Microsoft (NASDAQ: MSFT) wants to expand the reach of its vital Office suite of products. The software giant wants to utilize a subscription model for the collection of programs. The initiative will commence later this month at Circuit City (NYSE: CC) and it will eventually reach other retail stores. People will also eventually have the option of accessing the subscription product via computers such as ones made by Dell (NASDAQ: DELL). The cost is reported to be $70 for twelve months of Office access.

This is an interesting scheme. As the article points out, businesses might not bat an eye at subscribing to software applications, but for consumers, this is a different ballgame. Many of us, myself included, are so used to going down to a Best Buy (NYSE: BBY) to purchase a software package for a flat fee that paying yearly dues just seems like an alien concept. And I'd say this goes double for something as large and complex as the Office program. Microsoft believes that $70 on an annual basis will be perceived as cheap and will expose consumers who might normally either seek upgrades on a pirated basis or who would simply continue using older versions to regular approved updates. It is a large investment, after all, to upgrade to a new iteration of Office.

Microsoft would be wise to market the heck out of the subscription model for Office, taking full advantage of the inflationary environment we are currently in. If potential users can be convinced of the value proposition, then they could eventually become hooked on the promise of upgrades over time for the relatively economical price indicated. Checking around on the net, I notice that a lot of the negative comments about this idea center on the fact that there are already free alternatives out there to Office, such as applications offered by Google (NASDAQ: GOOG).

The thing is, though, many mainstream users of software applications probably are susceptible to the brand equity of Microsoft and Office. I am. Quite honestly, I'd rather use something used by the majority of people I know and work with as opposed to a free suite on Google or elsewhere. Sure, savvy software users will make fun of me for holding such an opinion and will point out a perceived lack of sophistication on my part, but my point is that, from a business standpoint, Microsoft does have a ton of equity to leverage in the form of the Office name, and it's a worthwhile goal to invest a little capital toward converting some of the mindshare out there who don't currently engage Office upgrades into subscribing users. Incremental revenues may result over time if an effective marketing campaign is drawn up. I don't think I'd subscribe, but I have a feeling others might...

Disclosure: I don't own any company mentioned; positions can change at any time.

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One of Yahoo!'s (NASDAQ: YHOO) plays for showing that it does not need a deal with Microsoft (NASDAQ: MSFT) is to find another large partner for a merger or joint venture. It is becoming more likely that the partner may be either Time Warner's (NYSE: TWX) AOL or News Corp (NYSE: NWS), which owns MySpace.

The structure of a deal with AOL might look very much like the one the firms discussed earlier in the year. According to The Wall Street Journal, "The two companies are talking about a structure they began discussing several months ago -- an arrangement whereby Time Warner would fold AOL into Yahoo and take a minority stake in the combined venture."

A transaction with AOL would give Yahoo! three important advantages. First, it would nearly double the size of its user base, giving it by far the largest audience of any company in the US. Yahoo! would also get AOL's Advertising.com network, the biggest display ad network in the nation. Finally, Yahoo! would get a substantial set of new customers for its search and search advertising businesses.

Wall Street wants to see Yahoo! sold. Any other alternative, including a deal with AOL, is likely to drive its shares down. But, if it wants any chance of staying independent, a transaction with Time Warner may be its only viable alternative.

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

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MAJOR PAPERS:

• According to people familiar with the situation, the Wall Street Journal reported that Yahoo! Inc (NASDAQ: YHOO) is again talking to Time Warner Inc (NYSE: TWX), this time about taking over AOL, with Time Warner taking a stake in the combined entity. News Corporation (NYSE: NWS) has its eye on any Yahoo moves. Meanwhile, Microsoft Corporation (NASDAQ: MSFT) is considering what its next move against Yahoo might be and is talking to News Corp.
• The Wall Street Journal also reported that, as part of the company's plan to cut costs, Tribune Co's Los Angeles Times newspaper may look to cut about 250 jobs, including about 17% of its news staff.
• The Financial Times reported that Chrysler, which has been searching for foreign partnerships, signed with China's Great Wall Motor a memorandum of understanding to explore long-term business ties in areas that include technology, distribution and components.

• According to the Dallas News, AMR Corporation's (NYSE: AMR) American Airlines informed its flight attendants' union that is may lay off 900 flight attendants on August 31.

• Yonhap reported that LG Electronics will release "Dare," a new touch-screen mobile phone in the U.S. that will compete with Apple Inc's (NASDAQ: AAPL) latest iPhone models.

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For those of you who own blue-chip stocks, this is an eye-opening prediction. An article at CNBC.com talks about the possibility of Dow 10,000. Dow 10,000!

I repeated that in case you didn't get it the first time. It sounds pretty scary to me, and it should sound pretty scary to a lot of you out there. I'd have to presume that most investors don't use the stock market primarily as a substitute casino for the times when Las Vegas is out of reach. Many of you out there must own a Disney (NYSE: DIS) or a Coca-Cola (NYSE: KO), maybe a General Electric (NYSE: GE) or a Microsoft (NASDAQ: MSFT), something generally considered core and safe for the long-term. I happen to own the first three. Anyone who does is in for some huge volatility if Dow 10,000 comes along.

Actually, whether it comes along or not, volatility is here to stay. And here's the thing about the Dow 10,000 prediction: it isn't so farfetched on a mathematical basis. When you first read that number, you say to yourself "No way, that would be like a depression!" But because the numbers are getting higher, the actual point moves aren't as dramatic as they may seem on the surface. If we hit 10,000, that would represent a decline of approximately 29% from the high reached back in October 2007. As I write this, the Dow is about 20% off the high. Is another 9% feasible?

It sure is. As the article mentions, John Carter of Trade the Markets makes the prediction on the Dow and says that "a trend is a trend until it ends." What I think is most disturbing about the current state of the markets is that, when a stock like GE is approaching a 5% yield (it currently yields about 4.6%), then a 30% decline in the Dow seems entirely possible. GE is the stock I am watching as one measure for determining when the bear market may finally turn. As long as it stays above 4%, investors and traders alike will need to remain on top of their game.

Now, as for me, I'm not so sure I buy the Dow 10,000 prediction just yet. Dow 11,000 is probably a given at this point since the summer is undoubtedly going to test the patience of many. But with oil so high, and with consumer confidence in need of an uplift, I think the "oil bubble" (assuming you believe it's a bubble) will pop sooner rather than later. If that does actually happen, then we may be safe from Dow 10,000.

So count me skeptical on Dow 10,000. There is no one on the planet who can predict future stock prices, but at least at this point, even though I am bearish on the Dow, I'm not that bearish.

Disclosure: I own Coke, Disney, and GE. Positions can change at any time.

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Brand-Name Stocks Uner $10: Buyer Beware
These well-known names in the bargain bin may look appealing, but experts advise laying off until their earnings picture is clear. Among the stocks to be weary of are Sprint Nextel, Motorola, Ford Motor, Qwest, Washington Mutual, Northwest Airlines, Del Monte, Rite Aid, Chico's, Crocs, United Airlines, Palm, Sealy, Blockbuster, Circuit City and Orbitz.
Brand-Name Stocks Under $10: Buyer Beware

How to Play the Market in the Second Half of 2008
Market pro Todd Harrison discusses the top 10 themes for the rest of the year.
Where we are and where we're going: 10 market themes - MarketWatch

Finding Safety in a Bear Market
Here are five ways to protect your portfolio.
Keeping Your Balance in a Scary Market - Kiplinger.com

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MAJOR PAPERS:

• According to people familiar with the discussions, the Wall Street Journal reported that Microsoft Corporation (NASDAQ: MSFT) has held discussions with Time Warner Inc (NYSE: TWX) and News Corporation (NYSE: NWS), among others, about joining it in a deal that could lead to the breakup of Yahoo! Inc (NASDAQ: YHOO). Some of the sources said the preliminary talks are unlikely to result in a deal with Yahoo!
• Johnson & Johnson (NYSE: JNJ) is reportedly in exclusive talks to sell its wound-care business Ethicon to the private-equity arm of JP Morgan Chase & Co (NYSE: JPM), according to the Wall Street Journal. Terms of the potential deal were not disclosed.

• Sources familiar with the inquiry said that the Justice Department has opened a formal antitrust investigation into a deal that would allow Google Inc (NASDAQ: GOOG) to provide some search advertising for Yahoo!. The Washington Post reported that investigators will demand documents from Google and Yahoo!, as well as other large companies in the media and Internet industries.

• Reuters reported that regulators in the European Union are looking at the long-term effects of BHP Billiton Limited's (NYSE: BHP) $170B bid for Rio Tinto Group (NYSE: RTP). Sources familiar with the EU questionnaire said regulators have asked competitors and customers about effects of the deal on their businesses through 2015.

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Apollo Group (NASDAQ:APOL) is up over 15% on strong profits.

Blockbuster (NASDAQ:BBI) is up over 10% on news it has dropped it bid for Circuit City (NYSE:CC).

Yahoo! (NASDAQ:YHOO) is up 6% on news of a possible new bid from Microsoft (NASDAQ:MSFT).

Circuit City is down over 10% due to Blockbuster walking away from a possible offer for the company.

GM (NYSE:GM) is off 5% on a brokerage downgrade.

Stocks may trade differently in the pre-market than they do in the regular session.

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

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Microsoft (NASDAQ: MSFT) may try to buy Yahoo! (NASDAQ: YHOO) again, but it does not want the whole company. It finds the search business useful as part of its battle with Google (NASDAQ: GOOG). The content portal business does not have much attraction, and Redmond wants a company like Time Warner (NYSE: TWX) to pick up that piece. According to The Wall Street Journal, Microsoft "approached other media companies in recent days about joining it in a deal that would effectively lead to Yahoo's breakup."

The new deal just might work. Yahoo! dropped below $20 yesterday, putting its stock back where it traded before the first buy-out offer. The No. 2 search company's shares reached as high as $33. Investors, especially Carl Icahn, are steamed that Yahoo! did not grab all of that extra money.

Even if Microsoft cannot find a partner to take the Yahoo! content business, it may move ahead. It only has 10% of the US search business. Yahoo! has about 20% and Google around 60%.

Microsoft still needs Yahoo!, and with its stock down by a third, Yahoo! needs a buyer.

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

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Six months of 2008 are now behind us and the stock market has not been a friendly place to most investors. Stability that was once found in household names that were industry giants is gone, and they have now been brought to their knees.

Many of them were the stocks we might have looked to in the past for stability, so you can be sure I put forward my five candidates with a little trepidation, but forward I go anyway. First a little review is in order.

Citigroup Inc. (NYSE: C) dropped from around $53 per share last year to around $30 in January and we can buy it today for around $17. Even at that price Goldman Sachs (NYSE: GS) has downgraded it to a sell and thinks there is more bad news to come. Citigroup was the largest bank in the world. Not any more.

General Motors (NYSE: GM) was the largest car maker in the world. That was before the stock tumbled from $43 to its current $11 range. A crushing blow to long time investors hoping that someone in the company could stop the ship from sinking.

Goldman Sachs (NYSE: GS) itself is down from $250 to a very soft $177 (it's traded as low as $161.21 today) and does not appear to be at risk as much as some of its competitors, companies that do not look as competitive any more. Bear Stearns is gone, Lehman Brothers Holdings (NYSE: LEH) is on the ropes and Merrill Lynch (NYSE: MER) and Morgan Stanley (NYSE: MS) are teetering.

Reliable software giant Microsoft Inc. (NASDAQ: MSFT) is down from $37.50 to $27 and is so desperate for some traction that it is wasting its time with something called the Zune and made an unsuccessful offer to acquire Yahoo! (NASDAQ: YHOO), which is also down on its luck; 50% down since it rejected the offer.

I do not own any of these stocks, and I could list a thousand stocks to keep them company. Some that I do own as "core holdings" that are down include Huaneng Power Intl ADS (NYSE: HNP) that was trading as high as $57 and is now a more affordable $27 per share. Another one of my favorites, Intuitive Surgical Inc (NASDAQ: ISRG), is down from $360 to $260 and may drop further as hospitals look to conserve capital the rest of the year and into the uncertainty of a new presidential administration and economy. Even that old standby for tough times Berkshire Hathaway (NYSE: BRK.B) has shown weakness dropping 20% from around $5,000 to $4,000 a share.

I could point to some energy and food stocks that have done well this year but those could lose their footing as well if oil prices do not hold up. There are those that think we are in a short term speculative bubble and they could give back some of the this year's gains.

So where to hide? What if anything has been stable? The following five companies made the grade.

1) Johnson and Johnson (NYSE: JNJ): This one is probably not any surprise. There was no money to be made here but you would not have lost any either. Year to date it has traded between $68 and $64 and that is about where it has been for quite some time. It does pay almost a 3% dividend yield and that's mighty fine these days.

2) Teva Pharmaceuticals ADR (NASDAQ: TEVA): Pharmaceuticals have long been a safe haven in troubled times and the world's largest maker of generic drugs is sitting pretty these days with expanding markets everywhere it looks. This Israeli company has traded roughly between $43 and $47 for quite some time, pays a 1% yield and looks to have plenty of upside going forward.

3) Chubb Corp (NYSE: CB) the conservative insurance company has held up better than most of its peers. Over the past six months and going back two years it has hovered between $49 and $54, all the time paying about a 2.6% yield.

4) Xcel Energy (NYSE: XEL) is a holding company for numerous utilities. Over the course of the past twelve volatile months it has been trading in a 10% range between $20 and $22 while paying a huge yield, which today stands at 4.8%.

5) Walt Disney (NYSE: DIS) may be a great place to hide if you want to forget your troubles, whether you chose the new Pixar hit movie "WALL-E" or Disneyland, or a trip down memory lane renting or downloading any one of its countless hits from its film library. The stock is currently trading in the neighborhood of $30.62, mid-point in its 52 week range. Over the past six months it has spent most of the time drifting between $30 and $33 per share with a few drops and pops here and there. The 1.1% yield is not as generous as the others but it I would be happy to take it.

What do they have in common? They are diversified among their industries, have growth horizons, and of course they all pay dividends. But the standout at this juncture seems to be that they all have shrewd conservative management teams -- and they have been in the right place, at the right time, and prepared.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. DISCLOSURE: I currently own shares of BRK.B, HNP, ISRG, JNJ.

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Yahoo's (NASDAQ: YHOO) embattled management and board have one month left to prove to shareholders that they made the right call in rejecting Microsoft's (NASDAQ:MSFT) bid. With shares trading at about $20, they are going to have to do some fancy footwork to show why rejecting a $31to $33 per share offer was actually good for shareholders.

Yahoo is trying to convince investors that a proposed 'search' deal with Google (NASDAQ:GOOG) will provide the growth needed to restore Yahoo to previous glory. According to an AP report: " By relying on Google's superior technology to show some of the ads alongside its search results, Yahoo believes it can increase its annual revenue by about $800 million and generate another $250 million to $450 million in annual cash flow."

Keep in mind that since the Microsoft deal fell apart, Yahoo has lost more than $16 billion in market cap. It is going to have to generate a lot more in revenues to show that they made the right choice.

My other problem is that I have many friends who over the last week have told me they can't access their Yahoo mail or open up their saved stock portfolio's on Yahoo Finance. I, personally, have been locked out for two days.

I have tried to follow the steps on their website, but all to no avail. Of course, I emailed customer service and still have yet to receive an answer as to why I am unable to log in. And, as I said, the same thing has happened to some of my friends. Has it happened to you?

If Yahoo is having trouble providing basic services to longtime users, how does it plan on generating another $16 billion in market cap for long-term investors?

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 7/01/08.

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I read an article over the weekend about Yahoo! Inc. (NASDAQ: YHOO) and its reorganization attempts. Make no mistake about it, this company needs to alter its DNA if it intends to survive in a world without a Microsoft Corp. (NASDAQ: MSFT) taking it over.

In a nutshell, it looks like Yahoo! wants to retool its divisions so that it can more efficiently react to changes in the online marketplace. Yahoo! apparently feels that its current organizational structure inhibits growth and is looking to create new teams dedicated to developing products that will capture eyeballs and advertising opportunities as quickly as possible. The company also wants to focus on cloud computing, a technology that is important to the business sector.

Well, from the point of view of an investor looking at Yahoo!, I don't see anything here that persuades me to buy the stock. Synthesizing a new plan of corporate attack is pretty much par for the course for any company that is doing terribly and is looking to get back on the good side of Wall Street. But is there anything really exciting in the plan? No. It's just Yahoo! doing something. There's nothing too revolutionary going on. Centralizing this and that might add value. It also might not. It's all in the execution, and I'm not sure I want to trust a company that rebuffed Microsoft's reasonable buyout offer to execute anything at this point.

If Yahoo! wants to remain on its own, I have no doubt that it will survive and will be here a decade from now. But will it be a good investment for the long term? That's uncertain at this point. It has incredible brand equity to web surfers, it's a popular portal that will always be of value to advertisers, but Google Inc. (NASDAQ: GOOG) has proven that Yahoo! cannot thrive simply on its name and image.

Carl Icahn will tell you that Microsoft is the only solution to Yahoo!'s problems. Unless Yahoo! comes up with a good plan for the future (and I'm not sure the current one will suffice), Icahn may be proven right. There was a time when I was very bullish on the company and stock. For now, that feeling is a memory.

Disclosure: I don't own any company mentioned; positions can change at any time.

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Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I do not own shares in the stocks mentioned in this story.

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This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that may eventually succeed them.

I remember way, way back to November 2006 when Wall Street was stunned that Google (NASDAQ:GOOG) was paying the ungodly sum of $1.65 billion for privately held YouTube. How were they to monetize this goofy, home video web site? Since November 2006, it appears that Google got a bargain when compared to other social networking web sites.

Facebook has over 80 million users including a new Facebook profile for Democratic presidential nominee Barack Obama. Facebook attained Wall Street relevancy last year when Microsoft (NASDAQ: MSFT) agreed to pay the unheard of $246 million for a 1.6% ownership stake. That October 24, 2007, Microsoft investment valued Facebook at nearly $10 billion in the private equity world. As of yet, there is no filed Facebook IPO, but investors bet the company will file an IPO before the end of 2009.

The new player capturing headlines in the social networking world is LinkedIn. The company is designed for the business and professional world. The more than 23 million registered users represent over 150 different industries. It's a place to swap ideas, best practices and other opportunities.

LinkedIn was founded in 2002 specifically for the business community. LinkedIn just received a $53 million venture capital investment led by Sequoia Partners. The $53 million represents a 5% stake in the company, therefore valuing LinkedIn at $1.06 billion.

The simple business model of social networking web sites allows for an instant global presence, thus enhancing the underlying values of these companies. In the case of Google, the monetizing of YouTube will begin shortly as Google strategically places quick 15 second ads on the bottom of the requested video. Google will be watched closely by other industry insiders as no one wants to cheapen the freedom and ease of use of the social networks by cluttering them with countless ads.

With fresh growth capital, LinkedIn will expand its marketing efforts globally and grow its user list. The user list is the most valuable asset and Sequoia Partners valued each member at over $50.

The next couple of Google-type IPOs may come from this sector of the Internet ... stay tuned.

Georges Yared is the editor of YaredsGameChangers.com and the author of the new report "How to Spot the Next Google."

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Jerry Yang, Yahoo! (NASDAQ: YHOO)'s CEO, and the company's chairman Roy Bostock sent a letter to shareholders defending the company's actions following the Microsoft (NASDAQ: MSFT) bid. There was nothing to defend. Those owning the web portal company's stock got slaughtered.

"Our board of directors and management made a great effort -- and conducted in-depth negotiations -- to elicit a feasible proposal from Microsoft that made strategic and financial sense for Yahoo, but without success," the executives wrote, according to The Wall Street Journal.

The comments are bogus on the face of it. Microsoft's offer got as high as $33 toward the end of negotiations. Yahoo! now trades at $22. That number almost certainly factors in two things that the market already knows. One is that Yahoo! plans to reorganize management to make the company more efficient. The other is that Google (NASDAQ: GOOG) will sell some of Yahoo!'s search ads, which should make the process more profitable.

Looking back on the entire Yahoo! and Microsoft mess, there is only one thing to remember. Yahoo! traded at $21.94 a week before the offer. It trades near the same price now. The only reason the company was ever worth more is because Microsoft needed it.

And, now that is over.

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

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