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To: blankmind who wrote (674)	12/8/1997 11:45:00 AM
From: Sector Investor	Respond to of 1629

Big Boys: Merrill Lynch Poll Sheds Light By Andrew Bary Have you ever wondered what prompts Wall Street's big boys to pull their billions out of one stock and put them into another? Well, now you have the answer, or rather, a series of answers, thanks to the latest annual poll of Merrill Lynch's institutional clients. Some of their responses are surprising. While the average investor might select blue-chip companies that boast familiar products, strong balance sheets and secure dividends, institutions shun such straightforward approaches, Barron's reports. Among the 122 outfits that responded to Merrill's poll, the top strategy was buying stocks of companies that had just delivered higher than expected earnings and selling those whose earnings had fallen short. On Wall Street, these occurences are known as "earnings surprises." As the accompanying table shows, this strategy played a role in the stock selection of 54% of the institutions. The conceit behind the "earnings-surprise" approach is that winners are likely to keep on delivering, while companies whose profits fall short of Wall Street expectations will continue to have trouble. The popularity of this strategy goes a long way toward explaining why stocks get so severely punished after failing to meet expectations. The second most popular yardstick is return on equity. Buyers in this category generally like to see earnings that equal 20% or more of a company's stated equity. The next most common technique is what Merrill calls "estimate revision." The folks who follow this indicator are the ones you see glued to their First Call screens to see whether analysts are raising or lowering their profit estimates on particular companies. Richard Bernstein, director of quantitative research at Merrill Lynch, says the results are useful as a gauge of which strategies have gained popularity in recent years and which ones have fallen out of favor. He notes, for example, that "earnings momentum has waned in the past year, and the use of dividends continues to decline, too." Indeed, a year ago earnings momentum ranked No. 3. Now it has fallen to No. 7 out of the 23 factors measured. It's easy to understand why. In the past year, some highflying stocks, including Oxford Health Plans, Ascend Communications and Cabletron Systems, have crashed, leaving many momentum investors badly burned. For further evidence, just look at the pitiful returns this year at one of biggest momentum-oriented investors, Pilgrim Baxter's $6 billion PBHG Growth Fund. It's down 2% in 1997, while the Standard & Poor's 500 Index, including dividends, is up 34%. When Merrill began its survey in 1989, nearly half of all investors paid attention to dividends. Now, only 12% do. The waning interest in dividends reflects a host of variables, including the fact that so many companies have elected to help shareholders by using their cash to buy back shares rather than increase their dividends. Also, in the current bull market, many investors get more excited by capital appreciation than income. It's ironic that dividends now rank so low in Merrill's poll because, at least since the market's plunge this past October, defensive stocks with relatively high dividends, like the Baby Bells and electric utilities, have been among the top-performing industry groups. Maybe dividends will score higher in next year's poll.

To: blankmind who wrote (674)	12/8/1997 11:52:00 AM
From: Sector Investor	Read Replies (1) \| Respond to of 1629

Latest In-Stat Analysis Shows Networking Market Growing Only 16% in 1997, Significantly Down from 48% Growth in 1996 Business Wire via Dow Jones SCOTTSDALE, Ariz.--(BUSINESS WIRE)--Dec. 8, 1997--According to the latest In-Stat research, the networking equipment market is on track to grow only 16% to $26.4 billion in 1997, up from $22.8 billion in 1996. This growth rate is significantly less than the 48% growth experienced in 1996. In-Stat previously estimated 24% growth for the networking equipment market for 1997. The new growth figure is the lowest ever for the networking industry. "Overall, the networking equipment market had significantly slower growth quarter-to-quarter in 1997 compared to 1996. 1997 started off on a slight down turn, followed by a slight increase of 3.5% in Q2, then a flattening in Q3," said Jeremy Duke, director of In-Stat's Communications Market Services. Although the networking market is slowing, In-Stat expects Cisco and Ascend to grow over the industry average of 16% for 1997. Cisco is on track to grow 34.4% in 1997, nearly 20 points higher than the industry average. Ascend is on track to grow 27.5%, just over 11 points higher than the industry average, despite a severely depressed third quarter that was way below industry average.Cisco, Bay, 3Com/USR, and Cabletron individually grew sales faster than the networking industry average in Q3 1997. In addition to an overview of the networking industry, the "Networking Market Growth Lower Than Expected" report (No. CN9710MS) provides quarter-to-quarter analysis of ATM LAN & WAN equipment, Routers, Remote Access Servers, NICs, LAN Packet Switches, Shared Media, Hubs, Frame Relay equipment, and other markets. Also included are report cards on the top 5 networking equipment manufacturers. In-Stat assigned grades based on performance analysis of revenues among the top 5 manufacturers and the overall industry for Q1 1996 through Q3 1997. "Networking Market Growth Lower Than Expected" is specially priced at $1,495 which includes analyst inquiry privileges on topics covered in the report. To purchase this report or for information about the In-Stat's Communications, Semiconductor, and Computer Services, contact Dennis Ashton at 602/483-4471, email dennisa@instat.com. In-Stat is a full service, high-technology, market research and information company serving the semiconductor, communications, computer, and multimedia marketplaces. In-Stat is part of Cahners Publishing Co., the largest publisher of specialized business publications in the United States. Visit In-Stat Online at instat.com . CONTACT: In-Stat, Scottsdale Jeremy Duke, 602/483-4469 email: jeremyd@instat.com Shannon Pleasant, 602/483-4460 email: shannonp@instat.com 08:07 EST DECEMBER 8, 1997