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The new Apple (NASDAQ:AAPL) 3G iPhone is becoming more popular for all the wrong reasons. It drops calls and has trouble connecting to some cell carrier's high-speed wireless network.

All sorts of analysts are out in the field trying to discover what is wrong with the new product. No one has come up with an answer. But AT&T's (NYSE:T) rivals have decided to use the opportunity to attack its products and services. According to The New York Times, "A phone is only as good as the network it's on," said a full-page Verizon Wireless newspaper ad."

Even if the iPhone is only a brick with a dial pad, the challenges are off the mark. Wireless systems, including those from Verizon Communications (NYSE: VZ) and Sprint (NYSE:S), are full of dead spots. A set of tests of almost any cell network in the U.S. or abroad would show that dropped calls are not rare.

Verizon has decided to use something that is common to go after its competition, which is fine until someone goes out and tests its network.

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

Delphi was once the mighty parts operation at GM (NYSE: GM). It got to go out on its own with an IPO, and it has been trouble ever since. Because of contract obligations GM had with its former division, it has poured hundreds of millions of dollars into Delphi.

Delphi has been operating under Chapter 11 and trying, without success, to return to its role as an independent company. Now the collapse of the car business is likely to cause a liquidation of the entire firm.

According to The Wall Street Journal, "Delphi's bankruptcy financing expires at year end, and there are indications that its current lenders may balk at renewing it." Analysts might find it easy to say that Delphi is a microcosm of the car industry and that car companies are heading in a similar direction. That is not true. Delphi has operated under Chapter 11 for some time.

On the other hand, "G.M.'s vice chairman, Robert A. Lutz, said the car companies need money to retool their plants but probably cannot raise enough capital on their own because of the tight credit markets," according to The New York Times. That may be the first time that a top industry executive has indicated the industry may simply run out of cash.

The U.S. auto industry has not caught up to Delphi yet, but it is running toward the same place awfully fast.

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

Several media outlets reported that Lehman Brothers (NYSE: LEH) will fire between 1,200 and 1,500 people, about 6% of its work force. This is not enough to have a significant impact on the firm's financials. Lehman would probably have to let 50% of its people go for that to happen.

Referring to Lehman's problems, Reuters writes: "Investors fear that write-downs of its commercial and residential mortgage assets could be large enough to dramatically reduce the company's net worth, which stood at about $26.3 billion at the end of May."

Lehman indeed faces more write-offs, probably for the next few quarters. The value of its commercial loan portfolio is almost certain to decrease by several billion dollars. It could try to sell those loans or its Neuberger Berman asset management arm, but so far nothing of the sort has happened.

What Lehman investors don't want to admit is that the value of their common shares is likely to be wiped out. The company's stock has been as low as $12, which put its market cap under $10 billion. If it has to raise another $10 billion at below market prices, the price of shares could drop below $5.

Lehman may have no good options because it really has no options at all.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Starbucks (NASDAQ: SBUX) will begin to offer a number of promotions and coupons to keep customers coming back to its stores during the current hard economic times. It might as well just cut the costs of its coffee and tell people it is cheaper to stop by for a cup of java.

According to Reuters, the company "will roll out more promotions such as free product coupons to perk up its flagging U.S. coffee sales, even as it holds off on wide price cuts, a top marketing executive said."

Yes, but a coupon for an extra cup of latte or a free donut is a discount, a price cut. So is free Wi-Fi because it costs Starbucks something to provide the service.

All of this means that, even if Starbucks can increase same-store sales, and that is a big "if," the margins on revenue will be smaller. Giving out coupons can get expensive.

Consumers may be fooled by the new programs, but Wall Street is not. It can expect lower gross margins at Starbucks in the next quarter or two.

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

The GDP number for the second quarter was revised up to 3.3% this morning. The market liked that, but not as much as people might have guessed. The Dow jumped up 200 points, which is substantial, but not an all-out rally.

The problem is probably that no one in his right mind thinks that Q3 and Q4 will be nearly as good. There is too much evidence of falling employment, rising prices, mortgage defaults, and slowing business spending. Being happy about the past is nice, but not when it is coupled with worry about the future. Below are today's unofficial closing bell levels:

DJIA: 11,515.18 (+1.85%)

NASDAQ: 1,300.65 (+1.22%)

S&P500: 2,411.64 (+1.48)

10-Year Bond: 3.7950% (+.0230%)

Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) continued their spikes up. The market is still enamored of the fact that the companies might avoid a government bail-out, which would wipe out common shareholders. Freddie was up about 10% and Fannie 15%.

The monoline insurers got a goose. MBIA (NYSE:MBI) said it would reinsure nearly $200 billion of municipal bonds backed by FGIC Corp. MBI shares jumped 34% to $16.14.

The excitement of the day boiled over into most of the financial stocks. Investors think there will be no recession. Bank write-off are over. All is well with the world.

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

Fannie Mae (NYSE: FNM) fired a few of its most senior managers. That includes its CFO and head of risk management. At a mortgage finance company, that is as close to the top of the pyramid as an executive gets unless that person is already the CEO.

The timing was awfully odd. All of the people moved out had been at Fannie Mae for at least a year. Over the last several days, the company's shares have turned upward as the market begins to believe that a federal bailout will not be needed to shore up its finances.

According to the AP, "banking industry consultant Bert Ely, a longtime Fannie and Freddie critic, was unimpressed by the changes, noting that the company promoted current executives, rather than hiring from outside." Ely makes some sense. When Fannie Mae began to get into trouble in early March, all of the key executives kept their jobs. They seemed to be good at what they were doing, or why would CEO Daniel Mudd have kept them on the job? When Fannie Mae's stock began to sell down aggressively in June, the team was not booted. When shares collapsed in July and were off over 70% from the beginning of the year, the whole gang was still getting salaries.

Wall Street may want to ask Mudd why he waited so long. At a lot of places, he would be the guy on his way out.

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

Since Apple (NASDAQ: AAPL)'s iTune virtually rules the music download business, it is not surprising that some people in the music industry would challenge its dominance from time to time. One of those times is now.

Artists are beginning to realize that the iTunes process of selling individual songs is hurting their album sales. According to The Wall Street Journal, "Label executives, managers and artists chafe against the iTunes policy that prevents them from selling an album only." Indeed, some artists like Kid Rock have stayed away from iTunes and their sales have done quite well.

The plan of selling music without iTunes is only likely to last so long. Apple's 99-cents-per-song format has proved irresistible to most customers. Bands that make a great deal of money may be able to risk staying off iTunes, but if they have one or two albums that do poorly, they will come back.

Perhaps the only way that labels and artists will break Apple's hold on music is to bring an antitrust suit. Apple does control enough of the market to make a case. Who knows?

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

It looks like the recession is hurting mobile phones sales. According to The Wall Street Journal, "For the full year, Gartner said it expects handset sales to grow 11% to 1.28 billion phones, slowing from last year's 16% growth."

A trend of that magnitude is bound to hit every company in the industry, but some have the financial strength and market share to weather the storm, That is especially true of Nokia (NYSE: NOK), which has a global market share of 40% of handset sales. Samsung, which has 15% of the market and is one of the largest companies in Asia, should also be fine.

Motorola (NYSE: MOT) is another matter. Its global share has dropped from nearly 15% to just above 10% in a year. More financial pressure could poison its chances of spinning off its handset operation in 2009. It is already questionable whether the division has any value at all.

The Motorola 10-Q shows that revenue at the company's mobile device operation fell 22% last quarter to $3.33 billion. The operating loss for the unit was $346 million. If the handset market as a whole is reaching a challenging period, what is to become of the weakest player in the industry?

The answer is that Motorola may not be able to get rid of its handset operation. It may be faced with the much harder task of fixing it.

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

Toyota (NYSE: TM) has already said that 2008 will be a bad year. Now it has revised down its sales numbers for 2009. The cut is about 7% and takes the company's estimate to 9.7 million vehicle sales worldwide.

The news may be bad for Toyota, but the company has a good balance sheet and has maintained a low cost base for years. Europe and North America is where the Japanese company said it is sustaining the most damage. According to The Wall Street Journal, the firm is "bracing for a long slowdown as robust sales to developing markets are failing to offset huge losses in the crumbling U.S. market."

For General Motors (NYSE: GM) and Ford (NYSE: F) the news could not be worse. Both rely on the U.S. market for the lion's share of their sales. Both are counting on some recovery in 2009 to allow them to stop the bleeding out of cash that threatens their abilities to remain independent and solvent.

The two U.S. car companies were going to go to the capital markets to raise money. Whether debt or equity investors would give them money becomes more problematic as each month of poor sales goes into the record book.

The government is talking about a $50 billion bail-out for U.S. car companies. That may be the only capital they can get.

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

Out of the generosity of their hearts, top management at Starbucks (NASDAQ:SBUX) will take no raises next year. According to Reuters, "U.S. workers at the vice president level and higher will not receive salary increases for fiscal 2009."

Since Starbucks shares have moved from nearly $40 to under $16 in less than two years, the action seems fair enough. Given the company's performance, it actually looks like a sacrifice that is much too modest, especially for CEO and founder Howard Schultz.

A look at the Starbucks proxy shows that Schultz owns over 32 million shares. Last year, he got a salary of almost $1.2 million and total compensation of over $10.6 million. Given that Schultz was the chairman while Starbucks was headed down the tubes, that is a lot of money.

Schultz, a very rich man with poor shareholders, should be working for $1.

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

There was a bit of a move up in the market today, but there was very little news to push sentiment one way or the other. Traders are too tired from the beating they have taken since Memorial Day.

DJIA : 11,504.87 +0.81%
NASDAQ: 2,382.46 +0.87%
S&P 500: 12.81.63 +0.8%
10 Year Bond 3.772% -0.0120
52-Week Lows

Short interest figures for stocks traded on both the NYSE and Nasdaq were released yesterday: Short sellers jumped out of both financials and big tech, signaling a possible turn up in those sectors.

Freddie Mac (NYSE: FRE) and Fannie Mae (NYSE: FNM) continued to rally, extending hopes they will not have to be bailed out by the government and that common shareholder will not be crushed. Late in the day Freddie was up 17% and Fannie 12%.

Very few companies had a decrease in the size of their shares sold short as Intel (NASDAQ: INTC) had. The numbers compare data from July 31 with figures from August 15.

The change is a bit odd because Intel's shares trade in the middle of their 52-week price range, changing hands at $23.15. So far this year, the company's stock price is down almost 15%.

There is evidence that PC sales are growing. Hewlett Packard (NYSE: HP) recently announced earnings. Its computer business did well, especially in Asia. Apple (NASDAQ: AAPL) cannot build enough Macs. All of that may mean that the market undervalues Intel's potential earnings over the next few quarters.

Intel is also picking up market share from smaller rival AMD (NYSE: AMD), which is struggling with a large debt load. If the AMD situation worsens, Intel is likely to get a significant benefit.

Some investors may also be willing to bet that Intel's move into chips for small portable devices, little computers slightly larger and more powerful than cellphones, will pay off.

Whatever the reason, the gambles that Intel's stock will fall are falling themselves.

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

Every time the FDA turns around, a few more people have died from the diabetes drug Byetta, a product developed and marketed by Eli Lilly (NYSE: LLY) and Amylin Pharmaceuticals (NASDAQ: AMLN). It has to make one wonder how the regulators spend their spare time.

According to The Wall Street Journal, the two companies "disclosed the deaths of four patients taking the diabetes drug Byetta that had been previously reported to regulators but not yet made public." The drug has already killed two people previously, at least.

Lilly and Amylin said they were a bit slow coming forward with the news because they wanted to "provide context" and "avoid confusion" in the future. That is double talk for the two companies not wanting to say anything at all. Dead is dead and there is no way of getting around that.

Why the FDA has allowed the drug to stay on the market is anyone's guess.

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

No one wants to own a gas station; the margins are too small. Consumers will only pay so much for petrol. If the price moves up, people begin to ride bicycles.

ConocoPhillips (NYSE: COP) will sell the last 600 stations it owns, walking away from a business that Exxon Mobil (NYSE: XOM) left just a few months ago. According to The Wall Street Journal, "ConocoPhillips is expected to sell the remainder of its 600 company-owned gasoline stations to closely held PetroSun West LLC for $800 million."

The announcement says a great deal about the perverse economics of the oil business. Due to the recent rise in oil prices, pumping oil out of the ground is an excellent business. The profits on $120 crude are stupendous. But the refining industry is awful. Trying to make margins on the gas and diesel from that high-priced oil is extremely difficult. Demand gets hammered by the consumer's inability to absorb the huge increase in fuel prices.

The question, of course, is why any company would get into the business. That says a great deal about the big oil company strategy of dumping stations. Either the people buying them are fools, or the profits in the sector will come back as gas prices drop. If so, Big Oil will look silly.

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

From the end of March to the end of June, problem banks, as they are defined by the FDIC, rose from 90 to 117. These are banks with a high percentage of "non-current" loans.

The trouble is that the agency may not have enough money to cover the possible upcoming bank closings. So the FDIC said it "might have to borrow money from the Treasury Department to see it through an expected wave of bank failures," according to The Wall Street Journal.

At least two implication arise from this. The most obvious is that the credit crisis is spreading. More banks are having trouble with mortgage, business and commercial real estate loans. Given the spreading effects of the recession, that is not odd.

The other is the extent to which the taxpayer will be hit because of lax bank management. Money from the Treasury is eventually money from every man, woman and child in the country. But who cares? After bailouts of banks and brokerages and possible help for car companies, what is a few more billion?

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