Updated from 9:34 a.m. EST

Corning

(GLW) - Get Report

warned its 2001 earnings would fall short of previous projections, but said its first-quarter earnings remain on target.

The maker of fiber-optic equipment said 2001 earnings are now expected to be $1.20 to $1.30 a share, down from $1.40 to $1.43 expected previously. Analysts surveyed by

First Call/Thomson Financial

were expecting earnings of $1.36. Revenue is forecast to be $8.2 billion to $8.5 billion, in line with analysts' estimates of $8.4 billion, and 15% to 20% better than 2000 revenue of $7.1 billion.

"Our new outlook is based on recent customer feedback which indicates that a meaningful recovery of spending by our telecommunications customers will occur much more slowly than we had previously anticipated," said Corning CEO John W. Loose.

Revenue from photonic technologies is now expected to grow at a 20% to 25% rate, half the 50% growth target Corning announced on Feb. 16. And that forecast was revised downward from a previous growth projection of 75% to 90%.

Corning said its first-quarter earnings still are expected to be 28 cents to 31 cents per share. The consensus analysts' estimate is 29 cents a share.

Corning recently hit a new 52-week low and said it would

cut 825 jobs in its photonics plants because of softening demand from telecommunications companies.

Mergers, acquisitions and joint ventures

Drug distributors

AmeriSource Health

(AAS)

and

Bergen Brunswig

(BBC) - Get Report

will merge in a stock-for-stock deal worth $7 billion, creating a new company, called AmeriSource-Bergen.

The combined company, with about $35 billion in annual operating revenue, is expected to achieve annual operating synergies of more than $125 million by the end of the third year. About $10 million in annual expenses related to purchase accounting adjustments is anticipated, but the companies expect the adjustments to be offset by the elimination of $23 million a year of goodwill amortization for the new company.

Under the terms of the agreement, unanimously approved by both boards of directors, each share of Bergen Brunswig common stock will be converted into 0.37 share of AmeriSource-Bergen common stock while each share of AmeriSource common stock will be converted into one share. The new company will have about 103 million shares outstanding, with current AmeriSource shareholders owning about 51% of the combined company and Bergen Brunswig shareholders owning about 49%. Based on closing stock prices on March 16, 2001, the new company will have a pro forma market capitalization of about $5 billion and about $2 billion of debt.

The transaction, scheduled to close this summer, is expected to be non-dilutive, before synergies and special items. The deal is subject to Hart-Scott-Rodino review and approval by shareholders of AmeriSource and Bergen Brunswig.

Robert Martini, chairman and CEO of Bergen Brunswig, will become chairman of the combined company, while R. David Yost, AmeriSource's chairman and CEO, will become CEO and president. Yost said the merger "enhances our confidence that we can sustain a long-term earnings per share growth rate of 20% and continue to create significant shareholder value."

FPL Group

(FPL) - Get Report

and

Entergy

(ETR) - Get Report

said their merger deal may be a bust after they found "that certain issues have arisen in connection with their pending merger, including governance structure/value-related issues and integration of the two companies going forward."

In a joint statement, the companies said, " The parties will be meeting in the near future to address these issues. The parties will have no further comment on the status of the merger at the present time."

The deal, which would create the country's largest energy company, was announced in

July.

Advertising giant

Interpublic Group

(IPG) - Get Report

said it has agreed to buy

True North

(TNO)

, a Chicago-based ad holding company, for $2.1 billion in stock, creating the largest marketing communications firm in the world.

Under the terms of the deal, each share of True North common stock will be swapped for 1.14 shares of Interpublic common stock. New York-based Interpublic said it expects the deal, which awaits shareholders and regulatory approval, to close in the summer.

True North said this morning it was comfortable with analysts' full-year estimates of $2.03 a share, according to First Call/Thomson Financial. The company said last September it would take a pre-tax charge of $17.5 million, or 20 cents a share, from the loss of the

DaimlerChrysler

(DCX)

account. The company has

taken a beating since then, and many on Wall Street considered it ripe for a merger.

Lucent Technologies

(LU)

won a three-year, $5 billion contract from

Verizon Wireless

(VZ) - Get Report

, making Lucent the largest supplier of Verizon Wireless' third-generation high-speed mobile network infrastructure.

With Lucent's technology, Verizon will potentially double its existing network's voice capacity and increase data-transmission speeds nearly 10 times. Verizon also will deploy a technology that enables data-only services to customers requiring even higher Internet access speeds for such needs as transmitting graphic-intensive files or streaming video downloads. Third-generation networks require high-speed data-networking systems to support mobile Internet sessions at increasing rates.

Terms of the agreement allow for Verizon to purchase multiple products and systems from Lucent's portfolio, including

Bell Labs

-developed software designed to expand wireless coverage, increase capacity and support high-speed data and mobile Internet applications. Verizon is also expected to launch a variety of Lucent's mobile Internet enhanced services.

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Earnings/revenue reports and previews

DuPont Photomasks

(DPMI)

, a maker of photomasks that are used by semiconductor companies to transfer chip designs onto silicon wafers, lowered its revenue forecast for the third fiscal quarter and provided a bottom-line estimate that would come in well below analysts' expectations.

Revenue in the third fiscal quarter will be between $108 million and $112 million, the company said, an increase of 1% to 5% from the top line of $106.8 million in the prior quarter. The company previously expected a sequential increase of 5% to 11%.

The reduced revenue range will lead to earnings of 53 cents to 66 cents a share, below the Street's forecast of 79 cents a share. In the year-ago period, the company earned 40 cents a share.

Illinois Tool Works

(ITW) - Get Report

lowered its first-quarter earnings forecast Monday, citing a decline in revenue and demand.

The company, which makes products used in the automotive, construction, and food and beverage industries, said it would earn between 58 cents and 62 cents a share, well below the 67 cent a share consensus estimate of eight analysts surveyed by First Call/Thomson Financial.

Lennox International

(LII) - Get Report

slashed its first-quarter and full-year 2001 outlook, citing the "sharp and widespread domestic economic slowdown" as well as "continued weak operating performance" in its retail business segment.

The heating and cooling giant, which is based in Richardson, Texas, said it expects a first-quarter loss of 17 cents to 22 cents a share, instead of break-even as previously projected. According to

First Call/Thomson Financial

, one analyst expected earnings of a penny a share for the quarter, compared with 10 cents a share last year.

For 2001, the company said it expects earnings per share to grow "at least" 10%, "assuming economic conditions stabilize" and "normal seasonal demand." The Street expects 29 cents a share, compared with 16 cents a share in 2000. Lennox also projected 2001 revenue growth in the low single digits.

Life insurer

Mony group

(MNY)

said it expects first-quarter earnings of 29 cents a share, sharply below Wall Street's consensus estimate of 53 cents a share, amid the decline in demand for brokerage, trading and capital markets services.

The New York firm also said it expects a "modest improvement in the equity markets" starting late in the second quarter, and gave a 2001 earnings estimate of $2.00 to $2.25 a share. Nine analysts polled by First Call/Thomson Financial expect $2.25 a share, down from $4.88 a share in 2000. The company said the estimate reflects a 14 cents a share dilution caused by the goodwill amortization for the company's acquisition of

Advest

, a broker and money manager.

Novoste

(NOVT) - Get Report

said it would beat estimates in the first quarter, but

Salomon Smith Barney

cut its rating on the medical device company to outperform from buy and lowered its 12-month price target to $31 from $70.

Novoste, which is based in Atlanta, said it would lose between 50 cents and 54 cents a share in the first quarter, compared with First Call/Thomson Financial's consensus estimate that calls for a loss of 57 cents a share.

The company, which is due to report its first-quarter results April 25, also expects to report revenue of $7.5 million to $8.5 million for the period, up from the Street's consensus estimate of $5.6 million.

Paychex

(PAYX) - Get Report

reported third-quarter earnings today that beat Wall Street's slightly raised estimates by a penny.

For its third quarter ended Feb. 28, Paychex earned $66.4 million, or 18 cents a share, up from $49.6 million, or 13 cents a share in the year-ago period. Sixteen analysts from

First Call/Thomson Financial

expected the company, which is based in Rochester, N.Y., to garner 17 cents a share. Paychex reported third-quarter revenue of $229.3 million, up 19% from $192.2 million in the same period one-year ago.

Paychex, which provides payroll, human resource and employee benefit outsourcing products and services, said it expects growth in corporate expenses to be up less than 10% in fiscal 2002.

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Analyst actions

Are brokerages ready to bound back from a brutal few months?

That's the major question being bandied about this morning after

Lehman Brothers'

analyst Mark Constant upgraded three of the four major brokerages he covers.

Merrill Lynch

(MER)

was upped to strong buy from buy. "We continue to believe that the stock offers the most attractive combination of relative earnings momentum, consistency and valuation discount, in this group," Constant wrote. Meanwhile, rivals

Goldman Sachs

(GS) - Get Report

and

Morgan Stanley Dean Witter

(MWD)

were upgraded to buy from market perform.

These actions come after influential Merrill Lynch analyst Judah Kraushaar

upped his rating on Goldman Sachs and

Legg Mason

(LM) - Get Report

on Friday morning.

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"Valuations in the sector have now pulled back enough to provide favorable risk/reward opportunities," wrote Constant in a note to investors on Monday morning. "Furthermore, the upside/downside potential on the stock we are upgrading appears to be considerably more appealing that it has been in recent months, even if the intermediate-term earnings outlook proves to be disappointing."

Common wisdom has long held that financials, like the brokerages, will fare much better than their Wall Street peers when the

Federal Reserve starts to cut rates. As the economy recovers, the now-cheaper supply of money should fuel a wave of fees for brokerages as companies merge and acquire each other. Trading volume should pick up as well, meaning another set of fees for some of these brokerages.

But that common wisdom has made common widows of many broker holders. Since the first Fed cut back on Jan. 2, brokers ramped up only to see those gains dissipate.

The month of January stuck close to the old way of thinking -- that a Fed cut is good for brokerage stocks. The

American Stock Exchange Securities Broker/Dealer Index

rallied 19%, closing out the month at 641.6. But in February and March, the brokers gave up those gains and then some, dropping 29% to Friday's close of 457.3. Brokerage firms came out during the month of February and said bad things about the state of the industry as big layoffs were announced at

Credit Suisse First Boston

and others. Indeed, Merrill's Kraushaar

dumped his earnings forecasts on a bunch of companies just weeks before upgrading Goldie and Legg.

As the smoke clears, analysts say the selling was so bad that valuations look pretty good after once warning about the state of earnings. These stocks might be undervalued, but the near-term problems aren't going anywhere. Business will continue to be slow. And there will be few catalysts, save for the Fed slashing at rates, in the next half-year or so. So, while the stocks appear undervalued and oversold, the question remains -- are brokerages ready to bound back after a brutal two months?

Goldman Sachs threw in the towel on staffing stocks on Monday morning, saying uncle on four of the bigger names in the industry after

Heidrick & Struggles

(HSII) - Get Report

warned that the next quarter will focus on the "struggles" aspect of its name. The company trimmed first quarter revenue forecast down to growth that's either nonexistent or barely there, with a 5% gain. Earlier, analysts expected the company -- and its peers, really -- to grow revenues by 15%.

Analyst Meg Saegebarth cut her rating on Heidrick to market outperform from the U.S. recommended for purchase list.

Manpower

(MAN) - Get Report

was cut to market outperform from the U.S. recommended for purchase list, while

Robert Half International

(RHI) - Get Report

and

Staff Leasing

(STFF)

were dropped to market perform from market outperform.

"With the U.S. economy showing no signs of improvement, it is getting increasingly difficult to be at all positive about investing in staffing stocks," she wrote. "Investor sentiment is very negative and while the first-quarter 2001 earnings may be OK, we think it is likely that future quarterly results could be 5% to 10% too high if demand does not improve."

In other words, companies that help recruit new executives aren't looking so good right now. It's really not surprising, considering the fact that many companies are cutting the workforce, not adding to it. Granted, the high-end labor market won't suffer in quite the same way as the minimum wage market, but growth will become increasingly difficult going forward. Look for more fallout from the Heidrick warning in the coming week.

Upgrades

Boeing

(BA) - Get Report

: UP to buy from accumulate at Lehman Brothers.

Pacific Sunwear

(PSUN)

: UP to buy from long-term accumulate at

Robertson Stephens

.

Pride International

(PDE)

: UP to trading buy from market outperform at Goldman Sachs.

Downgrades

Bergen Brunswig

(BBC) - Get Report

: DOWN to hold from buy at Credit Suisse First Boston.

First Industrial

(FR) - Get Report

: DOWN to market perform from long-term accumulate at Robertson Stephens.

Micromuse

(MUSE)

: DOWN to long-term accumulate from buy at Robertson Stephens.

Netcentives

(NCNT)

: DOWN to buy from strong buy at Credit Suisse First Boston.

Initiations

Carnival

(CCL) - Get Report

: NEW accumulate at Merrill Lynch; price target: $32.

Lan Chile Airlines

(LFL)

: NEW buy at Robertson Stephens; price target: $10.

Massey Energy

(MEE)

: NEW intermediate-term accumulate, long-term buy at Merrill Lynch; price target: $25. .

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Offerings and stock actions

After Friday's Close

Kraft Foods, a unit of

Philip Morris

(MO) - Get Report

, filed with the Securities and Exchange Commission for an

initial public offering of up to $5 billion of common stock, in what would be one of the largest IPOs ever in the U.S.

The food and beverage company plans to list its Class A common stock on the New York Stock Exchange under the symbol KFT.

Credit Suisse First Boston

and

Salomon Smith Barney

are the lead managers of the offering. The company will detail the number of shares in the offering and the expected price range at a later date.

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Miscellany

Brinker

(EAT) - Get Report

, operator of such restaurant franchises as Chili's Grill & Bar and Corner Bakery Caf, said its executive vice president and chief financial officer, Russell Owens, resigned.

Charles Sonsteby was named acting CFO.

Corixa

(CRXA)

said it will cut 10% to 15% of its workforce as a result of a delay in launching its Bexxar treatment for non-Hodgkins lymphoma.

The company and its partner

GlaxoSmithKline

(GSK) - Get Report

received a letter from the

Food and Drug Administration

requesting more information.

The job cuts, resulting in a first-quarter restructuring charge of about $1.5 million, will be made in research and development as well as administrative support staff. Corixa said the reductions could have an annual cost savings of about $6 million.

Corixa also announced that it was working on contracting out the services of its sales personnel to promote and sell a potential partner's products. If it can't reach an agreement, Corixa may be forced to make additional job cuts.

Southwest Airlines

(LUV) - Get Report

named James F. Parker vice chairman and chief executive and appointed Colleen C. Barrett president and chief operating officer, effective June 19. Herb Kelleher, the airline's chairman, president and CEO, will continue as chairman of the board and chairman of the executive committee.

After Friday's Close

Internet service provider

Aperian

(APRN) - Get Report

said that it will be cutting 20% of its workforce in an attempt to reduce costs and explore more profitable avenues.

Retail food and drug chain

Albertson's

(ABS)

announced that it was trimming its board of directors. Five members will resign.

Auto-parts supplier

BorgWarner

(BWA) - Get Report

announced it has

named George Strickler (a 30-year veteran of

Goodyear

, who most recently served as CFO of retail consulting firm

Lake West

) as its new chief financial officer. Former CFO Larry Skatoff will continue to work for BorgWarner as a consultant.

Pharmaceutical research company

Celltech

(CLL)

announced that it has received an approvable letter for a drug designed to treat attention deficit hyperactivity disorder (ADHD) in children. According to the

National Institute of Mental Health

, about one child in every classroom in the U.S. is afflicted with this disorder. An approvable letter is one of the last steps that must be taken before a product can officially be put on the market.

The U.K.-based Celltech expects sales for the drug, ADHD Metadate CD Extended-Release Capsules, to exceed $250 million.

Exabyte

(EXBT)

, a maker of computer storage devices, announced it will cut 250 jobs, about 24% of its workforce. Three vice presidents are also leaving the company.

Guidant

(GDT)

, a cardiovascular device maker, said Friday that it has

voluntarily stopped production and sales of the Ancure system, which is used to treat life-threatening abdominal aortic aneurysms.

The company halted production after finding deficiencies with its Ancure-related regulatory processes and following discussions with the

Food and Drug Administration

.

Energy-based holding company

PG&E

(PCG) - Get Report

, the parent company of beleaguered

Pacific Gas & Electricity

, said that it will make quarterly interest payments on its commercial paper beginning April 2, 2001, due to the ongoing California power crisis.

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