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To: Les H who wrote (5213)	1/28/2003 8:47:14 AM
From: Softechie	Respond to of 29602

Forty Percent of US Public Companies Have Negative Earnings 28-Jan-03 00:22 ET [BRIEFING.COM - Robert V. Green] Yesterday, we analyzed the average price/sales and price/earnings ratios of public companies. One of the unintended results of that study was a calculation of how many companies currently have trailing twelve month negative earnings. The numbers were astonishing. Yesterday's Stock Brief: Average Price/Sales and Price/Earnings Ratios In yesterday's Stock Brief, we analyzed the entire stock market to determine the average price/sales and price/earnings ratios for stocks in the market. To do that, however, we excluded stocks with negative earnings from the average price/earnings ratios. This has the effect of raising the average price/earnings of a stock far above the average PE of the S&P 500, for example, because the index averages are calculated differently. Index averages are computed by adding up the entire revenue of all companies, and the entire earnings of all companies. The same approach is taken for computing the PEs of the various sectors. Our approach in yesterday's Stock Brief allowed us to compute the average PE for stocks with earnings. In doing that, we had to exclude stocks without earnings. The earnings calculation methodology that was used excludes one-time extraordinary items and accounting changes. The earnings calculations are trailing twelve month earnings. Companies With Losses The following table summarizes the list of stocks without earnings for the entire market. We have excluded stocks on the bulletin board markets and companies with headquarters outside the US and ADRs. These exclusions ensure that all revenue numbers are in dollars. Stocks by Revenue Total Stocks Stocks With Negative Earnings Percentage 0 - $100 million 2,364 1,271 53.8% $100 to $500 million 1,445 502 34.7% Over $500 million 1,539 335 21.8% All US Stocks (NYSE, NASDAQ, AMEX only) 5,349 2,108 39.4% It is no surprise that losses are more prevalent in smaller companies, but it is unusual to find more than 20% of large revenue companies showing losses for the past twelve months. Stocks With Negative Earnings, By Sector What industries are not supporting the stocks that do business in that sector? The following table shows the number of stocks with losses in each sector. We have not broken these out by revenue size, but the overall pattern as shown above holds. Within each sector, the number of stocks with losses in the below $100 million revenue range is roughly twice the number in the over $500 million range. Sector Total Stocks Stocks With Negative Earnings Percentage Basic Materials 259 95 36.7% Capital Goods 291 80 27.5% Conglomerates 17 3 17.6% Consumer Cyclical 249 66 26.5% Consumer/Non-Cyclical 189 37 19.5% Energy 211 92 43.6% Financial 963 129 13.4% Healthcare 615 350 56.9% Services 1131 404 35.7% Technology 1209 803 66.4% Transportation 97 36 37.1% Utilities 118 13 11.0% Conclusions These percentages are high above historical averages for the number of stocks showing losses at any given time, although we have not presented historical percentages. The bubble era supported many stocks with losses, which greatly distorts a short term comparison. It is no surprise that technology companies are losing money, but few people probably realize that a full two-thirds of technology stocks are losing money. Also not surprising might be the healthcare sector, as this includes the biotech companies, many of which do not even have revenue, much less earnings. Nevertheless, this is pretty discouraging data for the health of American companies. However, it is a backward-looking perspective. What this data really shows is just how bad things were for most companies over the past year. The real problem at most companies is that expense levels could not be adjusted to match declines in revenue. The financials stand out as an exception to this overall condition. The positive news is the financial sector, which shows relatively healthy companies. The primary reason for this is that financial companies are frequently able to cut costs in bad times, in order to maintain profits. This is not very "healthy" if you work at a financial company, but it is healthy for the overall company. This data helps confirm a thesis we have maintained for some time: financial stocks will lead the market when it finally recovers, not technology stocks. Comments may be emailed to the author, Robert V. Green, at rvgreen@briefing.com

To: Les H who wrote (5213)	3/7/2003 5:18:57 AM
From: Chris McConnel	Read Replies (2) \| Respond to of 29602

Trin-10 back above 1.5 Didn't get much of rally off the last Trin-10 countdown. Maybe this one will work better. ------------------------------------------------------------------------------ Don't Run With the Emotional Crowd By Dick Arms Special to RealMoney.com 03/06/2003 08:07 AM EST THE MARKET: The Arms Index for the New York Stock Exchange hit 3.69 Tuesday, this indicator's highest reading in almost two years. It also marks only the 17th time in the past 20 years that the index has registered a level above 3.00, and was the second-highest reading since the start of the new century. A reading of 3.69 means that the declining stocks were receiving almost four times their fair share of the volume. It indicates indiscriminate and unthinking selling of stocks by a scared investment community. It is, to me, a contrary indicator, telling me that I don't want to follow the crowd when it's acting in such an emotional way. Historically, in almost every case, the very high reading was followed very soon by a strong market advance. It usually got going within two or three days. I see this as another strong indication that we're getting very close to a reversal to the upside. That is also borne out by the level of the 10-day moving average of the Arms Index, which is again above the 1.50 level.