All Things Digital

Piper Jaffray analyst Gene Munster writes this morning that Apple’s (AAPL) expansion today of the iPhone’s availability to 21 additional countries, nearly doubling the total, will lead to a 78 percent increase in addressable buyers, and that the resultant rise in iPhone unit sales is not being taken account of in Street estimates for Apple.

“Our iPhone estimate of 4.1 million units in the Sept. [fiscal third] quarter is likely conservative,” writes Munster. (Munster actually raised his estimate for this quarter to 4.47 million units last week. Not sure why he uses the old estimate in today’s note.)

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Worldwide server sales rose 12.2 percent, year over year, to 2.3 million units, in the second quarter, declares research firm Gartner (IT) in a note today, while revenue was up 5.7 percent for a total of $13.8 billion. The main driver was the replacement of x86 servers, a trend that began in the first quarter, notes Gartner, but the expansion of data centers backing Web sites was also an important factor, as was growth in emerging markets.

IBM (IBM) held onto the top revenue spot, with 31.2 percent of revenue, up 11.5 percent from last year’s 29.6 percent. HP’s (HPQ) share of the dollars, yen and shekels fell to 27.6 percent from 28.4 percent on 3 percent revenue growth.

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The market for mobile phones, especially for 3G smartphones, is alive and well, says a report this morning from First Global chief strategist Devina Mehra, who writes that mobile phones “continued to record a solid growth and were up 15.3 percent, year over year” in the second quarter “despite challenging economic conditions across the world.” Mehra notes both a “surge” in first-time buyers in developing markets and replacement sales in mature markets, helped by “smartphone features, such as GPS, multimedia and touchscreen.” Gee, ya think? However, the movement of GPS and multimedia to cheaper phones has resulted in some reduction in the industry average selling prices, notes Mehra.

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Citigroup’s solar technology analyst Tim Arcuri laid out the argument today for preferring shares of solar panel maker First Solar (FSLR) over those of SunPower (SPWR)–arguing that people get it wrong when they tend to think the former’s stock is more expensive than the latter’s. As measured by next year’s earnings per share (both companies are on a calendar fiscal year), SunPower trades at 26 times, while First Solar trades at 40 times, just going by today’s closing stock prices and the per-share forecast of $6.96 for First Solar and $3.64 for SunPower.

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Following a beat-and-raise quarter last night for online software vendor Salesforce’s (CRM), the rewards are not what you might expect, with the shares down $11.60, or 17.8 percent, at $53.73. The company’s forecast for a profit of 34 cents to 35 cents for the current quarter, excluding its cost to acquire privately held Instranet, was unimpressive to the Street. But the main worry is that the company’s deferred revenue balance–meaning sales for which it has received payments that have not been recorded as revenue on the income statement–at the end of last quarter signals that new business signings may be slipping.

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Is AT&T (T) ready to take on Best Buy (BBY)? The phone company announced today that it will offer a technical support team providing in-home service for “virtually any home technology or entertainment need.” (Makes one chortle, just a little, to think about the “entertainment needs” AT&T might service in one’s home.) The offering is obviously competition for Best Buy’s Geek Squad technical support operation.

AT&T says it will help consumers configure computers, set up networking, install home theaters and mount TVs. “ConnecTech” as it’s called, will be available in the 50 States. On its Web page, ConnecTech lists prices ranging from $69 for basic troubleshooting of your PC or home network support to $179 for someone to come to your home for the same.

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Shares of video game retailer GameStop (GME) are coming under pressure after the company reported sales and profit this morning for the fiscal second quarter ending in July that were well clear of estimates and at the high end of its forecast; it raised its forecast, but nevertheless, may not be seeing the profit upside some expected. Same-store sales are also lackluster this quarter.

Sales rose 34 percent, year over year, to $1.8 billion, beating the average estimate of $1.7 billion, while profit of 34 cents was ahead of the average 28 cent estimate, and ahead of management’s forecast by six cents.

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$61 million (market cap) broadband modem-maker Westell Technologies (WSTL) this evening reported that since July 28, the company has purchased 963,481 of its shares on the open market, about 2 percent of its float of 41.8 million shares. The company also said its interim CEO, Bernard Sergesketter, purchased 100,000 shares on his own in that period. That was an additional 40,000 shares on top of the 60,000 the company announced Aug. 12 that Sergesketter had already purchased.

Wonder if someone knew something? The shares were up almost 5 percent today at 86 cents prior to tonight’s release.

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What’s the killer app on a BlackBerry? … Citigroup analyst Jim Suva has a note out today detailing his experience testing the forthcoming Research in Motion (RIMM) BlackBerry–the “Bold.” He says one of his tests involved watching the comedy movie “Talladega Nights” about race car driver Ricky Bobby, which showed off the pretty screen on the device. (It is nice, I’ve seen it.)

Suva has recently made known his belief that the Bold will be an important factor for RIM in the second half of 2008.

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Half-a-billion-dollar (market cap) Rightnow Technologies (RNOW), which sells software over the Web to automate customer support, could be threatened by this morning’s announcement from Salesforce.com (CRM) that it’s buying privately held Instranet for software to expand in the call center market, according to a report out today from JMP Securities analyst Patrick Walravens.

“Historically, Salesforce.com has not had an effective knowledge-base solution, giving RightNow a major advantage in business-to-consumer (B2C) sales cycles, which emphasize self-service,” writes Walravens.

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Salesforce.com (CRM), which is mainly known for software that helps sales executives track and manage customer prospects, today said it paid $31.5 million in cash for Instranet, a 10-year-old company based in Chicago that makes software to improve product support. Salesforce plans to move Instranet’s software, which is usually installed on customers’ computers, onto its hosted computer facilities. Instranet already has some impressive customers using its software, a lot of it in call center operations, including Comcast (CMCSA). The company’s software is used by 350,000 call center agents around the world. When I asked the company if they will be able to sell product support software as distinct from customer relationship management tools, they noted that Salesforce has already been selling form of support software for four years.

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Wireless modem maker Novatel Wireless (NVTL), with a market cap of $250 million, is getting crushed after hours, falling $1.10, over 13 percent, to $7.30, after the company this evening reported sales of $89 million. Its second quarter ended June 30, ahead of an average estimate of $87.8 million, but non-GAAP profit per share of just three cents, well shy of the 15-cent estimate, excluding stock options expense.

The results reported are a preliminary estimate, as the company is withholding final results until it completes its accounting review.

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On the heels of Netflix’s (NFLX) problems last week getting DVDs out the door to subscribers, Needham & Co. analyst Charlie Wolf initiated coverage this morning of Blockbuster (BBI) with a “Hold” rating. Wolf says that while the company is throwing lots of things at the wall to “see if it sticks,” it’s not clear the company will get the increase in same-store sales it needs to offset the drag on earnings from its 6,000 retail outlets. He did not offer a target price.

“Blockbuster’s major problem lies in its base of 6,000 stores,” writes Wolf. “The company’s challenge and opportunity is wrapped up in the relatively large fixed expenses entailed in operating its stores.” Blockbuster revenue barely covers the cost of running the stores, but even a modest tick up in same-store sales could “transform a basically break-even operation into a highly profitable one,” writes Wolf.

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Pacific Crest analyst Andy Hargreaves released a note this morning with a bunch of data points showing the rising importance of Apple’s (AAPL) iPhone in Internet usage. And he implies that the current value of the shares could be closer to $184 than the current $176.15 at which the stock trades.

Hargreaves writes that based on data from privately held Internet measurement firm Net Applications, of Viejo, Calif., the Safari Web browser shipped on the iPhone accounts for .3 percent of all world-wide Web surfing in August so far, double its share in June, prior to the introduction of the iPhone 3G. “iPhone’s rapid share gains in Internet usage suggest potential upside to current estimates,” writes Hargreaves, “and are a strong indicator of what we believe are lasting competitive advantages.” He goes on: “As Web-based software and services become more ingrained in our every-day working and personal lives, Apple’s emerging advantage in the mobile Internet will, in our view, become increasingly valuable.”

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Here’s the follow-up to last Friday’s article reporting that Netflix (NFLX), after experiencing a technical difficulty that prevented sending out DVDs for several days, said it would refund 15 percent of monthly subscription fees to a subset of customers. Wedbush Morgan analyst Michael Pachter lowered estimates for the company this morning, while maintaining a “Buy” rating on its stock and writing that “Netflix is positioned for dramatic EPS growth as streaming adoption increases.”

There’s still no official printed notice from Netflix. You can see the company’s comments in an interview Bloomberg conducted on Friday.

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