Intel tumbles as margins miss

Intel reported second quarter sales that were above analyst projections and higher profits Tuesday citing strength in its chip sales.

But shares of Intel (Charts, Fortune 500), the world's No. 1 chipmaker, fell nearly 4 percent after the bell as it missed expectations for its gross margin, coming in at 46.9 percent, short of its forecast of 48 percent.

Intel said it saw earnings of $1.3 billion, or 22 cents per share (EPS) in the second quarter, including a tax item that boosted EPS by 3 cents per share.

Excluding that charge, the resulting 19-cent-per-share profit figure was in line with analyst expectations.

It earned $885 million, or 15 cents per share, in the same quarter last year.

The company reported revenue of $8.7 billion in the quarter, above estimates of $8.54 billion - and an increase of 8 percent from the prior year's quarter.

"It's a good solid quarter. We're still a little early in the company's turnaround," said Doug Freedman, an analyst with American Technology Research. "The reason the stock is down is because expectations were so high already. We're still early in the company's turnaround."

Intel has recently gained back market share from smaller competitor AMD (Charts, Fortune 500), which is set to announce its second-quarter earnings on Thursday.

"It has been more competitive than we expected this quarter," said Intel CEO Paul S. Otellini on a conference call. "We continue to believe the best defense against price wars is better products."

He said that the company was launching production of its 45 nanometer chips this fall, which should lead to better power efficiency. Intel will also increasingly focus on making chips for mobile Internet devices and consumer electronics, he told analysts.

The company has achieved great cost savings in the quarter after laying off 12,000 employees - or 12 percent of its work force - after announcing its restructuring, he said.

Intel stock is up 30 percent on the year, while AMD's has fallen by 22 percent.

Freedman said the results made him bullish about AMD, which could possibly see a revenue increase similar to Intel's.

Internet radio gets a reprieve

July 15 had been the deadline for a new set of royalty fees to kick in that would have raised rates for some Web-based stations by 300 percent or more. Many stations said they could no longer operate under the new fee structure, and some smaller broadcasters already have shut down.

But months of brinkmanship between Internet radio operators and recording industry representatives ended late last week with little more than a whimper as most stations kept running while negotiations progress toward a workable compromise. SoundExchange, the umbrella organization that collects royalty fees for the recording industry, agreed to continue negotiations on the new rates with hopes of reaching a deal that will please everyone.

Industry analysts believe the dispute, thought by some to be a potential deathknell for Web broadcasting, or streaming as it is often referred, is cooling off toward a mutually beneficial conclusion. They contend the true endgame could be an effort to target only the largest broadcasters while allowing mom-and-pop operators to continue under the previous and less onerous royalty structure.

"It's an interesting situation because SoundExchange has an obligation to maximize the royalties it collects and pays," said Cydney A. Tune, an entertainment and intellectual property lawyer with Pillsbury, Winthrop, Shaw and Pittman in San Francisco. "But it has to be careful because this is a new venue and new space. If you drive these players out of business, you're not going to be collecting any royalties."

Tune said negotiations are the most likely way to end the impasse, as legislation and litigation both look to be ineffective solutions.

Space tourism race heats up

Jim Benson's ship is called the Dream Chaser, and here's the dream he's chasing: a 50 percent profit margin on revenue of $200 million by 2015 from putting tourists into suborbital space.

He also wants to beat the mighty Richard Branson into this market by several months.

That goal may sound as ridiculous as the nascent space tourism business itself, but don't count either out just yet. The FAA sees suborbital flights becoming a $700 million business, with 15,000 passengers a year, by 2021; Benson's boast, then, may be on the conservative side. (Branson's Virgin Galactic says it will start turning a profit in 2011.)

Vacations in outer space

And while Benson, 62, isn't as wealthy or as well-known as Branson, he is a veteran entrepreneur who has already sent products into space.

Benson is the founder and majority shareholder of SpaceDev, which manufactures microsatellites and parts for NASA's Mars rovers. It also helped design the revolutionary engine that powered Burt Rutan's SpaceShipOne, the first commercial spacecraft, into the history books in 2004.

Now Benson and Rutan are rivals, divided by a bitter public feud over who should get credit for that engine. Rutan is building five copies of SpaceShipTwo for the Virgin Galactic venture, which claims that it will be conducting test flights in 2008 and flying passengers in 2009 at $200,000 a pop.

Benson founded Benson Space, based in Poway, Calif., with the express aim of getting there first. In the first five years of operation, he says, he can get the ticket price down to just $50,000.

Benson and Branson represent two radically different ideas about how to get to space. SpaceShipTwo, like its predecessor, rides under the belly of a plane called the White Knight, which slowly gains altitude before its payload takes off.

Branson's next big bet

The Dream Chaser is a bullet-shaped spaceship that launches vertically, based on designs by the U.S. Air Force and NASA. Powered by six of SpaceDev's engines, it will carry tourists to space in just 15 minutes.

Benson says, "You aren't circling around the atmosphere for two and a half hours trying to get altitude before you go to space," as you would be on SpaceShipTwo.

Rutan, for his part, snipes back at the Dream Chaser design. "The most dangerous operation of a rocket is at low altitude, where you can't abort motor operation," he says.

Virgin has a strong lead in the cash race, with $21 million in deposits and bookings for 200 passengers. Rutan's development is funded to the tune of $250 million. As of May, Benson was talking to four billionaires who were each interested in cutting him a $50 million check.

The Dream Chaser's advantage: It's already designed for the next frontier, orbital tourism. Rutan will have to build a new orbital craft, SpaceShipThree. So if Benson doesn't win this round, it's not the end of the race.

Eco-decorators for your home

OK, so you want to cut your energy bill and help save the planet. But how?

Will a wind turbine provide more wattage in your neighborhood than a roof full of solar panels? What about installation costs, state rebates, and federal tax credits? How about just better insulation?

It's enough to make any potential customer's head spin.

Solar power goes portable

That's where Standard Renewable Energy comes in. The year-old startup is rolling out a nationwide service that figures out what combination of green technologies makes the most sense in a given location. The company will audit you for free and then bid to install what it recommends.

Price: roughly $30,000 for homes and $200,000 for businesses. "We sort through the chaos for the consumer," says John Berger, a former Enron energy trader who founded Standard Renewable.

There's plenty of chaos to thrive on.

6 solar technologies to power the world

In Austin, for example, putting solar panels on your roof nets out to about $9,500; in Sag Harbor, N.Y., thanks to more generous local rebates, you can put in both wind and solar systems for that same price.

U.S. consumers and businesses spent $1.2 billion on such installations in 2006, a number set to rise to $2.2 billion in 2008.

Berger thinks he can make $8 million in 2007, with service in six states by the end of the year; in 2008 he expects revenue of $52 million from 15 states.

In the unlikely event that it doesn't work out, Berger has a backup plan: Standard Renewable is also building massive biodiesel refineries with Chevron (Charts, Fortune 500).

A scanner the size of a pen

When I heard about the Docupen RC800, I thought it was a no-brainer. Trade in my flatbed scanner for one the size of a small cigar? Gladly! As the owner of American Roof Preservers (cedarcare.com), a firm that cleans and preserves cedar-shake roofs in Illinois, Indiana and Wisconsin, I could see using the DocuPen to scan documents or collect helpful news articles on the go.

Manufacturer PLANon Systems Solutions (planon.com) advertises the RC800 as a full-color scanner capable of recording 100 pages, each in as little as four seconds. I was excited to test it.

I removed the DocuPen from the box, loaded the bundled software CD onto my computer, and charged the pen for 50 minutes. Then I set DocuPen to scan at its highest resolution with full color, figuring that even though I was scanning a black-and-white document, I wanted the best possible quality. I set the scanner on the page, pushed the power button and rolled the pen toward the bottom.

About three-quarters of the way down the page, all the lights on the scanner began flashing, and it shut off. I repeated the test, but each time the results were the same. Oddly, the software help menu offered only technical specs on the software itself. (Later I realized that there was a second help menu in the separate Paperport document viewer - all a bit too complicated for my taste)

Then I tried uploading. I connected the DocuPen to my PC with a USB cable and pushed a button. But midway through the upload, DocuPen lost its connection to the computer. I tried three different computers, with the same result.

I left a message with tech support and was pleased to get a call back within the hour. The technician told me to close out of the software and restart it. I'm not sure what that did, but it worked. He also confirmed that while the RC800 is a full-color scanner and can scan 100 pages, the two don't go together - in color it scans only about one page.

While I had the technician on the phone, I e-mailed him a PDF of my abortive scan. He confirmed its quality was appropriate. I was surprised. To me, it had the resolution of a garden-variety fax; I would hate to read 100 pages of such blurry type.

I set the DocuPen to black-and-white mode and scanned in 100 pages. At the bottom of each page, two lights blinked when the page had uploaded, and then the scanner shut off. I moved it to the top of the next page and repeated the process.

After I had finished 100 pages, I found that only 90 had been scanned; I'm not sure why that was, and I could find no mention of it in the manual. I also tried scanning a color page in full color. I found that the colors did reproduce accurately, but the image quality was only fair.

New Game Boy coming this year

The company unveiled the Game Boy Micro Tuesday, a smaller, lighter version of its most popular system. Measuring just four inches wide, two inches tall and less than an inch deep, the Micro weighs just 2.8 ounces, roughly the same as 80 paper clips. The machine will go on sale this fall. The company did not announce a sale price.

"This is not a new technology," said Reggie Fils-Aime, executive vice president at Nintendo of America. "It is a new look in that it has the best and brightest screen we've ever put in a handheld. It's also a new look in that no matter how tight your jeans are, it will still fit in your pocket."

The Micro will also be more customizable than previous versions of the Game Boy, with a removeable face plate, much like today's cell phones.

Nintendo hopes the Micro will help it maintain its leadership position in the handheld gaming space. The Game Boy (in all of its various forms) has sold over 177 million units since it was first introduced in 1989. The Game Boy Advance has sold over 28 million units in North America alone.

Previous competitors, including the Atari Lynx and Sega Game Gear, have fallen by the wayside, but the arrival of Sony's (Research) PSP may have changed the battle.

Released in March to critical acclaim, the PSP has not been quite as big a hit with consumers as some expected, likely due to its $250 price tag. Still, analysts expect the company to sell more than 7 million units worldwide by the end of 2005.

This will be the third handheld gaming system in as many years for Nintendo. Last year's Nintendo DS was a hot holiday gift, selling 500,000 units in its first seven days on store shelves. (Globally, more than 5 million DS units have sold.)

Ultramobile PCs

Sony Vaio VGN-UX390N

Size: 3.7 x 5.9 in.; Weight: 1.2 lb.; $2,500; www.sonystyle.com

31/2 stars

PROS Sony's technical wizardry shines in the new Vaio VGN-UX390N, which is the most feature-rich of this group. It has two built-in cameras, a fingerprint scanner, and a 32GB solid-state flash memory drive (SSD) that's faster and more durable than a traditional hard drive and lasts longer on a charge. The UX390N also has the brightest and sharpest screen of the bunch and uses Edge cellular technology (a close second to EVDO) for connecting to the Web when Wi-Fi isn't available.

CONS While the 4.5-inch screen is sharp, the small text can strain your eyes, and the keys are spaced far enough apart to make typing uncomfortable.

Samsung Q1P SSD

Size: 5.5 x 9.0 in.; Weight: 1.7 lb.; $2,000; www.samsung.com

3 stars

PROS Samsung takes a different approach to mobile computing--and it works with the Q1P. It dodges the dumb thumb issue with a glorious 7-inch touch- screen that's easy to use as a virtual keyboard or a template for scribbling notes. (The handwriting recognition is phenomenal.) The Q1P comes with a 32GB SSD as well as AVStation Now software for fast access to music, photos, and movies. Add the optional organizer case and a portable USB keyboard and you have the next best thing to a standard notebook.

CONS The Q1P is the bulkiest of the bunch, and Wi-Fi and Bluetooth are your only options for wireless Internet.