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To: Robert Rose who wrote (116769)	2/1/2001 12:08:14 PM
From: H James Morris	Respond to of 164684

Rob, I think anyone investing in Health care stocks will be rewarded. A couple of years no one wanted them and now everyone does. >CHICAGO, Jan 29 (Reuters) - Premium price increases and cost controls should once again help managed care companies post strong earnings gains in the fourth quarter, though the softening U.S. economy may have a mixed effect on the industry in the long term, analysts said. "The HMOs (health maintenance organizations) are on a roll," said William McKeever, an analyst at UBS Warburg. "We expect them to keep on churning out excellent results and improved earnings, better margins and good earnings per share and I expect that momentum is going to continue into 2001." Of the 13 companies that McKeever follows, nine are expected to report robust earnings growth while only two -- PacifiCare Health Systems Inc. (NASDAQ:PHSY) and Sierra Health Services Inc. (NYSE:SIE) - should report lower earnings, he said. A third, Humana Inc. (NYSE:HUM), should report earnings even with the year-ago quarter. And Aetna (NYSE:AET) Inc., the nation's No. 1 health insurer, is expected to continue to experience cost increases as it pursues a "kinder, gentler HMO" policy to mend relations with physicians and hospitals, McKeever said. Joshua Raskin, an analyst at Lehman Brothers, said he expects 10 managed care companies he follows to post an average increase of about 20 percent in per-share earnings with almost a 12-percent growth in total revenues. His estimate excludes results from Aetna and PacifiCare which are experiencing their own unique circumstances. "We would expect this earnings period to be similar to what we've seen in the last couple of quarters in that we expect upside surprises for many of the companies we cover," Raskin said. "(Premium) pricing cycle continues to be strong and several of these companies tend to benefit from share repurchases." Companies that could beat estimates include UnitedHealth Group Inc. (NYSE:UNH), WellPoint Health Networks Inc. (NYSE:WLP), Cigna Corp. (NYSE:CI), and Oxford Health Plans Inc. (NASDAQ:OXHP), while Humana continues to be in a turnaround phase, he said. "Humana, although definitely showing signs of improvement, will have difficulty showing a big upside in this quarter," he said. "It takes a good year to get the pricing cycle in line and a lot of initiatives started this year won't have an effect in 2001." Premium price increases -- prices charged by insurers to customers such as large and small employers -- are expected to be in the 9.5 percent to 10 percent range surpassing medical cost increases which are predicted to be in the 8 percent range, McKeever said. The industry's medical loss ratio - a crucial measurement that compares medical costs such as payments to doctors and hospitals against revenues - should remain flat at 84.4 percent compared with the fourth quarter of 1999, he said. PacifiCare and Humana are experiencing higher medical loss ratios while UnitedHealth, Cigna, Trigon Healthcare Inc. (NYSE:TGH) and Health Net Inc. (NYSE:HNT) are experiencing improvements in the ratio, McKeever said. Commercial enrollment growth in managed care companies - which excludes Medicare and other public entities - should increase in the mid-single digits in the fourth quarter. "Since the price increases are almost universal, the premium increases are having no impact on enrollment growth," McKeever said in a research report. "We expect Medicare enrollment to be essentially flat since the HMOs have reduced their marketing efforts in unprofitable markets. Some analysts said a softening in the U.S. economy could force premium price increases to drop in the long term if the labor market loosens and if employers gain more clout in negotiating rates with HMOs. However, others said, a prolonged softening in the economy could prove to be a benefit for the industry as well. "A potential hard landing would have a short-term positive effect on the industry and on (HMO) stocks in that it would drive more enrollment toward more restrictive, more profitable HMO plans and would create more incentives for investors to move toward these defensive names," Raskin said in a report. Estimates for some firms, based on data from First Call/Thomson Financial: COMPANY EPS ESTIMATE YEAR-AGO Aetna Inc. $0.16 N/A* Cigna Corp. 1.76 $1.66 HealthNet 0.37 0.31 Humana Inc. 0.15 0.15 Oxford Health 0.49 0.32 PacifiCare Health 0.20 1.59 Sierra Health 0.08 0.35 Trigon Healthcare 0.85 0.62 UnitedHealth Group 0.55 0.44 WellPoint Health 1.35 1.20

To: Robert Rose who wrote (116769)	2/1/2001 12:48:51 PM
From: H James Morris	Read Replies (2) \| Respond to of 164684

Rob, this is just a report, but I hope its wrong. >NEW YORK, Feb 1, 2001 (BUSINESS WIRE) -- BusinessWeek has learned that General Electric is planning massive job cuts--on a scale not seen since CEO Welch's early days in the 1980s. Wall Street sources and those close to the company say GE will likely eliminate at least 75,000 jobs--more than 15% of its workforce--during the next two years. And that total doesn't include 28,000 jobs lost in the closing of Montgomery Ward, a subsidiary of GE Capital. The carnage is largely due to GE's acquisition of 120,000 workers in its merger with Honeywell International in the coming weeks. GE is likely to cut up to 50,000 Honeywell jobs--or 42% of its workforce, according to analysts who have spoken to GE execs. But that's not all. GE may pare as many as 10,000 jobs from its appliances, lighting, broadcasting, and plastics divisions, areas sensitive to the slowing economy. GE won't confirm the layoffs, but Welch has spoken recently of "significant" cuts. The article will appear in BusinessWeek's February 12th issue, to be released today at 6:30pm. An expanded version of the report is posted to BusinessWeek Online at businessweek.com.