The takeover-rumor driven rally in Netflix (NFLX) shares has continued today, as investors debate the potential for an acquisition of the company by Amazon (AMZN)–or Microsoft (MSFT).

The focus of yesterday’s rumors was on a potential bid from Amazon, but a number of commentators have shot down that idea.

Cowen analyst Jim Friedland wrote in a research note late yesterday that an acquisition of Netflix by Amazon is unlikely.

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It’s a nice day for the solar sector, which is getting a boost from a flurry of analyst comments following the recently completed Intersolar trade show in Munich.

“By the end of Intersolar, we sensed growing, albeit cautious optimism,” Cowen’s Robert Stone writes in a research note this morning. “ASPs are still uncertain, but volumes should definitely be up in Q2/Q3, and deals were starting to close.” He says that despite a strong rebound in the stocks since early March, the group “remains mostly undervalued.”

Likewise, Thomas Weisel Partners analyst Jeff Osborne writes that “it appears demand trends in Europe are accelerating with many companies indicating a 40-100 percent increase in units in Q2 sequentially, led mainly by Germany with some credit easing in Mediterranean countries as well.”

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Oracle (ORCL) shares actually have gained ground since the company announced its plans to acquire Sun Microsystems (JAVA) thanks in part to the company’s promises to make the deal rapidly accretive to earnings. But in their enthusiasm for the deal, investors may be ignoring some significant risks.

Cowen analyst Peter Goldmacher today cut his rating on ORCL to Neutral from Outperform, asserting that the Street’s assumptions about how the the deal will boost profits are overly ambitious “given the considerable challenges” associated with the combination. He contends the decision to do the deal was largely defensive, as Oracle sought to keep Java out of the hands of IBM (IBM), given that the programming language is the base for its entire software stack, and notes that Sun is 4x larger than any company ORCL has ever bought.

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Activision Blizzard (ATVI) shares are down sharply for the second straight day after CEO Bobby Kotick disclosed the sale of a large block of shares.

Kotick personally sold one million shares at an average price of $10.1834 a share; he received the shares after exercising 260,558 options with a strike price of 51.04 cents, and another 739,442 options with a strike of $1.0315. He also sold another 242,425 shares held by a trust he controls.

Two analysts bullish on the videogame publisher weighed in today to defend the stock.

Cowen’s Doug Creutz said he doesn’t believe the sales are a signal that management is concerned about near-term operating results. “On the contrary, we continue to believe current management EPS guidance is conservative,” he writes. Creutz notes that appears to be “lingering investor concern” about insider selling due to a 2002 sale of shares by Kotick prior to a downturn in ATVI’s stock price.

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Cowen analyst Robert Stone this morning cut estimates for the solar sector across the board, asserting that Street estimates for at least the first half of 2009 are too high, and there could be further downside if project credit conditions do not improve.

“Street estimates generally have Q1 revenue flat-to-up sequentially, but we see a downtick as more likely,” he writes. “The main sticking point appears to be project financing rather than the price of modules. Smaller systems are more likely to find cash buyers or owner equity financing along with renewable-specific loans in markets such as Germany and Japan. However, larger projects are likely to be hampered by tight credit and lack of third-party tax equity.”

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Numbers continue to ratchet lower for Dell (DELL) ahead of the company’s earnings report after the close Thursday for the fiscal third quarter ended October. While Hewlett-Packard’s (HPQ) preliminary results today impressed the Street, investors are more focused on the implications of recent ominous warnings from Intel (INTC) and others about the prospects for the rest of this year and 2009.

A number of analysts issued pre-earnings notes this morning and brought down numbers; these follow previous cautionary comments from analysts at Barclays, Merrill Lynch, Goldman, BMO Capital, Citigroup and Credit Suisse.

Cowen’s Louis Miscioscia today repeated his Outperform rating on the stock, but slashed his estimates. He now sees EPS of 31 cents for the October quarter, down from 34 cents; 30 cents for the January quarter, down from 35 cents; $1.30 for the January 2009 fiscal year, down from $1.39; and $1.25 for fiscal 2010, down from $1.49.

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This week brings the first big wave of September quarter earnings reports. But here’s an interesting thought: Will the Street actually care what they show?

Cowen chip analyst John Barton, who today cut estimates on most of the companies he covers, contends that both Q3 results and Q4 guidance will be “close to meaningless” for the group. “Negative is obviously expected and anything better than expectations will be categorized under the label of ‘they just haven’t seen it yet,’” he writes. Even assuming a first-half recession, he says, all of the stocks he covers are trading at below historic trough valuations. On the other hand, he doesn’t expect investors to build substantial positions in the stocks until the point where the Street can estimate the post-holiday inventory overhand, which will take at least until late December.

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Shutterfly (SFLY) shares are down sharply today after Cowen’s Jim Friedland started coverage of the online photo services company with a Neutral rating. Friedland writes that he sees 17 percent compounded growth over the next five years, but that he expects the company “to continue to experience lower demand and returns in the near-term.” Friedland sees the company hurt by the weak macro economy, growing price competition and increasing R&D spending to develop new printing products, design features and a photo-sharing service.

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Solar industry shares are off to a rousing start this morning on news that the Senate plans to add the stalled “tax extender” legislation, which includes an eight-year extension to the solar investment tax credit to the pending bailout bill for the financial sector.

In a research note this morning, Cowen’s Robert Stone notes that the Senate will add the tax extenders to the bill, which the Senate is expected to vote on later today. Vishal Shah, solar analyst at Barclays, asserts in a note this morning that Senate approval of the bill could be followed by a House vote on the measure as soon as tomorrow.

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Palm (PALM) shares received a boost this morning from Cowen analyst Matthew Hoffman, who launched coverage of the company with an Outperform rating. Hoffman asserts that the stock can appreciate more than 30 percent over the next 12 months.

Hoffman sees two catalysts for the stock ahead: a refresh of the “once-aging” Treo lineup, with new models based on Windows Mobile 6.1, and the much-anticipated new Palm OS, which he says “should provide increased product differentiation” by the end of the May 2009 fiscal year.

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Adobe (ADBE) shares are losing ground today after Cowen’s Walter Pritchard cut his rating on the stock to Neutral from Outperform.

Pritchard is concerned about the company’s transition from the current version of its flagship software package–Creative Suite 3–to the coming update, Creative Suite 4. He says that with the May quarter, “the company will reach a peak in financial momentum.” But Pritchard contends that “many of the drivers of growth in CS3 are not in place and in some cases work against CS4 given the significant upgrade activity and price uplift that came with CS3.” He notes that in the case of CS3, there were 24 months between versions, rather than the usual 18. The current version, he adds, benefited from additional demand associated with Apple’s (AAPL) adoption of Intel processors for the Mac.

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