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To: NickSE who wrote (28463)	3/28/1999 11:42:00 AM
From: NickSE	Read Replies (2) of 86076

AZW1 speaks... Q. How can the market do better than you thought it would before, if profits aren't going to be as good as you expected? A. We revise our forecasts every March, after we have had the chance to spend some time with full-year economic and profit information. Not all of the S.& P. 500 companies have finished reporting, but we had enough data to go ahead. After we looked at the numbers, we recognized what we have been saying for several months -- namely, that our estimates of 1998 profits were too high. So, we sliced about $3 off our 1998 profit numbers. That changed our baseline for 1999, and we are now working off a lower base. (ho ho ho...) At the same time, we told our clients we are feeling better about the trajectory of profits going forward based on the evidence we now have. That is largely because the global economy is starting to look better. We aren't as enthusiastic about the rest of the world as we are about the United States, but we are feeling better. Modestly raising our price targets on the market reflects a clearer view on the next 12 months. And we think 2000 will be a good year as well. [....] Q. That said, don't you find that a lot of the market's best-known, biggest-cap names are selling at extremely high prices? A. Throughout the S.& P. 500 there are quite a few outstanding companies that deserve to be selling at price/earnings multiples that are higher than the overall market. The difficulty is identifying companies that are better values than others. In technology, for example, there is a great deal of enthusiasm for big companies. Yet I.B.M. is selling at a price that is below the market's price/earnings ratio. Another technology company selling below the market multiple is Dell. They have a terrific business model they have used on their product and are now using it to get into other product lines. nytimes.com

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