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The market's fickle nature revealed itself again Wednesday as early indications of more selling gave way to a decent rally, led by tech stocks.

Falling crude prices, earnings and merger activity provided a fundamental basis for the advance.

In addition to Yahoo's results, last night brought solid results and guidance from Broadcom and VMWare. Broadcom also benefited from the settlement of backdating options charges with the SEC, and both stocks were getting an extra boost from shorts covering their positions.

This morning brought strong results and guidance from Boeing, good enough results from EMC, and news of Liberty Mutual's bid for Safeco.

Additionally, it appears Jeff Saut was correct when he said Tuesday's slide was a technical phenomenon and the market primed for more upside, as detailed here.

Optimism is also coming from Dennis Gartman who is "quietly turning bullish" on shares after shedding a long-held bearish stance and moving to neutral earlier this month.» More

In an effort to both steal Yahoo's earnings thunder and strike a blow against Google, Microsoft launched a live preview version of Mesh Tuesday evening.

Mesh is Microsoft's answer to cloud computing, a potential paradigm shift in computing.

"To individuals, the concept of 'My Computer' will give way to the concept of a personal mesh of devices -- a means by which all of your devices are brought together, managed through the web, as a seamless whole," Microsoft chief software architect Ray Ozzie said in a memo about Mesh.

But rather than a true effort to allow users to access documents and applications from any device, anytime, anywhere, Mesh looks like an attempt to adapt the cloud concept to a PC-centric world.

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Intel reported first-quarter earnings of 25 cents a share, in line with expectations, while its revenue of $9.7 billion exceed the consensus of $9.63 billion. Gross margin was 53.8%, in line with the lowered guidance the company provided in early March.

More importantly, Intel gave second-quarter guidance revenue guidance with a midpoint of $9.3 billion vs. the consensus of $9.24 billion, and sees gross margins rising back to 56% in the second quarter and the 57% range for the full year.

"Our first quarter results demonstrate a strengthening core business and a solid global market environment," Intel CEO Paul Otellini said in a prepared statement. "We saw healthy demand for our leading-edge processors and chipsets across all segments. Looking forward, we remain optimistic about our growth opportunities..."

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When UPS issued a profit warning late Tuesday it confirmed the weakness emanating from Alcoa, AMD, and Novellus. Combined with the Fed minutes' warning about the possibility of a "severe and protracted downturn," it's no wonder the stock market struggled early Wednesday. (Maybe a bigger surprise is that it's not struggling more.)

Just as it took Ben Bernanke & Co. a long time to come to grips with the severity of the slowdown, so too traders are slowly seeing the reality that first-quarter earnings are likely to disappoint -- a surprising profit from Circuit City notwithstanding.

Tech tidbits this morning include a tepid defense of Yahoo by Legg Mason's Bill Miller, Motorola naming former AT&T chief David Dorman as non-executive chairman, EMC buying Iomega for $213 million, and chip-equipment maker FormFactor lowering its first-quarter outlook and slashing staff.

Speaking of which, a day after warning and announcing big layoffs, AMD now says its long-awaited Barcelona chip is available for distribution -- unfortunately, a day late and a dollar short for AMD shareholders and many employees.

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Oracle announces earnings after the bell, and Wall Street and Silicon Valley are both expecting a strong quarter. Thanks to its ongoing acquisition spree, Oracle doesn't have to rely on organic growth and has the benefit of huge maintenance software revenues. In other words, it's not necessarily depending on closing huge deals in the finance sector to make a good quarter. Still, analysts will be looking for any signs of weakness-- particularly from the software buyers in the financial sector. And of course, we'll be listening for any hints of what Larry has planned for that new $2 billion line of credit.» More

From AllThingsD, March 6, 2008:

With its new Leopard operating system, Apple tried to solve one of the most nagging problems faced by home-computer users: how to regularly back up their computers completely and painlessly. Leopard includes a feature called Time Machine that automatically and continuously backs up a Macintosh computer's entire hard disk, without requiring the user to do any tedious setup or have any technical knowledge.

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IBM got a big bounce Tuesday thanks to its share buyback announcement and accompanying bump to earnings guidance. IBM also rolled out its new System z10 mainframe, a new mainframe which Big Blue claims will improve data center performance by 100% percent while also tackling "the energy crisis that's being created by today's data centers." 

IBM spent $1.5 billion and five years to develop the z10, which runs on both 'legacy' and Linux platforms. IBM also worked with Sun Microsystems and Sine Nomine to develop a pilot program allowing Solaris to run on "System Z". 

IBM had a leading 31.1% slice of worldwide server revenue in 2007, according to IDC. But its overall server market share growth of 0.8% last year paled in comparison to Hewlett-Packard's 8.8% rise. With the z10, IBM appears to be doubling down on growth in the high-end server market (the system costs $1M); if the z10 really can live up to its billion, Big Blue's shares will have more upside ahead.  

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While the Nasdaq is struggling and Google is tumbling, Big Blue is solidly in the black Tuesday. Before the open, IBM launched the Z10, a new mainframe which it claims will improve data center performance by 100% percent while also tackling "the energy crisis that's being created by today's data centers."

'Green' is good, but what's really got Wall Street seeing green is IBM's subsequent announcement that it is raising the bottom end of its 2008 profit range to $8.25 per share thanks to a stock buyback authorization of up to $15 billion. IBM is forecasting a profit for the year of at least $8.25 per share. » More

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