As TheStreet.com first reported late yesterday, Goldman Sachs analysts downgraded the retail sector after yesterday's close. Among the stocks downgraded to either market outperformer or market performer from buy were Costco (COST) - Get Report, Kohl's (KSS) - Get Report, Target (TGT) - Get Report, Tiffany (TIF) - Get Report, Federated (FD) , Abercrombie & Fitch (ANF) - Get Report, Wal-Mart (WMT) - Get Report, May (MAY) , Ross (ROST) - Get Report, TJX (TJX) - Get Report, Tuesday Morning (TUES) - Get Report and Neiman Marcus (NMG.A) .

The sector has been under pressure all year due to fears of higher interest rates and increasingly difficult

same-store sales comparisons.

Donaldson Lufkin & Jenrette

disagreed with its competitor's macro downgrade of the sector and said that if retail stock takes a hit from the call, investors should "give it an hour and buy." DLJ said it likes

Circuit City

(CC) - Get Report

,

Best Buy

(BBY) - Get Report

and

Staples

(SPLS)

. Circuit City fell 1 9/16 to 58 38; Best Buy dropped 4 9/16, or 5.5%, to 78 1/4; Staples slipped 15/16 to 18 1/16.

Bestfoods

(BFO) - Get Report

, which makes products such as Hellmann's mayonnaise and Skippy peanut butter, said

Unilever

(UN) - Get Report

made an unsolicited bid to buy it for $18.41 billion in cash. Bestfoods said it rejected the offer as financially inadequate and not in the best interests of its shareholders. Unilever, an Anglo-Dutch consumer products giant, offered to pay $66 a share for Bestfoods.

Meanwhile, Unilever is seeking a $20 billion syndicated loan to back its bid for Bestfoods, U.S banking sources told Reuters. Participating banks include

ABN-Amro Banks

,

Deutsche Bank

and

UBS Warburg

. Banking sources also said that the size of the loan would allow Unilever to raise its bid.

Mergers, acquisitions and joint ventures

Integrated aluminum company

Alcoa

(AA) - Get Report

announced that it has completed acquisition of

Reynolds Metals

(RLM) - Get Report

following approval by the U.S. Department of Justice and the European Union. Under the deal, each Reynolds share was converted into 1.06 shares of Alcoa common stock. Alcoa must make divest some of Reynolds' assets according to the terms of agreements with the Department of Justice and the European Union.

Coca-Cola

(KO) - Get Report

and

America Online

(AOL)

said that they have entered into a two-year marketing agreement valued at roughly $64 million,

The Wall Street Journal

reported.

Lucent Technologies

(LU)

said it was considering a sale of its power systems unit. The tech giant said it would select a buyer within six months.

--

Tara Murphy and Diane Gross

Earnings/revenue reports and previews

(

Earnings estimates from First Call/Thomson Financial, earnings reported on a diluted basis unless otherwise specified.

)

It's a good thing --

Martha Stewart Living Omnimedia

(MSO)

posted first- quarter earnings of 11 cents a share, beating the 6-analyst estimate of 4 cents a share and up from the year-ago 7 cents a share. Total revenues increased 30% to $69.1 million, as compared to $53.4 million in 1999. Martha Stewart, the company's chairman and chief executive, attributed the revenue growth in part to a double-digit increase in circulation revenues, increased syndication of the second half-hour of the daily show and higher traffic on and strong sales from its Web site. Registered users increased 73% to 1.28 million over the comparable quarter of 1999.

Coventry Health Care

(CVTY)

reported first-quarter earnings of 18 cents a share, in line with the 13-analyst estimate and up from same time last year's 14 cents. Allen Wise, president and chief executive, said excluding the Principal Life fee income, revenues for the quarter were up 19% and net earnings were up 220% compared to first quarter 1999.

DaimlerChrysler

(DCX)

said that its fiscal 2000 revenue would beat out its forecast of $137.6 billion. The automaker attributed the outlook to increased demand for its

Mercedes-Benz

cars.

eToys

(ETYS)

announced that it intends to control its marketing and distribution costs and improve margins as "keys to profitability." Beginning in fiscal 2001, eToys said it expects gross profits to exceed these expenses.

ILEX Oncology

(ILXO)

posted a first-quarter loss of 15 cents a share, narrower than both the 6-analyst estimate of an 18-cent loss and the year-ago report of a 36-cent loss. The company said its revenues grew 94% to $6.6 million fueled by a higher-than-expected increase in contract research services revenue.

Intimate Brands

(IBI)

posted a 21% increase in April same-store sales.

Manor Care

(HCR) - Get Report

posted first-quarter earnings of 20 cents a share, missing the 12-analyst estimate of 27 cents a share and down from the year-ago 37 cents. Manor Care's board also said it would not put the company on the auctioning block.

Novell

(NOVL)

said it will fall short of First Call/Thomson Financial estimates of 16 cents a share with a "significantly lower-than-anticipated" 8 cents a share. The software maker pegged its problems on a sales shakeup,

Microsoft's

(MSFT) - Get Report

Windows 2000 release and the growing strength of the Linux movement. Novell said it expects to post just over $300 million in revenue, including $35 million from a royalty payment made by Linux distributor

Caldera

(CALD)

.

PaineWebber sliced its price target on Novell to 15 from 27, while Goldman Sachs cut its fiscal 2000 EPS estimate to 44 cents from 70 cents.

Revlon

(REV) - Get Report

reported a first-quarter loss of 48 cents a share, before business consolidation costs and a gain on the sale of the company's worldwide professional products line, beating the 4-analyst estimate by a penny and up from the year-ago 67-cent loss.

Starwood Hotels & Resorts

(HOT)

posted first-quarter earnings of 26 cents a share, a penny better than the 15-analyst estimate and up from the year-ago 20 cents a share. The hotel and leisure company, which, through its subsidiaries, operates the Sheraton, Westin, St. Regis, Luxury Collection, Four Points and W brands, saw total revenues increase 18% to $1 billion.

Wesley Jessen VisionCare

(WJCO)

posted first-quarter earnings of 44 cents, a penny better than the one-analyst estimate and up from the year-ago 34 cents a share.

Williams

(WMB) - Get Report

posted first-quarter earnings of 27 cents a share, before the cumulative effect of a change in an accounting principle. The year-ago report was a 13-cent profit. The 14-analyst estimate expected the company to post earnings of 16 cents.

--

Tara Murphy and Diane Gross

Offerings and stock actions

EMC

(EMC)

announced a two-for-one stock split, in the form of a 100% stock dividend, payable June 2.

Kulicke & Soffa

(KLIC) - Get Report

said that its chairman and CEO C. Scott Kulicke will sell about 250,000 shares of the company's stock that he holds. The semiconductor assembly equipment supplier said Kulicke's sale is an effort to diversify his assets. If he sold all 250,000 shares, Kulicke would still hold 275,000 common shares, which doesn't include his stock options.

--

Tara Murphy and Diane Gross

Analyst actions

Upgrades

Bestfoods

(BFO) - Get Report

: UP to buy from market perform at

Donaldson Lufkin & Jenrette

, price target: 75.

Sanmina

(SANM) - Get Report

: UP to top pick from buy at DLJ.

Transocean Sedco

(RIG) - Get Report

: UP to buy from hold at

UBS Warburg

, price target: 70.

Downgrades

AT&T

(T) - Get Report

: DOWN to market perform from buy at

Donaldson Lufkin & Jenrette

.

Cigna

(CI) - Get Report

: price target DOWN to 100 from 115.

General Motors

(GM) - Get Report

: DOWN to outperform from buy at

Lehman Brothers

.

Hilton Hotels

(HLT) - Get Report

: DOWN to attractive from buy at

PaineWebber

.

Robert Half

(RHI) - Get Report

: DOWN to hold from buy at Lehman.

Initiations

Infospace

(INSP) - Get Report

: NEW buy at

Credit Suisse First Boston

.

Luminex

(LMNX) - Get Report

: NEW outperform at

Lehman Brothers

, price target: 26.

Micro Therapeutics

(MTIX)

: NEW strong buy at

US Bancorp Piper Jaffray

.

Opus 360

(OPUS)

: NEW buy at

JP Morgan

, price target: 15.

Scient

(SCNT)

: NEW buy at

Banc of America

, price target: 85.

Uproar

(UPRO) - Get Report

: INITIATED buy at

Salomon Smith Barney

, price target: 40.

Group Moves

J.P. Morgan

initiated coverage of three cellular communications companies:

  • Rural Cellular (RCCC) at buy.
  • Western Wireless (WWCA) at buy.
  • Dobson Communications (DCEL) at buy.

Lehman Brothers

downgraded four mining companies to underperform from neutral:

  • Battle Mountain (BMG)
  • Homestake Mining (HM)
  • Newmont Mining (NEM) - Get Report
  • Kinross Gold (KGC) - Get Report
  • Lehman also sliced its long-term outlook on gold to $270 per once from $280 per once, citing weakening fundamentals.

--

Tara Murphy and Diane Gross

Miscellany

The

Nasdaq Stock Market

is mulling new regulations for dealers trading in premarket activity,

The Wall Street Journal

reported. The latest step considers how premarket trading can hurt investors.

Separately,

The Journal

reported that the Nasdaq will combine its emerging

Nasdaq Europe

operations with

Deutsche Boerse's Neuer Markt

, which focuses on European tech issues. According to a person familiar with the matter, the newly formed market would be branded to incorporate the Nasdaq name. The Nasdaq will probably assume a small equity interest in the market.

Conseco's

(CNC) - Get Report

ex-chairman and CEO Stephen Hilbert walked away with a $72.5 million severance package, according to a

Securities and Exchange Commission

filing, as reported in

The Wall Street Journal

Conseco's shares were off 1/4 to 6 3/8.

Polaroid

(PRD)

shares slid 1/16 to 20 5/16 after it announced the launch of a business-to-business Web site, which will go live June 30. The new site, aimed at improving effectiveness for end users, will offer business and professional users an online experience focusing on delivering real-time imaging solutions and e-commerce through channel providers.

The site is part of a collaboration with

Viant

(VIAN)

, an Internet professional services firm, to develop business strategy and creative design and to implement technology for the site. Viant shares lost 2, or 7.8%, to 23 1/2.