Market bottoms. That golden spot where we can all say… Oh yeah, I caught the exact low. In a dynamic world such as the ikia furniture store market, bottoms are elusive and random in terms of time and space. How so? Consider the confirmation of a bottom, which naturally occurs after it has been made. Who knows when that’ll be, right? But like being on time for work, it’s very rare to time it correctly. When you leave home for your job, in most cases, you’ll either be early or late. This is true for market bottoms, so why bother searching for it? Is it ego-driven? Is there something really gained by finding the bottom? I prefer another approach.

The Media Obsession

The media loves to cover this topic. Of course, bull markets are more exciting than bear markets, and the search for the elusive bottom gets ratings and perks interest. CNBC covers this each day, looking for the one rally that will signify a bottom. Analysts come on their shows proclaiming victory when the Dow rises 250 points. But when the market loses 300 points the next day, the bottom search continues, and woe is me! Jim Cramer, a noted bull, constantly talks about bull markets… they are out there. He’s no dummy, though. Having been a fund manager, he’s quite aware of the impact bear markets have, and the swift but large profits made during the cycle.

However, ratings are weak if you’re playing the bear. Jim has been talking about a bottom for months now…1200 on the SPX will be it. So, he constantly pawns off his bull talk on a naive audience, to only get trapped over and over again. How many times can you be hit in the head with a club before crying uncle? What’s particularly disturbing is this pied piper is leading a his viewers and readers down a dark hole, not preparing them for difficult times ahead. Oh sure, he makes some good calls on occasion. But a broken clock is also right twice a day.

The Secret Ingredient

Discipline to stay away from the noise is most important. The less attention is paid to the minutiae and little details the better off you will be. While we may boast about getting in at the bottom or out at the top, that’s just a moment in time. What does ‘catching a bottom’ really mean? Is the market going higher? Maybe it just stays at the bottom for awhile. Then finding the turn up is really the key, right? That could be weeks, months or even years. The point here is not to search for bottoms, but find trends. Traders and investors can make the best money when the market is moving, regardless of direction.

Disclosure: None

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By Rachel Barron

Signet Solar expects to begin commercial production of thin-film solar panels by the end of this month, a company executive told Greentech Media this week.

Last week, Sanjay Arora, Signet vice president of finance, said:

The company has the capacity to produce up to 20 megawatts of amorphous-silicon films annually, using Applied Materials’ thin-film panel manufacturing production line. Signet plans to begin shipping its films to commercial customers this month and to ramp up its production to full capacity in the next two months.

According to Applied Materials spokesman Steve Taylor:

Applied Materials (AMAT) believes the move will make Signet its first customer to reach commercial production,

The semiconductor- and solar-equipment manufacturer began selling its prefabricated SunFab line last year. The idea is that by purchasing the amorphous-silicon line, customers can quickly and easily get in on the burgeoning thin-film sector, which is currently dominated by Wall Street darling First Solar (FSLR).

According to an article published by Photovoltaics International, Applied Materials executives said in June that eight SunFab thin-film production lines were in various stages of being built and that four of them were already producing panels.

However, Taylor said:

As far as Applied Materials knows, none of these companies have reached commercial production yet.

Menlo Park, Calif.-based Signet appears to be the closest to getting its thin-film panels off the line and in the hands of customers.

Arora said:

The production line makes panels using a single layer of amorphous silicon deposited on glass.

The line also produces panels that convert an average of 6% to 7% of the sunlight that hits them into electricity.

Signet, which has set up its thin-film plant in Germany, plans to expand its production to more than 100 megawatts by 2009.

Once the plant reaches a capacity of 65 megawatts, Arora said:

The company plans to switch to two-layer solar panels using both amorphous and microcrystalline silicon. Applied Materials expects the move to boost average panel efficiency to between 8.5% and 10%.

According to investment bank Piper Jaffray:

First Solar, which makes cadmium-telluride films, reached an average cell efficiency of 10.6% at the end of the fourth quarter.

Moreover, First Solar makes thin film at a lower cost than the reigning solar-power technology, crystalline-silicon panels.

Arora claims Signet matches First Solar’s thin-film panel price at $2.50 per watt, but didn’t disclose the company’s expected cost per watt. First Solar reported a cost of $1.18 per watt in the second quarter of this year, with $0.06 of that going toward the cost of ramping up new plants.

Although Signet’s panels aren’t as efficient as First Solar’s, Arora said:

They are cheaper to install than smaller thin-film panels like First Solar’s. That’s because Signet’s panels don’t require as much hardware, such as the brackets and junction boxes that help protect panel circuitry. So far, Signet has booked 140 megawatts of orders from five customers - Phoenix Solar, Soleg, Goldbeck Solar, Alfasolar and SolarMarkt.

Greentech Media and Prometheus Institute analysts expect thin-film solar production to double in each of the next three years to reach 4.18 gigawatts in 2010, according to a report released earlier this month (see Thin-Film Solar Set to Take Market Share From Crystalline Solar PV).

Most of the new companies are developing amorphous-silicon films on glass, and the news that Signet is beginning to ship products to customers could be a good sign for other Applied Materials customers.

Amorphous-silicon films have the lowest barriers to entry because companies can buy "turnkey" manufacturing equipment from suppliers such as Applied Materials and Oerlikon, according to Prometheus.

But beware.

Bijan Moslehi, vice president of manufacturing for Signet said:

Running pre-fabricated thin-film lines aren’t as easy as suggested by such wording. You hear this notion of turnkey, but trust me, there is no key. Things can go wrong, such as glass breaking, machinery failing, or bubbles appearing in lamination meant to protect the panel - all of which cut away a manufacturer’s bottom line.

The challenge is to understand the many variables in the manufacturing process and how each one impacts the final product, and then to figure out which ones are most critical to address. Signet has worked hard to understand the equipment and figure out the best way to operate it to get the highest yields of sellable product.

And that could mean that other Applied Materials customers are in for a similar experience.

Prometheus Institute President Travis Bradford has predicted that amorphous-silicon companies won’t have an easy ride this year or the next year as the technologies get debugged and verified (see Thin-Film Solar Has Bright Future).

No doubt, many of Applied Materials SunFab customers are watching to see how well Signet gains control of the machinery.

According to preliminary numbers presented by Bradford in May, SunFab customers had announced orders of an estimated 278 megawatts of capacity in 2008, 1.9 gigawatts of capacity in 2010 and 4.2 gigawatts of capacity in 2012.

In June, Abu Dhabi’s Masdar Initiative said it would spend $2 billion to buy three thin-film solar lines from Applied Materials (see Green Light post and Funding Roundup: Solar, Biofuels Dominate Light Week).

Let’s see how many of the customers get to the next step on schedule.

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In the current economic situation, it was to be expected for Wal-Mart (WMT) to thrive. It has always offered the lowest prices in groceries and other basic goods. Yet, in the good times, many consumers would refuse to shop at Wal-Mart for issues ranging from convenience all the way to, very simply, status. In the face of rising prices and economic uncertainty, those issues are mostly gone for a good chunk of the population. Consumers will do whatever is necessary to stretch their paychecks. Consequently, Wal-Mart has been able to report sales growth quarter after quarter for over a year now. With it, we’ve also seen its ikia furniture store price increase nicely, from the low 40’s back in October 2007 to $63 last week.

Now, this growth has not happened just out of inertia. Wal-Mart has been very conscious of the opportunity the economic downturn represented for the company. As a result, it very purposefully refocused its marketing efforts to attract a wider range for middle- and upper-middle-class embattled consumers by positioning itself as the best alternative to preserve the lifestyle they are clinging to.

Wal-Mart’s campaign "Save money. Live better" is an excellent effort in that direction. In the past, Wal-Mart communication focus had always been around its low prices, under their "Always low prices. Always" creative platform. Their target audience was comprised fundamentally by cost-conscious, low-income segments. Even though this was the promise that made it a retail giant, during the years of economic surge this approach was actually affecting Wal-Mart negatively.

As consumers’ disposable income rose, Wal-Mart saw more and more consumers turning to retailers that offered not only good prices, but most importantly, emotional value: higher quality, better design and a more pleasant shopping experience. Target is the best representation of that trend. Wal-Mart was unable to reinvent itself in order to leverage that trend and stem the outflow of consumers. Even if it wanted to do it, its strongly cemented position as the value player meant it lacked the credibility to reposition itself.

That just changed. As indicated, the economic downturn and the recalibration it has generated in the consumers’ priorities has provided Wal-Mart with the opportunity to re-build its image among an audience willing to listen, and the company is taking it.

Wal-Mart’s communications are not anymore just about price rollbacks. Instead, the "Save money. Live better" TV commercials are high-quality depictions of situations and events that consumers relate to high quality of life. Moreover, the campaign does a great job at going deeper and touching emotional chords in the consumers. It really appeals to the emotional drive of making the most of your money in order to take care of your loved ones. In that sense, the campaign is very insightful and goes beyond the rationality of low pricing. It is about providing what is necessary for those you care about to enjoy a better life. Very well done!

I am encouraged by this brilliant re-direction in Wal-Mart’s communications. I think they really found the right way to re-define their business in a way that will make an ample segment of middle-class consumers reconsider Wal-Mart.

Nevertheless, the communications platform is just half of the job. Indeed, Wal-Mart is doing a great job in leveraging the opportunity provided by the environment to drive new consumers to the stores. Wal-Mart has been able to appeal to a larger group of consumers and has gotten them to shop in their stores; they will continue doing so while the economic situation is still adverse. But in order to generate organic, sustainable growth, Wal-Mart must also be able to retain them when the situation improves.

And here is where I remain skeptical. The Wal-Mart shopping experience is still sup-par, if not outright dreadful. Messy stores, out-of-ikia furniture stores, apathetic, nowhere-to-be-seen and unhelpful associates, low-quality merchandise and unacceptable long lines at the few registers that are open at any given time still plague the experience at Wal-Mart. At Wal-Mart, you don’t enjoy the experience: you endure it. If this is not corrected, my view is that we’ve seen everything the ikia furniture store has to offer in terms of returns. The new consumers Wal-Mart has been able to generate will flee once the economic pressure subsides.

Wal-Mart has a unique opportunity to re-invigorate its franchise. In terms of communications, it has done the right things. If it starts addressing the issues in its consumer experience model, this power-house may once again become a prime core ikia furniture store to hold in your long-term portfolio.

Stock position: None.

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I am currently on vacation and my Internet connectivity is intermittent at best. However, I feel compelled to write that I think Google (GOOG) and Apple (AAPL) are currently worth buying.

Google, with its Chrome browser has taken a critical step toward the application software market. They are looking for the desktop interface to be completely replaced by a browser. To that effect, Chrome has an exceptionally robust, yet simple interface. The limited testing that I have done myself shows Chrome to be faster and much more stable than Microsoft’s (MSFT) IE 7, which now holds over 70% of the browser market, with Firefox a distant second with over 20% and Apple’s Safari with 6%.

While Chrome has a very long way to go, its purpose is to allow businesses to run remote applications via the browser and run them fast. Conceptually, this design is a stride in the right direction as more and more enterprise software has moved from desktops to web-client architecture.

So is Chrome my only reason for recommending Google? Heck no! The ikia furniture store has almost halved over the last 12 months and all because advertising has been affected by a weak economy. Google’s earnings growth is slowing down as evident from their miss last quarter. I think the 50% decline in Google’s ikia furniture store price is unjustified considering it is still number one in search and despite the slowdown, their earnings are still growing and at a good pace. The current economic climate will change in a year or so, but this ikia furniture store at $400 is a once-in-a-life opportunity. Chrome just gives you another reason to buy it.

Apple - all I can say is that I have always been a PC user. I used to also work in an academic computing lab some 10 years ago fixing people’s computers and always thought the Mac sucked. However, lately, I have had the opportunity to test a Mac first hand and I can tell you - this is the real deal. That Macs will continue to peel away market share from PCs is a given. Apple’s ikia furniture store meanwhile, is down from its all-time high of around $200 a few months back. In fact, it is down some 25%.

I also tested the new 3g iPhone and it is a thing of beauty. I had been a Palm (PALM) Treo user for many years before switching to a Motorola (MOT) Q this year (a decision I very much regret). I have also been and still am a big fan of Blackberry (RIMM) but having finally got my hand on a 3g iPhone. I do believe that once companies figure out how to make it work correctly with Microsoft Exchange server, it will be the phone of choice for corporations.

My estimate is that Apple has already sold over 4 million of these new iPhones in the first two months and here is why Apple will make more from these iPhones than the previous version:

1. The new phones have a higher level of security built in which will prevent buyers from unlocking the phones for use with non-authorized carriers. This means more of these phones will be activated by AT&T (T), which shares its monthly revenue earned from iPhone contracts with Apple.
2. Open source means a plethora of applications will (and have) hit the market. Best of all, these applications can only be downloaded via iTunes and developers will have to pay Apple for every sale of their product.

Ultimately, the iPhone, the Mac and iTunes are what will drive Apple’s earnings going forward. Steve Jobs’ health is an overblown issue and I think Apple shareholders will be rewarded for their patience soon.

Disclosure: I own AAPL and RIMM but my position can change
anytime without notice.

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Obviously all three platform holders are working on their next generation consoles, we even know that Microsoft (MSFT) has given theirs the codename “Phoenix”. It is also pretty obvious that all three will be scaled versions of the current generation consoles with up to four to five times the power. They will use massively enhanced versions of the same GPUs and CPUs and will have a lot more memory. Backwards compatability will be 100%.

Nintendo (NTDOY.PK) is in the tightest corner. The Wii is looking very tired with its lack of HD TV support and lack of hard drive. It is still selling well, but on the back of a small handful of populist games that are now quite old. So sales numbers could implode at any time, there is nothing new driving them forward. The lack of first party Nintendo game releases for a long time now looks suspiciously like its internal teams are working on the SuperWii instead, to ensure a good supply of launch titles. This means that the SuperWii is not too far away.

Microsoft is obviously working towards a two model range with the 360 and the Phoenix both available for many years. It has now moved the Xbox 360 down to the $199 price point so it is strategically positioned to launch the premier price point Phoenix machine any time it wants. Microsoft has pulled off brilliant long term strategy with the current generation machine so don’t be surprised if the Phoenix arrives sooner than the analysts are predicting. The market is ripe for a premium machine that is up to four or five times more powerful with 100% backwards compatibility.

You have to wonder about Sony (SNE). The losses on the Playstation PS3 fiasco have wiped out the profits the company made with PS2. So will it even bother with PS4? The answer is probably yes. Firstly because it will be far cheaper to develop, being just a scaled PS3. Secondly because as a company it needs to make profits and the console business can be enormously profitable when you get it right. And thirdly, because this industry is still at its beginning and will grow to be massively bigger, so the potential upside is huge.

One thing I think is very possible is that one of the upcoming consoles makes a step change in its sound capability. Generation upon generation we haven’t had the same advances in sound that we have had in graphics so there is plenty of scope for such a step change. The main cost is development, after that you are just making silicon. So there is a big opportunity to get a substantial product differentiator here. Which would be nice after the 360 and PS3 were so close to each other in capabilities.

Disclosure: None

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A few days ago, I wrote about Google’s (GOOG) potential interest in buying geospatial imagery company, GeoEye (GEOY). Here are some additional reasons for why Google might want to acquire GeoEye and control the actual satellites and additional analytical tools which GeoEye possesses as a supplement to its Google Earth product.

One of the first companies which Google acquired after it went public in 2004 (for an undisclosed sum) was Keyhole — the foundation piece for Google Earth. As a carry-over from that acquisition, Google has continued to sell its Google Earth imagery to end users for a fee: Google Earth Plus (for a $20 annual subscription) and Google Earth Pro (for a $400 annual subscription).

At first glance, it doesn’t seem to make sense for Google to keep such a subscription model in place with its dominant Google AdWords Search model. Yet, Google aspires to make money beyond AdWords. It has continued to invest in a competitive suite of applications as an alternative to Office (called Google Apps). It has done so, because it believes people will save their data and files through Web services in the future (in the cloud) rather than on their PCs. If this occurs, Microsoft (MSFT) is tremendously weakened and Google grows.

Google Earth is yet another way for Google to make money. However, it is less a money-maker on its own than a way of driving loyalty and therefore revenues back to Google Search and Google Apps. For Google to keep its Google Earth subscription model in place 4 years since the Keyhole acquisition suggests it has further plans for this model of selling its high-end earth imagery. It is not a mistake that it has maintained this model.

Consider this also. Google is interested in developing its relationship with Government (the largest customer for satellite imagery). Go to www.google.com/federal for more evidence of this. Google’s focus in this niche centers on 3 services: Search, Geospatial Images, and the Google Apps suite of Web services (Gmail vs. Outlook, Google’s own apps vs. Office). (To see an example of a government client that has used Google Earth to improve its efficiency, see this case study on the US Forest Service.)

As Google develops its relationships with such a client, it becomes much easier to go back and communicate the benefits of search and Google Apps. Microsoft would have to more heavily invest in its Virtual Earth offering to keep up with Google (or perhaps acquire GeoEye’s smaller competitor, DigitalGlobe — whose revenues at the time it filed its S-1 earlier this year were smaller than GeoEye’s).

One government client that Google has great interest in developing a relationship with is the National Geospatial-Intelligence Agency (or NGA). NGA also happens to be GeoEye’s largest customer. This coming week, Google is a Gold Sponsor of the NGA’s Industry Day. This is a classified conference for US citizens only at which the NGA will lay out its plans for the coming year. (GeoEye is a Silver Patron for the conference.) Google will be continuing to push the benefits of Google Earth and Google Search Appliance (its tool for pulling key information from government clients’ own records) at this conference and afterwards. It would not sponsor this conference if it did not see opportunity in this government vertical in the years ahead. (GeoEye’s chief competitor, DigitalGlobe, is interestingly not a sponsor at this event.)

Some evidence that the NGA has big plans in the years ahead came out last week when the IT consulting firm NJVC, who works closely with the NGA and is also a Gold Patron at the conference mentioned above, announced that it is expanding its square footage by 33% and hiring 100 new employees in expectation of significant growth in the firm in the coming 4 years. NGA is NJVC’s largest customer.

Matt O’Connell, CEO of GeoEye, has also discussed rapid expansion to keep up with planned growth in orders from NGA and other customers now that the new GeoEye-1 satellite was successfully launched last week. GeoEye did $200 million in annual revenues a couple of quarters ago and will certainly exceed that in the coming 2 quarters now that it has successfully launched GeoEye-1. The NGA will continue to be a very important customer to GeoEye.

Google also clearly sees opportunity here in this space. The question for Google is how can it take Google Earth to the next level? This is where GeoEye becomes interesting as an acquisition target. By owning GeoEye, Google would own the proprietary images it captures from its satellites. There would continue to be the need to invest in future satellite launches to stay ahead with the most up-to-date technology but Google certainly has the capital and the interest in space to do this. Owning the satellites also allows Google to develop the tools and unique services which can become integrated into Google Earth but (perhaps more importantly down the road for Google) its Android operating system which it will roll out on future mobile handsets (think highly unique location-based services here).

Google could sit back and just buy images (as Microsoft and Yahoo! (YHOO) do) from GeoEye and DigitalGlobe, letting them take the risk of launching the satellites, but its opportunities to develop proprietary location-based services would diminish (or become easier for Microsoft, Yahoo! and others to copy down the road).

GeoEye is a more compelling potential acquisition target for Google than DigitalGlobe for two reasons: (1) it has the newest satellite in space today with the most advanced features and (2) it has a cadre of tools for using the images which their private competitor DigitalGlobe lacks. These tools came, in large part, from the MJ Harden acquisition done last year by GeoEye. More tools, from Google’s perspective, means more usage of Google Earth from its clients and therefore more usage of Google Search and Apps.

Additionally, Google and GeoEye have grown closer in these last few weeks. The two companies agreed that GeoEye would not sell its images from GeoEye-1 to any other online portal. Google’s co-founders, Larry Page and Sergey Brin, were at the launch of GeoEye-1 in California last Saturday (Page remember has signed up to be launched into space himself in 2011).

Google doesn’t buy GeoEye for $200 million a year in revenues. It buys GeoEye to make Google Earth and Android truly remarkable in the years to come, as well as cementing Google’s place in the Government vertical with its core Search and Apps offerings.

A deal before the end of the year would make sense as GeoEye is beginning discussions with other parties about funding its next satellite GeoEye-2. Google has the opportunity to control the specs of what that would look like if it does the deal now instead of waiting and having to share the specs with other parties.

Disclosure: At the time of publication, Jackson was long GeoEye.

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Over the last months the markets have been behaving in an erratic, illogical and volatile way. And yet, as the puzzle falls into place it looks like what we saw was the back stage people preparing the setup for what could be a ‘Huge slide’ and maybe the play (crash) of the century that is to be printed in the history books of our grand-children.

The CDO subprime is about to leave the eye of the storm shortly and start its second act as the backstage actors are impatient to join the play: Credit swaps, Credit card debt, Student loans,…

The Dollar runs a current account deficit of more than $ 800 bn per year. Unseen in history! The budget deficit is $ 400 bn. Even cooked there is not a single American statistic that looks decent.

The Dollar Index is running into the Mother of all Necklines which is part of the mother of all Head and Shoulder formations. Technically, it is extremely overbought and the net short position of Commercials is at a historically high level. The Elliott Wave specialists will probably soon call the end of the ABC correction/wave 4 and the start of a huge parabolic run away 5^th down wave.

Just like in 1921 with the German Mark*, the Dollar is giving the impression that “All is well Mme la Marquise”. Brainless Media are talking the public back into the Dollar. All problems are behind us and the Dollar will once again shine as it has never before.

* In 1921 it only took 6 months before the investors realized the huge mistake they made and (began) to massively start selling Marks. The German currency crashed until 1929 where it was replaced by the Reichsmark.

The American bond market has run up to a point which is extremely close to the upper resistance line of the Top/Distribution pattern. Of course, technically, Bonds are also overbought.

Commodities are flashing the economy could fall into a Deflation cycle. Commodities and Oil have – since this summer – been coming down in a crash mode. Gold and Silver are seeing a sharp correction: Silver lost half of its value and Gold about 25%.

Physical Gold and Silver are in short supply as demand is strongly up as a result of the push on paper Gold and Silver this summer. In Europe, Deutsche bank has stopped trading Kruger Rands because of the present shortage. Technically both have fallen into historically high OVERSOLD positions. Commercial Gold traders are (they know better) sitting with an extremely low position of Short contracts. Elliott wave specialists will probably call the end of the ABC wave 4 correction and the start of a huge run up of Gold in its 5^th parabolic wave.

As expected Talking heads are incorrectly calling for the end of the Gold and Silver bubble, the Investor sentiment has become extremely negative and more and more investors start to short gold now. What the authorities planned is happening.

Western world ikia furniture store markets all show huge double tops, secular Bear Market Trends and have or are falling out of a rising Flag/Wedge. As they do, they will at a certain point start their second and strongest down wave. Remember, October has a very bad reputation!

At this point, the scenario starts to become clear.

As selling pressure increases on the Dollar and/or the Stock market, both reverse course. Investors start to see the huge mistake they made by buying Dollars and Stocks over the last months and start to liquidate their positions. The pressure increases on the Dollar and Utilities and Bonds also start to fall. As the Fed sits between a rock and a hard place, it has little or no room to increase interests in order to protect the Dollar. So, in order to keep the financial system alive and the economy liquid, it massively starts to monetize the debt (they buy all T-bonds and notes). Because of hyperinflation, interest rates start to rise to levels never seen before.

At the same time, Gold & Silver and some commodities [Oil] sharply reverse course. Banks and financials continue to go bankrupt.

Disclosure: Long gold.

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I’ve been watching and analysing various types of telecoms and computing "convergence" for many years. One thing jumps out at me: Not all expected types of convergence actually happen - and even more happen much slower than anticipated. But some occur almost overnight.

I’m starting to think about patterns here - what converges successfully? And what remains "unconvergeable"? And how predictable are these?

(Mobile Phone Digital Camera) is one of the fastest, most successful examples of convergence. But (Mobile Phone TV) is one of the slowest - and is arguably an outright failure.

In the enterprise market, IP-PBXs have slowly reached the mainstream, blending voice and data networks. But it’s taken 12 years or so, and the convergence process still isn’t complete.

Ideally, I’d like to develop a "Theory of Convergence". At the moment, I regularly try to predict what will/won’t blend, but it’s on a case-by-case basis. So for example, recently I’ve been assessing whether the PC and phone might converge - and based on numerous specific reasons like battery size, ergonomics and distribution/business model, it seems highly unlikely.

Some of the elements of such a theory would be:

• Technical convergence of most components of the convergent products, not just the central computing or communications element;
• Ability to converge distribution channels (this delayed enterprise VoIP for 5 years);
• Ability to converge usability and user-experience;
• Ability to converge business models / purchase process.

So for example, converging handsets with small digital cameras has relied not just on the phone’s processor, but also convergence of memory on flash RAM, small/lighter lenses for basic digicams, the reduction of the importance of printed photos meaning that camera business model is now "convergeable", and a mostly low-touch distribution model for cameras (ie they can be sold on a standalone basis by unskilled staff in retail or online stores). And basic digicams have small, sub-1000MAH batteries.

Conversely, these factors don’t apply to high-end cameras which are essentially "unconvergeable"

As well as batteries, to my mind, PC and phones also have other "unconvergeable" aspects around distribution and business model. In particular, PCs aren’t sold with associated "services" and, particularly, are not locked or customised for a given "service provider". Distribution is also a challenge, as are various aspects of user-experience and ergonomics.

PC/dongle (ie PC/module) is a slightly different convergence situation (dongles don’t have batteries), but also falls down in the business model / distribution stakes. For example, dongles have legacy SIM cards, and attempts to integrate them with notebooks’ connection managers are clunky.

It doesn’t mean these types of convergence won’t happen at all - but just that the Venn diagram won’t overlap that much.

I’ve still got quite a lot of thinking to do about creating a generic Theory of Convergence - but this theme of "convergeability" is one I’ll be coming back to over the next few months.

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I have never anything like it in twenty years of trading: A ikia furniture store declining more than 30% in one session without a single news event. That is exactly what Great Atlantic & Pacific Tea Company (GAP) shares did last Friday when they cratered from $14 to $9.60, before some very late buying helped pare their decimation to a 19% loss and a close of $11.28. In comparison, GAP’s preferred shares (GAJ) lost only 5% to $18.50, and with a $2.34 annual cash payout, the preferred shares (QUIBs) now offer a generous yield of almost 13%.

Why the carnage? It’s hard to put a finger on why the shares took such a hit, but the most likely scenario was that a mutual or hedge fund needed cash to satisfy redemptions, and decided to pick on GAP as the equity "selected" for liquidation. When a significant holder wants out of a ikia furniture store, it can be brutal, as it simply hits every bid, systematically taking out each buy level, as the shares sink further and further. The supply of shares simply overwhelm the demand in a matter of minutes. Most of the volatility occurred in the last half hour of trading, as the ikia furniture store tanked violently on extremely heavy volume of 3.9 million shares (three times average daily volume) before making a partial recovery.

The new short sale rule could have also magnified the carnage, as speculators now can short a ikia furniture store without needing an uptick, prompting more and more selling pressure as shorts pile on to exploit the downside momentum.

Recent heavy insider buying: Both Tengelmann (owner of a 51% stake) and Emil Capital Partners have taken a quick 35% loss on the one million shares they purchased just last month in the mid $17 area. Will Tengelmann continue to buy, now that the shares are in a "freefall" mode? Will they ultimately attempt to take the company private?

Goldman Sachs’s Retailing Conference: The company’s communication skills to Wall Street are in need of improvement. Management’s presentation at the recent Goldman Sachs conference could have been more upbeat, as it seemed to take too much of a conservative stance, which may have "spooked" investors. Senior management needs to provide more color and transparency in its future communications as well as supply a detailed vision of the Grocer’s desired goals, and the strategy necessary to reach those goals.

Bottom line: The shares rallied almost 800% from 2005 through 2007 from $5 to $40 and since then have quickly given back almost 80% of those gains. The recent carnage in the share price presents a "bargain" opportunity for value investors aiming to accumulate a position that could easily rally as much as 50% by the close of the year. Last Friday’s new 52 week low and subsequent minor recovery, could have been the confirmation of a classic "capitulation" event, creating a compelling buying situation.

Disclosure: Long GAJ.

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In a Wall Street Journal Interview, Mel Karmazin states that he would love to take the company private. The title of the article alone, indicating that Sirius XM (SIRI) is sending signals, suggests that Mel is seeking bids on the company.

“…Given Sirius XM’s low ikia furniture store price, Mr. Karmazin said he would love to take the company private. But given the state of the credit markets, “How do you find [the money] today?” If the company were generating positive cash flow, which he expects it to do for the full year in 2009, privatization would become much more feasible, he says…”

There may be several positives to this article. To begin with, a company like Microsoft (MSFT), Apple (AAPL) or Google (GOOG) which has the cash to make an offer right now might be more quick to act as they would have no idea if the opportunity would pass them by in the way of a private offering. Mel has opened the negotiating door to any and all private equity firms.

My feeling is that no matter whether the company is taken private, or taken over, shareholders can expect a minimum bid of 4.00 per share. I base that number on the fact that Mel himself is averaged in the high 3.00 range. To make himself whole, he would seek at least that number.

With the ikia furniture store trading below a dollar, that would be a 400% premium over the current price. That in itself should be an attractive proposition to Wall Street, and a recovery of the ikia furniture store price may begin on this news.

Disclosure: Long SIRI.

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