Earnings Fun With Sun

Could Tuesday be a weirder day for tech earnings?

Sun surprises (good).

AMD posts a loss despite pre-announcing a week-and-a-half ago, surprises (bad).

Yahoo comes in as expected, and the stock dips. But then, it issues surprisingly good progress on Panama (very good!).

Let's begin with AMD . Either the company didn't properly calculate the costs connected to its multi-billion dollar purchase of ATI Technologies, or didn't want to share its bad news all at once with the Street when it pre-announced. Ouch. Instead of the dime a share we were expecting, the company comes in at a penny. Wow.

Why such a massive shortfall? Profit margin. The Street expected 45% or 46% which would've been a significant shortfall from quarters past. AMD reported a stunning 40% instead. The price-war with Intel is far more brutal than anyone could have imagined.

Eric Ross at ThinkEquity calls the report far worse than he expected. Mike McConnell at Pacific Crest doesn't understand why investors would park money in either company.

To Yahoo now where on the conference call CEO Terry Semel says the company is on track and he's pleased with progress. That assessment despite Yahoo's more than 60% year-over-year fourth-quarter operating profit plunge. This kind of performance even though Yahoo continues to operate in one of the great growth sectors in all of technology.

And while Yahoo shares took a noticeable dip because of the soft first-quarter guidance, they perked right back up when news came out that it's new Panama monetization software, designed to squeeze more money from every click, appears to be ahead of schedule. But if that's the case, why the soft guidance? Doesn't make much sense and the discrepancy didn't come up on the call. That could make for interesting trading on Wednesday.

Meantime, Sun Microsystems beats the pants off Wall Street -- 3 cents never looks prettier than when the analysts are only expecting a penny! But the bigger news, of course, is the $700 million KKR investment. Not only a big time endorsement of Sun's technology and longer term health and welfare, but what some analysts will surely speculate as the "one small step for KKR; one giant leap for a possible LBO!" Will they or won't they? Sun's got a marketcap under $20 billion nowadays. Add a 15 or 20% premium -- even though that may not be necessary, and you're only talking about a $24 billion deal. Tops! This will make for some very interesting handicapping in the coming weeks and months.

Ebay's next. Followed by Microsoft Thursday, and the Google next week.

Yeah... Funner!

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