Updated from 1:30 p.m.

Another earnings warning greeted the floundering market this morning. This time, it was Swedish telecom equipment giant

Ericsson

(ERICY)

, which said it would take a first-quarter loss rather than break even, as it had previously forecast.

The company said cell phone sales are traditionally low in the first quarter, but the economic slowdown coupled with high inventory levels and low replacement demand will push sales down farther. The company said total sales would be flat or lower compared to the year-ago quarter, rather than the previously expected net increase of 15%.

The loss will be between $400 and $500 million, executives said. Ericsson will report its first-quarter results on April 20.

Fourteen analysts surveyed by

First Call/Thomson Financial

were expecting a breakeven performance in the first quarter. In the year-ago period, Ericsson earned 5 cents a share. The company will continue its restructuring program in the consumer products division, as well as a hiring freeze in mobile systems, Ericsson's largest unit. Other cost-cutting measures will be considered, executives said. Ericsson closed down $2.09, or 25%, to $6.28.

Mergers, acquisitions and joint ventures

Delphi Automotive Systems

(DPH)

said it plans to acquire

Eaton's

(ETN) - Get Report

vehicle switch and electronics division for $300 million.

Delphi expects to complete the transaction, which is pending regulatory approval, at the end of the first quarter and anticipates it will add to earnings in the first year. Delphi closed down 44 cents, or 2.9%, to $14.71; Eaton was down 5 cents, or 0.1%, to $73.15.

Online auction site

eBay

(EBAY) - Get Report

had been on the upswing -- before the dismal market pulled it down today -- after announcing plans for a strategic alliance with

Microsoft

(MSFT) - Get Report

to develop e-commerce applications and build their presence online. eBay closed down $2.44, or 7.2%, to $31.56; Microsoft closed down $4.75, or 8.4%, to $51.94.

British insurance giant

Prudential

said today it has agreed to buy

American General

(AGC) - Get Report

in an all-stock deal worth $26.5 billion. The deal would create the world's sixth-largest insurance group.

American General stockholders will get 3.6622 Prudential shares for each of their shares, placing a value of $49.52 on each American General share. It closed at $38.25 on Friday. Prudential shareholders will own about 50.5% of the merged entity, and American General holders will own about 49.5%.

In European trading, American General was up on the deal, but Prudential fell to a two-year low, implying investors think the company is paying too much for the American insurer.

Pretax cost savings are expected to be $130 million annually by the end of 2002 at an estimated one-time cost of less than one year's worth of savings, according to Prudential. The merger is still subject to shareholder approval and regulatory consent, but is expected to close in the third quarter of 2001.

Prudential will keep its primary listing on the

London Stock Exchange

with American Depositary Receipts listed on the

New York Stock Exchange. American General closed up 55 cents, or 1.4%, to $38.80.

Sony

(SNE) - Get Report

said it hired

IBM

(IBM) - Get Report

to develop a microprocessor for its next generation of consumer electronics products, including the Playstation 3.

The agreement could mean between $2 billion and $4 billion in revenue for IBM, according to published reports.

The new chip, called "Cell," will be designed in Austin, Texas, and produced at a new plant in East Fishkill, N.Y. IBM is based in Armonk, N.Y. Full production will begin in 2003.

Toshiba

designed and built the chip for the popular PlayStation 2, but has a diminished role in the production of the new microprocessor. Engineers from the Japanese company will be on the Austin design team and the company will bid for manufacturing contracts.

The three companies expect to invest a combined $400 million in the project. Sony closed down $2.30, or 3.3%, to $68.35; IBM was down $3.80, or 3.8%, to $95.49.

SPX

said Monday it will acquire

United Dominion

(UDI)

for $1.83 billion, including the assumption of $876 million in United Dominion debt.

Shareholders of Toronto-based United Dominion, a manufacturer of industrial and builders' products, will receive SPX shares worth $25 for each of their shares, a 30% premium over Friday's closing price of $19.50. The stock portion of the transaction is valued at $954 million. SPX, another maker of industrial products, based in Muskegon, Ill., said it will use cash on hand and a new $780 million credit facility underwritten by

J.P. Morgan

to refinance United Dominion's existing debt. The deal is expected to close in the second quarter. Shares of SPX closed at $103.60 Friday. United Dominion closed up $2.38, or 12.2%, to $21.88 today.

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Earnings/revenue reports and previews

Apache

(APA) - Get Report

said Monday strong energy prices and high volume helped bolster profits in January to $123.8 million.

The independent oil and gas company, which is based in Houston, said its monthly net income was $1.00 a share and cash flow was $2.06 a share.

The company also said it does not expect future oil prices to return soon to January's levels, but added that it doesn't predict "their imminent collapse, either." Apache closed down $2.30, or 3.4%, to $65.10.

General Semiconductor

(SEM) - Get Report

warned that first-quarter earnings would be 12 cents to 14 cents a share before one-time restructuring charges, below the Street's estimate of 19 cents a share.

Joining the legions of warning chipmakers, the company said revenue will be 14% to 16% below the previous quarter's $119.9 million "as a result of the continued slowdown in our customers' markets and excess inventory still in the channels." General Semiconductor closed down 25 cents, or 2.6%, to $9.40.

Silicon Storage Technology

(SSTI) - Get Report

drastically lowered its first-quarter 2001 earnings and revenue projections Monday morning to nearly half of Wall Street's estimates. The company blamed the slumping economy and inventory corrections that lower demand for technology products.

For its first quarter ending March 2001, Silicon Storage said it expects earnings of 5 cents to 7 cents a share, while seven analysts surveyed by First Call were estimating the company, which is based in Sunnyvale, Calif., would earn 27 cents a share. In the year-ago period, Silicon Storage earned 11 cents a share. Silicon Storage anticipates first-quarter revenue to be between $75 million and $85 million, nearly half of the $141.2 million five analysts expect, according to First Call.

In the same period a year ago, the company posted revenue of $62.3 million. The company expects product gross margins to be approximately 35% due to softness in average selling prices of some of its products. Silicon Storage supplies flash memory semiconductor devices for the digital consumer, networking, wireless communication and Internet computing markets. Silicon Storage closed down $1.19, or 11.3%, to $9.31.

After Friday's Close

Microsoft's chief financial officer said Friday the software giant's projections for its fiscal third quarter are unchanged in the wake of

Intel's

(INTC) - Get Report

warning on Thursday, but the company said it remains cautious.

Speculation has been flying that Microsoft, which is inherently linked with Intel, would also warn that it would miss quarterly expectations. As noted above, Microsoft closed down $4.75, or 8.4%, to $51.94; Intel was down $1.69, or 5.7%, to $27.75.

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Analyst Actions

Goldman Sachs

lowered

AT&T's

(T) - Get Report

2001 EPS estimate to 27 cents from 79 cents and set the 2002 EPS at 33 cents a share. The shares are on the firm's U.S. recommended for purchase list.

Analyst Frank Governali made the cut because of "intensifying" competition and continued price erosion in the long-distance telephone market.

"Our new estimates incorporate, in part, all the information that has been conveyed to the Street over the past couple of months, as well as our assessment of T's competitive position in its relevant markets, " Governali wrote in the note.

The company has planned a breakup into four companies. Also, last year, its wireless phone unit

AT&T Wireless

(AWE)

was the largest IPO in U.S. history at $9 billion. AT&T ended the trading day down 94 cents, or 3.98%, to $22.67; AT&T Wireless was down $1.25, or 5.98%, to $19.67.

In a research note entitled "Death by a Thousand Cuts -- Slashing Estimates Again,"

Credit Suisse First Boston

cut

Cisco's

(CSCO) - Get Report

estimates once more.

CSFB's Lissa Bogat said her firm was cutting estimates to reflect the networking company's

comments Friday, in which it formally announced it was cutting about 15% of its workforce and hinted at an earnings shortfall. Bogat said the estimates are already at the low end of the Street range.

Still, she lowered its current quarter's estimate to 7 cents from 11 cents a share and for the next quarter to 11 cents from 13 cents a share, which brings the full-year 2001 estimate to 53 cents from 60 cents a share. She said that implies EPS is down 39% year-over-year for the second half of 2001.

The firm lowered its full-year 2002 estimate to 70 cents from 75 cents a share, saying "proposed cost-reduction actions should mitigate the impact of our reduced revenue forecast."

The note went on to say: "Our new revenue forecast normalizes growth for the five-year period from 1998 to 2003 to forecast the second half of this time period. We have also reality-checked this forecast with a product-by-product forecast, which demonstrates upside to our growth rate for calendar 2003.

"We believe that Cisco has the ability to grow 25% to 30% on the top line, but investors are not likely to give the company credit for this until there is greater visibility. For now, we continue to expect investors to discount a growth rate at the lower end of the 20% to 25% range, which does not, by our calculations, imply much downside from here." Cisco closed down $1.81, or 8.8%, to $18.81.

Upgrades

Equitable Resources

(EQT) - Get Report

: price target UP to $93 from $89 at Goldman. Equitable closed down 25 cents, or 0.4%, to $65.45.

Kinder Morgan

(KMI) - Get Report

: UP to strong buy from buy at CSFB. The stock closed down $1.76, or 2.98%, to $57.36.

Pitney Bowes

(PBI) - Get Report

: UP to $41 from $35 at

Lehman Brothers

. Pitney Bowes closed up 75 cents, or 2.1%, to $36.21.

Downgrades

Dominion

(D) - Get Report

: DOWN to buy from strong buy at CSFB. Dominion ended the day down $1.69, or 2.5%, to $65.20.

Enron

(ENE)

: price target DOWN to $110 from $128 at CSFB; price target DOWN to $95 from $102 at Goldman. Enron closed down $7.57, or 11%, to $61.27.

KeySpan Energy

(KSE)

: DOWN to hold from buy at CSFB. KeySpan closed down 65 cents, or 1.7%, to $37.16.

Initiations

Manugistics

(MANU) - Get Report

: NEW long-term attractive at

Robertson Stephens

. Manugistics closed down $1.88, or 8.2%, to $21.13.

Maximus

(MMS) - Get Report

: NEW strong buy at Lehman; price target: $45. Maximus closed down 35 cents, or 1%, to $34.

PeopleSoft

(PSFT)

: NEW long-term attractive at Robbie Stephens. PeopleSoft closed down $2.06, or 9.6%, to $19.50.

Universal Compression

(UCO) - Get Report

: NEW buy at Lehman; price target: $44. Universal Compression closed down 16 cents, or 0.4%, to $37.75.

Group Moves

Lehman lowered its investment opinion to market perform from strong buy on oil and gas exploration and production companies,

Noble Affiliates

(NBL) - Get Report

and

Pioneer Natural Resources

(PXD) - Get Report

Noble Affiliates closed down $2.62, or 5.2%, to $47.72; Pioneer Natural Resources closed down $1.15, or 5.8%, to $18.60.

The firm said the average exploration and production stock has doubled over the last year and that it now believes that the shares are approaching fair value. But Lehman said that growing concerns about natural gas demand made its forecasts riskier, hence the downgrades. Lehman added that slower economic growth this year could lead to slower than expected electric power and natural gas growth this summer.

Noble's 2001 EPS estimate was cut to $5.85 from $6.50 and 2002 EPS estimate DOWN to $3.05 from $3.35. Pioneer's 2001 EPS estimate was knocked down to $2.20 from $3. Its price target was lowered to $20 from $23.

Also, Lehman upped its price targets for several waste companies, including:

Allied Waste

(AW)

UP to $22 from $18. Allied Waste closed down 43 cents, or 2.5%, to $16.81;

Republic Services

(RSG) - Get Report

UP to $21 from $18. Republic Services closed up 35 cents, or 1.9%, to $18.76;

Waste Management

(WMI)

UP to $36 from $32. Waste Management closed down 75 cents, or 2.8%, to $26.20.

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Miscellany

Jeff Bezos

, the founder and chief executive officer of

Amazon.com

(AMZN) - Get Report

was quoted saying that small investors should not invest in Internet stocks.

Bezos, the head of the Web's leading e-tailer, reportedly said during an interview with

BBC's

"Money Programme" that retail investors should stay away from the sector because of its volatility. "For a short-term investor or for a small investor, I wouldn't invest in Internet stocks," Bezos reportedly said.

Bezos, whose recent share dealings in Amazon stock are

under investigation by the U.S.

Securities and Exchange Commission

, added that Amazon was working hard to build a lasting company and over time Amazon would become a very valuable company.

Separately, media reports during the weekend said Amazon rebutted claims it is facing corporate governance problems and said it had sufficient cash to remain financially viable.

Reuters

reported that the company was responding to a letter sent Thursday by the

New York Society of Security Analysts

, an organization of investment professionals, concerning the reliability of comments made by Amazon's management that had caused "a credibility crisis."

Reuters

quoted an Amazon spokesman as saying, "We started the year with more than $1.1 billion in cash, and we'll end the year with more than $900 million in cash." Amazon closed down $1.63, or 13.3%, to $10.63.

Shell Oil

launched a $55-a-share hostile bid today to acquire

Barrett Resources

(BRR)

after Barrett's board rejected a takeover offer last week.

Shell, a subsidiary of

Royal Dutch/Shell Group

, said the cash offer price represents a 24% premium over Barrett's share price of $44.25 on Feb. 28, the last trading day before Shell's initial acquisition proposal. Barrett closed down 52 cents, or 0.8%, to $62.

Northwest Airlines

(NWAC)

and its mechanics union are stalling on an agreement, but President Bush's emergency board should push back any possibility of a strike to the middle of May. Northwest Airlines closed down 75 cents, or 3.3%, to $21.75.

Novo Networks

(NVNW)

said it is cutting its workforce by 70 jobs, or 40%, and is exploring other strategic alternatives to save money.

The broadband network services provider said the reduction would be achieved through the elimination of some positions and normal attrition. The company has retained

J.P. Morgan Chase

to evaluate strategic alternatives. Novo closed down 22 cents, or 8.9%, to $2.25.

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