By Scott Moritz

Corning (GLW) says big TVs are still flying off the shelves.

The tech glassmaking giant stood by its financial forecast and says its outlook on flat-panel TV sales remains bright despite fears that consumers have let high fuel prices and credit constraints dim their spending plans.

“Corning has no evidence of an economic downturn impacting LCD TV sales in the U.S.,” CEO Wendell Weeks said in a press release. “In fact, LCD TV unit sales in the U.S. have been up at least 30% year over year for each of the first four months of this year and are expected to continue to be strong,” Weeks continued in the press release.

The encouraging comments come amid concerns that the slowing economy has caused consumers to pull back on big-ticket discretionary purchases like luxury TVs.

To help back up its claims, the company reiterated its second-quarter guidance. For the current period ending next month, Corning says it expects adjusted earnings in the range of 47 cents a share to 50 cents a share on sales of about $1.73 billion. This compares with a pro forma profit of 34 cents on $1.42 billion in sales in the year-ago period. Analysts expect a profit of 49 cents on $1.72 billion in sales for the second quarter, according to Yahoo Finance.

By Scott Moritz

After an alarming first quarter U.S. search advertising slowdown, Google (GOOG) managed to reignite growth in the all-important paid click category according to April data from comScore.

Last month, Google’s paid clicks grew 19.6% over year-ago levels, improving on an much-watched trend of slowing paid click numbers in the first quarter of this year, thanks to a strong rebound in U.S. growth. The nearly 20% year-over-year increase compares with a less than 1% decline in January and about 3% growth in February and March, according to comScore.

The results weren’t so good for rival Yahoo (YHOO), which saw paid clicks fall 4.4% in April. And Microsoft’s (MSFT) MSN numbers were even worse showing a 9% decline from last year, says comScore. The weak numbers underscore the logic behind a proposed merger between the No.2 and No.3 players in online search. For Yahoo, the trend is particularly dour.

“In January, Yahoo’s paid clicks accelerated 15% year-over-year, 5.3% year-over-year in February, but then fell 3.1% in March, and fell 4.4% Y/Y in April,” Lehman Brothers analyst Doug Anmuth wrote in a research note based on comScore’s data. “Prior to March’s decline in paid clicks, we note that Yahoo! had consistently seen growth in comScore’s paid clicks,” Anmuth notes.

Good news also came from Time Warner’s (TWX) AOL unit where paid clicks reversed the decline in April by surging 28.3% over year-ago levels, according to comScore. Time Warner has been shifting its AOL strategy from the declining subscription business to more of an advertising model. The company, which also owns Fortune and CNNMoney, has been exploring deals that would pair AOL with partners like Yahoo.

By Scott Moritz

Motorola’s (MOT) tailspin is looking more like a nose dive as the mobile phone maker’s market share dips more than 50% below its 2006 level.

At this rate, Motorola is on track to fall to the back of the five-player pack this year as its first-quarter phone sales fell to 29.9 million units. The slip gives Motorola a 10.2% share of the total cell phone market, down from 18.4% a year ago, according to a Gartner research report Wednesday.

Motorola’s phone business has tumbled since the Razr phone fell out of fashion in 2006. The company plans to spin off the money-losing business to shareholders sometime next year. And it’s little wonder why. The former top phone maker has seen Nokia (NOK) and Samsung take the No.1 and No.2 spots in the indusry. And Motorola’s time as No.3 seems limited - LG is hot on its heels with 8% of the market, up from 6.2% in the year-ago period.

So far, the new phones Motorola has introduced “were not competitive enough to maintain its place in the market,” says Garnter’s Carolina Milanesi.

Smaller fish, tougher pond

Despite a big fourth quarter, Sony Ericsson also fell, to 5th place with 7.5% of the market in the first quarter, according to Gartner. Part of the drag on Sony Ericsson was a drop in demand for middle-to-higher priced phones in Europe. Gartner says first quarter sales for all phone makers fell 16% below year-ago levels in Europe. This is the first drop in sales Garnter has ever recorded in the past 7 years of tracking the mobile phone market.

Overall, Gartner says the industry is still on track for growth between 10% and 15% this year thanks to strong demand in developing markets. That demand doesn’t completely offset declines in Europe, however, since it’s mostly for lower priced phones. So the higher volume growth will come at a lower total value, says Gartner.

“The value of the market will be lower than we stated in our forecast,” says Gartner’s Milanesi in a press release. “This is because the current economic slowdown and higher fuel costs will force consumers to defer phone purchases in mature markets, while higher food prices will lead to longer replacement cycles in emerging ones.”

So if Motorola had troubles before the spending crunch, imagine how the phone shop will fare now.

By Scott Moritz

Some tech shops continue to sink while others swim ahead against the slow-spending current.

Networking and security gearmakers are running strong as businesses build and safeguard their expanding networks, but PC and server sales look to be on the losing end of the ongoing corporate budget squeeze, according to a second-half 2008 spending forecast report by RBC.

Outfits such as Cisco (CSCO) and Juniper (JNPR) stand to benefit from whatever modest gains come along in IT spending. And PC shops such as Hewlett-Packard (HPQ) and Dell (DELL) as well as software giant Microsoft (MSFT) will feel more of the pinch as tight-fisted procurement officers continue to lay off the new computers for awhile more.

RBC analysts surveyed “2,049 leading-edge corporate IT buyers” about their spending plans for the remainder of the year. The results showed that spending will likely remain soft and tied to the overall economy. The good news is that there seems to be no significant decrease in spending ahead, says RBC.

“We should continue to expect difficulty in getting deals signed as companies still appear hesitant to spend on IT products and services: 56% of respondents claim their company has a red/yellow light when it comes to spending on IT, the highest level in over four years.” RBC says in its report Wednesday.

Some bright spots amid the gloom include Research in Motion (RIMM), which RBC expects to gain another 5 percentage points and walk away with 82% of the mobile e-mail business market this year.

And Apple (AAPL) continues to have a hot hand among the corporate crowd, says RBC. Unlike the slide in PC sales, Macs are taking more share in the office. RBC expects Apple to build 3.5 percentage points of overall computer market share in 2008, up from the 2.9-percentage-point gain last year. RBC says Apple will close in on 10% marketshare in business computers this year, up from 7.2% in 2007.

By Yi-Wyn Yen

With Bill Gates preparing to retire next month, the Microsoft chairman gave his take on the future of the software maker’s online strategy – search advertising.

“You make these bets and you stick with them for more than five years,” Gates told an auditorium filled with Microsoft advertisers last week at the company’s Redmond, Wash., headquarters. “You bet on graphics interface, you bet on Internet browsing. Here with search, we believe that we can take it and embed it in a broader experience.”

But some observers say that Microsoft (MSFT) is gambling its future on the wrong type of online advertising. If Microsoft really wants to be a market leader, it should focus its efforts on display advertising.

“Display is a much more wide-open and fragmented market,” said Paul Levine, marketing vice president of AdBrite, a leading online ad network. “There’s an opportunity to be a real leader. The display market today is where search was five years ago. No one has a winning formula yet.”

Display is the preferred method of brand advertisers to broadcast messages through images and videos rather than text ads.

A Microsoft spokeswoman says the company is working equally hard on its display advertising efforts. The company has bulked up its display advertising presence in the past year with the purchase of marketing firm aQuantive and by signing partnerships with Viacom and social media sites Digg and Facebook. It also bought YaData, an Israeli startup that serves banners ads based on the way Internet users browse sites, and rolled out a new analytics service called “engagement mapping” to let advertisers know which of their online ads – display or search – are most effective.

Still, no one has yet found the way to dominate display advertising the way Google has done with search. Not even Google (GOOG) is there yet. “It’s fair to say that Google is not the leader in display ads,” Google CEO Eric Schmidt admitted to CNBC’s Maria Bartiromo in an interview last month.

Microsoft doesn’t hide the fact that it desperately wants to compete with Google in online advertising and that it bid $47.5 billion for Yahoo in an effort to catch up to the market leader. Google market share rose to 61.6% in April with Yahoo (YHOO) at 20.1% and Microsoft at 9.1%, according to comScore.

Though Microsoft CEO Steve Ballmer withdrew the offer to buy Yahoo earlier this month, he’s reconsidering a deal to acquire Yahoo’s search business.

Analysts don’t think that’s a good idea, either. “It makes more sense for Microsoft to work with Yahoo on display because it’s a much more open market and it will attract brand marketers,” said David Hallerman, an analyst with research firm eMarketer.

While Microsoft is pouring billions to catch up to Google in search, its competitor is investing billions to make its mark in the graphical display market.

Google’s acquisition of DoubleClick and YouTube are widely seen as ways to buy into the untapped market of delivering ads when people aren’t searching online. According to eMarketer, the U.S. search ad market is expected to double to $19 billion by 2012 while the display ad market, which also includes videos and rich media, is projected to triple to $18.7 billion.

With or without Yahoo, Microsoft is forging ahead with plans to chip away at Google’s dominance of search advertising. “A pure keyword search has its limits,” Gates said last week. “People want refinement. When a search doesn’t work, they want to know how they can go to that next step.” Gates said Microsoft will focus on delivering better results in specific search domains like commerce, travel, and images.

Microsoft’s first stab at taking search to the next level is through its “cashback” program, a rebate scheme that will pay Internet users money whenever they buy products like cameras and electronics through Microsoft’s Live Search engine. Microsoft is banking that as more people spend time buying on Live Search, more advertisers will promote their products, and Microsoft will grab a bigger slice of the paid search market.

AdBrite’s Levine, a former Yahoo exec, thinks that’s the wrong strategy. “People think of search on the Internet as a utility, like sticking a plug into a wall and getting electricity,” he said. “I have trouble believing that people will flock to different search engines for different purposes.”

Even if Microsoft is able to attracts enough consumers and marketers to worry Google, analysts say the cashback scheme isn’t a game changer. “In the unlikely event that Google experienced significant share loss to Microsoft as a result of Cashback, it would retaliate with a similar scheme of its own,” wrote Bernstein Research analyst Jeffrey Lindsay in a note to clients. “We see Live Cashback as more of a competitive discounting challenge than a truly disruptive new pricing model.”

Some argue that at least Microsoft should be applauded for finding an alternative to Google. “Big advertisers like eBay have a love-hate relationship with Google,” said Yen Lee, CEO of travel search engine Uptake and a former exec for Yahoo’s search business. “That Microsoft has a clever way of price-cutting, well that’s interesting to big advertisers.”

By Scott Moritz

Dell’s (DELL) customer service isn’t so award-winning after all.

New York State Supreme Court Justice Joseph C. Teresi ruled that Dell engaged in fraud, false advertising and deceptive business practices. The decision is a victory for New York Attorney General Andrew Cuomo, who brought the case against Dell a year ago charging that the company failed to live up to its responsibilities to its customers.

“For too long at Dell the promise of customer service was a bait and switch that left thousands of people paying for essentially no service at all,” Cuomo said in a statement Tuesday. “We have won an important victory that will force Dell to live up to its responsibilities.”

A Dell representative said the company disagrees with the ruling and feels that it was based on a small number of customers. The company has not decided if it will appeal the decision. 

In a 26-page decision, Teresi outlined deceptive interest-free and no-payment promotions, lengthy rebate payment practices and a lack of promised on-site tech service. The court will hold further proceedings to determine Dell’s penalty.

By Scott Moritz

Qualcomm (QCOM) got a piece of the action as China’s phone industry shake-up opens the gate for 3G wireless suppliers.

After four years of preparation, China’s government finalized plans this weekend to restructure the country’s telecommunications industry by combining six phone companies into three major carriers: China Mobile (CHL), China Telecom (CHA) and China Netcom (CN). The move was made to create stronger competition for China Mobile, which dominates the market with some 400 million users.

Suppliers, including Alcatel Lucent (ALU), Nortel (NT), Ericsson (ERIC), Nokia Siemens, Motorola (MOT) and Qualcomm, have been eager to see how the telco deck got reshuffled, especially as it related to wireless network upgrades. Not exactly a surprise, China Mobile was given the green light to go with China’s home-brewed technology TD-SCDMA. No.2 China Telecom will license CDMA2000 and China Netcom got the WCDMA license.

Qualcomm gets about 4% in licensing fees from patents it licenses in CDMA2000 and WCDMA, and approximately 0 from TD-SCDMA, say analysts. The company also collects royalties from all CDMA2000 and WCDMA phone sales.

Qualcomm is likely to benefit from a conversion of a third of China Telecom’s subscribers to basic CDMA, about 58 million users, says JPMorgan analyst Ehud Gelblum in a research note Tuesday. The San Diego wireless standard-bearer will also collect royalties from all 3G WCDMA phones sold by China Netcom.

With China’s 3G plans in place, Qualcomm now looks ahead to July and a Delaware court date where the company expects to hear whether its arbitration plan with Nokia (NOK) over license fees gets accepted. Nokia, the No.1 phone maker, has been contesting Qualcomm’s right to license some of its wireless technology patents and the amount of the fees it charges. Analysts say if the court sides with Qualcomm, the company would reap a major financial award in the form of a new license agreement as well as back pay from Nokia.

If the court sides with Nokia, Qualcomm’s licensing revenue would suffer as lower rates awarded by the court to Nokia would also have to be extended to all its other wireless customers.

The new Chinese telco trio certainly removes one element of uncertainty hanging over Qualcomm, but the tranquility will be brief as the Nokia battle heads to court.

By Scott Moritz

Don’t hold your breath, but a federal regulator says a final decision may be reached June 30 at the latest on the merger of XM (XMSR) and Sirius (SIRI). While most analysts expect the Federal Communications Commission to sign off on the deal, the question now is what conditions the agency will impose.

“The commission could act by the end of the second quarter.” said Federal Communications Commission chairman Kevin Martin, speaking to reporters at a conference Friday, according to Bloomberg.

The tie-up between the only two satellite radio shops, announced in early 2007, passed an antitrust review by the Justice Department in March and analysts say its only a matter of time before the FCC has agreed on what concessions will be required to approve the deal. The FCC is trying assuage critics who say the satellite radio monopoly squanders the competitive opportunities that were established by having two companies hold dual licenses for radio waves.

Analysts say forcing XM and Sirius to share the airwaves with competitors or outside programmers would address the problem, but it isn’t clear what form that approach would take. In March, Martin said his staff was drafting different proposals, presumably in an attempt to find a compromise that can pass muster with the commission, which is made up of two Democrats and three Republicans.

In recent weeks, lobby groups and lawmakers have urged the FCC to force the combined company to, among other things, return or lease access to some of its radio spectrum and allow satellite radio makers to add features, which could include video and MP3 compatability, into new devices. These moves are intended to stimulate competing services from other broadcasters and new choices for consumers. Another possibility: Reserving channels for public or independent programmers.

Meanwhile, satellite radio subscriber growth has slowed dramatically with the cooling economy and sluggish car sales. The delayed merger decision has started to draw attention to the heavy costs and steep losses that continue to accumulate at both companies. XM is getting static for its first-quarter adjusted net loss of $30.7 million, up from a loss of $27 million in the year-ago period. The company also faces a $400 million loan payment due next year.

And on Wednesday, XM said it tapped $62.5 million of a $250 million credit facility to help fund an escrow commitment with Major League Baseball. In the wake of the move, the company said in a filing that it has asked its creditors to lower the amount of cash required to avoid a default, from $75 million to $50 million, for the next 90 days.

 A delayed merger approval with onerous conditions might not have been the big payoff the companies were expecting when they proposed the deal a year-and-a-half ago.

By Todd Woody

NEW YORK – T. Boone Pickens dropped by Fortune to chat with the magazine’s editors and writers and naturally Yahoo came up. The billionaire oilman has bought 10 million Yahoo shares and is backing Carl Icahn’s bid to oust the Internet company’s board in the aftermath of the failed (so far) deal with Microsoft.

“I’m just coat-tailing Carl on that,” said Pickens, who celebrated his 80th birthday last Thursday. He said he had not discussed Yahoo with Icahn before buying up Yahoo (YHOO) stock. “I didn’t talk to Carl. Hell, I can’t even write an e-mail,” said Pickens.

“I’m not even sure what Yahoo does,” he added.

We’re not quite buying that but we’re pretty sure the legendary dealmaker knows an opportunity to make some money when he sees it. According to Pickens, after Microsoft (MSFT) walked away from its $47.5 billion bid on May 3, he called his office and asked what Yahoo was trading for. “When they said around $21, I said buy 1 million shares but they misheard me and bought 10 million,” he said, pausing a beat before cracking a smile.

By Scott Moritz

Help wanted: Apple (AAPL) seeks wireless engineer to help steer its course in so-called fourth-generation technology.

The Cupertino, Calif. Mac maker has posted an opening for a senior engineer to “work in a technology group on next generation wireless communications products.” The job posting – which was first reported by the Appleinsider blog – ask for applicants with knowledge in “Bluetooth, 3G, ultrawideband, WiMAX, GPS, Mobile TV and similar wireless technologies.”

Clearly, Apple has plans to create new 4G mobile devices and build 4G wireless capabilities into existing products like notebooks, tablets and phones.

“I think they recognize that these are important and potentially viable technology standards,” says Michael Cote an independent wireless consultant. “Should these technologies gain traction, they would like to be on the forefront” in terms of products. Fourth-generation technology is expected as early as 2010.

Apple’s wishlist of 4G skills for its future engineer stands out for another reason: the presence of WiMax and the absence of long term evolution, or LTE. Is this an endorsement of the Sprint/Clearwire/Intel WiMax camp and a rejection of the fourth-generation LTE path wireless embraced by telco giants AT&T (T) and Verizon (VZ)?

No, says Cote, don’t jump to any WiMax conclusions. The reason you don’t see LTE on the list is because it doesn’t yet exist as a standard. It might be appear a little suspicious if someone said they had LTE experience, says Cote.

The job listing goes on to say that candidates must be open to global travel, flexible in changing work environments and “be fluent in wireless communications standards and wireless technology.”

Picture a Maxwell Smart-type character that speaks in 4G.