Updated from 3:25 p.m.

The market has been bracing for weaker earnings from brokers as the slowing economy has impacted trading activity and underwriting business. This morning, three brokerages posted first-quarter earnings that were down from their year-ago levels.

Bear Stearns

(BSC)

posted first-quarter earnings that missed analysts' lowered estimates; profits tumbled 40% amid an increasingly difficult market environment.

The brokerage's stock ended the day down $1.36, or 2.9%, to $45.39.

Bear Stearns said first-quarter earnings were $166 million, or $1.10 a share, down from $278 million, or $1.89 a share, in the year-ago period. The

First Call/Thomson Financial

consensus estimate was $1.28 a share. Earlier this month the company warned it would have difficulty meeting analyst estimates even as it cut staff.

Trading revenue slipped 9% to $341 million but it was somewhat offset by strength in bond trading, in which revenue edged up 1.5% to $340 million. Investment banking revenue tumbled 59% to $120 million in the latest quarter.

Lehman Brothers

(LEH)

reported that first-quarter earnings dropped nearly 28% from the same period last year, even though the results slightly exceeded Wall Street estimates. Lehman Brothers closed down $2, or 3%, to $63.90.

Lehman reported earnings per share of $1.39, 2 cents ahead of the First Call/Thomson Financial consensus estimate, but down noticeably from the $1.84 in the year-ago period. Net income totaled $387 million, compared with $551 million in the first quarter a year ago.

Investment banking revenue fell to $483 million from $602 million last year. Meanwhile, principal transactions, or revenue from trade executions, dropped to $998 million in the latest quarter from $1.1 billion a year ago.

In a written statement, Lehman said it had "strong performance in a challenging market environment" and pointed to its diverse business mix. Underscoring the record levels of last year's results, Lehman noted that the quarterly revenue was the third-best the firm has ever recorded.

And at

Morgan Stanley Dean Witter

(MWD)

, first-quarter earnings dropped 30% from the year-ago level, as the slump in stock market activity weighed on trading commissions and underwriting income. Morgan Stanley closed down $1.86, or 3.3%, to $54.64.

First-quarter net income was $1.08 billion, or 94 cents a share, down from last year's record $1.5 billion or $1.34 a share. Analysts on average expected 93 cents a share.

The slowdown in equity underwriting opportunities was evident in Morgan's securities business, where net income fell 37% to $784 million from last year's record levels. Morgan Stanley said lower underwriting fees and trading revenue were partially offset by strong performance in fixed income.

Mergers, acquisitions and joint ventures

Dell

(DELL) - Get Report

and Korea's

Samsung

signed a technology and research-and-development deal worth $16 billion. Samsung will supply memory components, liquid-crystal displays, monitors and optical drives to Dell for use in its computers. The two companies will also collaborate on research and development for new Dell computers and other products. Dell closed up 25 cents, or 1%, to $24.69.

After Tuesday's Close

Northwest Airlines

(NWAC)

announced it will undertake a number of measures in an attempt to cut costs by over $200 million. The airline plans to optimize its flying schedule and fleet composition, including the early retirement of three DC10-40 aircrafts in the fall. Northwest will also defer advertising, management training and other discretionary spending.

The airline will also lower management payroll expenses by 5% and defer officer and director merit salary increases until February 2002. Northwest said it does not plan to achieve the reduction in management payroll expense with companywide, across-the-board layoffs, but will leave each department in charge of how the cost reductions will be reached. Northwest Airlines closed up 31 cents, or 1.5%, to $20.56.

E-commerce software provider

Commerce One

(CMRC)

announced that it plans to acquire

Enterprise

, a maker of online business-to-business exchanges, for $78 million in stock. The deal is expected to be completed some time during the second quarter of 2001. Commerce One closed up 19 cents, or 2%, to $9.57.

Office equipment retailer

Staples

(SPLS)

announced that it would merge its small-business and catalog operations with

Staples.com

. The merger is an attempt by the Massachusetts-based company to cut costs and broaden its client base. The company will abandon its pursuit of an

initial public offering of Staples.com and convert its stock into parent company stock, pending shareholder approval. According to the terms of the proposal, shares of Staples.com would be converted into 0.4396 shares of the parent company. Staples closed down 13 cents, or 0.8%, to $15.63.

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Earnings/revenue reports and previews

St. Louis-based

A.G. Edwards

(AGE) - Get Report

posted fourth-quarter earnings of 57 cents a share, including a $7.2 million charge related to the replacement of obsolete computer equipment, which was well below year-ago earnings of $1.11 a share. The

First Call/Thomson Financial

dual-analyst estimate was 64 cents a share for the quarter.

In a statement, CEO and Chairman Robert Bagby said, "Net earnings were impacted by a rise in expenses associated with our commitment to new technology, particularly our new financial consultant workstation. Net earnings also reflected the pressure on compensation resulting from our continuing effort to retain quality professionals. The fourth-quarter results were adversely affected by a charge of $7.2 million related to the replacement of obsolete computer equipment. Going forward, we will continue to focus on serving our clients while controlling expenses."

A.G. Edwards closed down $1.36, or 3.8%, to $34.08.

Allegheny Technologies

(ATI) - Get Report

said it would miss earnings estimates in the first quarter because of surging energy costs and the sluggish economy. The producer of specialty metals said it expects first-quarter earnings to be 5 cents to 10 cents a share. Eight analysts polled by First Call/Thomson Financial were expecting Allegheny to earn 17 cents a share. The company earned 41 cents a share in the year-ago quarter.

Beleaguered industrial markets have seen demand and prices wither for flat-rolled products, especially stainless steel. This will cut revenue by about 25% from the $625.4 million posted in the year-ago period, executives said.

Pittsburgh-based Allegheny said earnings concerns would extend into the second quarter. Though executives offered no specific guidance, they did say the company would take steps to cut costs and conserve energy. Conditions in the flat-rolled products business are expected to pick up in the third quarter as inventory levels off and demand rises, the company said. Allegheny Tech closed down 68 cents, or 3.8%, to $17.33.

Dean Foods

(DF) - Get Report

said it earned 47 cents a share for the fiscal third quarter, beating the nine-broker First Call/Thomson Financial estimate of 45 cents a share. At this time a year ago, the company earned 67 cents a share. The company reported sales of $1.09 billion, compared with $976 million at this time a year ago.

The company said it expects to earn between $2.50 and $2.55 a share for the fiscal year, which would match or beat current estimates for $2.50 a share. Dean Foods closed up 53 cents, or 1.7%, to $32.63.

In a further sign that the manufacturing sector is reacting to persistent slowing in demand,

Deere

(DE) - Get Report

today said it is scaling back production, as customers have become more cautious in making purchases. In addition, the company will fall short of earnings estimates for the second quarter.

The manufacturer of tractors, construction and farming equipment said it expects second-quarter earnings to fall short of year-ago levels, when the company earned 87 cents a share, as well as short of the current 15-broker First Call/Thomson Financial estimate of 96 cents a share.

Products primarily being affected, according to a company press release, are the construction and grounds-care equipment, but also large farm tractors. Overall, the company now expects its physical volume of sales without acquisitions to be flat for the quarter and up 4% for the year. The company said it is "targeting higher earnings for the year, though attainment may prove challenging." The current First Call estimate for fiscal year 2001 is for earnings of $2.36 a share. Deere's shares closed today down $2.16, or 5.4%, to $38.17.

FedEx

(FDX) - Get Report

posted third-quarter earnings that beat Wall Street estimates by a penny and projected that fourth-quarter earnings would be essentially unchanged from a year ago. The package delivery company earned $109 million, or 37 cents a share, compared with $113 million, or 37 cents a share, in the year-ago period. Analysts on average expected FedEx to earn 36 cents a share.

FedEx reported revenue of $4.8 billion, up from $4.5 billion in the year-ago period.

As with many other companies, the deteriorating market hit FedEx harder than expected. Volume growth, yield growth and weights for February took a considerable drop, executives said.

In the fourth quarter, FedEx said it expects to earn between 85 cents and 90 cents a share. The current First Call estimate is 85 cents a share, which is what FedEx earned in the fourth quarter of 2000. The company said it also expects to see a 1% to 2% decline in U.S. domestic express-package volume, but ground and international priority volumes will grow 5% to 7%. FedEx ended the trading day up $2.35, or 5.8%, to $42.60.

Two homebuilders exceeded earnings estimates today, due to ongoing strength in housing and low mortgage rates. Both Los Angeles-based

KB Home

(KBH) - Get Report

and Miami-based

Lennar

(LEN) - Get Report

reported strong results for their most recent earnings period.

KB Home said it earned 70 cents a share for the three months ended Feb. 28, 2001 (fiscal first quarter 2001), beating the nine-broker

First Call/Thomson Financial

consensus of 66 cents a share. The homebuilder earned 56 cents a share at this time a year ago. Revenue for the most recent quarter totaled $821 million, up from $799 million at this time a year ago.

Lennar earned 75 cents a share for the fiscal first-quarter 2001, beating the eight-broker consensus estimate of 64 cents a share. Revenue was $1.1 billion, up from $640 million at this time a year ago. The company expects earnings per share to grow 30% for the full year, revising a previous estimate for earnings growth of 20%.

KB Home closed up $1.25, or 4.5%, to $29; Lennar was up $1.29, or 3.4%, to $39.04.

3Com

(COMS)

posted a wider-than-expected loss in its third quarter, blaming weaker industry conditions, higher costs and eroding prices and margins.

The maker of networking products lost $122.8 million, or 36 cents a share, compared with a profit of $88.3 million, or 22 cents a share, in the year-ago quarter. Nine analysts surveyed by First Call/Thomson Financial were expecting a loss of 33 cents a share.

The company, which is based in Santa Clara, Calif., reported revenue of $629.6 million, down from $1.1 billion in the year-ago period. 3Com said reduced demand took its toll on most product segments. To cauterize the earnings hemorrhage, 3Com said it plans a restructuring to increase its focus on core markets. The company did not indicate specific restructuring actions, but said it plans to generate ongoing annual savings of $1 billion starting at the end of this fiscal year. The stock closed down 22 cents, or 3.5%, to $6.

After Tuesday's Close

Electronics manufacturer

Jabil Circuits

(JBL) - Get Report

posted second-quarter earnings of 21 cents a share, beating Wall Street estimates by a penny. However, the news was a mixed bag because the company also announced an undisclosed number of job cuts and lowered its outlook for the next two quarters.

Jabil went on to say that it will take charges of $20 million to $25 million for the third and fourth quarter in an attempt to realign manufacturing with lower-than-expected volumes. Jabil Circuits closed up $1.64, or 9.1%, to $19.76.

Quantum DLT & Storage

(DSS) - Get Report

announced that it will post lower-than-expected earnings for its fiscal fourth quarter, citing the continued slowdown in information technology spending as the cause. The California-based company said revenue is expected to decline 20% from the previous quarter, but reassured that "despite the current economic climate, the fundamental strength of our business model remains unchanged," according to CEO Michael Brown.

Shares of Quantum closed up 15 cents, or 1.3%, to $12.06.

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Analyst actions

Oops. They did it again.

One day after

Credit Suisse First Boston

analysts Herve Francois and Mark Hassenberg snipped their earnings targets on

Solectron

(SLR)

, the duo did it again. Only this time, the pair

upped

their 2001 and 2002 forecasts, while nudging up its price target to $30 from $23. CSFB now calls for the world's largest electronics manufacturing service provider to make 83 cents a share for fiscal 2001, up from the 78 cents called for yesterday.

Solectron closed down 17 cents, or 0.9%, to $18.92.

Why the change? The pair talked to management, which was probably unhappy about yesterday's revised forecast from CSFB that was well below the rest of Wall Street.

Prudential Securities

,

ING Baring

,

Robertson Stephens

and

Bear Stearns

all called for the company to make more than 90 cents a share -- far more bullish than CSFB's call.

"After further discussion with management, we are adjusting our (ratings), based solely on expected cost savings from Solectron's restructuring program," the pair wrote to investors.

Merrill Lynch

, which put Solectron's 2001 forecast in a headlock and noogied it down to 86 cents a share, bullied the rest of the electronics manufacturing service sector. Analyst

Jerry Labowitz dropped his 2001 and 2001 earnings-per-share forecasts on seven companies in the sector after visiting EMS companies in exotic locales and hearing the bad news from Solectron.

"As we highlighted, February was the turning point for the EMS providers as a sharp drop in demand from many original electronics manufacturing customers ... quickly reduced the growth potential in calendar 2001, a trend we now believe could result in a couple of quarters of flat sequential revenue growth," he wrote to investors in a note on Wednesday morning. "Our visit to several EMS providers in Guadalajara and Monterrey last week reinforced our thoughts."

Here's a recap of the adjustments made, and how they stack up to current Wall Street consensus, as listed by

First Call/Thomson Financial

:

FleetBoston Financial

, the rapidly expanding regional bank serving the northeast, was upgraded to strong buy from buy by

Lehman Brothers

analyst

Henry Dickson. The analyst recently met with the top brass at the bank and liked what he heard. He thinks Wall Street's view of the company doesn't line up with the firsthand experience he had, thus the upgrade.

"Fleet's stock carries one of the lowest valuations in our universe, which we think reflects concerns about its near-term earnings-per-share outlook, confusion about the company's strategy and asset-quality concerns," he wrote. "Based on recent meetings with management, it is our impression they are realistically addressing issues and positioning Fleet to sustain a higher level of organic growth. The chasm between perception and reality is the reason why we are raising the rating to strong buy."

FleetBoston Financial closed down 93 cents, or 2.6%, to $35.28.

Someone cue the Police.

W.R. Hambrecht

will be watching

Inktomi

(INKT)

, starting today. Every move this Internet infrastructure company makes, every trading level it breaks, Hambrecht will be watching it.

Analyst Prakesh Patel started the company with a neutral, not exactly the kind of rating that sets the world aflame, because of all the near-term difficulties facing the stock and the limited visibility into forthcoming quarters.

"We are looking for signs that the company can still capture the large market opportunity for the reliable and rapid delivery of Internet content," he wrote to investors, calling the company a "core component of the infrastructure software market." But until Inktomi has more visibility and can show some growth -- more specifically, topping the 5% revenue growth target -- Patel says his rating will stay at neutral. Inktomi closed down 23 cents, or 3.6%, to $6.16.

Upgrades

BG Group

(BRG) - Get Report

: UP to buy at Lehman Brothers. The stock closed up 55 cents, or 2.9%, to $19.45.

Enterprise Oil

(ETP)

: UP to buy at Lehman Brothers. Enterprise Oil closed down 55 cents, or 2.2%, to $24.70.

Jefferson-Pilot

(JP) - Get Report

: UP to intermediate-term accumulate from intermediate-term neutral at Merrill Lynch. Jefferson-Pilot closed down 64 cents, or 0.98%, to $64.38.

Pharmaceutical Product Development

(PPDI)

: UP to strong buy from buy at ING Barings. The company's stock closed up 31 cents, or 0.8%, to $37.38.

Downgrades

APW

(APW)

: DOWN to market perform from U.S. recommended for purchase list at

Goldman Sachs

. APW closed down $9.99, or 57.5%, to $7.39.

PurchasePro

(PPRO)

: DOWN to hold from accumulate at Prudential Securities. PurchasePro closed down $1.56, or 20.8%, to $5.97.

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Offerings and stock actions

After Tuesday's Close

San Francisco-based

ABM Industries

(ABM) - Get Report

announced Tuesday that it will issue a 16.5% cash dividend (an all-time high) for its shareholders effective April 13, 2001. On the heels of the announcement, ABM posted first-quarter earnings of 34 cents a share, up 2 cents from a year ago. ABM closed down 91 cents, or 2.97%, to $29.70.

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Miscellany

Conseco

(CNC) - Get Report

said it named Charles Chokel as chief financial officer, replacing acting CFO Tom Hagerty.

The life insurer and loan firm, which is based in Carmel, Ind., said Chokel joins the company after 23 years at auto insurance company

Progressive

, where he was the co-chief executive officer responsible for investments and capital management. Chokel will be nominated to serve on Conseco's board of directors, the company said.

Tom Hagerty, who was Conseco's acting CFO for eight months and will remain on the company's board, will resume his duties as a partner at private equity firm

Thomas Lee Partners

. The firm owns about 7% of Conseco common stock. Conseco closed down 40 cents, or 2.8%, to $14.16.

DoubleClick

(DCLK)

said it will cut about 10% of its staff and disclosed plans to split its U.S. business into two separate units.

The Internet advertiser expects to have about 1,850 employees by the end of the second quarter. Most of the job cuts will come from DoubleClick's global media unit, which is expected to provide less than 20% of the company's gross profit in 2001.

In the U.S., DoubleClick will split into one network to focus on branded sites and another for audience reach and targeting. One media sales force will sell the services of both networks. Outside the U.S., DoubleClick's structure will remain the same.

Though DoubleClick's announcement signals continued belt-tightening, others in the Internet advertising business are doing worse. Fellow Net ad firm

24/7 Media

(TFSM)

postponed reporting its fourth-quarter financial results, originally scheduled for Feb. 26, saying it was "actively evaluating strategic alternatives to improve its cash position." DoubleClick closed down 50 cents, or 4.6%, to $10.44.

Ongoing restructuring efforts have not been enough for

Procter & Gamble

(PG) - Get Report

, which is considering cutting 10% to 20% of its workforce, or 11,000 to 22,000 people, according to a report in today's

Wall Street Journal

.

An internal task force, led by Steve Donovan, a senior executive, is examining the company with an eye to trim. Sales of Procter & Gamble products, such as

Tide

,

Crest

and

Pampers

, have flagged in the past 18 months, the report said. Last month, P&G warned that its earnings for the third quarter and the full year would be at the low end of Wall Street's estimates, blaming political and financial instability in Turkey, its 12th-largest market.

If the company, a component of the

Dow, does cut jobs, it will join the leaders of other industries trying to tread water in an economic riptide. Procter & Gamble closed down $2.70, or 4.1%, to $63.20.

After Tuesday's Close

Big Foot Financial

(BFFC)

announced Tuesday that president and CEO George Briody will retire effective March 31. The Illinois-based bank named current CFO Timothy McCue as his successor. The stock closed flat at $14.06.

Boston-based

Teradyne

(TER) - Get Report

announced that it will lay off 650 employees and trim the salaries of senior employees as a result of a weakening economy and a decrease in demand for its products. Teradyne closed up 15 cents, or 0.5%, to $32.96.

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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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