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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Boplicity who wrote (78943)	6/18/2001 11:30:17 PM
From: puborectalis	Respond to of 99985

Merrill Lynch says it will make its advice clearer BY DEBORAH LOHSE Mercury News Merrill Lynch said Monday it is changing its investment research to make its advice clearer and to better disclose if analysts own the stocks they are recommending. The move by the largest brokerage firm follows actions by others, including Prudential Financial and Credit Suisse First Boston, to bring their research practices in line with recommendations by an industry trade group earlier this month. Analysts at big brokerage firms have come under fire from investors and regulators for being unduly bullish on the companies they cover. Critics charge that the analysts -- who are supposed to provide unbiased advice to investors about which stocks to buy or sell -- are under pressure not to alienate companies with negative reports. That's because the brokerages want those companies to use their firm's investment banking services for stock offerings or merger deals. Various firms have made such conflicts of interest worse by linking analysts' pay to how many deals they worked on, or even allowing investment bankers or the companies covered to review the research before it is published. The ``best practices'' recommendations, put out by the Securities Industry Association (SIA), said analysts should be very explicit about what their ratings mean, and should sometimes tell investors when to sell stocks, not just when to buy. The recommendations also suggested that investment bankers not oversee analysts. In an e-mail sent to Merrill's 15,000 financial advisers on June 15, the firm's two top research executives said that by the end of the year, Merrill's analysts will rate stocks using one of four ratings, one of which recommends selling at least some shares: Strong Buy (meaning the stock is expected to produce a 20 percent or higher total return); Buy (greater than 10 percent); Neutral (0 percent to 10 percent) or Reduce/Sell (negative total return expected). Previously, Merrill used five ratings: Buy, Accumulate, Neutral, Reduce or Sell. Merrill also said it will ``boldly disclose'' on each company report if the firm has a business relationship with the company, and if one of the analysts owns shares in that company. Merrill said the changes bring the firm into compliance with the SIA suggestions. Still, industrywide, it's not clear that anything will change much as a result of the new rules. Critics say that SIA's guidelines aren't explicit enough to ensure an impenetrable wall between research and banking. They said the guidelines still permit deal work to be a factor in analysts' pay, and that informal pressure is always at work between analysts and investment bankers. Damon Silvers, associate general counsel with AFL-CIO, said data he supplied in testimony to Congress last week shows firms that offer both research and investment banking are routinely more bullish on their companies, and more incorrect in their projections. Though he hadn't reviewed Merrill's changes, Silvers was skeptical of such moves by brokerage firms. Said Silvers: ``Changes like this don't address the problem of conflicts.''

To: Boplicity who wrote (78943)	6/18/2001 11:31:01 PM
From: SecularBull	Read Replies (2) \| Respond to of 99985

I do not agree about storage at all. ~SB~

To: Boplicity who wrote (78943)	6/19/2001 2:34:18 AM
From: 10K a day	Read Replies (2) \| Respond to of 99985

< Hell I just saw a pic of multi colored plastic fiber optic conduit on a dusty road in India how many of those cows have fast connections...

To: Boplicity who wrote (78943)	6/19/2001 8:02:05 PM
From: SecularBull	Respond to of 99985

Storage: The Short and the Long of It By Monica Rivituso, SmartMoney.com - Stock Watch EARLY TUESDAY MORNING, Salomon Smith Barney analyst H. Clinton Vaughan issued a note cutting his growth estimate for the data-storage industry. The move knocked 2% to 3% off the stocks of three of the industry's top companies: EMC (NYSE:EMC - news), Network Appliance (NASDAQ:NTAP - news) and Brocade Communications (NASDAQ:BRCD - news). No surprise there. With the exception of a brief rally in April and May (along with the rest of the technology sector), the three companies have been market whipping posts for much of the past year. Since last fall, when EMC, Network Appliance and Brocade each hit 52-week highs, they've plunged 75%, 91% and 73%, respectively. Salomon said to expect revenue growth of 10% to 15% this year, not the 15% to 20% the firm had been talking about earlier. And that was enough to bring out the knives anew. So what, you say? We know: Analyst warnings and downgrades are a dime a dozen these days. But we draw your attention to this one because it illustrates a key point about technology investing in this environment. When sorting through the rubble that used to be the towering technology sector, it's always important to remember one thing: You have to distinguish between real trouble in an industry and problems brought on by the broader economy. Consider that while data storage may be undergoing a growth slowdown due to the overall sluggishness of the GDP, the group still has relatively healthy fundamentals. Contrast that with the telecom-equipment business, where a huge inventory overhang and massive broadband overcapacity haven't only slowed business for companies like JDS Uniphase (NASDAQ:JDSU - news) and Cisco (NASDAQ:CSCO - news) to a crawl but have clouded the future miserably. Yankee Group analyst William Hurley notes that the telecom business is plagued by the sale of used equipment on the secondary market. By contrast, he says, there isn't a huge amount of storage equipment being resold, which indicates that there's still a balance between what customers are buying and what they need. ``As information continues to grow at a rather rapid rate, information storage needs to keep pace with that,'' Hurley explains. ``But because it's a buyers' environment, there have been some rather fantastic deals cut [for equipment].'' What he means by a ``buyers' environment'' is that customers of companies like EMC and Network Appliance have had the upper hand at a time when economic sluggishness has slowed overall spending. With the vendors anxious to cut a deal — any deal — buyers can exact better prices and more aggressive terms. So even if customers are still buying equipment, the near-term ride for this industry will likely be a bumpy one, according to Salomon's Vaughan. He thinks the quarter will be another that's ``plagued with preannouncements and downward revenue, margin and EPS revisions.'' He predicts deteriorating economic conditions are going to continue to affect the fundamentals of storage makers in the upcoming months and make for a ``tough'' summer. That said, however, Vaughan's overall outlook is still encouraging — something we think Wall Street is ignoring. Vaughan said he thinks the industry's long-term growth rate will again rebound above 20% when the economy improves. There's no lousy execution or weak management to worry about, he insists, only difficult markets. ``We see many storage companies exiting the economic pullback in stronger relative positions due to their management teams' ability and willingness to adapt to current economic conditions and, as a result, take market share,'' Vaughan wrote. There are other bright signs as well. One problem that has lingered for the industry is that traditionally, storage products haven't all worked well together. That meant customers who adopted a smorgasbord of storage equipment might have trouble managing their infrastructure. But Yankee Group's Hurley notes that storage makers are starting to solve some of the interoperability complexities, and that will make it easier for customers to integrate existing systems with new storage solutions. As companies like EMC, Network Appliance and IBM (NYSE:IBM - news) succeed on this front, sales should improve as well, Hurley predicts. ``The fact of the matter is that people have not stopped or slowed their vociferous delivery of emails, power-point presentations, aggregation of databases and the like,'' he says. With all of this in mind, EMC and Network Appliance look pretty cheap at current prices. Based on Tuesday's close, EMC was trading at about 33 times trailing 12-month earnings, versus its five-year average of 57. Network Appliance was trading at 64, versus a five-year average of about 140. Brocade is also off its average, but still trades at a trailing P/E of 99 — pretty pricey in our book. Will these stocks rise from here? There's no telling about the short term. But over the long haul, this beaten-down sector sure looks healthier than the market is giving it credit for.