Why no Obamarally? Obama's pretty inaugural speech gave no promise to shareholders of a quick buck:

In reaffirming the greatness of our nation, we understand that greatness is never a given. It must be earned. Our journey has never been one of short-cuts or settling for less. It has not been the path for the faint-hearted - for those who prefer leisure over work, or seek only the pleasures of riches and fame.

Translation: the short-term reward seekers of Wall Street won't get any more bailouts. Shareholders are going to share in the sacrifice. Therefore, stocks are down. Can we dispense with the theory that Obama has a magical hold on the stock market — and that the Dow is a perfect proxy for the health of America?

The latest stock jock to retake the field is Thom Calandra, the founding editor of MarketWatch, a financial-news site now owned by News Corp. He has launched a new investment newsletter, Ticker Trax, on Stockhouse.com. A gutsy move, considering that's exactly the vehicle which crashed his career at MarketWatch; an SEC investigation found that Calandra was buying shares of stocks he recommended before he wrote them up in a MarketWatch newsletter, and then selling them after publication. He surrendered $416,109.58 in illegal profits, and paid a $125,000 fine. As part of the settlement,

Calandra joins Henry Blodget, who was banned from the securities industry for privately trash-talking stocks, but now runs Silicon Alley Insider, a tech-stocks blog. He's been profiled in Wired and explaining Wall Street's woes in The Atlantic. CNBC shouter Jim Cramer draws higher ratings than ever for his populist on-air rants. As a money manager, he was investigated by the SEC and cleared, but later admitted to manipulating stocks. Nevertheless, he's now nominating himself as the SEC's next chairman.

So why are we taking advice from admitted crooks? I think we all cynically subscribe to the theory that it takes a thief to catch one. The mortgage meltdown revealed abuses at Wall Street firms that encompassed the entire business; it wasn't a matter of bad apples, but a rotten barrel. If the game is rigged, then who better to guide your play than the most expert of riggers?

Apple, where cofounder Steve Jobs returned to power in 1998, is up 600 percent since the beginning of 2002. Amazon.com, where Jeff Bezos has reigned as CEO more or less uninterruptedly since the online retailer's founding, tripled its worth. Google, where cofounders Larry Page and Sergey Brin form a troika with hired-hand CEO Eric Schmidt, has also tripled in value since its inital public offering in 2004. These gains remain despite the stock market's punishing fall.

What about Yahoo, eBay, and Microsoft, where founders handed over the company to professional managers? They are all back where they started almost seven years ago. Under former CEO Terry Semel, Yahoo had a brief golden age in 2004, where it outperformed all the other big Internet companies; it ended just as Google began its relentless rise. Meg Whitman overstayed her welcome at eBay, presiding over its stagnation before handing over the CEO job to John Donahoe — like Whitman, also a management consultant by training. Microsoft CEO Steve Ballmer has proven that he's no Bill Gates; the stock has flatlined under his leadership.

Under Yang, the stock has gone down, down, down, interrupted only by the hope that Microsoft might buy the company and in so doing, give its employees the leadership and sense of purpose they so desperately crave. Does that disprove the value of founders? No. Rather, it suggests that by abandoning his company when it was merely a toddler to be reared by strangers, that he was never much of a father figure to begin with.

1) Intel is not the bellwether that it once was. Personal computers and servers, the primary destination for Intel's processors, are not nearly as large a percentage of tech spending as they were back in 2001.

2) Layoffs in the economy have already begun. Fewer employees, fewer PCs needed.

3) Large companies are accelerating virtualization projects. Virtualization is a fancy word for running more applications on fewer servers. It is greener (less power), simpler (fewer servers to break), and cheaper. Good for companies looking to lower capital expenditure and operating expenses in a recession, but bad for Intel.

This explains why Yahoos have been fretting more than usual about the stock's plunging price. Yahoo's stock-purchase plan offers employees a 15 percent discount on shares; the price is set periodically based on market prices, and the discount taken off that. Monday was the most recent price-setting date; the company has a one-day waiting period before employees can sell shares. Hence the concerns that the stock not drop 15 percent in two days — which it nearly did, rendering even the instant profit from the discount void.

It's legal for employees to sell after the one-day waiting period, but it's hardly in the spirit of stock-purchase plans. Yahoo's management is in a tough position: They can crack down on the share-flipping by putting in a longer waiting period, which might hurt morale; or they can allow it to continue, and thereby coddle employees who don't have the company's best interests at heart.

What it really illustrates, though, is how the equity culture turns toxic when share prices tumble. The makeup of the human mind sets us up to treasure gains too little and fear losses too much; that means that employees take stock gains for granted, but fume when their options go underwater.

When that happens, taking a company's 15 percent discount on stock and treating it like free money is just barely understandable. Employees should wonder why they ought to be the ones to buy and hold when it hardly seems like their company has a future. And shareholders should wonder why employees like these are getting free money. So much for aligning interests.

(Photo by 42dreams)

MOUNTAIN VIEW, Calif. – October 16, 2008 - Google Inc. (NASDAQ: GOOG) today announced financial results for the quarter ended September 30, 2008.

“We had a good third quarter with strong traffic and revenue growth across all of our major geographies thanks to the underlying strength of our core search and ads business.  The measurability and ROI of search-based advertising remain key assets for Google,” said Eric Schmidt, CEO of Google.  “While we are realistic about the poor state of the global economy, we will continue to manage Google for the long term, driving improvements to search and ads, while also investing in future growth areas such as enterprise, mobile, and display.”

Q3 Financial Summary

Google reported revenues of $5.54 billion for the quarter ended September 30, 2008, an increase of 31% compared to the third quarter of 2007 and an increase of 3% compared to the second quarter of 2008. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC).  In the third quarter of 2008, TAC totaled $1.50 billion, or 28% of advertising revenues.

Google reports operating income, net income, and earnings per share (EPS) on a GAAP and non-GAAP basis.  The non-GAAP measures, as well as free cash flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAP measures in the accompanying financial tables.

?       GAAP operating income for the third quarter of 2008 was $1.74 billion, or 31% of revenues.  This compares to GAAP operating income of $1.58 billion, or 29% of revenues, in the second quarter of 2008. Non-GAAP operating income in the third quarter of 2008 was $2.02 billion, or 37% of revenues. This compares to non-GAAP operating income of $1.85 billion, or 34% of revenues, in the second quarter of 2008.

?       GAAP net income for the third quarter of 2008 was $1.35 billion as compared to $1.25 billion in the second quarter of 2008.  Non-GAAP net income in the third quarter of 2008 was $1.56 billion, compared to $1.47 billion in the second quarter of 2008.

?       GAAP EPS for the third quarter of 2008 was $4.24 on 318 million diluted shares outstanding, compared to $3.92 for the second quarter of 2008 on 318 million diluted shares outstanding.  Non-GAAP EPS in the third quarter of 2008 was $4.92, compared to $4.63 in the second quarter of 2008.

?       Non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, and non-GAAP EPS are computed net of stock-based compensation (SBC).  In the third quarter of 2008, the charge related to SBC was $280 million as compared to $273 million in the second quarter of 2008.  Tax benefits related to SBC have also been excluded from non- GAAP net income and non-GAAP EPS.  The tax benefit related to SBC was $63 million in the third quarter of 2008 and $48 million in the second quarter of 2008.  Reconciliations of non-GAAP measures to GAAP operating income, operating margin, net income, and EPS are included at the end of this release.

Q3 Financial Highlights

Revenues – Google reported revenues of $5.54 billion for the quarter ended September 30, 2008, representing a 31% increase over third quarter 2007 revenues of $4.23 billion and a 3% increase over second quarter 2008 revenues of $5.37 billion.  Google reports its revenues, consistent with GAAP, on a gross basis without deducting TAC.

Google Sites Revenues - Google-owned sites generated revenues of $3.67 billion, or 67% of total revenues, in the third quarter of 2008.  This represents a 34% increase over third quarter 2007 revenues of $2.73 billion and a 4% increase over second quarter 2008 revenues of $3.53 billion.

Google Network Revenues - Google’s partner sites generated revenues, through AdSense programs, of $1.68 billion, or 30% of total revenues, in the third quarter of 2008.  This represents a 15% increase over network revenues of $1.45 billion generated in the third quarter of 2007 and a 1% increase over second quarter 2008 revenues of $1.66 billion.

International Revenues - Revenues from outside of the United States totaled $2.85 billion, representing 51% of total revenues in the third quarter of 2008, compared to 48% in the third quarter of 2007 and 52% in the second quarter of 2008.  Had foreign exchange rates remained constant from the second quarter of 2008 through the third quarter of 2008, our revenues in the third quarter of 2008 would have been $59 million higher.  Had foreign exchange rates remained constant from the third quarter of 2007 through the third quarter of 2008, our revenues in the third quarter of 2008 would have been $168 million lower.

In the third quarter, we recognized a benefit of $34 million to revenue through our foreign exchange risk management program.

Revenues from the United Kingdom totaled $776 million, representing 14% of revenue in the third quarter of 2008, compared to 16% in the third quarter of 2007 and 14% in the second quarter of 2008.

Paid Clicks – Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 18% over the third quarter of 2007 and increased approximately 4% over the second quarter of 2008.

TAC - Traffic Acquisition Costs, the portion of revenues shared with Google’s partners, increased to $1.50 billion in the third quarter of 2008.  This compares to TAC of $1.47 billion in the second quarter of 2008.  TAC as a percentage of advertising revenues was 28% in the third quarter, compared to 28% in the second quarter of 2008.

The majority of TAC expense is related to amounts ultimately paid to our AdSense partners, which totaled $1.33 billion in the third quarter of 2008.  TAC is also related to amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $167 million in the third quarter of 2008.

Other Cost of Revenues - Other cost of revenues, which is comprised primarily of data center operational expenses, amortization of intangible assets, content acquisition costs as well as credit card processing charges, increased to $678 million, or 12% of revenues, in the third quarter of 2008, compared to $674 million, or 13% of revenues, in the second quarter of 2008.

Operating Expenses - Operating expenses, other than cost of revenues, were $1.63 billion in the third quarter of 2008, or 29% of revenues, compared to $1.64 billion in the second quarter of 2008, or 31% of revenues.  The operating expenses in the third quarter of 2008 included $859 million in payroll-related and facilities expenses, compared to $810 million in the second quarter of 2008.

Stock-Based Compensation (SBC) – In the third quarter of 2008, the total charge related to SBC was $280 million as compared to $273 million in the second quarter of 2008.

We currently estimate stock-based compensation charges for grants to employees prior to October 1, 2008 to be approximately $1.1 billion for 2008.  This does not include expenses to be recognized related to employee stock awards that are granted after October 1, 2008 or non- employee stock awards that have been or may be granted.

Operating Income - GAAP operating income in the third quarter of 2008 was $1.74 billion, or 31% of revenues.  This compares to GAAP operating income of $1.58 billion, or 29% of revenues, in the second quarter of 2008.  Non-GAAP operating income in the third quarter of 2008 was $2.02 billion, or 37% of revenues.  This compares to non-GAAP operating income of $1.85 billion, or 34% of revenues, in the second quarter of 2008.

Interest Income and Other, Net – Interest income and other was $21 million in the third quarter of 2008, compared with $58 million in the second quarter of 2008.  The decrease was primarily related to an increase in expenses substantially due to more activity under our foreign exchange risk management program. The cost of the options used to manage our foreign exchange risk is amortized on a mark-to-market basis.  As a result, the amount of amortization expense we recognize in any particular quarter is impacted by how much the option moves into or out of the money, as well as the underlying currency's volatility.

Net Income – GAAP net income for the third quarter of 2008 was $1.35 billion as compared to $1.25 billion in the second quarter of 2008. Non-GAAP net income was $1.56 billion in the third quarter of 2008, compared to $1.47 billion in the second quarter of 2008.  GAAP EPS for the third quarter of 2008 was $4.24 on 318 million diluted shares outstanding, compared to $3.92 for the second quarter of 2008, on 318 million diluted shares outstanding.  Non-GAAP EPS for the third quarter of 2008 was $4.92, compared to $4.63 in the second quarter of 2008.

Income Taxes – Our effective tax rate was 24% for the third quarter of 2008.

Cash Flow and Capital Expenditures – Net cash provided by operating activities for the third quarter of 2008 totaled $2.18 billion as compared to $1.77 billion for the second quarter of 2008.  In the third quarter of 2008, capital expenditures were $452 million, the majority of which was related to IT infrastructure investments, including data centers, servers, and networking equipment.  Free cash flow, an alternative non-GAAP measure of liquidity, is defined as net cash provided by operating activities less capital expenditures.  In the third quarter of 2008, free cash flow was $1.73 billion.

We expect to continue to make significant capital expenditures.

A reconciliation of free cash flow to net cash provided by operating activities, the GAAP measure of liquidity, is included at the end of this release.

Cash – As of September 30, 2008, cash, cash equivalents, and marketable securities were $14.4 billion.

On a worldwide basis, Google employed 20,123 full-time employees as of September 30, 2008, up from 19,604 full-time employees as of June 30, 2008.

I had no idea idea it would fall this much but I finally decided to stop pushing a rope by calling for change from the inside (as a shareholder). I voted with my feet. This board has the blood of its shareholders on its hands, and I hope they wear that scarlet letter stigma for a long time.

I'm a tech generalist. I have a lot of opportunities to invest in other stocks with less drama and easily understandable stories.

Got that? There's Yahoo's problem in a nutshell. Jerry Yang thinks he's got a one-of-a-kind global Internet franchise. But to Wall Street, Yahoo's just another set of numbers. Want exposure to the online-advertising market? Just buy Google. That seems easier. (Photoillustration by Fortune)

Yahoo is now hastily revising its mass-firing plan, upping the number of employees who will be shown the door. The theory: eBay's mass-firing, which had been demanded by shareholders for months, was greeted with Bronx cheers because it didn't go far enough in light of the ongoing global economic crash. Now eBay will like be forced to break the cardinal rule of mass firings: death by an unending wave of cuts.