Wall Street Beat: Products, transitions slam IT shares

Upcoming products and transitions in leadership buffeted shares of Advanced Micro Devices, Apple, and Yahoo this week.

Investors have soured on AMD this year as Intel has advanced its own multicore chip technology. The postponement of volume production of AMD’s Barcelona quad-core Opteron server chip to the third quarter has not helped.

But AMD got a vote of confidence Thursday when brokerage Stifel Nicolaus raised its rating to “buy” from “neutral.” The brokerage said that bad news has already done whatever damage it could to company shares. On the positive side, the brokerage noted that the last half of the year includes a traditionally strong selling season and that the chip market has stabilized. In response, AMD shares jumped by $1.12 Thursday, to close at $14.77.

Apple shares, meanwhile, jumped $4.59 to close at $125.09 Monday on news of improved features for the much-anticipated all-in-one iPhone mobile device. Apple said that the handset will have eight hours of talk time and six hours of Internet use, and that its screen will be glass rather than plastic. One criticism of the iPod screen is that it is prone to scratching. The iPhone’s glass display is expected to be better.

The company’s share price fell somewhat during the week but is still historically high for the company.

Despite great anticipation for the product, due out June 29, and recent surveys showing that consumer interest is high despite the high price (about $500), analysts have issued caveats.

“This phone is more closely watched than any other cell phone, ever. That means any glitch will be covered,” said frequently quoted Jeff Kagan, in an e-mail. “This is the biggest job ever in the history of the cell phone business.”

A big transition, though not to a new product, also moved Yahoo shares. On Monday the company announced that Terry Semel ended his six-year tenure as chief executive officer and that company co-founder Jerry Yang will take over. Semel had been a lightning rod for criticism of the company.

Though Yahoo is widely acknowledged to have some of the best services on the Internet and was an early leader in recognizing the importance of bringing Web 2.0 interactive features into its fold, it has been unable to keep up with Google in the most important revenue generator on the Web: search engine advertising.

The news of Semel’s departure was greeted with enthusiasm. Yahoo shares rose $0.81 to close at $28.12 on the news Monday. But the share price subsequently drifted down, despite getting a temporary boost from rumors that News Corp. would take a share in Yahoo in return for merging the MySpace service with the company.

Yang’s appointment leaves more questions than answers. It’s not clear what new leadership he can bring to the company, which is much bigger and more complex than years ago and is in the middle of various transition efforts. Early results from its new search advertising platform, Panama, are good, but the jury is out on efforts to boost display advertising.