Equity Research and Investment Analysis

We are not as dire as Canaccord in our analysis or Palm with their new $0 price target, because at some point we think the intellectual property may become attractive to another mobile phone company. However, we would not be surprised if Palm continues lower before any potential buyers begin to show interest, especially as sales and earnings remain weak and the burn rate accelerates.

Consumers have quickly adopted mobile connectivity to the Internet through smart phones and netbooks, and wireless carriers have been all too happy to sign them up for a data plan. However, the demand for bandwidth has grown recently far faster than the network providers can expand their coverage. The immense popularity of smart phones like Blackberries, Apple's (AAPL) iPhone, and Motorola's (MOT) Droid is already putting a strain on the networks which results in dropped calls, non-functioning applications and other undesirable outcomes.

On Tuesday, rumors of a possible tie-up between Barnes & Noble (BKS) and the new Apple (AAPL) iPad that was to be release the next day. The stock jumped from the mid $17s all the way up to $20.68 before moderating in the afternoon to settle well above $19 per share. Apple's much anticipated event has come and gone and there was no mention of Barnes & Noble, and the stock has given back its quick gains.

Medtronic (MDT), the world's largest medical device maker, received some important news that has been largely passed over as the market anticipated Apple (AAPL) and other headline earnings reports. The Food and Drug Administration cleared a heart valve made by Medtronic that can be placed without open-heart surgery.

These are exciting times for technophiles as everyday technology becomes more and more integrated into life. In the first few days of the year techies are treated to a major unveiled of Google's (GOOG) much anticipated Nexus One handset. Furthermore, a feast of new gadgets and gizmos will be on display later this week at the annual Consumer Electronics Show or CES for those in the know. There is a buzz and an excitement in the air surrounding the tech sector, which begs the questions: Could tech stocks repeat the impressive run they enjoyed over the last year?

The negative sentiment swirling around Research in Motion had brought the stock very much out of favor with the market. RIM has woefully underperformed the competitors mentioned earlier over virtually any timeframe in the past year. At Ockham, we continue to believe that RIM is Undervalued, and even after the run-up in after hours it presents an attractive opportunity to investors.

The stock is trading right around the low end of its historically normal valuation ranges of price-to-cash earnings and price-to-sales. We can see why Cramer is excited about this holiday season at Best Buy, but so much of that has already been reflected in the price as it has more than doubled from this point last year.

The Kindle has been a hit thus far and has the potential to dominate the digital book market the way the iPod has for digital music. We all know how that has worked out for Apple (AAPL) in the last decade. Not to mention, Amazon's ecommerce site has never been hotter and should be a major destination for holiday shoppers.

We agree with Cramer that this is a stock that investors should more readily buy than sell. The Citi downgrade was piling on with the bad news and the resultant drop should be viewed as an opportunity.

Google (GOOG) has made quite a splash today with the announcement that the new Motorola (MOT) Droid will incorporate free turn by turn navigation capabilities. This threat to Garmin's revenue in combination with the disappointing results from TomTom have sent the stock down more than 17 percent on Wednesday afternoon.

The old adage tells investors "the time to buy is when there is blood on the streets", and today's 22% decline and at least three analyst downgrades certainly qualifies for such a situation. We are contrarian investors at heart and see the market's response to this report as a little overkill. Any better execution for Brocade in upcoming quarters will likely be met with significant price appreciation. Based on the historically normal ranges of price-to-sales and price-to-cash earnings, we believe Brocade could easily achieve a price of $10 based on the current fundamentals.

Our methodology is value-oriented and our most important factors come from the fundamental strength of the stock, which is plainly obvious from looking at our overwhelmingly positive historical valuation chart. However, we agree with Cramer that the long term prospects for the business model are distressing, and this could be the dreaded value trap. At the very least, it appears the company will need to reinvent themselves which can often be long and arduous process. Although this stock looks like a value investors dream, we cannot advise holding this stock for the long term.

Tellabs (TLAB), which sells its products and services to telecom providers to help them manage increased traffic on lines, reported its fiscal fourth quarter results on Tuesday morning and their stock surged nearly 13%. The market is shaking off a slight revenue disappointment because there were other positive developments in Tellabs' report. For one, the company has initiated a quarterly dividend of $.02 per quarter which, based on yesterday's close, would imply a yield of 1.3% right off the bat.

Intel Corp. (INTC) delivered a tremendous fiscal fourth quarter last week, but the stock gapped down nearly 3% on the following day and has yet to recover. This head-scratcher of a situation has CNBC's star pundit Jim Cramer felling bullish on Intel, and he even said that he's increasing his exposure to Intel in his Charitable Trust if it falls below $20.

IBM's fourth quarter demonstrates that the company is performing quite well, and that could be a great thing for the technology sector going forward. Big Blue is managing impressive earnings growth and margin expansion and they deserve credit for that. That being said, IBM's story is well known to the market and it is no longer a great buy at these price levels. We would advise investors to look to some of the lesser known success stories in the tech sector to take advantage of this trend.

Makers of storage networking equipment, Emulex Corp. (ELX) said that they are having a better fiscal second quarter than analysts had expected. In fact, the new earnings guidance of 16 or 17 cents per share is well above their previous guidance of 10 to 12 cents per share. Furthermore, revenue is now expected to be about $107 million compared to previous estimates of about $90 million. The great performance was driven by strong demand for its products which connect computers and servers to remote storage facilities.

These are exciting times for technophiles as everyday technology becomes more and more integrated into life. In the first few days of the year techies are treated to a major unveiled of Google's (GOOG) much anticipated Nexus One handset. Furthermore, a feast of new gadgets and gizmos will be on display later this week at the annual Consumer Electronics Show or CES for those in the know. There is a buzz and an excitement in the air surrounding the tech sector, which begs the questions: Could tech stocks repeat the impressive run they enjoyed over the last year?

The negative sentiment swirling around Research in Motion had brought the stock very much out of favor with the market. RIM has woefully underperformed the competitors mentioned earlier over virtually any timeframe in the past year. At Ockham, we continue to believe that RIM is Undervalued, and even after the run-up in after hours it presents an attractive opportunity to investors.

Google is currently within its historically normal valuation ranges, yet if it were able to achieve the midpoint of these ranges it would imply a price for GOOG of $790. Google is still growing rapidly but may not be able to command the same premium from the market as it did as a less mature company. Clearly, we are still optimistic about Google's long term prospects just like Cramer; however, this not news to the market and there are plenty of cheaper stocks.

As November sales totals demonstrate, these are difficult times for the video game industry as a whole. However, value seeking investors could do worse than picking some unloved players in this market that continue to perform adequately through the challenges.