A lot has been written about Dell's third-quarter earnings report, but what caught the eye of analyst Shaw Wu of American Technology Research was its disappointing gross margin: 18.5%, down 150 basis points from 20% a year earlier.

"Controversial and confusing," Wu called Dell's (DELL) explanation for these results, especially in comparison to competitors like Apple (AAPL) and Hewlett Packard (HPQ).

"DELL cited a tougher component pricing environment. We find this odd as AAPL and HPQ experienced the opposite and our own supply chain checks indicate otherwise. … It is interesting to note that DELL's costs may actually now be higher than HPQ and AAPL, something that was unthinkable not that long ago."

UPDATE: China Mobile is now said to have denied Southern Daily's report that talks with Apple have stalled. See here.

Instant analysis from The Mac Observer's Apple Finance Board:

Pretty much as expected, everyone is playing hardball, but China Mobile just blinked by having to issue a denial that it had terminated discussions, thereby looking like the weaker hand. They'll be furious at having to disclose their interest in this manner – it undermines their bargaining position and strengthens Apple's with the other carriers like Unicom. –Tommo_UK

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Less than three weeks after the first reports that Apple (AAPL) was in talks with China Mobile — the world's largest cell phone operator with 350 million subscribers — to carry the iPhone in China, negotiations have broken down, according to a report today in China's Southern Daily newspaper.

This follows earlier reports that talks with China Unicom, the country's second-largest carrier, had also failed. The sticking point in both cases: the revenue-sharing model that Apple insisted on — and got — in the U.S. and European market.

It's impossible to say from the brief report today whether this door is firmly closed or could be re-opened. Henry Blodget has argued persuasively in Silicon Alley Insider that a China iPhone deal is inevitable. The Chinese market is so big that even if Apple got only a 1% slice of the pie, no revenue sharing and fire sale prices, it could see revenues of $600 million a year. A 5% market share at today's iPhone prices could bring in $6 billion a year, even without revenue sharing. (link)

That there is demand for the iPhone among Chinese mobile aficionados is clear. Wired early this month reported on the lively trade in black market iPhones, known in China as the "Ai Feng" ("Crazy Love"). The devices are carried back into the country where they were originally manufactured by mules from Hong Kong and sell for as little as $474.

But Apple may need China more than China Mobile needs it. Earlier this week, Chinese wire services reported that rather than relying on the big Chinese distributors to sell the iPhone, Apple plans to open its own stores in China in 2008.

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.

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Employees at Carphone Warehouse, the U.K.'s largest cellphone retailer and the main distributor of Apple's (AAPL) iPhone in Britain, have been caught trying to mislead customers about what is and isn't covered by the purchase agreement, according to the BBC.

Responding to viewer complaints, undercover researchers from BBC One's Watchdog unit visited five Carphone Warehouse stores. In three out of the five, a salesperson told BBC staffers posing as customers that if they lost their iPhone, they would have to buy both a new phone and a new 18-month contract at a minimum cost of 630 pounds ($1,300 at today's exchange rate).

That's not true. Customers who lose an uninsured iPhone have to buy a replacement, but can still use their existing contract. Apparently the salespeople were trying to convince customers to buy coverage they did not need from the store's own insurance policy.

In a fourth Carphone Warehouse store, BBC One was told that the iPhone insurance policy offered by O2, Apple's other U.K. partner, provided less coverage than theirs. That was also untrue.

The story is reminiscent of some of the problems that surfaced when Apple partnered with AT&T (T) to sell the iPhone in the U.S. Shortly after the iPhone was introduced — and when the devices were still in stort supply — several AT&T stores reportedly wouldn't let customers buy an iPhone unless they also bought a bundle of AT&T accessories. See Gizmodo's report here.

A spokesperson for Carphone Warehouse acknowledged to the BBC that there could be "some element of confusion among an isolated number of sales consultants," but added that the company did not believe the small number of complaints were a "fair reflection" of the experience of thousands of iPhone customers.

The BBC report points out that Carphone Warehouse was fined 245,000 pounds ($500,000) last year for breaking British rules about selling insurance.

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.

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"You'll have it next year."

That was AT&T (T) chairman Randall Stephenson's answer to a question yesterday about when Apple (AAPL) will introduce an iPhone that runs on a faster, third generation wireless network rather than AT&T's 2.5G EDGE network, according to an overnight report.

The remark was made at a meeting of the Churchill Club in Santa Clara, Calif., and seemed to offer slightly more hope of a speedy delivery than Steve Jobs' latest public comment on the matter.

“Hopefully we’ll see that late next year,” was what Jobs said when asked last September why he hadn't built a 3G iPhone.

A few weeks later, Broadcom began delivering samples of a low-power integrated device it calls "a 3G Phone on a Chip" that would seem to meet Apple's requirements. It will be available next year in bulk for $23 apiece. (see here)

AT&T chairman couldn't comment on how much an iPhone built around such a chip might cost. Steve Jobs "will dictate what the price of the phone is," Stephenson said — a choice of verbs that reveals more about the relationship of the two CEOs than he probably intended.

Engadget speculates that such a phone might fit into the $599 price slot formerly occupied by the 8 gigabyte iPhone while carrying 16 gigabytes of flash memory like the iPod touch.

Rumors that a 3G iPhone might come as early as May 2008 were floating around last week. Will Stephenson's remarks put a damper on Christmas iPhone sales? ParisLemon thinks so. Piper Jaffrey's Gene Munster not so much.

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).

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Shoppers headed online in droves on Cyber Monday, according to the latest stats: 32.5 million visitors entered virtual stores, up 10 percent from a year ago.

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Apple's (AAPL) iPhone goes on sale in France late tonight at select Orange boutiques at prices that look very different from those charged in the U.S. ($399), the U.K. (289 pounds) or Germany (399 euros locked, 999 euros unlocked).

France Telecom, which owns Orange, knew even before it signed its exclusive deal with Apple that it was going to be required to offer customers the option of buying the iPhone with or without a contract. Agence France Press (link, in French) reports that Orange has structured its prices accordingly.

• 749 euros ($1,109) unlocked iPhone, no contract
• 649 euros ($956) locked iPhone, no contract
• 549 euros ($809) unlocked iPhone, with Orange contract
• 399 euros ($588) locked iPhone, with Orange contract
• 100 euros ($147) to unlock a locked iPhone

After six months, Orange will unlock an iPhone for free.

T-Mobile, which had already signed its exclusive deal with Apple when it learned that it would be required to offer German customers the contract-free option, is charging a 600 euro premium for unlocked iPhones. Yesterday a competitor, Debitel, offered a 600 euro rebate to people who bought unlocked iPhones from T-Mobile but agreed to sign a contract with Debitel instead (see The $890 iPhone Rebate).

Official sales of the iPhone in France begin tomorrow, Nov. 29.

Panasonic's rugged laptops already rack up more than $600 million in annual sales. Can it keep growing by building brawn and beauty into one trim package?

The Toughbook Y7, T7 and W7. Images: Panasonic

Not everyone commutes to work in an armored tank, and not everyone needs a fully rugged laptop.

In a nutshell, that explains Panasonic's latest expansion to its Toughbook line. The three new computers are not the sort you'd take into a real battle zone; for that, you'd be better off with an old-school Toughbook CF-30 (it resembles a toolbox). Instead, the T7, W7 and Y7 are 3-pound laptops are designed for white-collar warfare — and they represent the company's best hope of capitalizing on its rough-and-tumble reputation.

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