If you thought open-source software was a threat to big-company profits, think again.

Oracle CEO Larry Ellison. Image: Oracle

Just a few years ago, the open-source software movement was a pariah among big software firms. Shai Agassi, then an executive at SAP (SAP), likened it to socialism. Microsoft CEO Steve Ballmer called it a cancer. The attitude among many in the establishment seemed to be that the “free code” revolution led by software such as Linux would discourage invention and erode profits.

That nightmare scenario hasn’t happened. Instead, the open-source movement has helped lower the cost of computing, and fueled a lot of moneymaking innovation, and not just among scrappy startups. For just one example, consider Oracle (ORCL), which is likely to highlight open-source trends as one of the growth drivers in its business when the company reports quarterly earnings today.

Inside HP’s plan to get more bang for its research buck

Prith Banerjee, former dean of the engineering school at the University of Illinois at Chicago, brings new ideas to his role as director of HP Labs. Image: HP

It’s a tale nearly as old as Silicon Valley itself. Nearly 30 years ago, a young Steve Jobs visited the scientists at Xerox’s Palo Alto Research Center and spied the first computer that had a mouse and desktop icons. Jobs soon commercialized similar ideas at Apple’s (AAPL), but Xerox couldn’t seem to take the brilliant concepts from its own labs and turn them into marketable products.

Today Hewlett-Packard (HPQ), the valley’s largest tech company, wrestles with a similar problem. Though HP’s advanced research group once invented wonders such as the scientific calculator, the thermal inkjet printer and commercial LED lighting, these days executives feel HP Labs and its $150 million annual budget could do more to boost the company’s bottom line.

The scrappy chipmaker has plenty of life left – but mistakes have cost it dearly.

AMD’s manufacturing facility in Dresden isn’t yet producing enough quad-core chips to boost the bottom line. Photo: Sven Doering/AMD

If you’d like to beat up on Advanced Micro Devices CEO Hector Ruiz, now would appear to be a good time. Ruiz has won praise for helping the chipmaker mature into a worthy challenger to industry heavyweight Intel, but as he prepares for a Thursday meeting with Wall Street analysts, AMD has the look of a well-used punching bag.

Its stock this year has dropped by half, and in recent weeks it has dipped below $10 per share for the first time since 2003. That price marks a disheartening throwback to the days when PC makers didn’t take AMD’s processors seriously and its market share was weaker at about 15 percent. There’s good reason for the share price collapse: though AMD landed a few good shots in recent years, Intel (INTC) has bounced back with a popular, competitively priced product lineup that’s grabbing back some market share and erasing its rival’s profits.

Cisco Systems CEO John Chambers gives a presentation in July. Image: Cisco

To understand why Cisco CEO John Chambers is still bullish on the company’s growth prospects in an uncertain economy, consider the change underway at the BBC.

The European public service broadcaster is in the throes of a major digital transformation. Its online operation, bbc.co.uk, moves a staggering 1.3 petabytes of data every month to its audience – the equivalent of transmitting all the print holdings of the Library of Congress twice, every day.

But an even bigger wave is coming on Christmas day. That’s when the BBC plans to widely launch iPlayer, video software that allows people to download programs to their computers. By the broadcaster’s internal estimates, traffic will quadruple in a year – so the BBC is now in the market for lots of the gear Cisco sells.

Pop quiz: Which tech company has the most cash?

(A) IBM (IBM)
(B) Hewlett-Packard (HPQ)
(C) Intel (INTC)
(D) Google (GOOG)
(E) Apple (AAPL)

The executive briefing center on Dell’s campus. Image: Dell

Dell is held up as one of the business world’s train wrecks of the moment, sort of a tech version of Britney Spears. The stock is down near the levels where it traded when founder Michael Dell re-took the reins as CEO in February, and the pundits have plenty of questions about the company’s prospects. How could things have gone so wrong? Can Dell ever top the charts again?

If Dell wants to regain its former glory, it will have to do a better job selling laptops like its XPS m1330; and that means new marketing methods. Image: Dell

Two years from now, we’ll be hailing Dell as a marketing innovator — or snickering about its failed attempt to decode the art of hype.

Either way, the struggling computer maker is promising a spectacle that marketing experts everywhere will be watching with keen interest. This week Dell (DELL) announced that over the next three years it will pour its considerable $4.5 billion marketing spending into an unprecedented partnership with marketing giant WPP.

Dell’s headquarters in Round Rock, Texas. Image: Dell

Michael Dell’s turnaround plan isn’t moving as quickly as Wall Street would like. And investors let him know it by sending his company’s stock down nearly 10 percent in after hours trading on Thursday following Dell’s third-quarter earnings report.

On the most basic level, the drop is about investor annoyance that Dell (DELL) is still spending so heavily as it turns things around. Analysts on average had expected revenues of $15.34 billion and earnings of 35 cents per share. Dell beat the revenue number, coming in at $15.6 billion, and barely hit the profit number when one-time charges are excluded. Include those charges, and Dell missed by a penny.

But it’s not all about costs. Some of the investor unease comes because this isn’t the predictable Dell they’re used to.

In this example of how “Ads for Adobe PDF powered by Yahoo” will work, this photo club newsletter has ads in a righthand panel. Image: Adobe

We’ve got ads on web pages and ads in e-mail. Next will we have ads in digital documents?

Yahoo (YHOO) is beginning to publicly test a new type of online advertising it hopes will prompt publishers of newspapers, magazines and newsletters to let readers freely access their digital archives. As part of a fledgling partnership the company is announcing today with Adobe Systems (ADBE), Yahoo can now make its contextual text ads appear alongside Adobe PDF documents in a format similar to a search engine.

Palm Centro. Image: Palm

Tech stocks generally have had a good year, and anyone shorting them had better have intestinal fortitude. But at the moment, there might be no tech stock short sellers are betting against more fervently than Palm (PALM).

According to information released by the Nasdaq stock exchange, bets against Palm have surged over the two weeks between October 31 and November 15, making it one of the five stocks that short sellers are beating up most. Other stocks that some traders are placing big wagers against include Sirius Sattellite (SIRI), ETrade Financial (ETFC), Level 3 Communications (LVLT) and Microsoft (MSFT).