Microsoft stock has crept higher since it sank three months ago on word of its Yahoo bid.

Can Microsoft do it again?

Late last year, investors and analysts were wringing their hands over a tech stock collapse. With the economy starting to slow, investors punished a slew of big techs including Microsoft (MSFT), IBM (IBM) and Hewlett-Packard (HPQ). Not even hot-growth companies like Apple (AAPL) and Research in Motion (RIMM) were spared.

Then Microsoft reported earnings in January, and the sun came out: $6.5 billion in profit for the holiday quarter on sales of $16.4 billion. And best of all, the forecast was bright. “We actually feel very optimistic,” said Microsoft Chief Financial Officer Chris Liddell. “The next six months we feel very good about.”

The HP Mini laptop is aimed at the education market, but it could appeal to road warriors as well. Image: HP

Pick up HP’s new $500 mini-laptop, and the first thing you notice is the aluminum casing. Though the thing weighs only about 2.5 pounds, what’s striking is how its sleek skin makes it feel solid and professional – not at all what you’d expect from a budget PC.

I’m in a suite at the Palace Hotel in San Francisco getting a first look at Hewlett-Packard’s (HPQ) latest machine, which the company hopes will help it steal share from Dell (DELL) and Apple (AAPL) in the education market. (Each of the three companies has just under 20 percent of the worldwide market.) HP’s development team, I’m told, consulted educators as they designed the 2133 Mini-Note, and as I turn the laptop over in my hands that comes through in little details.

Lenovo’s critically acclaimed ThinkPad X300 laptop does without a hard drive. Image: Lenovo

While munching on a reuben at Birk’s, a steakhouse in Silicon Valley, Seagate (STX) CEO Bill Watkins is explaining why he’s not too worried about a these trendy new laptops that have everything but a hard drive.

On the surface, this would seem to be a big problem. Seagate, after all, is the world’s largest hard drive maker with expected sales of more than $3 billion this quarter – so Watkins likes to see his wares go into more gadgets, not fewer. It’s easy to see why he tends not to favor devices like Lenovo’s sleek ThinkPad X300, which is winning raves for its light weight and silent operation, and its 64-gigabyte flash storage drive.

HP Chief Strategy and Technology Officer Shane Robison says the reorganization of HP Labs should speed innovation and eventually boost profit margins. Image: HP

Now that it’s an undisputed turnaround story, Hewlett-Packard (HPQ) is looking for ways to fuel long-term growth. An important piece of its plan is HP Labs, a group of 600 top-flight researchers who work to develop breakthrough technologies. To better position HP Labs as a growth engine, the company announced Thursday that it will refocus its efforts on five areas: Information explosion, dynamic cloud services, content transformation, intelligent infrastructure and sustainability. (Earlier: Turning an idea farm into a hit factory)

I sat down with HP strategy and technology chief Shane Robison to talk about the research shift, and what it means for the company. Below is an edited transcript of our chat.

Memory prices are bruising profit margins, but CEO Paul Otellini says the chip giant can still thrive.

CEO Paul Otellini spent 2007 restoring investor faith in Intel; thanks to a slow economy and eroding memory prices, he’s got more work to do. Image: Intel

Facing flagging profit margins and a skeptical Wall Street, Intel (INTC) CEO Paul Otellini hosted investors at the company’s Silicon Valley headquarters Wednesday. His message: Despite a weak U.S. economy and an ugly memory market, the Internet boom will supercharge revenues at the world’s largest chipmaker.

“We essentially think we can triple the market for our products,” Otellini told a gathering of financial analysts. “And this isn’t assuming that we have a full run of every market; it’s assuming we have a moderate view of success.”

But Intel’s growth story is a tougher sell today than it was a few months ago, which helps explain why the company took the unusual step of hosting investors at its Santa Clara headquarters instead of doing the event in New York as usual. And the tough sell is not just an issue for Intel; since November, when it became clear that the U.S. subprime mortgage crisis could tip the economy into recession, the tech industry in general has been hit hard. Stocks like Intel and Apple (AAPL) that were investor darlings in 2007 have suffered gut-wrenching losses; Intel has shed more than $35 billion in market capitalization, a quarter of its value, since December.

Image: Apple

Can Apple regain its status as a Wall Street darling?

So far 2008 has not been kind to the technology trendsetter. With U.S. iPod sales slowing and iPhone hype fading, investors have been seized by worries that the crew in Cupertino isn’t much of a growth story anymore. The stock has fallen 40 percent from its recent highs, losing some $50 billion in market value –and it isn’t clear what could turn things around.

It does seem certain that major relief won’t come from Apple’s (AAPL) newest products. This week’s update of the MacBook laptop line adds speed and memory, but no breathtaking design touches. The super-slim but pricey MacBook Air laptop that CEO Steve Jobs unveiled in January has met with mixed reviews, and won’t provide enough of a boost to make up for the iPod slowdown. And Apple TV, the second incarnation of Apple’s failed attempt to bring digital downloads to the television, doesn’t seem to be attracting an iPod-like following either; on Amazon (AMZN), it’s about as popular as a niche backup hard drive.

So where will Apple go for a sales boost to lift its stock? Perhaps overseas.

Even as U.S. tech spending slows, the market for high-tech gear and the opportunity for Apple to grow, is rapidly expanding in Europe and Asia. To wit: Hewlett-Packard (HPQ) CEO Mark Hurd noted last week that emerging markets accounted for nearly half of the industry’s PC shipments at the end of 2007, and well over half of the growth.

As sales growth slows, the focus shifts to services

HP Executive Vice President Vyomesh Joshi wants to use software and services to drive printing profits. Courtesy: HP

Even during the bad times, Vyomesh Joshi’s printing business at Hewlett-Packard (HPQ) was the go-to place for good news. As recently as 18 months ago, the affable executive vice president’s unit accounted for more than half of the overall company’s operating profits.

But things have changed since HP’s dramatic turnaround took hold. HP’s computing group grew profits 75 percent in the October quarter by stealing market share from Dell (DELL) and riding the popularity of laptop computers. Meanwhile the Technology Solutions Group, which sells servers and other tech plumbing to big companies, is doing well too – last quarter operating profit jumped 31 percent to $1.4 billion. “Because of our footprint, because of our global nature, we are what we talked about in the fourth-quarter call,” Joshi says. “We are meeting our expectations.”

Which means Joshi’s Imaging and Printing Group no longer needs to prop up the rest of HP. It’s a good thing, too – because Joshi has his own transformation to worry about.

A moody market braces for a big earnings week. How ugly will it get?

It’s time to face the music.

When leading tech companies offer their earnings numbers this week, Wall Street’s focus won’t be on how healthy their overseas businesses are, or how strong sales were during the holiday season. Instead, with global financial markets in turmoil, analysts will be sensitive to hints that executives are losing their sunny optimism.

Larry Ellison bullied and bluffed. But in the end, this software value meal proved too good to pass up.

A little more than a decade ago, fast-food giants realized they could get people to spend more by bundling burgers, fries and a drink together in a value meal.

Oracle CEO Larry Ellison finally got BEA — and another big opportunity to upsell corporate customers. Image: Oracle

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Today’s business software giants are catching on to the same thing. And that, more than anything, explains Oracle’s (ORCL) willingness to pay $8.5 billion for BEA Systems (BEAS) in what would be the third-largest software deal ever.

To understand what BEA brings to the table, let’s take the menu metaphor a little further. Oracle, helmed by deal making CEO Larry Ellison, already sells the industry’s most popular database. And with purchases like PeopleSoft and Siebel, Oracle has been beefing up its selection of applications businesses use to manage employee performance, business expenses, and other functions.

But to entice customers to do all their software shopping with Oracle, Ellison needs to create a full value meal. To achieve that, Oracle needs more of what BEA has.

“For Oracle, this deal is a very big step toward completing our vision of becoming a strategic enterprise software vendor of choice for our customers,” Ellison said. “We’ve demonstrated over many acquisitions that we’ve made the past three years how expanding like this benefits both our customers and our shareholders.”

The benefit that BEA brings Oracle is middleware. Middleware is the secret sauce that helps the jumble of corporate software programs work together, for example allowing a customer service system to access information from the billing program. In the age of the Internet, that kind of linkage is key as companies seek to build time-saving online experiences for their customers and employees.

The market was all set to throw itself a big pity party, and along comes IBM to ruin it all. But it’s too soon to say Big Blue’s sunny report will be enough to breathe life back into tech stocks.