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To: Gottfried who wrote (9606)	4/28/2003 1:50:07 PM
From: The Ox	Read Replies (1) \| Respond to of 95640

Yardeni: On earnings, following up on Ed Keon's view from the sectors and the earnings so far, looking at 2004 expectations and 2003 expectations from the swiggle analysis, combining them on a time-weighted average to get the forward earnings, we see there are definite signs that the forward earnings funk we have been in for about a year may be ending. We are starting to see some upturns in forward earnings and that is because 2004 has started to tick up a little bit and the 2003 looks stable, when averaged out together the forward earnings are rising above $55 a share. We are in the optimistic camp and do believe that forward earnings are going to improve. When looking at the same analysis, 2001 is very reminiscent with what happened in 1991, what happened with earnings estimates in 2002 is reminiscent to 1992 and 1993 is a good blue print for this year. In 1993, as we got further into the year, earnings expectations stopped falling and started to level out. We believe that 2004 should be a year like 1994, that is the analysts are not going to be far off on the earnings picture, and in our thinking by year end they will be looking at $60 a share in earnings on the S&P, and that will be the relevant number for thinking about the market next year. In mid-caps, the earnings expectations are also trending higher, while small-caps are barely moving higher. The weekly data is good indicator of how the analysts are incorporating the news as they are getting it and the S&P looks better. On the credit spreads, the credit spreads have been moving lower, yet it is still to high. We would like to see the credit spreads between corporates and Treasurys move lower to below 200 basis points. One of the reasons for the outlook is the industrial commodity prices are inversely correlated with the credit spreads and we think these industrial commodity prices have held up remarkably well over the past several weeks given the uncertainty of war, then the war and now concerns about whether the economy will lift. There have been no signs of improvement in the labor markets, but again we would point out that the unemployment data that has been out is also similar to the patterns of 1991, 1992, and 1993. As businesses confidence comes back this should stabilize. From: prudential.com

To: Gottfried who wrote (9606)	4/28/2003 4:24:14 PM
From: Return to Sender	Respond to of 95640

Global chip sales growth slows in March Monday April 28, 3:28 pm ET By Elinor Mills Abreu (Updates throughout to add SIA, more analyst comment, updates stock prices; changes byline and dateline from AMSTERDAM previous) SAN FRANCISCO, April 28 (Reuters) - Global semiconductor sales growth slowed in March, prompting a chip trade group on Monday to lower its forecast for 2003. The U.S.-based Semiconductor Industry Association lowered its chip industry forecast to 10 percent to 15 percent growth this year, from a forecast of nearly 20 percent growth and second-quarter growth of 3.5 percent to 5.5 percent. The 2002 forecast is still more bullish than predictions from analysts, who are looking for growth of between 5 percent to the low teens in general. The trade group dismissed many of the concerns that chip industry watchers see as potentially derailing growth in the second half, including inventory build up and Severe Acute Respiratory Syndrome. "The recovery that has been underway for 15 months, did have a pause in February, but bounced back in March," George Scalise, president of the SIA, said in a conference call. "Increased demand and slightly lower inventory should bode well for this market place. We still anticipate corporate PC upgrade cycle buying." Worldwide chip sales in March were $12.13 billion, down 2.6 percent from February, but up 13 percent year over year, according to the World Semiconductor Trade Statistics (WSTS) and the SIA. That compared with year-over-year growth of 18 percent in February, traditionally a slow month. The sales increase in chips, which serve as the brains of electronics ranging from PCs and DVD players to shavers and cell phones, was led by Japan, with month-on-month growth of 4.8 percent. Meanwhile, sales in the Americas declined slightly. EXCESS INVENTORY But analysts said SIA's forecast was still overly optimistic given indications they have seen of a build-up of inventory and continued weak demand. "Despite the strong SIA March results, we believe inventory replenishment/build drove the sales as end demand appears to remain sluggish," Chris Danely of J.P.Morgan wrote in a research note. "In addition, the results appear to support our view of decelerating year-over-year growth in semiconductor sales during 2003 as the easy comparisons of 2002 are left behind," Danely said. After growing about 37 percent to a record level in 2000, global chip sales plunged more than 30 percent in 2001 and grew 1.3 percent last year. Even double-digit growth is optimistic for a sector that uses only 75 percent of its production capacity, analysts said. Low factory utilization rates turn it into a buyer's market prone to low prices. "Achieving 10 percent growth this year will be a challenge. Price pressure will continue to be severe," said Rob van Oostveen, hardware technology analyst at ABN Amro Asset Management, who helps oversee $30 billion of investments. Shares of semiconductor companies have priced in a large part of an economic recovery, but the fundamentals of the chip industry are as weak as they come, van Oostveen said. Danely recommends against purchase of chip stocks due to high valuations and the belief that fundamentals will erode as a result of an inventory correction. The largest markets for microchips -- computers and communications -- show signs of continued weakness, said Eric Rothdeutsch, the chips analyst for Friedman Billings Ramsey. Capital spending cuts by communications services companies will take their toll on chip sales and a focus on software and security could mean less of the corporate technology spending pie could be for hardware and chips, Rothdeutsch said. "I think it's going to be a slow steady recovery," he said. SARS WORRIES Analysts also said they were concerned about the impact of on the industry of SARS, which has led to quarantines and plant and shopping mall closures in Asia. "It appears SARS is impacting demand in China and China accounts for approximately 10 percent of total PC demand and 15 percent of total cell phone demand," said Danely. Scaliese discounted those worries, as well. "We don't believe there is any reason to think there will be any impact either on the market for our products or for the supply chain as a result of SARS," he said. Except for China, "they are getting this under control." Still, semiconductor stocks in Europe and the United States shrugged off the gloomy message sent by the March sales statistics. The European FTSE semiconductor index (London:^FTTXSC - News) rose 3.36 percent to 161.55. The Philadelphia Stock Exchange semiconductor index (Philadelphia:^SOXX - News) was up 2.65 percent, and most chip stocks were higher on the day, as well. (With reporting by Lucas van Grinsven in Amsterdam and Daniel Sorid in New York.) biz.yahoo.com

To: Gottfried who wrote (9606)	4/28/2003 7:55:02 PM
From: Gottfried	Read Replies (2) \| Respond to of 95640

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