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has taken the



express lately, dropping 23% on Friday on fears that it too

faces a severe liquidity problem. The mobile phonemaker refuted the notion that it had a liquidity crisis and the stock rallied back yesterday and today. It was up 6.7% to $12.30 in early morning trading. But despite the rally and Motorola's comments,

Merrill Lynch's

Michael Ching said the company's credit rating was indeed at risk and was likely to be reduced.

"On the heels of Motorola's recent preannouncement, both




placed Motorola on negative credit watch. We believe that Motorola's credit rating will likely be lowered, which will increase the company's borrowing costs."

As a result of the credit situation, Ching changed his risk rating on the stock, calling it an above-average risk instead of an average risk. With a credit rating change possibly in the works, Ching feels that it's more dangerous to buy the stock. That said, he maintained his overall accumulate rating because of attractive valuation levels. Motorola's price-to-earnings ratio is currently around 20.

Ching also cut



risk rating, calling the company a high risk instead of an above average risk due to a volatile stock price.

The mobile phone business is in a major transition year as businesses face high handset inventory levels and declining demand for portable yakking devices. According to Ching, Qualcomm will not be affected by the handset inventory problem, having divested its manufacturing operations three years ago.

But, according to the analyst, CDMA technology sales will be affected, even though the company has moved towards intellectual property licensing. Despite having no handset inventory to speak of, concerns are mounting that Qualcomm's CMDA chipset inventory is building -- something that will certainly affect the top and bottom line.

"Qualcomm is somewhat insulated from the worst effects of the weaker handset market, including a slowdown in European business and manufacturing capacity adjustments," he wrote. "However, we still believe CDMA handset expectations for 2001 are optimistic. We maintain our earnings per share estimates, although there may be risk to our revenue forecasts."

If You Could See Us Now

Lehman Brothers

analyst Felicia Kantor assumed coverage of the cruise industry and essentially shrugged, rating the two biggest players at neutral.

Royal Caribbean


was started at market perform while



was initiated at market perform, down from the previous buy rating.

Kantor's view is that the same poor economic climate that's curbing corporate spending will eventually affect the prospects for vacationers, because ordinary folks will be less likely to go away on vacation. She thinks high-end luxury cruises are likely to falter, possibly dragging down the less-luxurious premium and contemporary cruises. The industry, which rallied significantly in 1999 only to fall 70% in three months in 2000, continues to face pressure. Carnival recently warned on March 21, telling Wall Street that first-quarter profits fell 25% from the previous year.

"Despite Carnival's relatively low valuation and status as a market leader," Kantor said to investors this morning, "we believe that the current stock price does not reflect the risk of downward earnings revisions in the second half of the year."

And already, both companies have felt the pain. After rallying in the first three months of the year, a vicious March selloff vaporized any gains. Royal Caribbean is off 12% year-to-date. Carnival is off 2.3%.

Merrill Slashes Insurance Earnings Estimates to Rock-Bottom! And That's -- IN-SANE!

In the 1980s,

Crazy Eddie

screamed about drastically reduced prices, frothing like

Ted Turner

without the meds, hooting that his sales weren't just crazy -- they were IN-SANE!

Merrill Lynch's Edward Spehar took a page out of the Crazy Eddie playbook, trimming back his estimates on six insurance companies. New 2001 earnings estimates were doled out to







Lincoln National



John Hancock



American General





, taking Spehar's already-low estimates to rock bottom valuations.

"We were close to the lowest estimate on the Street for the companies with the most exposure to the stock market (Nationwide, Hartford, Lincoln National and John Hancock) even prior to the reduction," he wrote. "We are now the lowest estimate in each case."

Spehar lowered estimates on those four insurance names and two others because of the disruptive effect the stock market will have on companies that count on equities to add to the bottom line. In his opinion, consensus estimates have been slow to come down. Insurers with equity exposure have seen estimates dropped by 3%. In comparison, estimates for the

S&P 500

are down 14%. According to the analyst, expect a glut of analyst revisions to come after the first quarter is over.

"We believe that consensus estimates will be reduced after first-quarter results are reported," he wrote, "at least partially because we expect cautionary comments from management."

Here's a roundup of those estimate reductions:

* Estimates courtesy of

Thomson Financial/First Call


A Quick Roundup of the Rest


Public Service Enterprise Group


: UP to strong buy from buy at Lehman Brothers.




: NEW buy at

Credit Suisse First Boston

, NEW buy at Merrill Lynch.