Bank of America/Merrill Lynch (BAC) chip analyst Sumit Dhanda this morning turned cautious on semiconductor stocks, downgrading a slew of stocks; his colleague Daniel Heyler made a comparable on the foundries, lower ratings on a number of stocks.

“We are downgrading our view on the sector given unfavorable indications from our cyclical framework,” he writes. “In particular, our industry model suggests that following a period of rapid replenishment of inventory and normalization of semi shipments to true consumption levels, inventories in the supply chain are approaching a level suggesting a modest overshoot versus equilibrium levels. While we see limited risk to near-term estimates, we think the longer this persists the great the risk of a correction in the supply chain. Barring a sharp upturn in the global economies, this, in our view, renders the risk reward associated with ownership of chip stocks unattractive.”

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Several Internet stocks are taking some heat this morning following the release yesterday of a Senate report on aggressive sales tactics on the Web–and in particular singling out for scorn a practice known as “post-transaction marketing.”

The report, issued by the Senate Committee on Commerce, Science and Transportation, asserts that three Connecticut-based direct marketing companies–Affinion (which is owned by Apollo Management), Vertrue (which is owned by investors One Equity Partners, Rho Ventures and Brencourt Advisors as well as members of management) and Webloyalty–and their e-commerce partners have together raked in over $1.4 billion in revenue “by using aggressive tactics to charge Internet shoppers for club membership programs.”

These guys are responsible for the stream of offers you get for trials in membership clubs, “cash back,” and other services when you are buying movie tickets, airline tickets, flowers or others goods on the Web.

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Salesforce.com (CRM) posted revenue for its fiscal third quarter ended October 31 of $330.5 million, up 20 percent year over year, and ahead of the Street at $324.4 million. EPS was in line with estimates at 16 cents.

For FY Q4, the company sees revenue of $340 million to $342 million and EPS of 14-15 cents; the Street has been expecting $334.6 million and 15 cents.

For all of 2010, CRM now sees revenue of $1.292 billion to $1.294 billion, and EPS of 62-63 cents; the Street has been expecting 62 cents.

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Seriously, Overstock.com (OSTK) has to provide more entertainment value per dollar of market cap than any company in America.

Consider yesterday’s developments at the online retailer. The company disclosed in both a press release and an 8-K filing with the SEC that it has fired Grant Thornton as its auditor. Grant Thornton had become the company’s auditor in March, replacing Price Waterhouse.

Overstock lays out the situation in a classically loopy press release that leads with a quote from Friedrich Nietzsche: “all things are subject to interpretation; whichever interpretation prevails at a given time is a function of power and not truth.”

Overstock says that in February, it “was notified” that it had overpaid a fulfillment partner by about $700,000, but that the same partner asserted that OSTK might owe it more than $400,000.

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SunPower (SPWRA) this afternoon said a review of its Philippine manufacturing operations found the company may have made “unsubstantiated accounting entries” in the first three quarters of 2009, some of them relating to 2008. The company said its Audit Committee is investigating the matter.

The solar company said a preliminary investigation found that cost of goods sold was overstated by about $1 million in the first quarter, but understated by $14 million in Q2 and $2 million in Q3. SPWRA said the findings could impact previously reported results.

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Matching a recent move by Wal-Mart (WMT), Amazon.com (AMZN) has unveiled a new promotion on Research in Motion (RIMM) BlackBerry phones, giving buyers of certain models who sign up for new 2-year plans free $100 “e-gift cards.” The deal runs from November 14 through November 20. The gift cards will be mailed automatically 6 weeks after the phones are purchased.

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Applied Materials (AMAT) yesterday afternoon posted stellar results for the fiscal fourth quarter ended October 25; revenue of $1.53 billion was well ahead of the Street at $1.32 billion, and non-GAAP EPS of 13 cents a share crushed the consensus number at three cents. Likewise, the company said FY Q1 revenue would be up 10-25 percent sequentially, which implies $1.68 billion to $1.91 billion, smartly above the Street consensus at $1.4 billion.

As I noted yesterday, CEO Michael Splinter said on the call that he expects the chip industry to spend $18 to $20 billion on capital equipment in 2010, up from $12 million to $13 million this year; at the mid-point, that would be an increase of 52 percent, which while off a nightmarish bottom, is still nice growth.

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Google (GOOG) plans to buy back $750 million of its common stock to offset dilution from shares to be issued in the pending all-stock acquisition of AdMob, CEO Eric Schmidt told Bloomberg yesterday.

In a research note, Broadpoint.Amtech analyst Benjamin Schachter notes that this will be the first time Google has ever repurchased any of its own shares, despite its $22 billion cash position.

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In a development that only Scrooge and the Grinch would find amusing, the tech industry has entered into a fevered period of pre-holiday job cuts. In the last few weeks, there have been layoff announcements from Adobe (ADBE) (680 jobs), Electronic Arts (ERTS) (1,500 jobs), Sprint (S) (up to 2,500 jobs), Microsoft (MSFT) (800 jobs), RealNetworks (RNWK) (70 jobs), AOL (100 jobs), Sun Microsystems (JAVA) (3,000 jobs), Blue Coat (BCSI) (roughly 150 jobs), Lexmark (LXK) (825 jobs) and Nokia Siemens (NOK) (potentially north of of 5,000 jobs).

Applied Materials (AMAT) could be next.

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Live Nation (LYV) today said it expects the acquisition of the company by Ticketmaster (TKTM) to close in the first quarter of next year. Meanwhile, both companies today posted solid results for the third quarter.

Live Nation posted Q3 revenue of $1.81 billion, up from $1.59 billion a year ago, and ahead of the Street consensus at $1.62 billion. The company said the 14 percent increase in revenue was driven by a 12 percent increase in event attendance. Adjusted operating income of 160.8 million was up sharply from $109.5 million; free cash flow of $123.2 million was nearly double the $64.4 million reported for the year-ago quarter.

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You should not be surprised to learn that a federal judge yesterday ordered BlueBeat.com to immediately stop selling Beatles songs and other music from its site, rejecting a goofy assertion that the company had copyrights on the songs via the use of something called “psycho-acoustic simulation.”

The company had been sued by EMI earlier in the week, after it came to light that BlueBeat had been selling Beatles tracks and other music for 25 cents a track, and offering free streaming of albums from the Fab Four and other groups. To date, no online music site has the rights to sell or stream the Beatles music.

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Activision Blizzard (ATVI) this afternoon posted slightly better-than-expected Q3 results, and reiterated its previous guidance for the full year.

For the quarter, the video game publisher posted non-GAAP revenue of $755 million and non-GAAP profits of 4 cents a share; previous guidance had been for $700 million and 3 cents.

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Garmin (GRMN) this morning reported much better-than-expected Q3 results, giving an early lift to shares of the GPS device maker.

For the quarter, Garmin posted revenue of $781 million and non-GAAP EPS of $1.02 a share; the Street had expected $704 million and 69 cents. Revenue was down 10 percent year over year, but up 17 percent sequentially.

CEO Min Kao said in a statement that the company “saw steady sequential improvement in our consumer segments during the third quarter and are very pleased to return to year-over-year earnings per share growth in the quarter.”

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So, the race to $0 book prices continues.

As the AP notes this morning, the fierce price cutting in the book business, which until now had focused largely on pre-orders, has now spread to current works: Amazon.com (AMZN) is offering both John Grisham’s short-story collection Ford County and Barbara Kingsolver’s new novel The Lacuna for $9 apiece. Both books are officially being released today. Grisham’s book lists for $24, while the Kingsolver book lists at $26.99.

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Roth Capital Partners analyst Arnab Chanda this morning lowered his rating on several chip stocks to “Hold” from “Buy,” citing the risk of a modest inventory build given high projected margins and growth at Intel (INTC), Marvell (MRVL), Nvidia (NVDA) and others.

“Overall, we’re getting the sense that lead times in the semi industry have gone up a lot. There may be orders that are ‘phantom,’ or double-orders,” Chanda told me in a phone conversation this morning.

“Second, the PC end markets are probably flat year over year, but look at Intel’s [projected Q4 revenue] growth of 23 percent, Marvell’s 50 percent, Nvidia’s 80 percent–that just seems like there’s some “exuberance” embedded in that,” says Chanda.

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