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To: Bobby Yellin who wrote (10633)	4/25/1998 1:58:00 PM
From: Lucretius	Read Replies (2) \| Respond to of 116790

As I keep reading BS like this, it makes me think we are more and more right..... all investors see is up...... Saturday April 25 8:04 AM EDT Lean, Mean Companies Best Bet for Investors By Pierre Belec NEW YORK (Reuters) - Lean and mean, and meaner. That's the shape of things to come for Corporate America, and it could be tremendously bullish for the stock market. Investors have been feasting for the last 3-1/2 years on corporate earnings growth of 10 percent or more, thanks in part to the push by American companies to make cost-cutting a way of life. What is extraordinary, Wall Street veterans say, is how many companies are still striving to boost productivity and lower costs even though they already hold the strongest positions in their industries. Indeed, Wall Street may have already seen the future as far as cost-cutting goes, which helps explain why the stock market has been streaking to the moon. While many blue-chip companies are growing earnings, they refuse to stand still and are constantly overhauling or restructuring -- Wall Street lingo for shutting down plants or offices and firing workers. "When a best-in-class company that is already winning in the corporate marketplace takes a restructuring, you're really putting on the afterburners and it makes it very difficult for the other companies to catch up to them," said Alex Henderson, director of technology research at Prudential Securities. He said ongoing cost-cutting could be the catalyst to drive an elite group of stocks to even higher prices. "Just imagine what the stock of Microsoft would do if it took a big restructuring charge to downsize its overhead," he said. "This is a company that is crushing its competition and if it took a charge, investors would absolutely have to own it, because it would be an outperformer," Henderson said. The phenomenon is already taking place. Early this month, Intel Corp., the world's largest computer chip maker, beat Wall Street's earnings estimates by a country mile. At the same time, Intel surprised analysts with plans to cut 3,000 jobs. "This may be a developing issue for the market to understand, which may spawn a whole new investment approach where people are not looking at a stock's growth at a reasonable price but a best-in-class company at any price," Henderson said. In the 1980s, companies restructured because they were in trouble. Now, they are shaking things up internally to further strengthen their profits. The copier and printer giant Xerox Corp. recently announced a massive restructuring to streamline its operation, even though it is the best in its league. Almost 18 years ago, Xerox was one of the first major companies to take a big restructuring charge. "Xerox, then, was struggling and the Japanese were bludgeoning them over the head and they had a huge cost disadvantage," Henderson said. Now, Xerox is firing on all cylinders and delivering strong earnings. Another powerhouse is General Electric Co., which consistently beats earnings expectations, but has taken one-time charges over the years to improve its competitive position and ability to grow, Henderson said. The lean, mean and meaner philosophy comes when many companies have little pricing power due to tough competition from low-priced imports. Gone are the years when companies could expect to raise prices amid a booming economy. But they still need to protect their profit margins as most companies cannot afford to keep raising wages at a pace above productivity gains. On Friday, the Dow Jones industrial average ended the week with a loss of 102.88 points at 9,064.62 after setting a record close of 9,184.94 Tuesday. Among other market gauges, the Nasdaq composite index was up 2.36 points for the week at 1,868.96. The Standard & Poor's index of 500 stocks was off 14.82 to 1,107.90 and the NYSE composite index of all listed common stocks ended at 574.47, off 9.64 for the week.