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Technology Stocks : Jimbo's Playhouse/CPQ -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (10084)	1/14/2002 5:13:59 PM
From: Mao II	Read Replies (1) \| Respond to of 12662

Paul: I understand and sympathize. Im interested in the impact on FLM, actually. M2

To: Paul Senior who wrote (10084)	1/14/2002 9:44:28 PM
From: Jimbo Cobb	Respond to of 12662

Kmart Kmart Corp. (KM-NYSE) By Bear Stearns (4.20, January 11, 2002) We downgraded Kmart to Neutral from Attractive due to lower earnings visibility. A combination of the slow economy, a harsh pricing environment across the retail sector (including discount stores, supermarkets, drugstores, department and specialty stores), and an uncertain business strategy for 2002 and 2003 are limiting our visibility to forecast earnings growth. The impact of a profound mix shift toward lower-margin consumables, along with increasing price competition, is contributing to significant gross margin erosion in our opinion. We lowered our fourth quarter earnings per share estimate to $0.20 from our previous estimate of $0.43, versus $0.48 last year, and reduced our 2002 estimate to $0.25 from $0.60 to reflect a less optimistic pace of sales and earnings improvement. In addition to lower earnings guidance, management also noted that the company is reviewing its "current and prospective liquidity position," reflecting a tone that suggests near-term challenges remain. Kmart's business plan for 2002 and 2003 is also being revisited. While we have been impressed with the rapid change that has been implemented under new management, the current environment will likely necessitate additional time to complete the company's restructuring goals, and we do not see a compelling risk reward ratio given the uncertain outlook.