By Yi-Wyn Yen

Yahoo’s fate is becoming more convoluted every day. Just two days after the Times of London reported that talks between Microsoft and Yahoo were back on, the the Wall Street Journal says former AOL chief executive Jonathan Miller is trying to raise money from private equity and sovereign wealth investors to buy the struggling Internet company.

Shares of Yahoo (YHOO) spiked 11% to $12.50 in mid-day trading on the news that Miller wants to raise between $28 billion to $30 billion to buy the company at $20-$22 a share.

Calls to Miller’s office were not returned.

Some are skeptical that Miller will be able to succeed. Wrote Standard & Poor’s Internet analyst Scott Kessler in a note, “We think YHOO is attractively valued, but that Miller would have difficulty raising this amount of capital, given the state of the global economy, of capital markets, and of YHOO itself.”

Miller has close ties with Yahoo and activist investor Carl Icahn. Miller was nominated to Yahoo’s board last August as part of a settlement which gave Icahn three seats. However, Miller withdrew because former employer Time Warner (TWX) (which also owns Fortune) would not waive a non-compete clause. Miller, who runs venture firm Velocity Interactive Group, was a consultant to Microsoft (MSFT) and Yahoo during their negotiations earlier this year.

Last week Icahn doubled down on Yahoo by spending $67 million for another 6.8 million shares. The corporate raider’s move fueled speculation that a search deal with Microsoft was inevitable. Icahn has lost roughly $1 billion since buying 69 million Yahoo shares at $25 a pop.

By Scott Moritz

It was a tale of two techs Tuesday. Hewlett-Packard (HPQ) surprised Wall Street on Tuesday with a fourth-quarter earnings report that beat analysts’ profit and sales targets. HP shares soared nearly 14% in early trading.

Meanwhile, glass maker Corning (GLW) warned of a sales shortfall in the current quarter as demand for its flat-screen TV and computer panels drops faster than anticipated. Shares fell nearly 12%.

HP posted preliminary adjusted earnings of $1.03 a share, which compares with 84 cents in the year-ago quarter and beats analysts estimates by 3 cents. Sales for the quarter ended Oct. 31 were $33.6 billion, an 19% improvement from revenues of $28.3 billion in the same quarter last year. Analysts were looking for sales of $33 billion, according to Thomson First Call.

The recent acquisition of IT service shop EDS so far has helped HP dodge the full impact of the impending recession. “Our ability to execute in a challenging marketplace differentiates HP, enabling it to increase share, expand earnings and emerge from the current economic environment as a stronger force,” CEO Mark Hurd said in a statement.

Looking ahead, HP predicts pro forma profit of about 94 cents a share on sales of $32.25 billion in the first quarter ending in January. Analysts expected adjusted earnings of 93 cents a share on $33.7 billion in sales. HP says it will release its October quarter earnings Nov. 24.

Corning, however, continues to struggle with order cuts as flat-panels and big-screen TV inventories pile up. The company, the largest maker of liquid crystal display screens for televisions and computers, says fourth-quarter sales will fall below its guidance of $1.1 billion to $1.2 billion. It warned that profits will be at the low end or below its prior guidance of $0.20 to $0.28 a share. Corning did not offer revised financial targets.

By Scott Moritz

U.S. regulators on Monday charged Dallas Maverick owner and outspoken blogger Mark Cuban with using confidential information in 2004 to sell his stake in Mamma.com, a Montreal search engine now known as Copernic (CNIC). His sale of all 600,000 shares helped Cuban avoid a 10% dive in the stock, or about $750,000 in losses, the government contends.

The Securities and Exchange Commission filed a civil lawsuit against Cuban on Monday. No criminal charges were filed.

Cuban, the biggest shareholder in Mamma.com, was allegedly angered by plans for a private sale of discounted Mamma.com stock, according to the lawsuit filed in U.S. District Court for the Northern District of Texas.

Mamma’s CEO had contacted Cuban to see if he was interested in participating in the so-called PIPE, or private investment in public equity, according to the SEC complaint. Selling the stock at a discount effectively dilutes the stakes held by existing shareholders. Cuban allegedly responded: ”Well, now I’m screwed. I can’t sell,” according to information provided by the Mamma CEO to regulators.

But sell he did, according to the SEC. One minute after hearing the full details of the private investment offer for Mamma.com shares, Cuban allegedly called his Dallas broker and said: “Sell what you can tonight and just get me out the next day.”

The SEC wants Cuban to pay back the $750,000 he avoided in losses after Mamma.com’s shares fell as well as a potential fine of $2.25 million.

Cuban issued a statement Monday saying the charges had no merit. “The government’s claims are false and they will be proven to be so,” he said.

Cuban’s net worth has been estimated to be $2.8 billion. His big jackpot came in 1999 when he sold Broadcast.com to Yahoo (YHOO) for nearly $6 billion, one of the largest cash-outs of the Internet boom.

As the owner of the Mavericks and Internet soapbox Blog Maverick, Cuban has displayed a fiery temperament at times. After a few shouting matches with Mavericks head coach Avery Johnson earlier this year, Cuban fired Johnson, the most successful coach in franchise history, at the end of the NBA season in April.

If skirting securities laws to avoid losing a relatively insignificant amount of money sounds strange, it isn’t, says Scott Friestad, deputy director of enforcement for the SEC.

“It’s not uncommon that the amount of the transaction is not correlated to a person’s financial wherewithal,” said Friestad. “We’ve seen sales worth $15,000 by people with $1 million-a-year salaries.”

By Scott Moritz

Nortel (NT) plans a major restructuring and another round of job cuts as demand for tech gear plunges.

The Toronto networking equipment giant said Monday it would trim 1,300 jobs on top 1,200 cuts previously announced. Nortel had 32,550 employees at the end of 2007.

The company also said four top executives, including its head of sales and its chief technology officer, would leave at year-end.

The news comes as Nortel posted third quarter earnings that met lowered targets. The company warned, however, that 2008 sales would fall 4% — at the lower end of its previous guidance of 2% to 4%.

Like other tech shops that have lowered forecasts, including Qualcomm (QCOM), Cisco (CSCO), Microsoft (MSFT) and Intel (INTC), Nortel cited a sudden slowdown in orders that started in September and has shown no signs of letting up. Corporate spending cuts, tight-fisted phone companies and a weaker consumer demand have sent the tech sector into a deep slump.

In September, Nortel slashed guidance and said it would look to sell or eliminate some business units. The news shocked investors who sent the stock down 43% in a one-day selloff Sept. 17.

In addition to plans to cut a total of 2,500 jobs, Nortel has shuffled its management. Marketing chief Lauren Flaherty, technology chief John Roese, head of global services Dietmar Wendt and head of sales Bill Nelson will leave the company at the end of the year, Nortel announced.  

For the third quarter, Nortel took a one-time charge of $3.2 billion ($2.1 billion in writedowns for tax adjustments, and $1.1 in goodwill charges) putting the net loss at $3.4 billion, or $6.85 a share. Excluding those charges, pro forma profit was 30 cents a share, well below the 8-cent adjusted profit last year but in line with analysts expectations.

Sales for the third quarter were $2.3 billion, down 15% from year-ago levels but meeting Wall Street expectations.

Looking ahead, Nortel cut its full year sales projection to about $10.5 billion or about 4% below 2007 levels. Analysts had anticipated a 4% full year slide in sales for Nortel.

The Roadster goes 0 to 60 mph in 3.9 seconds. Image: Yi-Wyn Yen

By Yi-Wyn Yen

SAN FRANCISCO – How much is Tesla Motors worth?

Tesla CEO Elon Musk won’t say, but it’s at least too expensive for General Motors to buy. “I’m not sure they can afford Tesla right now,” he said during a 30-minute talk Friday at the Web 2.0 Summit.

The South African-born entrepreneur talked candidly with host John Battelle about the failures of the auto industry and Tesla’s own troubles. Battelle had asked why GM (GM) doesn’t buy the electric car startup.

GM reported a $2.5 billion loss in the third quarter Friday and also warned that it could run out of cash soon. Said Musk, “There’s an issue with organized labor and trade and management still acts like it’s 1955. There are too many country club memberships, and [GM] management has focused on the wrong thing. “

Tesla has been plagued with its own problems. In mid-October Musk, who has helped bankroll Tesla, became its third CEO in less than a year, announced layoffs and delayed the debut of its forthcoming electric sedan, the Model S.

Musk explained why Tesla had to let go 10% of his employees last month. “Before market Armageddon occurred, the point was to raise $100 million. And we intended to get going with that in full force before the market collapsed,” he said.

The company settled for cutting costs and raising $40 million from its existing investors. Musk says he’s backing half of the $40 million round. He has already poured $55 million of his own money into the company.

Despite the tough economic climate, Musk felt confident that Tesla could have raised the $100 million. However, he said that would have meant giving up more control of the company.

Production of the Model S has been delayed six months to mid-2011. Musk says the company is churning out 10 of its Roadster sportscars a week and by early next year, will make 30 cars per week. He says Tesla will be profitable when it sells its expected lot of 1,200 Roadsters.

Said Musk, “I may be optimistic with the schedule, but I can deliver.”

By Michal Lev-Ram

SAN FRANCISCO – Last year Facebook CEO Mark Zuckerberg showed up at the Web 2.0 Summit in sandals and dodged questions about Microsoft’s then-rumored $240 million investment in the company.

This year, he showed up in tennis shoes and told the crowd of techies that Facebook doesn’t need any more funding, despite recent rumors that the Palo Alto-based social networking site is looking to raise another round of financing. Zuckerberg also said that instead of a hiring freeze or layoffs (which have plagued many local companies in recent weeks), Facebook is actively looking for more “really good technical people.” The company currently has about 700 employees.

Microsoft’s (MSFT) infusement of cash brought Facebook’s valuation to $15 billion late last year, shocking many in the industry. Web impresario John Battelle, who interviewed Zuckerberg on stage, asked the young CEO if he thought Microsoft is happy with the price they paid.

“The deal was about more than the investment,” said Zuckerberg, who emphasized the two companies are working together on ad placement and search functions. “I think a lot of people obsess over the price that they paid.”

Facbook says it now has over 120 million users. But despite its popularity, the site has been criticized for not having a proven revenue model. Zuckerberg said some have misunderstood his emphasis on growing the site to mean that the company doesn’t have a strategy for making money. Facebook, he noted, has several revenue strategies — including brand sponsors and ads. (Battelle added a third — Microsoft).

“They are both strong and growing quickly,” said Zuckerberg, who would only say revenues are in the “hundreds of millions.” As an example, he cited a New York Times ad that prompted more than 200,000 people to pass around an article on Barack Obama’s presidential victory.

Zuckerberg also discussed Facebook Connect, a new iteration of the company’s platform which will allow developers to create applications outside the site. But he admitted the first version, reportedly launching later this month, won’t be a direct source of new revenue.

By Scott Moritz

Dell (DELL) is trying unpaid vacations (for starters). 

The No.2 PC maker, already grappling with a massive turnaround strategy, is taking a closer look at expenses and has informed employees of a company-wide cost cutting plan that includes voluntary five-day unpaid leaves for everyone.

According to an internal memo confirmed by a company representative, Dell has frozen its hiring and is considering a range of cost-reduction plans.

In addition to the unpaid furloughs, the company is offering buyouts and cutting some of its contract workers. Dell already completed a 10% staff reduction plan this year that was put in place in May.

Sales, particularly in the company’s PC business, started slumping in September, and Tuesday’s move shows they haven’t bounced back yet. Dell is scheduled to release its October earnings results November 20. Some observers are bracing for a shortfall warning before then, given the slumping demand and overall decline of the economy.

Dell has been particularly vulnerable to the slowdown, having started its shift to a retail sales strategy and away from its famed buyer-direct, made-to-order manufacturing scheme. The company had boosted its staff levels for the transition.

In 2005, Dell had 72,000 employees, and by the end of 2006, the company had about 90,000 workers. Dell had 88,000 employees at the end of last year. “These were mostly white-collar workers brought in to build the business,” says Cowen analyst Lou Miscioscia. “Things have gotten a lot more challenging,” says Miscioscia, who doesn’t see the other PC makers like Hewlett-Packard (HPC) or IBM (IBM) having as bad a problem right now.

The big problem for Dell says UBS analyst Maynard UM, is that “they are unfortunately retooling during the backdrop of a weak end market. “

By Scott Moritz

Free. That’s Vodafone’s (VOD) recently-unveiled price for the hotly-anticipated touchscreen BlackBerry Storm from Research in Motion (RIM) in the United Kingdom.

In a sign of just how desperate phone companies are to lock customers in to lengthy contracts, Verizon’s (VZ) wireless partner is willing to subsidize the Storm – which sells for about $500 without a calling plan – in order to lure subscribers in England.

Though a final decision has yet to be made, Verizon is considering the same strategy for the Storm’s U.S. debut next month, according to an industry source familiar with the discussions. Another person close to the company says it’s unlikely the Storm will be free.

Verizon declined to comment on its pricing plan for the Storm.

The fact that Verizon is even considering a free phone highlights the competitive pressure created when AT&T (T) started selling a heavily-subsidized Apple (AAPL) iPhone for $199.

Most industry analysts expect the Storm, which has received favorable reviews, to be priced at or below the iPhone.

While Verizon would like to use its exclusive Storm deal to gain an edge in the smartphone market, selling it for free “would be breaking new ground for Verizon,” said Roger Entner, an analyst with Nielsen IAG’s . “It’s likely that they will put it at $150 and maybe $99 if they want to ship massive volumes during the holiday.” At either price, the Storm would be heavily discounted.

Verizon has come up short on blockbuster phones over the past year and a half as the iPhone has become the icon of the smartphone market. AT&T has been a driving force in the U.S. wireless market thanks to the iPhone, which pulls in an average $95 per month. But that drive has also come at a steep price to Ma Bell, which forks over $375 upfront for every iPhone sold. That cost the company $900 million in the third quarter.

For RIM, the Storm represents its biggest step yet into the consumer market as it tries to derail the success of the iPhone. One major challenge is to get devotees of BlackBerry’s physical keyboard to embrace the clickable touchscreen keypad on the Storm. The iPhone’s onscreen keyboard has presented some difficulties for many typists.

So far, Verizon hasn’t had much success with its touchscreen devices. But the Storm, if it’s a hit, could finally establish Verizon as a player in the red-hot touchscreen market. What’s more, it could not only entice new customers, but also convert old lower-paying customers to more expensive contracts. Each Storm subscriber will have to sign up for a BlackBerry e-mail and calling plan, which currently starts at $80 a month.

By Scott Moritz

Motorola on Thursday said its plan to break up into two companies is on hold, leading the head of its mobile phone business to outline a new plan for reviving the company’s ailing handset business.

Part of the restructuring plan includes the loss of 3,000 jobs, most from the mobile phone division, a company representative confirmed.

Motorola (MOT), which reported third quarter earnings that beat profit estimates but missed sales targets, said the split up called for by activist investor Carl Icahn will not happen in the third quarter next year as planned. Icahn wasn’t immediately available for comment.

Motorola was down 5% Thursday and has seen its stock fall 72% in the past year as the lack of a successor to its once-hot Razr phone wiped out its sales volume and profits amid a declining economy.

Sanjay Jha, who took over as head of the handset business in August, blamed the economy, the credit freeze and “changes underway” in the mobile phone unit for the breakup delay. Analysts have been critical of the costly breakup plan, seeing it as a distraction that failed to address the underlying problems at the world’s third-largest phone maker.

On a conference call with analysts after earnings were announced, Jha said the company would cut the total number of phones models it produces next year and focus less on its own mobile operating system in favor of systems developed by other companies, including Google’s (GOOG) Android and Microsoft’s (MSFT) Windows Mobile.

Some analysts who have been critical of the company welcomed the new plan.

“Sanjay nailed it,” said Ed Snyder, an analyst with Charter Equity Research. “It was a perfect description of the big problems facing the handset business and an intelligent plan for fixing them. Unfortunately it will be painful.”

By Michal Lev-Ram

SANTA CLARA, Calif. – First Apple rolled out its App Store, a mobile storefront where consumers can download games, social networking services and other software programs for their smartphones.

Starting Wednesday, Google will offer similar services through its Android Market, which coincides with the launch of the first Google-powered mobile phone.

Now comes Research in Motion (RIMM). The BlackBerry maker announced Tuesday that it too will launch a mobile storefront – this one dubbed Application Center.

“This is a new channel to market,” RIM co-CEO Mike Lazaridis told some 700 mobile developers attending the BlackBerry developer conference here on Tuesday. “The opportunity is larger than ever, from enterprise to consumer.”

Mobile applications have been around for years, but never gained traction until Apple started offering consumers the user-friendly, one-stop shopping App Store in July. Almost overnight, the race for consumer dollars — not to mention the advertising dollars attached to mobile software — was on. Apple says its customers have downloaded more than 100 million applications to date. Now companies like RIM are scrambling to compete.

The three stores, while essentially similar, have some key differences. Unlike Apple (AAPL) and RIM, Google says its applications will be available for free. RIM will take a 20% cut of the revenue generated from download fees, while Apple pockets 30% of its developers’ revenues. Also, Apple and RIM must approve software applications before they can be sold — a level of control that critics say should be left to users, not the companies. Google, meanwhile, insists developers can sell any programs they want through Android Market.

This isn’t the first time RIM, the leader in the U.S. smartphone market, has gone after Apple. The two companies became rivals when the iPhone launched last year, but it didn’t get serious until Apple started courting BlackBerry’s business customers with the new high-speed iPhone 3G and App Store. RIM, for its part, is now chasing after Apple’s core customers – tech-savvy consumers - with flashier devices that emphasize multimedia and social networking features. The Canadian mobile device maker plans to launch an iPhone-like touchscreen device called the Storm later this fall.

But the iPhones assault and some unexpected product delays are worrying RIM investors as the crucial holiday season nears. ”We believe the next 30-45 days are a critical window for RIM,” Citigroup analyst Jim Suva wrote in a recent report.

And while Apple and Google’s (GOOG) application stores are already live, RIM’s Application Center won’t be up and running until March 2009.

Still, RIM’s 31% share of the U.S. smartphone market will be hard to crack. Apple trails in fourth place  — behind HTC and Palm (PALM) – with about 12%, according to Nielsen Mobile. But RIM isn’t alone in its pursuit of Apple. Samsung, Nokia (NOK) and just about every other handset maker is now looking to catch up too.