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To: Bill Harmond who wrote (118099)	2/18/2001 4:53:19 PM
From: Mark Fowler	Respond to of 164684

This from S&P's Stock Reports In the year 2000, the S&P Communications Equipment Index fell 57%, versus an 8% decrease in the S&P 1500. The significant drop in the Communications Equipment Index was primarily due to market concerns over a slowdown in telecom spending. Disappointing third-quarter earning releases from network system leaders Lucent Technologies and Nortel Networks exacerbated these fears. However, we believe the weak results were company-specific problems rather than a function of overall market demand. As a result, we continue to remain positive on the group, due to our opinion that capital spending on equipment will continue to grow at a healthy pace. Spending for telecom equipment in 2000 exceeded all forecasts, growing over 30%. However, weak preliminary budget forecasts for the incumbent telecommunications service providers (ILECs) along with financial uncertainties in the competitive local exchange carrier (CLEC) market has put a damper on the spending outlook for 2001. Cap-ex forecasts have historically been substantially lower than actual spending. Carriers will need to invest in their networks to remain competitive, lower costs, and introduce new service enhancements. Also, the struggling CLEC segment represents less than 10% of total telecom spending. Moreover, the percentage of cap-ex geared toward telecom equipment is increasing -- so even if the growth percentage of 2001 spending declines from the robust rate in 2000, the absolute dollar amount should be higher. In the wireless market, industry observers estimate that around 410 million cell phones were produced in 2000, down from previous aggressive estimates of about 480 million. The overall dynamics of the industry has begun to change, as carriers concentrate on increasing profitability over raw subscriber growth. The reduction of subsidies in countries like Korea and France and higher penetration rates in Europe and Asia have made future growth comparisons tougher. Also, WAP (wireless application protocol) enabled phones have not lived up to their hype. Still, long term trends are favorable given the potential of new Internet-based phones. In fact, Nokia projects that by 2003 there will be more Internet-ready handsets than PCs connected to the web. Industry: Communications Equipment *Peer Group: Wireless Equipment

To: Bill Harmond who wrote (118099)	2/18/2001 6:23:53 PM
From: H James Morris	Respond to of 164684

>...and I remember all the speeches from you criticizing momentum investing. I don't consider Texaco (TX) to be a momentum stock! 44 to 64 is what I call boring!

To: Bill Harmond who wrote (118099)	2/18/2001 7:26:25 PM
From: Robert Rose	Read Replies (1) \| Respond to of 164684

<and I remember all the speeches from you criticizing momentum investing. > the thing i like about hj is that i know where he's coming from. he may be clever or entertaining or on the edge or whatever. but i have never felt that if i asked him an honest question, i didn't get an honest answer. (something to be very thankful for, especially in this market ! )