That’s the new theory being put forth by J.P. Morgan analyst Mark Moskowitz, who believes the Fire will end up being a catalyst for additional iPad sales.

Moskowitz met recently with Apple CEO Tim Cook and CFO Peter Oppenheimer, and came away with the impression that Apple isn’t much bothered by Amazon’s new lower-priced entrant in the tablet market.

“If anything, we think that Apple views the Kindle Fire as a device that stands to bring incremental consumers to the tablet market, and here, these consumers could gravitate to more feature-rich experiences,” Moskowitz said in a note to clients. “We think that Apple is not seeing much pressure from lower-priced tablets.”

In other words, the Fire may well expand the iPad’s addressable market by drawing more price-conscious customers into it — customers who might someday upgrade to the more capable and versatile iPad.

“Given all the investor interest in the Kindle Fire, competitive risk in tablets was one focal point of our meeting,” Moskowitz said. “[But there’s] not much concern in tablet town.”

In other words, the iPad juggernaut rolls on. And while the Fire may aspire to be the No. 2 player in the tablet market, it’s got a ways to go before it gets there.

And a battle to fight, one that may require a better weapon than the Fire — according to Moskowitz, anyway.

“We think that for any vendor to wrestle momentum longer-term from Apple, a fully loaded offering is a must, and here, the current revision of the Kindle Fire falls short,” Moskowitz says. “We think that, over time, consumers may come away disappointed with the Kindle Fire’s lack of functionality and smaller screen size. In our view, the Kindle Fire is the current netbook of the media tablet market.”

The netbook of the tablet market.

That’s a harsh analogy. Netbook sales, of course, have been in decline for a while now, with many claiming the iPad is partially responsible for their deterioration. And netbooks themselves have often been disparaged as cheaply made and underpowered, often by Apple, which has long taken a dim view of the devices.

As CEO Tim Cook said in 2010: “I’ve been very clear about my view of netbooks. I think they are an experience most people will not want to continue to have. People were interested in their price, but when they got them home, they said, ‘Why did I buy this?’”

Which is not to say that consumers purchasing the Kindle Fire are asking themselves that question. The device has gotten some decent reviews, is selling well and, according to some analysts, will continue to do so throughout 2012. But it’s conceivable that the question might arise among those whose expectations were too high.

Even in a generally positive review, Walt Mossberg said of the device:

“To be clear, the Kindle Fire is much less capable and versatile than the entry-level $499 iPad 2. It has a fraction of the apps, a smaller screen, much weaker battery life, a slower Web browser, half the internal storage and no cameras or microphone. It also has a rigid and somewhat frustrating user interface far less fluid than Apple’s.”

Maybe “netbook” is a good analogy.

J.P. Morgan analyst Doug Anmuth reports back from a recent huddle with Netflix managers, and says he thinks they’re done writing checks for a while: “We believe the vast majority of Netflix’s domestic streaming spend for 2012 … has already been announced or committed. Accordingly, we would not expect Netflix to spend aggressively or announce major new deals until management has better visibility on U.S. subscriber growth.”

Anmuth gives himself some wiggle room in his prediction — it’s possible that CEO Reed Hastings still has some whopper deals he’s signed but hasn’t announced yet — but the winking and nudging seems to indicate that the checkbook has gone away.

Part of the Netflix pitch in recent months has been that it’s going to be spending a lot of money beefing up its streaming video catalog, in part because it won’t be spending it on a Starz deal that gave it access to Disney and Sony movies. And Hastings says that, increasingly, Netflix is going to be paying a premium for stuff you won’t be able to find anywhere else — it’s one of the reasons his content bill is jumping to $3.3 billion, up from $1.2 billion a year ago.

Recent Netflix deals include a new pact to stream DreamWorks Animation movies, which used to run on Time Warner’s HBO, and a deal to grab reruns from the CW, the broadcast joint venture between Turner and CBS. And the company has made one high-profile commitment to original content, via “House of Cards,” the Kevin Spacey/David Fincher miniseries that will run next year.

Are those kind of deals enough to keep Netflix subscribers happy, or to lure new ones back to the service? We may get some hints from Hastings and company in the next few weeks, as they hit the investor-conference circuit. Netflix CFO David Wells will appear at a Credit Suisse gathering on Nov. 29, and Hastings will speak at a UBS conference on Dec. 6.

“The company did not announce a redesigned iPhone, which many were calling an iPhone 5 and which may disappoint some investors,” Piper Jaffray analyst Gene Munster wrote in a research note to clients. “That said, we believe the iPhone 4S will meet or exceed unit expectations, as it represents the first iPhone launch at two major US carriers (Verizon and Sprint) along with KDDI in Japan.”

J.P. Morgan analyst Mark Moskowitz also bemoaned the lack of the so-called iPhone 5.

“We had expected the company to announce two new devices, an iPhone 5 and a 4-plus,” he said in a note to clients. “We are disappointed that Apple did not introduce a thinner form factor, but we see the feature set improvements in the iPhone 4S and the broader pricing strategy as positives.”

Moskowitz was particularly impressed with Siri, Apple’s new virtual assistant, and views it as an advantage that will raise the 4S above the pack of rivals that perpetually pursue it. “Once investors dig into Siri, we think its addition will overshadow the lack of full iPhone form factor change,” he said.

Goldman Sachs analyst Bill Shope took a similar view, arguing that the big news of the day was really the software that was on display. “Siri represents a more significant platform enhancement than we anticipated,” he said in a research note. “We believe this, coupled with iCloud and iOS 5, suggests today’s event represented a critical positive inflection point for the iOS platform overall.”

UBS analyst Maynard Um echoed Shope and went him one better, suggesting that the addition of Siri to the iPhone is one of those watershed innovations that will again change the way we interact with our mobile devices. “While some may be disappointed by largely unchanged design, Apple used its owned ecosystem to embed the Siri personal assistant throughout its OS to change the way we interact with phones. We believe Siri, iCloud & other iOS 5 features will continue to drive the next wave of demand.”

And in all likelihood they will. Sure, Apple did not meet some of the market’s hardware expectations. But what the market sometimes forgets is that it is software that truly differentiates Apple from its rivals.

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“We are not impressed with Kindle Fire,” Moskowitz said in a research note to clients. “In our view, [it] is a stepping stone, at best, into the tablet market. We think that for any vendor to wrestle momentum from Apple, a fully-loaded offering is a must, and here, Kindle Fire falls short for now.”

In other words, raised on the iPad, the market has come to expect the feature-rich experience it offers. For a potential rival to offer it anything less is to let it down — even at that friendly $199 price point — which, by the way, is indicative of just how low-frills the Fire is.

Moskowitz again: “In our view, Kindle Fire’s low price point speaks to how there is much lacking in the device. At $199, we argue that the price point is not going to afford most users a tablet-experience, which is a problem if Amazon wants to become a major tablet vendor.”

Of course, the Fire is Amazon’s first take on the device and allegedly a bit of a rush job. There will undoubtedly be a second. Question is, will it be a souped-up 10-inch tablet intended to go head to head with the iPad, or will its design hew to that of the current Fire and be consistent with the second approach to the tablet market that Amazon CEO Jeff Bezos discussed earlier this week.

That’s the gist of another rebuttal to Hong Kong-based J.P. Morgan analyst Gokul Hariharan’s claim that the company is cutting orders to vendors in its iPad supply chain, this one from Sterne Agee’s Shaw Wu.

In a Tuesday morning research note, Wu added his voice to others seeking to correct the evidently mistaken impression that iPad demand is flagging, saying build plans for the device remain “well above expectations.”

Though reports of production cuts may have some merit, they’re no cause for concern, said Wu.

“From our understanding, these production cuts are due to much improved capacity and Apple actively managing its inventory in front of what is likely an iPad refresh in the March quarter,” Wu explained. “The iPad 2 started shipping in March 2011 making the product likely due for an update near its 1-year anniversary. We would also like to remind investors that production changes are common throughout a quarter and through the lifecycle of a product.”

In other words, the Monday morning scare that sent shares of Apple briefly downward was unmerited. Said Wu, “Our distributor checks indicate demand remains strong.” His estimates for iPad shipments in the second half of the year: 12 million in the September quarter and 15 million in the December quarter.

Shares in the company, which have been charting new all-time highs recently, fell $8.21, or 2 percent, to $396.09 in early trading following the report, which claimed supply chain vendors indicate a 25 percent cut for fourth-quarter iPad sell-in orders.

A nasty bloodletting, and unmerited according to a few other analysts. Piper Jaffray’s Gene Munster, for example, dismissed J.P. Morgan’s report as a misinterpretation of supply chain noise.

“Following our recent trip to Asia we remain confident in our iPad estimates for the September and December quarters of 10.0m and 12.0m, respectively,” he said in a note to clients. “While we heard chatter of supply chain order reductions, the absolute sell-in figures for 2H CY11 likely remain well above our estimates. We also note that previous calls based on sell-in or supply chain data have, for the most part, proven to have very little correlation with Apple’s results vs. consensus.”

Susquehanna chip analyst Chris Caso also raised an eyebrow over J.P. Morgan’s claims, arguing that what we’re seeing is a scheduling adjustment, not a cut.

“We believe chatter regarding iPad production cuts are misleading — we have seen pull-ins, not cuts,” Caso said. “We have noted recent comments by competitors discussing iPad production cuts for 4Q. Our recently published AAPL supply-chain checks noted a sequential decline in 4Q iPad builds from 17 mln-19 mln units in 3Q to 11 mln-13 mln units in 4Q. However, the 4Q sequential decline was accompanied by an increase in 3Q builds, leading us to conclude that production was likely pulled-in from 4Q to 3Q. We believe AAPL has attempted to accelerate production in 3Q to ensure product availability for the holidays. In addition, we expect AAPL will need to modulate production of iPad2 to prepare for iPad 3.”

In other words, don’t pay too much attention to supply chain noise. J.P. Morgan’s Apple analyst Moskowitz isn’t. He hasn’t changed his iPad numbers and, according to the note that inspired today’s sell-off, “does not expect the supply chain adjustments to result in downside to his estimates.”

UPDATE: Later Monday afternoon J.P. Morgan issued a second research note on rumored iPad production cuts, this one written by Moskowitz. Its gist: Apple is fine.

“A recent alert on Hon Hai Precision from our J.P. Morgan Asia colleague Gokul Hariharan has the equity markets worried about Apple,” Moskowitz wrote. “Mr. Hariharan’s report focuses on how Hon Hai could be impacted by potential iPad sell-in order cuts. This alert is not the view of the US IT Hardware team. As referenced at the end of the Hon Hai alert, our estimates for Apple remain unchanged, and we do not expect any downside risk.”

“In recent months, there has been rising investor speculation that a new iPad 3 would be launched for the holiday season,” Moskowitz wrote in a research note to clients. “Our latest research continues to indicate that there is no such device slated for production this year. … There are prototypes in the supply chain related to the next-generation device, but our conversations with industry participants suggest that a new device will not be available until sometime in calendar 2012.”

Which makes perfect sense, really. Remember, the iPad 2 launched in March of this year. Why bother updating a device that isn’t yet a year old — especially when it’s selling so well? According to the latest metrics from IDC, the iPad holds 68.3 percent of the tablet market. With that massive a share and no true rival to threaten it, there’s little reason to expedite the next version of the device.

Says Moskowitz, “We do not think Apple needs to be in a rush to unveil a new iPad. … The other tablet entrants have stumbled so far, and that trend-line could persist deep into 2012. Motorola Mobility and Research In Motion have been recent disappointments, and we expect more stumbles from others.”

So in all likelihood, 2011 will remain “the year of the iPad 2,” just as company Chairman Steve Jobs said it would earlier this year. And given Apple’s profound lead in the tablet market, chances are good 2012 will probably be the year of the iPad 3.

Yahoo is preparing to hire investment bankers and other strategic advisory firms, said sources close to the Silicon Valley Internet giant, as it seeks to figure out what to do next at the company.

The board of Yahoo, which ousted its CEO Carol Bartz today in a unanimous decision, is exploring a range of possible strategies to turn around its moribund growth, including possible acquisitions, shedding units, bringing in new investment partners and even taking the company private or selling it.

A sale is the least likely of options, said sources close to the situation, but — given today’s news — Yahoo might attract a lot of attention from investors seeking to take advantage of the company’s powerful but troubled assets.

“It is all on the table,” said one source close to the company.

Independent board member David Kenny, president of Akamai, is heading the strategic options committee in charge of managing the process, sources said.

No adviser has been selected yet, but sources said Yahoo is likely to hire Allen & Co., which advises many tech and media firms. It is currently advising AOL, for example.

Other candidates would likely be the typical panoply of choices, including big investment banks like JPMorgan Chase, Goldman Sachs and Morgan Stanley, and smaller boutique firms such as Qatalyst Group and Code Advisors.

Sources said whoever is hired will be charged first with doing an extensive review of the company that is more intensive than has been done before.

“There is a potential for enormous growth that the company has not been capitalizing on and should,” said another source. “The board needs to get this company on a trajectory for growth.”

Indeed, it does, as it has not under the leadership of Bartz. Revenue growth has stalled and product innovation has lagged.

The company will also be conducting a search for a CEO, which will be difficult because any new top exec will want to be part of such a companywide review.

Yahoo’s choice of an executive search firm has also not been determined, but is likely to be one of the big companies that specialize in the arena.

One thing is certain, said multiple sources: Yahoo will continue to focus itself as what it has previously called a “premier digital media company.”

What that means now, of course, will be determined in the months ahead.

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You would think the settlement of a major dispute would goose the stock of a company, but Yahoo’s deal with its Chinese partner Alibaba Group on Friday did exactly the opposite.

Despite the clearing of an obvious overhang to its shares, the stock of the Silicon Valley Internet giant dropped almost three percent Friday to close at $13.10. While the ongoing federal budget wrangling was partly to blame, it was only a very small part with an overall market decline of under one percent.

A tepid reaction to the deal — in which Yahoo, Alibaba and Japan’s SoftBank came to terms over the spinoff of Alibaba’s Alipay payments unit after much wrangling over the move — came quickly from Wall Street analysts.

A report titled “Yahoo Inc: Alipay Agreement: Better than Nothing, But Not That Great,” by J.P. Morgan’s Doug Anmuth, was typical. Pointing to no clarity on an IPO of the Chinese assets of Alibaba and that “prior to the divestiture, Alibaba Group owned 100% of Alipay and all of its income, which is now reduced to 37.5% ownership of Alipay and 49.9% share of the pre-tax income,” he noted that Wall Street “has recently assigned no value to Yahoo!’s share of the asset.”

Well, less than zero, if the stock decline is taken into account, which means Yahoo’s market cap is now just over $17 billion.

According to sources close to the situation, especially since Yahoo’s Asian assets make up more than $9 billion of that valuation, private equity investors and others are pulling out their spreadsheets once again about a possible takeover or privatizing of Yahoo.

Several months ago, for example, former News Corp. exec Peter Chernin had been contemplating a friendly bid with partners such as Providence Equity Partners and others. While there have been rumors recently that he has reengaged in that effort, that is unclear.

Sources also note that Yahoo’s top execs, especially CEO Carol Bartz, and also members of its board, are perplexed that the settlement in China — a positive development — had the opposite effect on the stock.

It’s part of a continuing decline. Yahoo shares are down almost 26 percent in the past three months. Most Web stocks — such as Google, Amazon and Microsoft — are strongly up in that period. The only other obvious laggard is AOL, which is down almost 16 percent in the past three months.

In a move reminiscent of one done by Facebook in 2009, Twitter is close to completing an $800 million funding deal that will include a second part in which around $400 million of the total will be used to cash out current investors and also employees.

According to several sources close to the situation, the complex transaction could be completed within two weeks.

Along with basic funding needs, this is largely being done this way to give those with stakes in the San Francisco microblogging company an ability to monetize their privately held common stock and also to do this selling in a more organized — and legal — manner.

That is especially important since the company is not likely to go public for at least a year or more. And, while it could also be sold to a bigger company such as Google, that is also not in Twitter’s immediate future.

Before this secondary follow-on, the first part of the deal will be a $400 million investment for preferred shares by new and also existing shareholders, as was reported by the New York Times last week.

That round will indeed value Twitter at $8 billion, as the Times reported, which is a higher number than in other earlier reports.

This is more than double what Twitter was valued at when it got $200 million in venture funding from Kleiner Perkins in December at a $3.7 billion valuation.

Once the latest investments are complete, Twitter’s total cash haul since it was founded five years ago will be $760 million.

Key new moneybags are expected to be Russian investing heavyweight DST Global, which has invested in Facebook, Zynga and Groupon; as well as the digital growth fund of J.P. Morgan and perhaps others.

Current investors include Benchmark Capital, Union Square Ventures, Spark Capital and several other venture firms, as well as a spate of prominent angel investors.

The latest funding is an important one for Twitter and will up the pressure for its management, including CEO Dick Costolo, to really get its business growing in terms of revenue and profits.

Twitter is still struggling with coming up with a truly lucrative business model, and its execs have presented a number of them, such as promoted tweets, largely based on advertising.

It reportedly has $200 million in annual revenue from its efforts, which is still small in comparison to other Web 2.0 start-ups.

Interestingly, that was a similar situation to where Facebook found itself two years ago, when it allowed its employees to sell 20 percent of their shares.

That financing was part of a $100 million add-on to a $200 million investment in the social networking company by DST. At the time, the tender offer valued the company at $6.5 billion for the common stock, or $14.77 a share.

Of course, Facebook is worth upward of more than 10 times that now, so any Twitter sellers might want to consider their options carefully.

It is not clear exactly who can sell their Twitter shares, and in what amount, in the new deal. When Facebook did a similar move, for example, its top leadership could not sell any of their stakes.

A Twitter spokeswoman would not comment about any fund raising.

But, interestingly, in an onstage interview at a Fortune magazine tech conference this week, Costolo criticized stock trading of the shares of popular start-ups on secondary exchanges as a “distraction.” Like other companies, he said, Twitter had instituted stricter policies to limit the ability of its employees and investors to trade on those markets.

The updates come after the Securities and Exchange Commission reviewed the documents and made comments, according to sources.

The latest document will likely be looked at under a magnifying lens, given that the daily deals company faced a series of negative reports following the news on June 2 that it intended to raise roughly $750 million in an initial public offering.

The day after its IPO filing, Eric P. Lefkofsky, co-founder and executive chairman of the board, told Bloomberg in an interview that Groupon will be “wildly profitable,” referencing worries about losses unveiled in its financial statements and his past record of start-ups.

In today’s filing, Groupon backpedaled, explaining that, “You should not rely on a reported statement in a June 2011 news report by our co-founder and Executive Chairman in making your investment decision.”

It goes on to say that Lefkofsky did not agree to be interviewed and that Groupon representatives had requested that the statement not be published. “The reported statement does not accurately or completely reflect Mr. Lefkofsky’s views and should not be considered by prospective investors in isolation or at all.”

Along the same lines, Groupon CEO Andrew Mason’s letter to potential shareholders, which could be construed as overly positive, was moved from one of the first pages to page 32.

Besides that, the major update to the document includes a full list of the company’s underwriters. The newest addition is J.P. Morgan, which will be joining Morgan Stanley, Credit Suisse and Goldman Sachs as the lead investment banks.

Another 11 investment banks are also joining the process in supporting roles. The full list: Allen & Co., B of A, Merrill Lynch, Barclays Capital, Citi, Deutsche Bank Securities, William Blair & Co., Loop Capital Markets, RBC Capital Markets, Citadel Securities and the Williams Capital Group.

Also new to the filing was a breakdown of the company’s international business, which is actually larger in terms of revenues than in the U.S.

Revenue from its international and domestic operations was $346.8 million and $297.9 million, respectively, in the first quarter 2011. In addition, it said that its gross profit margins (which is the amount Groupon retains after paying a percentage to the merchant) are higher internationally.

It said that overall gross margins were 41.9 percent at the end of the first quarter, dropping from 45.2 percent in the year-ago period. The decrease was primarily due to an increase in national deals in North America, which resulted in lower margins for the purpose of acquiring new subscribers and establishing its brand.

[Photo: Asa Mathat | Clip art iStockphoto/Jules Kitano]

Tapjoy has already evolved at least once from its days as the Facebook app promoter Offerpal. “We have been very successful in rebuilding the firm and now it’s time to step on the gas a little bit,” CEO Mihir Shah said today.

Shah maintained that Tapjoy investors were not at all deterred that Apple is no longer approving apps that contain Tapjoy “offer walls” to encourage users to download other apps, even though many developers have been significantly impacted by losing the promotional boost from this Tapjoy feature.

Shah said today that Tapjoy is independent of any platform, noting the company recently debuted a fund to help app developers port to Android and launched on Windows Phone 7 last week. Other platforms could include HTML5, international and direct-to-consumer, Shah said.

“We’re still very strong on iOS and strong on Android,” Shah said, noting that pay-per-install is not Tapjoy’s only offering. “It’s a combination of installs, engagements and others that drive discovery and lifetime value.”

Tapjoy continues to be profitable, Shah said, and will now look at making acquisitions. The new funding counts as Tapjoy’s Series D, and comes after a $21 million raise that was announced in January.

Meanwhile, it looks as though social Web services like Twitter and Facebook are setting themselves up to play a much larger role in mobile app discovery.

J.P. Morgan analyst Mark Moskowitz figures Apple could rake in as much as $6 billion from CDMA iPhone sales through Verizon, and half that through carrier partners overseas, particularly in the Asia-Pacific region.

“We expect the iPhone’s relative growth to moderate over time, but in the next 18-24 months, we see incremental growth opportunities in both Asia- Pacific and the U.S., specifically in CDMA-based networks,” he writes. “Apple just began to penetrate this opportunity with its Verizon iPhone launch in February, and we think that the incremental CDMA market penetration can be a multi-year phenomenon for the company.”

I’d say so, considering there are some 564 million CDMA subscribers worldwide, of which Verizon’s 95 million comprise just 17 percent. So where will Apple bring the CDMA iPhone next? Moskowitz thinks the company will focus its efforts where CDMA adoption rates are highest: China, India, Japan, and South Korea. And, in all likelihood, it’s probably close to hammering at least a few of these deals out.

Apple is widely rumored to be negotiating a CDMA iPhone deal with China Telecom. It’s also said to be in talks with Reliance and rival CDMA carrier Tata Teleservices in India. Assuming Apple finalizes some, if not all, of them in the next year, what kind of sales and revenue can we expect from them? Moskowitz expects Apple to sell 10 million CDMA iPhones through Verizon in calendar 2012 for $6 billion in revenues. Overseas, he expects the company to capture about 10 percent of the CDMA market in 2012, which would generate approximately $3 billion in revenue.

That’s a nice boost to Apple’s bottom line and to the iPhone’s growth trajectory, which may well continue to outpace that of the broader smartphone market–if Moskowitz’s numbers pan out.

[Image credits: iFixit and JP Morgan]

Thirty-six U.S. venture-capital funds raised more than $7 billion in the first quarter of 2011. That’s up 76 percent, by dollar commitments, compared with the first quarter of 2010, which saw 44 funds raise $4 billion, according to Thomson Reuters and the NVCA.

Bessemer Venture Partners VIII raised $1.6 billion during the quarter, while Sequoia Capital 2010 raised $1.3 billion and J.P. Morgan’s (JPM 46.97, +0.13, +0.28%) Digital Growth Fund raised $1.2 billion.

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To wit, J.P. Morgan expects some 81 million tablets to be manufactured in 2011, with just under 48 million being shipped to retailers. That’s a massive discrepancy. Lop 20 percent off that manufacturing projection and you still get a surplus of 17.2 million units.

That’s nearly 36 percent oversupply. And it’s J.P. Morgan’s base-case scenario. The firm’s best-case scenario is a surplus of 7.6 million units and 13.2 percent oversupply. Worst-case scenario: A 51 percent oversupply of 21.9 million units.

In all three versions, the tablet bubble pops and more than a few manufacturers new to the market take a financial bath, leaving Apple’s massive lead relatively unshaken this year.

“The iPad 2’s early success is a warning sign of a global tablet bubble,” J.P. Morgan analyst Mark Moskowitz said. “There are many competitive tablet entrants expected, but so far, we think that both Samsung and Motorola have experienced disappointing adoption curves. We expect more of the same from other entrants. Meanwhile, Apple’s iPad 2 technical and form factor improvements, coupled with opening weekend stock-outs, point to a widening gap in market share ownership potential. We expect Apple to own at least 61 percent of units in 2011, but there is likely upside to this estimate given the early-stage momentum of iPad 2.”

Attrition in the tablet market was inevitable, particularly given the sheer number of devices announced earlier this year. But if Moskowitz is right, this is shaping up to be a real bloodbath.

[Image Credit: Audiophile & Synergy Industries]

In 2010, the research outfit estimates, tablet-related cannibalization of PCs was about 18.9 percent. And in the next two years it will nearly double.

“We expect tablets to have an increasingly negative impact on PC shipments,” analyst Mark Moskowitz wrote. “We are modeling more than 35 percent of tablets sold in 2012 to cannibalize PCs. More specifically, we expect that tablets will have the largest impact on the netbook market, which had represented about 20 percent of the notebook PC market prior to the tablet’s arrival. As a result of our assumptions, we estimate that the cannibalization rate of PCs gradually will trend close to 10 percent of notebook PC units (including standard notebooks and netbooks).”

Lousy news for PC makers without a strong tablet offering, and great news for the company with the strongest tablet offering of them all: Apple. Moskowitz expects the iPad to sustain the company’s competitive advantage in the tablet market for at least the next few years. In 2011, for example, he sees Apple shipping 29.1million tablets–about 60.8 percent of the tablet market. The following year, however, that percentage will decline. Apple will account for 44.6 percent of tablet unit shipments, a sizable decline in share from the prior year, but one tempered by the unit sales and the great margins the company so often claims. Moskowitz believes about 60.5 percent of tablet market revenues in 2012 will go to Apple.

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The caveat here is that HP’s new tablet (or tablets) presents developers with an enormous opportunity precisely because its app ecosystem is uncertain. It’s going to be a lot easier to score a hit there than it is in Apple’s App Store, where developers must compete for users’ attention with hundreds of thousands of apps. And if you do score a hit there, it might even set the stage for you to translate that success to larger mobile platforms that are generally tougher to break into.

In yet another sign that the Internet market is getting very interesting to Wall Street, well-known analyst Imran Khan (pictured here) is jumping from his perch as managing director at J.P. Morgan to become a banker at Credit Suisse, according to sources close to the situation.

In this new role, the high-profile Khan–well known for his reports on digital companies–will be running investment banking for Internet markets, including IPOs and M&A.

Khan, who will leave Morgan in several months, is making a big shift from analyst to banker, designed to give Credit Suisse more credibility in the arena as more Web companies come to market.

He also has a strong focus internationally, especially in China, where there has been huge growth of late.

Khan did not return an email and phone call seeking comment, and Credit Suisse has also not responded.

But one industry veteran noted that Khan had the profile and potential–mixing analysis with banking–to be the next investment star, especially as initial public offerings ramp up again.

“In my mind, Imran is certainly as good as Frank Quattrone, said the person, referring to the well-known Silicon Valley banking legend of Web 1.0, who remains active still in dealmaking. “And even stronger in some ways, because of his international and China domain expertise.”

The company has already stopped making the chip with the problem, but as is always the case with the incredibly complex process of semiconductor manufacturing, doing so is a costly process. Intel said it will reduce its revenue forecast for the first quarter by $300 million as it ends production of the old chip and gets volume of the new one ramped up. Total cost to repair and replace affected materials and computers already sold with the problem chip will be $700 million.

Those with long memories will recall Intel’s Pentium bug in the mid-1990s, which caused a big crisis of confidence in Intel chips, jokes from late-night TV hosts and a drop in the company’s stock price. This error is nothing like that. The company says the processor itself is unaffected.

Analysts are telling investors not to overreact. “Assuming pent-up demand for Sandy Bridge and mild competition, we think impact of this problem will be relatively small,” Standard & Poor’s analyst Clyde Montevirgen told clients in a note today. Mark Moskowitz of J.P. Morgan said it is likely that only a small number of end consumers are affected.

Meanwhile, Intel closed its $1.4 billion deal to acquire the wireless chip division of the German chipmaker Infineon, and said it expects to finally close its $7.7 billion acquisition of McAfee by the end of the quarter.

The combination of those two deals plus the chip trouble caused Intel to issue new guidance for the first quarter. It now expects first-quarter sales in the range of $11.3 billion to $12.1 billion, which is slightly higher than previous guidance. However it shaved three points off its gross margin forecast: The mid-point of the range is now 61 percent, down from 64 percent.

Intel shares are down more than one percent at the moment, while shares of rival Advanced Micro Devices are surging by more than five percent.

No big deal, Google said–just a little re-org.

And at first blush, Wall Street seemed to take the company at its word. Eric Schmidt, Larry Page, whatever. A sampling of analyst reactions:

• J.P. Morgan’s Imran Khan: “We think it is important to note that although the titles have changed, the core team remains the same. We think this new team structure makes a lot of sense and could result in faster decision making.”
• Citigroup’s Mark Mahaney: “We view this change as un-dramatic, as Eric Schmidt will still be working closely with Page and Brin…we believe Larry Page has been groomed for the role of CEO, and we don’t expect any dramatic changes to Google’s core strategies.
• Barclays’ Douglas Anmuth: “We don’t actually view it as that material of a change. We still think Google will be run in a similar manner as it is today, and mostly by the same people.”

Investors also seemed to yawn, or at least they seemed to last night: Google stock moved up a little bit after the market closed, but that was it.

Today, though, the story is harder to discern from the GOOG chart, which is one of the reasons you should always be wary when someone tells you with confidence why a stock is moving one way or another.

Watch the huge spike at this morning’s open, and then the steady decline. This was taken shortly before noon, New York time:

Again, don’t make too much of a stock’s movement on any given day. But you do have to wonder if any of this reflects a reassessment of the move.

It is definitely true that Larry Page was deeply involved in every major decision Google grappled with, and it’s undeniable that the company relies on a second tier of executives, like CFO Patrick Pichette and sales boss Nikesh Arora, to make the trains run on time. So, easy enough to argue that there’s no real change.

Still, now we’re seeing reports reminding us that the weird power-sharing arrangement between Schmidt, Page and co-founder Sergey Brin was, in fact, a weird arrangement. And that it didn’t always work smoothly. And that the three men may not have been on the same page about a variety of things. Which means that the company may in fact behave differently under Page’s guidance.

Which again, isn’t necessarily a bad thing. But it could be a new thing–and Wall Street never quite knows what to make of that.

“Apple’s stock could face headwinds for several weeks as the media feeds on a yet-to-be-determined mix of speculation and disclosures about Jobs’ future role at Apple,” Oppenheimer analyst Yair Reiner said in a note to clients today. “At the same time, Apple’s investors will theorize and worry about what Jobs’ status will mean for future innovation at Apple. But this worry stage will likely run out of fuel relatively quickly, because convincing evidence of how Jobs’ presence or absence is impacting Apple’s fundamentals won’t present itself for years. Lacking evidence, investors will shortly go back to trading AAPL’s stock based on measurable fundamental performance.”

J.P. Morgan’s Mark Moskowitz was similarly optimistic. “While not knowing the details behind the current medical leave, we point out that Mr. Jobs has demonstrated a great resolve to improve his health previously, emboldened by the attitude and philosophy that helped him lead Apple’s remarkable rise over the past decade,” he writes. “In our view, Mr. Jobs and his team have made Apple become the primal force in shaping consumers’ technology-driven ‘way of life.’ While the competition is increasing in the areas of smartphones and tablets, we do not expect Apple’s technology and user experience leadership to fade.”

PREVIOUSLY

• Steve Jobs’s Finest Product–Apple–Won’t Break Down
• Steve Jobs Asked for Privacy–and He Deserves It This Time
• Apple Shares Down Nearly 8 Percent in Frankfurt on News of Jobs’s Medical Leave
• Citing Health, Steve Jobs Steps Away From Apple, Again
• Deutsche Bank Joins the Running of the Apple Bulls
• Jobs: “I’m Vertical, Back at Apple and Loving Every Day of It”
• Apple Investors Are Wusses
• When Steve Jobs Said “Stay Hungry. Stay Foolish,” He Did Not Mean This Foolish
• AAPL Sauce
• Apple’s Steve Jobs: “I Have Decided to Take a Medical Leave of Absence”
• The Entire Letter: Steve Jobs Explains His Health Problem: “Hormone Imbalance”–Predicts Recovery by Spring and Will Stay On as CEO
• Ain’t Nobody’s Business If Jobs Is or Isn’t

Being the largest e-commerce company is an obvious barrier to entry, but there are at least two opportunities in 2011 that will drive even more traffic to its site and others: Social and mobile.

A 78-page presentation by J.P. Morgan on the Internet Sector Outlook of 2011, which focuses a lot on the e-commerce market, predicts that the big losers will be physical retailers as more spending shifts online.

If you’ve been reading eMoney, you already knew this. Last month, we referred to these trends as the so-lo-mo trifecta, referencing the impact of social, local and mobile on e-commerce.

In 2010, J.P. Morgan found that nearly 8 percent of Amazon’s traffic was coming from Facebook, compared to 20 percent coming from Google, and that e-commerce revenues are expected to grow by 13.2 percent in 2011.

But as more consumers discover products and services through social networks, like Facebook, and compare prices on their smartphones in stores, traditional brick-and-mortars will lose market share and face bankruptcy, J.P. Morgan concludes. (It’s a small coincidence that Macy’s said it expects to add about 725 new positions over the next two years to beef up its Macy’s and Bloomingdale’s Web sites).

Here’s how J.P. Morgan makes the case for the future of e-commerce:

–U.S. e-commerce revenues totaled $28 billion in 2000, soaring to $166 billion in 2010. Revenues are expected to grow by 13.2 percent in the U.S. this year alone.

–In 2010, 36 percent of people said they bought something online at least once a month. Slightly less, or 32 percent of people, said they purchased one to two items online a month. However, less than 2 percent of folks bought more than 10 items a month.

–Traffic to Amazon’s sites is increasingly coming from Facebook, jumping 328 percent over the past year to almost 8 percent. That compares to almost 20 percent of referrals coming from Google.

–Facebook is driving less traffic to eBay than to Amazon, or roughly 4.7 percent, compared to 11.4 percent from Google.

–E-Commerce 2011 Top Picks: Amazon, Priceline and Latin American e-commerce provider MercadoLibre.