reuters, the company's "largest labor union said on Friday it advised its members to reject the company's final contract proposal and go forward with a strike this week that could cost the plane maker $3 billion a month."

Boeing's logic is that it does not want to face high costs in the future when its revenue may be lower. But that logic is deeply flawed, and the union knows it. Boeing has a heavy delivery schedule that goes out at least five years for the Dreamliner and other planes. The company also says that deliveries over the next two decades will be strong due largely to demand in Asia.

Boeing management is making a tactical error and shareholders will pay for it. The stock is at $65, but the strike will send it to $50.

Douglas A. McIntyre is an editor at 247wallst.com

Gustav may have done some damage to oil rigs and refineries in the Gulf of Mexico. At this point, that harm seems to be very modest. As the storm passed, oil dropped almost $5 to $109.

In the past, a natural disaster that could disrupt supply, a negative signal from OPEC, or a political problem in an oil-producing nation would have caused an oil spike that might have lasted for weeks.

Gustav may be the most significant indication yet that the dynamics of the price of crude have substantially changed. There are only a few reasons that this could happen. One is that the drop of oil and government investigations have pushed speculators out of the market. It was never clear how large their role was in the run that took crude above $140, but if they have moved to the sidelines the chances that oil would drop are probably enhanced.

The other explanation is one of simple supply. Almost all evidence points to Americans driving less and airlines flying less. It appears that a slight slowing of the economies in China and India has decreased their use some as well. The Bush administration said it was prepared to increase supply out of the Strategic Oil Reserve if Gustav had hit production hard.

Odds are the global economy will continue to cool. If so, the recent changes in the dynamics of oil prices are likely to continue to take the cost of the commodity back toward $100.

Douglas A. McIntyre is an editor at 247wallst.com.

Google (NASDAQ: GOOG) will offer its own internet browser to compete with Microsoft's (NASDAQ: MSFT) Internet Explorer and the Mozilla Firefox product.

The software may be plagued by the law of unintended consequences, doing more damage to Firefox than to Microsoft. According to The Wall Street Journal, Google says the "software is designed to make it faster to browse the Web and easier to run applications without downloading software to a computer."

Most PCs come loaded with Internet Explorer as part of Microsoft Windows. That leaves Google with the challenge of getting consumers to download its new browser. Firefox is also software which must be downloaded. Google may end up competing more with Firefox, a product it has supported in the past, than with IE.

Most consumers don't care what browser they use as long as they have access to the internet. Microsoft's largest advantage is that it is part of the PC software package that people use without any thought as to how it might be changed.

Google will end up hurting an ally without doing any damage to its primary rival.

Douglas A. McIntyre is an editor at 247wallst.com.