Updated from 10:14 a.m. EST.

Williams

(WMB) - Get Report

posted fourth-quarter earnings that powered past analysts' expectations, fueled by strong performances in the company's energy services and gas pipeline units, and said it expects to meet expectations for 2001.

The Tulsa, Okla., energy firm said fourth-quarter earnings were $259.3 million, or 57 cents a share, compared with $66.1 million, or 14 cents a share, in the same period last year. According to a

First Call/ Thomson Financial

survey, 13 analysts expected fourth-quarter earnings of 22 cents a share.

Revenue for the quarter was $3.28 billion, up from $2.08 billion a year ago, boosted by profit at its energy services unit, which posted a profit of $630.5 million, compared with $142.9 million during the same period of 1999. Williams said the increase was due primarily to higher natural gas prices and electric power trading profits. Profit at its gas pipeline unit grew to $741.5 million, from $697.3 million a year ago. Williams closed up $1.52, or 3.9%, to $40.62.

PepsiCo

(PEP) - Get Report

showed some fizz this morning as it reported an increase in fourth-quarter earnings, matching analysts' expectations, and maintained its double-digit earnings growth expectations for 2001.

The Purchase, N.Y., soft-drink and snack food company earned $567 million, or 38 cents a share, up from $494 million, or 33 cents a share, in the same period last year. Fifteen analysts polled by

First Call/Thomson Financial

expected earnings per share of 38 cents for the quarter.

Revenue rose to $6.12 billion from $5.68 billion a year ago. PepsiCo ended down 2 cents, or 0.04%, to $44.97.

Mergers, acquisitions and joint ventures

Patterson Energy

(PTEN) - Get Report

said it will buy

UTI Energy

(UTI) - Get Report

in a stock swap worth about $1.34 billion. Patterson ended down 81 cents, or 2.3%, to $35.19.

Phillips Petroleum

(P)

said Sunday it agreed to buy

Tosco

(TOS)

for $7 billion in stock. Phillips is paying 0.80 share for each Tosco share. Phillips closed Friday at $58.13, while Tosco closed up 62 cents at $34.61.

Phillips closed today down $4.78, or 8.2%, to $53.35 and Tosco closed up $5.58, or 16.1%, to $40.19.

FleetBoston

(FBF)

said Friday that it sued to block

Advanta's

proposed sale of its mortgage business to a unit of

J.P. Morgan Chase

(JPM) - Get Report

.

FleetBoston said it wants the transaction blocked unless Chase assumes the alleged $140 million obligation Advanta has to Fleet. Representatives of Advanta weren't immediately available for comment. FleetBoston contends that the sale of Advanta's assets meets a provision of its 1998 agreement to buy Advanta's credit card business. FleetBoston said that the buyer of "substantially all" of the rest of Advanta's assets is responsible for any remaining obligations tied to the transaction.

FleetBoston closed up 6 cents, or 0.1%, to $42.05 and J.P. Morgan Chase closed down 4 cents, or 0.1%, to $54.60.

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Earnings/revenue reports and previews

Caremark Rx

(CMX)

earned 14 cents a share, in line with the 13-broker consensus. The company earned 10 cents a share for the year-ago quarter. Caremark closed up 32 cents, or 2.5%, to $13.30.

A major rehaul could be in the pipeline for auto giant

DaimlerChrysler

(DCX)

.

The Wall Street Journal

reported this morning that the Auburn Hills, Mich., company, which announced 20% workforce cuts at its troubled Chrysler unit last week, will take a 2001 charge of $2 billion to $3 billion to pay for a massive restructuring.

The company will reportedly present a restructuring program for its U.S. unit on Feb. 26. DaimlerChrysler's Smart unit, which makes small cars targeted for consumers in small European cities, is expected to report an operating loss in the range of $300 million to $400 million this year and take a charge of $600 million to $800 million, the paper also said. Media reports last week said DaimlerChrysler asked advising banks

Deutsche Bank

and

J.P. Morgan

to develop a

takeover defense strategy, which the automaker has since denied. DaimlerChrysler closed up $1.30, or 2.8%, to $47.29.

Engelhard

(EC) - Get Report

earned 58 cents a share, in line with the 6-broker consensus. The company earned 39 cents a share for the year-ago period. Engelhard closed down 1 cent, or 0.04%, to $22.85.

General Mills

(GIS) - Get Report

is turning a neat trick for its fiscal third quarter. The company said it expects to beat the 14-broker First Call estimate for earnings of 36 cents a share, because most estimates take into account costs stemming from the company's planned acquisition of

Pillsbury

.

Well, the Pillsbury acquisition hasn't closed, and therefore, "third-quarter diluted

earnings per share will be significantly above that consensus estimate," the company said. The quarter ends Feb. 25. General Mills closed up 62 cents, or 1.5%, to $42.13.

Keane

(KEA)

said it expects fourth-quarter revenue of $218 million to $219 million, which it says is higher than previously expected, and earnings of 13 cents a share, in line with the current 12-broker estimate. Keane closed up $2.47, or 15.3%, to $18.63.

Optical fiber company

Williams Communications

(WCG) - Get Report

said losses widened sharply in the fourth quarter. The company, which is 85% owned by energy company

Williams

(WMB) - Get Report

(which

reported earnings earlier this morning), said losses for the quarter were $1.18 a share, much wider than the estimate for a 48-cent loss for the quarter. Revenue increased to $287 million from $159 million for the year-ago period.

The losses include a $1.05 loss from discontinued operations; the company lost 13 cents when considering only continuing operations, which includes its fiber optic communications network. Discontinued operations exclude losses from

Williams Communications Solutions

, a division the company plans to sell. Williams made that announcement Jan. 29. Williams Communications closed down 7 cents, or 0.4%, to $17.98.

After Friday's Close

Weis Markets

(WMK) - Get Report

, which operates 163 stores in six states, posted earnings of 36 cents a share, missing the single-analyst estimate of 49 cents a share and down from year-ago earnings of 48 cents a share. Weis closed up 4 cents, or 0.1%, to $37.69.

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Analyst actions

The semiconductor industry is in sorry shape. That's what analysts are saying this morning after some new data from the

Semiconductor Industry Association

that shows chip sales are falling.

Sales were down 6% in the Americas from the third quarter to the fourth quarter, and have dropped 3% worldwide. Normally, sales increase 5% quarter-over-quarter. They still show positive year-over-year growth, just at a much slower rate than during the summer.

Credit Suisse First Boston

said inventory levels have worsened in recent months (that is, stockpiles have grown at a time when demand is shrinking) and could likely take until the end of the second quarter to burn off.

Lehman Brothers

, in a comment, wrote that "semiconductor revenue growth will decline into negative comparisons by mid-2001."

How does the latest industry data compare? CSFB says these quarter-over-quarter sales are the poorest results seen since 1997 and 1986. Plus, "normal first-quarter seasonal weakness is being aggravated by economic slowdowns in demand; visibility is as impaired as we've seen it since the eighties."

CSFB wrote that stock valuations of chip companies are too high -- and another wave of downward revisions could occur in the next two months.

Chip sales have been sagging along with weaker consumer and corporate demand for new computers and equipment that use semiconductors to power them. When demand slows, companies find themselves with excess capacity, forcing them to cut back production in order to eliminate their existing inventories. The ripple effect is partially responsible for the current slowing throughout the economy. Companies like boxmaker

Gateway

(GTW)

and chip giant

Intel

(INTC) - Get Report

, for example, have seen their sales slow and their stocks drop. Gateway ended the day down 3 cents, or 0.2%, to $19.68 and Intel finished down 94 cents, or 2.6%, to $34.69.

The industry association, in its release, forecasts 22% year-over-year growth, although it admits that inventory accumulation makes the forecast unlikely to be reached.

Credit Suisse First Boston upgraded the media, cable and interactive TV sector to a neutral from an overweight stance and upgraded three companies in the process.

Comcast

(CMCSA) - Get Report

was upgraded to strong buy from hold;

Cox

(COX)

was upgraded to strong buy from hold; and

Charter

(CHTR) - Get Report

was upgraded to strong buy from buy.

Comcast closed up $1.88, or 4.6%, to $43.06; Cox closed up 91 cents, or 2%, to $46.04 and Charter closed up 31 cents, or 1.4%, to $22.50.

Upgrades

AnnTaylor

(ANN)

: UP to outperform from neutral at

Morgan Stanley Dean Witter

.

Prudential Securities

reduced fourth-quarter estimates to 33 cents a share from 38 cents a share. AnnTaylor closed up 41 cents, or 1.5%, to $27.40.

Active Power

(ACPW)

: UP to buy from accumulate at

Merrill Lynch

. Active Power closed down 6 cents, or 0.3%, to $20.50.

Dillard's

(DDS) - Get Report

: UP to buy from neutral at

Salomon Smith Barney

. Dillard's closed up $2.73, or 17.9%, to $18.

Ultramar Diamond Shamrock

(UDS)

: UP to strong buy from buy at

UBS Warburg

. Ultramar Diamond Shamrock closed up $1.93, or 6.3%, to $32.82.

Downgrades

Abercrombie & Fitch

(ABF)

: fiscal 2001 EPS DOWN to $2.80 from $2.85 at Prudential Securities. Abercrombie & Fitch closed down 29 cents, or 2.3%, to $12.36.

APW

(APW)

: fiscal 2001 earnings per share DOWN to $2.00 from $2.40 at CSFB; price target: $65 from $80. APW closed up 50 cents, or 1.4%, to $35.70.

Kilroy Realty

(KRC) - Get Report

: DOWN to buy from strong buy at

Deutsche Banc Alex. Brown

. Kilroy Realty closed up 66 cents, or 2.5%, to $26.78.

Storage USA

(SUS)

: DOWN to neutral from outperform at Morgan Stanley. Storage USA closed down 46 cents, or 1.5%, to $31.35.

Initiations

Gtech Holdings

(GTK)

: NEW buy at Morgan Stanley. Gtech closed up 55 cents, or 2.4%, to $23.70.

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Offerings and stock actions

Shares of

Exodus Communications

(EXDS)

fled south this morning on news the company intends to sell about 13 million shares of common stock and $500 million in convertible subordinated notes in public offerings. Its shares fell about 11.59%, or $2.69, to $20.50, on preopen

Island

trading, down from Friday's closing price of $23.19 on the

Nasdaq

.

Qwest Communications

(Q)

announced a tender offer for certain outstanding debt to reduce interest-rate costs. The company is planning to recall notes with coupons ranging from 8.29% to 10.875%. Exodus closed down $4.44, or 19.1%, to $18.75.

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Miscellany

Microsoft

(MSFT) - Get Report

has announced new and upcoming versions of its core Windows and Office products, due later this year, which will enable customers to "have more fun with technology." The new products will be renamed Windows XP and Office XP, with the "XP" standing for "experience," the software giant said. "These breakthrough versions of Windows and Office will give people the most powerful end-to-end computing experiences ever available,'' said Bill Gates, the company's chairman and chief software architect. Microsoft closed up $1.13, or 1.9%, to $61.94.

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By the Numbers

The data on NYSE and Nasdaq percent winners and losers are filtered to exclude stocks whose previous day's volume was less than 25,000 shares; whose last price was less than 5; and whose net change was less than 1/2.

Dow point gain and loss data are based on New York closing prices and do not reflect late composite trading.

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