Top Tech News: Netflix Wilts From Amazon's Heat as China Shows Cracks and a Chip Stock Loses Flavor

Buyouts, bum guidance, and a broadening decline for a one-time tech titan top the tech week in review. Here's more on four stocks that moved investors to act this week.

1. Netflix (NFLX) catches a dream, then wakes up to a nightmare
Hollywood took center stage in the tech world this week, with both Netflix and Amazon.com (AMZN) announcing new content streaming deals.

Netflix is teaming with DreamWorks Animation (DWA) to stream new movies that, in prior years, would have gone to HBO. The agreement kicks off in 2013 and could bring DreamWorks as much as $30 million per film. Amazon, meanwhile, is adding classic movies and TV shows from News Corp.'s (NWS) Twentieth Century Fox.

The tit-for-tat nature of the announcements -- Netflix CEO Reed Hastings announced the DreamWorks deal Sunday, Amazon countered Monday morning -- did nothing for Netflix's share price: The stock is off more than 10% for the week.

2. Amazon lights a fire
At least some of Netflix's losses came after Amazon announced the Kindle Fire tablet Wednesday. The full-color, 7-inch tab runs $200 and provides an instant portal to thousands of movies and TV shows freely available to Amazon's premium Prime customers.

While the device is smaller than Apple's (AAPL) iPad, there's little doubt CEO Jeff Bezos aims to lure those who might otherwise be attracted to the iPad. How? By making it a service.

"We asked ourselves, is there some way that we can bring all of these things together into a remarkable product offering that customers would love? The answer is yes -- it's called Kindle Fire," Bezos said during a press conference in New York.
Amazon's tablet also includes a browser that synchronizes storage between the device and far-flung servers. A built-in mechanism for guessing where users might browse next also purports to load pages faster.

Investors seem to think the device is disruptive to competitors, yet remain unsure of its impact on Amazon. The e-tailer is trading roughly flat for the week as of this writing, while Apple and Barnes & Noble (BKS) are each off more than 4%.

3. Chinese stocks catch a cold
The fear plaguing the shares of Amazon's competitors compares to the plague touching Chinese tech. Several of the country's highest-profile tech stocks have taken a beating in the wake of reports that Chinese regulators are weighing the merits of ending the corporate structure -- known as Variable Interest Entities (VIE) -- that allows Sino stocks to be sold on U.S. exchanges. Online portal provider SINA (SINA) took the brunt of the week's sell-off, down more than 12% as of this writing.

But the story doesn't end in China -- U.S. regulators are also getting involved. The Department of Justice, FBI, and SEC are all investigating alleged Chinese accounting frauds. No companies have been named, but Baidu (BIDU) nevertheless fell roughly 10% on the news.

In simpler terms: Investors aren't willing to wait to find out if there's another shoe to drop.

4. The simple story of Advanced Micro Devices' (AMD) decline
Finally, the chip sector took another beating with the news that AMD wouldn't be able to meet demand for some newer chips thanks to problems at a factory operated by its chief supplier, Globalfoundries.

The news could be worse. AMD could be suffering because of slackening demand, as Texas Instruments (TXN) was after Nokia (NOK) cut orders in June. Instead, Globalfoundries is having trouble producing AMD's newest line at 32 nanometers; a tiny manufacturing scale trades complexity for efficiency. Executives say the mishap will crimp third-quarter revenue growth targets by 4% to 6%.

And that's the week in review. What tech stocks are you following right now? Please weigh in using the comments box below. You can also send Tim an email with your suggestions.

Motley Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Apple and Netflix at the time of publication. Check out Tim's portfolio holdings and columns, or connect with him on Google+ or Twitter, where he goes by @milehighfool. The Motley Fool owns shares of Texas Instruments and Apple. Motley Fool newsletter services have recommended buying shares of Amazon.com, Baidu, SINA, Netflix, Apple, and DreamWorks Animation SKG. Motley Fool newsletter services have recommended creating a bull call spread position in Apple and creating a bear put spread position in Netflix.


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Gumby

AMD is suffereing slackening demand because most apps are yet to be rewritten to take advantage of APU chips ( graphic / integer)... Most apps are still dumb and incapable of using AMD's latest APU chips called or known as Fusion chips... AMD had released tools to developers to start writing apps to match with Fusion chips and this will take some time for the apps to come out along with demand. You will be back with glowing stories about AMD's Fusion chips or APUs.. before too long, I guess..

October 04 2011 at 5:28 PM Report abuse rate up rate down Reply
ioa5599

The only way to solve any of this is for the american worker to figure out how to be happy with far less than what he has now. However this loss could be offset if the american fatcats could do the same.
We all need to learn how to compeat with the rest of the world.

October 03 2011 at 8:23 PM Report abuse rate up rate down Reply
tombecbee

There will come a time that paying other bills ,will slow the sales of the high tech. gadgets... I come from a time
when Black and white TVs were it. Now, everyone wants it all. The High priced Hybrid autos, Instant phone, camera
and web. A place to live, food, gas, utilities, on and on, will come first.
As our economy slows , and the US debt gets even higher, you can't count on all jobs to be permanent. There will
be alot of this as second hand on ebay......

October 03 2011 at 9:59 AM Report abuse rate up rate down Reply
GrayHatsBeGone

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October 02 2011 at 10:18 AM Report abuse rate up rate down Reply