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Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (15705)	1/14/2003 2:12:18 PM
From: Bill Harmond	Read Replies (1) \| Respond to of 57684

UTStarcom is on the march. Good China telecom equipment play. ...and Japan, and Vietnam, and Taiwan...

To: Lizzie Tudor who wrote (15705)	1/14/2003 2:44:53 PM
From: stockman_scott	Respond to of 57684

Merrill bearish on 2003 Economists stress caution By Steve Gelsi, CBS.MarketWatch.com Last Update: 2:28 PM ET Jan. 14, 2003 NEW YORK (CBS.MW) - The U.S. economy may grow slightly in 2003, but recent stock buyers are anticipating a boost that's not likely to materialize as geopolitical woes and slowing consumer spending persist throughout the new year, analysts at Merrill Lynch said Tuesday. "2003 will echo the Chinese calendar, the year of the sheep," said David Rosenberg, chief economist for Merrill. "We're sheepish on the economy." Meeting with reporters to provide an annual economic outlook, Rosenberg was joined by Richard Bernstein, chief U.S. strategist, and Martin Mauro, manager of private client fixed income research. Still skeptical on equities Bernstein reiterated Merrill's December view to trim equity holdings to 45 percent from 50 percent. He dismissed recent gains in the Nasdaq and "speculative" stocks as a seasonal "January effect" and not the start of any major upsurge in beaten down tech stocks for the year. Despite crushing losses over the past three years, the "riskiest stocks still sell at a higher valuation," meanwhile, "safe stocks are still cheap," Bernstein said Recent market gains are feeding off of optimism that the economy will boom once an expected war with Iraq passes in the second quarter, but Bernstein maintains the geopolitical woes that surfaced after Sept. 11 may persist for the next five- to ten years. He highlighted stocks with dividends, not only because of the expected tax cut proposed by the Bush administration on income from dividends, but because they provide consistent yields over time. With Baby Boomers reaching retirement age, the time is running out for investors to wait for long-term gains in stocks. Shifting to dividend-paying stocks now could allow investors to start ringing up returns ahead of the pack. Best of a bad lot Bernstein said energy stocks would remain hot for years to come, as rising demand may be harder to meet with the industry's aging infrastructure. Overall, Merrill continues to take a "back-to-basics approach" to investing in key sectors such as consumer staples, selected utilities, aerospace, defense and major pharmaceuticals. Mixed macro messages Rosenberg said gross domestic product would likely grow 2.5 percent in 2003, about flat with 2002 levels. Unemployment is expected to grow to 6.5 percent, up from 6 percent. Consumer spending, which has driven the economy, is expected to grow at a rate of about 2.4 percent, lower than GDP growth for the first time since 1991. The dollar is likely to continue its fall against other currencies, but it's not expected to have a drastic impact. Merrill sees the dollar falling to $1.12 on the euro, on top of a 13 percent fall in 2002. The unemployment rate and inflated home prices may start to take the wind out of consumer spending. Businesses may increase capital spending, but only as a way to avoid hiring more people. He noted that after the Gulf War in 1991, the economy began to turn around, but it took a couple of years before it shifted into high gear. Forecasts of a swift victory in Iraq and a boom shortly after will not come true based on past history, he said. Mauro said investors should take credit risk selectively via coupon income and back away from interest-rate risk. Municipal securities, and mortgage-based securities have appeal, he said. Steve Gelsi is a reporter for CBS.MarketWatch.com in New York. marketwatch.com

To: Lizzie Tudor who wrote (15705)	1/14/2003 3:13:35 PM
From: stockman_scott	Respond to of 57684

Glitter Lost Luster After The High-Tech Gold Rush By Frank Ahrens Washington Post Staff Writer Monday, January 13, 2003; Page A08 AOL Time Warner Inc. Chairman Steve Case is the latest in a line of new-economy moguls to fall victim to some old- fashioned economic pitfalls. Or it may be that he and his fellow vanquished media lords just dreamed up their good ideas too early. Case, 44, who was once a Pizza Hut flavor-tester, came to AOL in 1983, when it was an obscure company called Control Video Corp. He helped to create online games and chat rooms and rose through the ranks of the company he would rename America Online. Case personified the khakis-and-polo-shirt dot-com ethos of the time and built employee loyalty by throwing beer bashes and proselytizing his vision of creating an online community.... washingtonpost.com

To: Lizzie Tudor who wrote (15705)	1/14/2003 5:55:39 PM
From: stockman_scott	Respond to of 57684

Briefing: digital defenses VC Whispers Due to government and corporate demand, there's a VC market for data and network security startups. By Julie Landry The Red Herring January 13, 2003 redherring.com Will the businessman of the future have anything in common with the soldier of tomorrow? Probably not, and therein lies the paradox of venture capital investing in defense-related technologies. President Bush's 2003 budget allocates $37 billion for homeland security, of which $722 million alone is for using technology to share information between departments. But despite the allure of committed dollars in an otherwise parched spending environment, VCs are wary of investing in startups that could be held captive to a government agency or military customer. "If you sell a new encryption technology to the Department of Defense, I can guarantee you won't be allowed to sell it anywhere else," says Jonathan Silver, a cabinet adviser for the Clinton administration and now a general partner at Core Capital Partners, a VC firm based in Washington, D.C. Most VCs have broadened their definition of defense-related investments to include most anything related to data protection or enterprise network security. Their position is that the government and military--not to mention private companies and their backers--are better served with advanced computer security products developed for commercial markets and then modified for defense use. And few VCs are venturing anywhere near bioterrorism-related technologies like vaccines and biosensors, saying such expensive advanced research is best left to universities and large companies. "Homeland security and protecting the commerce that goes on across the Internet are highly interrelated," says Marc Sokol, a partner at the VC firm JK&B Capital, which has made six investments in security software companies in the last two years. "A lot of the largest companies have much of their back offices exposed to the Internet." Mr. Sokol isn't the only VC focusing on backing defense-related technologies that address businesses' need for secure networks and databases. According to the research firm Thomson Financial/Venture Economics, 102 security-related companies raised a combined $810 million in the first three quarters of 2002: $483 million for security software, $267 million for Internet and transaction security, and $60 million for computer security services. Again, these investments aren't focused strictly on government priorities, but rather on what's seen as broad demand--from both large companies and government agencies--for protection of information infrastructure. In the past, this approach to investment has played second fiddle to cost savings and revenue generation. "What we've seen since September 11 is an increase in the perception of threat, and therefore a greater willingness to spend," says Scott Sandell, a general partner at the VC firm New Enterprise Associates. He says both corporate and government customers are opting to purchase select cutting-edge security tools, rather than an integrated suite of software products. That, in turn, makes the market much more suited for startups building a single tool or software product. Over the last 12 months, NEA has focused investments in network-protection startups like Trojan-virus monitoring from WholeSecurity, an extranet appliance from Neoteris to protect communication between businesses, and secure storage network technology from Decru. A similar strategy was behind the spin-off of Network Associates Technology's email encryption division, Pretty Good Privacy, into a new company backed by $14 million from investors including Doll Capital Management and Venrock Associates. Startups are also moving quickly to develop wireless security products, viewing untethered access as an area in which security could be integrated early in the development phase, rather than layered on in later stages, as is done with Internet security. Among the companies raising venture cash in 2002 for these endeavors were I-Control Security (a $12.5 million second round from the venture arms of Nokia and Ericsson); Vernier Networks (a $24.2 million third round co-led by Allegis Capital and Financial Technology Ventures); and Cranite Systems (a $12 million third round led by JK&B Capital). Some investors--including Ray Rothrock, a general partner at the VC firm Venrock Associates and founding investor in the firewall leader Check Point Software Technologies--have hesitated to place bets here, saying wireless security will eventually be embedded in the hardware, or even in the chips. Elsewhere, there's been a wave of consolidation in the security market, especially in companies with technology for protecting communication networks. The security products maker Symantec spent more than $370 million to acquire four security startups in July, and the applications integrator NetIQ acquired security software upstart PentaSafe Security Technologies for $255 million in October.