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Yahoo! (NASDAQ: YHOO) yesterday posted its lowest price in nearly five years. The stock moved to $17.75, down from a 52-week high of $34.08.

The Wall Street Journal pushed the idea that this was an options play. "Trading in Yahoo options leapt to four times the normal level as investors picked up 168,000 calls that allow them to buy the company's stock." In other words, some traders are willing to gamble that the shares will go up.

But, they won't go up. There is growing evidence that marketers prefer search internet ads to display advertising. Yahoo! sells a great deal of display inventory and is a distant second to Google (NASDAQ: GOOG) in search. Some of that may change as Yahoo! begins to use the Google system to create its search results.That may not offset the fact that Yahoo! probably has as much display advertising availability as any company in the world.

Because Yahoo! has shown it is unwilling to make major cost cuts, a flattening of its revenue growth would be a disaster for its investors. The firm's year-over-year sales improvement is already barely above 10%. What had been a growth stock three or four years ago has now become a buyout gamble. Investors still hang on to some hope that Microsoft (NASDAQ: MSFT) or a large media company will make an offer for the portal company.

That means that Yahoo! still carries a "takeover" premium, which begs the question of where the shares might trade at the end of the year, if there are no offers. Investors are gambling that there is a 30% chance that Yahoo! will be bought, if it is not, the stock heads toward $13.

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

Google (NASDAQ: GOOG) appears to be moving in the direction of having a new product launch every day. Over the weekend it said it would bring out its own internet browser. It also announced the launch of a video-sharing product for businesses.

According to Reuters, "Unlike YouTube, which is aimed at consumers, Google Video for business is designed to be shared among designated users within an organization's own Web domain, protecting executive speeches, product training, sales meetings or other employee video messages from unauthorized disclosure outside the company."

Because Flash video, the most widely used format, can already be put in password protected sections behind a company's firewall, it is hard to see why the new product would have much appeal.

Google has not had much success with its enterprise software. There is little evidence that the Google Apps desktop software is selling well. That may be because the company offers good free versions of the product. Most of Google's other productivity software including GMail, Google Calendar and Google Talk can be used without charge.

One of Wall Street's only criticisms of Google is that its move into enterprise products is not making any money. If that comment is fair, Google just dug itself a deeper hole.

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

Analyst upgrades:

• RBC Capital upgraded Sciele Pharma (NASDAQ: SCRX) to Sector Perform from Underperform following the acquisition by Shionogi.
  
• Merrill believes Alcoa (NYSE: AA) may pursue an acquisition of Alumina Ltd (NYSE: AWC) following recent share weakness. Shares of Alumina were upgraded to Buy from Underperform.
  
• Stanford upgraded shares of Google (NASDAQ: GOOG) to Buy from Hold after channel checks indicated U.S. search market trends have stabilized as they believe GOOG's market share gains are broadening, Q3 expectations are modest and the valuation is near lows. The firm has a $550 target on the stock.
• Lowe's (NYSE: LOW) was raised to Buy from Neutral at Goldman.
  

Analyst downgrades:

• WestLB downgraded shares of Ericsson (NASDAQ: ERIC) to Reduce from Hold as they believe the company's Q3 earnings could miss expectations.
  
• Lehman downgraded Intersil (NASDAQ: ISIL) to Equal Weight from Overweight based PC exposure and market share loss in notebook power. The company's target was lowered to $24 from $29.
• Dean Foods (NYSE: DF) was lowered to Equal Weight from Overweight at Morgan Stanley.
  
• Gilead Sciences (NASDAQ: GILD) was cut to Neutral from Buy at Banc of America.
• JP Morgan lowered Bank of Nova Scotia (NYSE: BNS) to Underperform from Sector Perform.

Analyst initiations:

• Citigroup initiated Eastman Kodak (NYSE: EK) with a Sell rating and $13 target. The firm believes 2008 consensus estimates and guidance are too high given the company's headwinds.
  
• GT Solar (NASDAQ: SOLR) was assumed with a Neutral rating and $16 target at Banc of America. The firm believes the risk/reward is balanced at current levels with no significant new polysilicon opportunity. Shares were also initiated at Thomas Weisel with an Overweight rating and $18 target and at UBS with a Buy rating and $19 target.
• Citigroup initiated Xerox (NYSE: XRX) with a Buy rating and $20 target and Electronics for Imaging (NASDAQ: EFII) with a Hold rating and $18 target.

The New York Times reports that Google Inc. (NASDAQ: GOOG) will introduce its own browser -- named Chrome -- but will it cost Microsoft Corp. (NASDAQ: MSFT) any revenues? Since Microsoft gives away its browser, the answer is no. However, Google's move may force Microsoft to divert resources to upgrade its browser to avoid losing market share.

And Microsoft' still dominates the browser market. The Times reports that Microsoft "still holds 73 percent of the browser market. [Open-source browser] Firefox's [share] has climbed to 19 percent, while Apple Inc.'s (NASDAQ: AAPL) Safari has 6 percent." And Google's Chrome introduction marks "a shift for Google, which has strongly backed Firefox."

So why is Google doing this? It could be so that as Google develops applications -- such as search, word processing, spreadsheets, presentation and e-mail programs -- designed to run on browsers for PCs and handheld devices it wants to avoid being so dependent on Microsoft. InfoTech reports that a "new feature in the latest beta of Microsoft IE 8 makes it easier for users to block information about their browsing habits, a move which could hamper Google's interests in display advertising." And while Firefox keeps pressure on Microsoft to upgrade its browser, Google has far more resources to threaten Microsoft's share. So Chrome could divert more Microsoft cash and staff.

U.S. stock futures were higher Tuesday morning as oil dropped $8 a barrel following little damage to oil rigs in the Gulf of Mexico from Gustav. Tuesday marks the return of many from the holiday weekend and the beginning of the school year. While oil will undoubtedly be the focus today, construction spending and ISM Index numbers are also due.

Korea Development Bank is in talks to buy a stake in Lehman Brothers Holdings Inc. (NYSE: LEH), Bloomberg reports. LEH shares are climbing over 5.5% in pre-market trading after CEO of the Korean bank confirmed the discussions. According to the Sunday Telegraph, KDB could inject as much as $6 billion of additional capital into Lehman. No doubt, this is something Fuld has been hoping for following the massive writedowns Lehman took. But is it something Americans wants as more foreign government-backed firms buy into Wall Street companies.

Meanwhile, the internet is abuzz over Google Inc. (NASDAQ: GOOG)'s introduction Tuesday of its own internet browser, Chrome, as it further butts heads with Microsoft Corp (NASDAQ: MSFT). While Microsoft has its Internet Explorer, other browsers exist, including the popular Mozilla's Firefox. Google claims its browser is designed better to show web applications and provide higher protection. GOOG shares are climbing over 1.5% in pre-market trading on the news.

Meanwhile, Alcatel-Lucent (NYSE: ALU) revamped its top management on Tuesday and named a former BT boss Ben Verwaayen as its new chief executive and Lagardere executive Philippe Camus as its new chairman. ALU shares are down about 1.5% in pre-market trading.

Google (NASDAQ: GOOG) will offer its own internet browser to compete with Microsoft's (NASDAQ: MSFT) Internet Explorer and the Mozilla Firefox product.

The software may be plagued by the law of unintended consequences, doing more damage to Firefox than to Microsoft. According to The Wall Street Journal, Google says the "software is designed to make it faster to browse the Web and easier to run applications without downloading software to a computer."

Most PCs come loaded with Internet Explorer as part of Microsoft Windows. That leaves Google with the challenge of getting consumers to download its new browser. Firefox is also software which must be downloaded. Google may end up competing more with Firefox, a product it has supported in the past, than with IE.

Most consumers don't care what browser they use as long as they have access to the internet. Microsoft's largest advantage is that it is part of the PC software package that people use without any thought as to how it might be changed.

Google will end up hurting an ally without doing any damage to its primary rival.

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

According to this article, advertisers who use the Internet to get their message across may not like Microsoft's (NASDAQ: MSFT) Internet Explorer 8 beta. That's because the software giant is incorporating technology into the browser that will make it harder for data collection that could be used to target ads. In addition, the browser will be able to block some ads entirely, as well as block content from another website from appearing on the current site a user is viewing. The rationale for the latter is that the outside website could be capturing data on the user's habits.

All this adds up, in my mind, to a legitimate fear for advertisers. Look, I'm like anyone else. I don't want a lot of data collection going on. But, there are basically only two ways for companies like Yahoo! (NASDAQ: YHOO) and Google (NASDAQ: GOOG) to make money off web content: engage a subscription model, or utilize ad platforms to monetize eyeballs. The Internet has proven to be very resistant to subscription models. Sure, some do work to great success. For the most part, however, surfers don't want to have to throw a credit-card number into a form to be able to see content. It just doesn't work. They want unfettered access to sites. If this is to be the case going forward, then highly-targeted ads are going to play an increasing role in the solution to monetization challenges. Web sites aren't like cable channels, which have the dual revenue streams of subscriber fees and ad sales.

And, keep in mind that the companies mentioned above aren't the only ones who rely on targeted ads. How about Disney (NYSE: DIS)? News Corp. (NYSE: NWS)? Viacom (NYSE: VIA)? They all have major Internet strategies that utilize ad revenues. And let's not forget the incredible irony here. Mr. Softy has its own Internet strategy that needs ads to survive. I guess it's a tough position to be in: the designers want to enhance the attractiveness of Internet Explorer to users by helping them avoid the very thing that powers, in part, shareholder value for the maker of Internet Explorer. A conundrum, to be sure. I personally hope a solution can be found that will allow advertisers to continue selling their wares. I don't find advertising to be evil. I think it's a great industry that serves an important function in the economy. Microsoft had better consider that.

Disclosure: I own Disney; positions can change at any time.

Sheldon suggested the other day that Microsoft Corp. (NASDAQ: MSFT) should split off its web search and services arm so that it could fit better with a possible Yahoo, Inc. (NASDAQ: YHOO) combination. Instead of entertaining that notion, Microsoft still has some cash to spend to ensure, for now at least, it still has a growing presence in the web search and e-commerce arena.

To that end, the company announced this morning that it will spend $486 million to purchase Greenfield Online, Inc. (NASDAQ: SRVY) as it swiped an earlier takeover offer from the Quadrangle Group with its $15.50 per share offer. Microsoft's offer of $17.50 per share is a 10% premium over Greenfield's closing price this past Monday, when the offer was received without Greenfield knowing the origin. That is, until today.

Microsoft wants control of www.ciao.com, one of Europe's leading price comparison shopping search engines. Does Microsoft really think owning a leading consumer review and price shopping search engine will bolster its Microsoft Live platform? Since it couldn't compete in the U.S. against Google, Inc. (NASDAQ: GOOG), perhaps Microsoft is turning to international purchases as a second competitive act. Greenfield also has an "internet survey solutions" division that Microsoft will sell to an undisclosed buyer.

Stock futures were lower Friday morning after Dell reported disappointing results after the close Thursday. Rising oil prices due to Gustav also weighed in on investors. This morning, some economic data on personal income and spending among others will be released. Perhaps it could give the market some positive news ahead of the three-day weekend.

Dell Inc. (NASDAQ: DELL) shares are dropping about 10% in pre-market trading after the computer maker reported a 17% drop in profit to $616 million, or 31 cents per share as margins were hurt by slashing PC prices as Dell tried to fend off competition in overseas markets. Sales rose 11% to $16.4 billion, ahead of Wall Street's view for $15.9 billion in sales.

Staying with earnings, Marvell Technology (NASDAQ: MRVL) shares are also down -- over 3% in after-hours -- after it reported its results after the close Thursday. The chipmaker that supplies Apple's iPhone and Research In Motion's BlackBerry beat expectations but gave a conservative outlook, forecasting current quarter sales below analyst expectations.

Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) which stocks have been shooting upward the past few days. The climb in share prices follows a period of downward spiral. BusinessWeek is trying to estimate how much investors have lost in its damage report.

This week, I had a chance to talk to Elizabeth Blair. She joined Yahoo! (NASDAQ: YHOO) in 1998 and then became the company's vice president of business operations for the global operating group. Yes, she got a great education in the online marketing space. Interestingly enough, she also has a law degree from Harvard and even practiced M&A and securities law.

Well, Blair has leveraged her experience into an upstart venture: Brand.net. The company recently raised a $10 million Series B round. The investors include: Norwest Venture Partners and InterWest Partners.

Essentially, Brand.net is an online advertising network focusing on major customers. The platform is more than just some technology, though, as Brand.net has assembled a top-notch team of brand experts.

Of course, as seen with companies like Google (NASDAQ: GOOG), the search-based ad business has become a huge profit machine. But this is only one part of the advertising game. Of course, branding is a huge market in the ad market, so why can't it be the same for the online world?

Certain issues still need to be worked out, such as dealing with user-generated content or finding ways to measure performance. No doubt, these are tough problems. But , if companies like Brand.net can find some creative solutions, it should open up another big growth opportunity in the online world.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

It's cool fun sometimes to look at under-$10 stocks and see if there are any worth investing in. TiVo (NASDAQ: TIVO), famous maker of digital-video-recorder technology, is currently trading under $10 a share, and it reported its Q2 numbers on Wednesday. I can't say, though, that I'm ready to buy just yet, even though some of the stats presented in the release described a nice improvement in year-over-year comparisons.

The bottom line, in fact, improved substantially. Earnings per diluted share came in at 3 cents. Last year, TiVo saw a loss of 18 cents per diluted share. According to Earnings.com, analysts were looking for a loss of 2 cents per share during the quarter, so estimates were certainly beat.

Cash flow from operations also jumped in a very nice way. The company generated over $10 million over the last six months. During the similar time period in 2007, TiVo needed to use almost three times that amount to keep operations going. Cash flow is an important metric for investors to look at, so that was good to see.

Google, Inc. (NASDAQ: GOOG) unveiled its Ad Manager advertising management platform this week after a beta release in June. This platform allows website operators to manage advertising inventory, tracking and ROI. And the price is right -- there is none -- which fits into Google's history of giving away some key products for free.

Google's Ad Manager public release is significant because it will allow almost anyone to set up and use both direct and network-based advertising to help eliminate costs and pump up revenue -- even if the ads aren't from Google's massively popular AdSense or AdWords program.

However, Google is making it super easy for website publishers to integrate its AdSense platform directly into its Ad Manager product. This was pretty obvious from day one as Google continues to recruit more ad customers into its universe to grow its own ad revenue. Ad revenue, still, is the biggest single component of Google's income.

Research in Motion (NASDAQ: RIMM) closed at $127.18 Tuesday. RIMM October option implied volatility of 53 is near its 26-week average according to Track Data, suggesting non-directional price movement.

Apple (NASDAQ: AAPL) closed at $173.64 Tuesday. AAPL October option implied volatility of 37 is below its 26-week average of 47, suggesting decreasing price movement.

Google (NASDAQ: GOOG) closed at $474.16 Tuesday. GOOG October option implied volatility of 39 is near its 26-week average, suggesting non-directional price movement.

Intel (NASDAQ: INTC) closed at $23.15 Tuesday. INTC October option implied volatility of 35 is near its 26-week average, suggesting non-directional price movement.

Cisco (NASDAQ: CSCO) closed at $24.11 Tuesday. CSCO October option implied volatility of 30 is below its 26-week average of 33, suggesting decreasing price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com