TheStreet Notes: A Daily Briefing of Wall Street Research and Analyst Actions - TheStreet

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Change In Ratings | Stock Comments / EPS Changes | Strategy Calls / Market Calls | Economics | Meetings | View Archived StreetNotes

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AES Corporation (AES / NYSE)
Goldman Sachs
Downgrading from Recommended List to Outperform based on price. Up 45% from 10/01 bottom of $12. Trading at asset value of $15-$20.

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AvalonBay Communities (AVB / NYSE)
Lehman Bros
Downgrading from Strong Buy to Buy, with a $50 price target. We believe investors should commit funds to more aggressive investments.

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BEA Systems (BEAS / Nasdaq)
Bank of America Montgomery
Downgrading to Market Perform to recognise its exposure to Airbus, and the dominished potential of a major order for Hawk from India.

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BMC Software (BMC / NYSE)
Bank of America Montgomery
Initiating coverage with a Buy rating and a $27 price target. BMC appears to be undervalued at current levels, versus other software comps. Recommend value-oriented/turnaround investors to take a closer look at this company.

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Computer Associates Int'l (CA / NYSE)
Salomon Smith Barney
Initiating coverage with a Buy rating and $45 target. Increased sales and opportunities possible with increased interest in centralized computing. Minor concerns over new business model.

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Charter Communications (CHTR / Nasdaq)
Morgan Stanley Co.
Downgrading from Strong Buy to Outperform, as we expected muted growth in the near-term.

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Cumulus Media (CMLS / Nasdaq)
Lehman Bros
Initiating coverage with a Buy rating and $18 price target. We believe the company can produce 20% annual EBITDA growth through 2005.

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Canadian National Railway (CNI / NYSE)
Deutsche Banc Alex Brown
Downgrading from Strong Buy to Buy, with a $50 price target. We believe upside is limited from current levels, as compared to U.S. rail stocks.

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Canadian Pacific Limited (CP / NYSE)
Deutsche Banc Alex Brown
Initiating coverage with a Buy rating and $22 price target. We believe the stock will be one of the early beneficiaries of an early cyclical rally.

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Equity Office Properties (EOP / NYSE)
Lehman Bros
Downgrading from Strong Buy to Buy, with a $33 price target. We believe earnings growth will slow in 2002, and total return will likely be limited to the company's dividend.

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Extended Stay America (ESA / NYSE)
Lehman Bros
Initiating coverage with a Buy rating and $21 price target. We believe the company's long-term lodging prospect makes it slightly more insulated to the current industry slowdown.

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Ford Motor Company (F / NYSE)
Warburg Dillon Read
Downgrading from Hold to Reduce, with a $14 price target. The company will announce the details of its restructuring plan tomorrow morning, but we believe there is no quick fix to Ford's problems. A further dividend cut and the need for external financing appear inevitable before the end of the year.

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InFocus Corporation (INFS / Nasdaq)
Deutsche Banc Alex Brown
Downgrading from Buy to Market Perform, based on valuation. The company has yet to give guidance for 2002, so we are trimming our EPS projection to $1.06 per share. Investors should consider re-purchase when visibility improves.

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Innoveda (INOV / Nasdaq)
Robertson Stephens
Upgrading to Buy from Neutral. Raising EPS for 2001 from -5c to -4c and 2002 from 10c to 11c. Preannounced above estimates. High speed PCB and elecromechanical products continued to perform well.

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Intersil Corporation (ISIL / Nasdaq)
Warburg Dillon Read
Upgrading from Hold to Buy, with a $40 price target. Recent channel checks show the company's products are selling at or above previous expectations.

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KPMG Consulting (KCIN / Nasdaq)
Lehman Bros
Downgrading from Buy to Market Perform, with an $18 price target. The company said yesterday that business in the U.S. will be weaker than previously expected for 2002.

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Lockheed Martin Corp. (LMT / NYSE)
Bank of America Montgomery
Raising investment grade to Strong Buy. LMT is in excellent position to benefit for an expected acceleration in defense spending.

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MGM MIRAGE (MGG / NYSE)
Robertson Stephens
Upgrade from Buy to Strong Buy. Raising 2002 EPS from $1.11 to $1.35 and target from $30 to $38. Recovery expected in 2003.

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USX-Marathon Group (MRO / NYSE)
Prudential Securities
Downgrading from Buy to Hold based on price. The stock rose 8% last year and was the best performer among the integrated oil companies. No change in EPS estimates, but the first half of 2002 is expected to be very difficult.

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Network Associates (NETA / Nasdaq)
Bank of America Montgomery
Initiating coverage with a Buy rating and a $35 price target. Believe NETA contains upward potential in operating margin leverage, acceptance and increased sales of WebShield AV appliances, and further execution on the turnaround.

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Nassda Corp.(NSDA / Nasdaq)
Warburg Dillon Read
Initiating coverage with a Buy rating and $23 price target.

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PEC Solutions (PECS / Nasdaq)
Warburg Dillon Read
Downgrading from Buy to Hold, based solely on valuation.

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Precise Software Sol. Ltd (PRSE / Nasdaq)
Bank of America Montgomery
Initiating coverage with a Buy rating and a $33 price target. Believe margins could improve to 10% in 2003 from -1.6% in 2001, and new product catalyst in 2002 presents PRSE as a lucrative investment.

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Rational Software Corp. (RATL / Nasdaq)
Weisel Partners
Initiate with Buy & $27 target; Leading provider of applicationdevelopment software; Addressable mkt growing at 20-25%; Expect solid December quarter results after today's close.

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SPS Technologies (ST / NYSE)
ABN Amro
Downgrading from ADD to HOLD, as we believe the company willoutline a 2002 EPS scenario below the current consensus when theyreport in late January or early February. We are lowering our 2002 EPS estimate from $2.90 to $1.55 and 2003 from $3.30 to $1.50.

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Symantec Corporation (SYMC / Nasdaq)
Bank of America Montgomery
Inititiating coverage with a Buy rating and a $80 price target. Forecast 25% secular EPS growth, where it should trade at a premium to its growth rate based on its early traction with enterprise customers and continual market share gains.

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TrizecHahn Corporation (TZH / NYSE)
Lehman Bros
Downgrading from Buy to Market Perform, with a $17 price target. We expect little NAV appreciation from the company this year, and believe investors would be better positioned in more aggressive stocks.

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AT&T Corporation (T / NYSE)
ABN Amro
Upgrading from HOLD to ADD as they continue on their plans tomassively restructure the company. Despite an incredibly challenging operating environment, we now believe AT&T (core) could post results in 2002 that are better than consensusexpectations.

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Union Pacific Corp. (UNP / NYSE)
Deutsche Banc Alex Brown
Upgrading from Buy to Strong Buy, with a $70 price target. We believe the company currently offers the most compelling value among rail stocks.

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URS Corporation (URS / NYSE)
Lehman Bros
Initiating coverage with a Strong Buy rating and $40 price target. The company has some of the highest margins and earnings growth record in the construction industry.

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WorldCom Group (WCOM / Nasdaq)
ABN Amro
Upgrading from HOLD to ADD and our price target could beas high as $18. We believe the current quarter could mark the low water mark for slowing data and Internet revenue growth rates.

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Alcoa (AA / NYSE)
Goldman Sachs
Announced raised equity stake in Elkem ASA. Maintain Recommended List rating and $43 target.

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Accenture (ACN / NYSE)
Bank of America Montgomery
Raising full year 2002 and 2003 EPS estimates to $0.95 and $1.11, with a $32 price target based on increasing business momentum and the potential for earnings upside along with a lower tax rate as guided by maganament.

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American Eagle Outfitters (AEOS / Nasdaq)
NEWS
announced total sales for the five weeks ended January 5, 2002 increased 10.9% to $256.0 million from $230.9 million last year. However, the company reported that earnings for the 4Q are expected between 56c to 60c/share. The Street forecast is 61c/share.

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American Eagle Outfitters (AEOS / Nasdaq)
Dain Rauscher
Tweaking fourth-quarter estimate lower by $0.01 to $0.58and maintaining a Buy rating. December same-store sales gain 0.5% and beat our expectations. Inventory levels remain under control.

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American Eagle Outfitters (AEOS / Nasdaq)
Morgan Stanley Co.
Trimming full-year EPS estimate to $1.40, because of high sweater discounting in the fourth quarter. Maintain Strong Buy rating.

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Applied Materials (AMAT / Nasdaq)
Robertson Stephens
Raising 2002 EPS from 21c to 24c in anticipation of industry recovery in mid 2002. Reiterate Strong Buy and raising target from $55 to $61.

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Best Buy Company (BBY / NYSE)
Deutsche Banc Alex Brown
Raising EPS estimates to $2.42 in 2001 and $2.85 for next year. The company hinted of wider margins at its analyst meeting yesterday, although management now expects only low single-digit comparable sales growth in the February quarter. Maintain Buy rating.

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Best Buy Company (BBY / NYSE)
Robertson Stephens
Reported outstanding December sales. Raising EPS for 2001 from $2.31 to $2.42 and 2002 from $2.62 to $2.87 and target from $80 to $85.

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Brocade Communications (BRCD / Nasdaq)
Goldman Sachs
Very comfortable with current demand and future oportunities after meeting with BRCD. Has definate competitive advantages. High growth with upside potential. Reiterate Recommended List.

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CIGNA Corporation (CI / NYSE)
NEWS
announced it will realign service operations in its Employee Health Care, Life and Disability Benefits, thus recording a 4Q after-tax charge of approximately $65 million ($100 million, pre-tax). These changes will result in a reduction of approximately 2,000 positions.

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Coach (COH / NYSE)
Warburg Dillon Read
Raising estimates and price target to $50 per share. We now expect the company to earn $1.72 per share in fiscal 2002.

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Dana Corporation (DCN / NYSE)
Deutsche Banc Alex Brown
The company suggested yesterday that consensus 2002 earnings estimates were too low. Maintaining Market Perform rating and our above-consensus expectations for now, although the company could further leverage its model in the coming quarters.

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Dana Corporation (DCN / NYSE)
Lehman Bros
The company guided 2002 earnings to $0.75 per share, more than double previous estimates. We believe the company's restructuring plans could extend the final EPS potential past $1. Reiterate Buy rating.

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Dow Jones & Co. (DJ / NYSE)
Robertson Stephens
Reit buy; raising target from $53 to $65. Better advertising environment expected. Improving economy. Also raising 2002 EPS from $1.55 to $1.60.

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Dow Chemical Company (DOW / NYSE)
Morgan Stanley Co.
We believe the company's exposure to asbestos is limited to $175 million, and most of this figure is already insured. Maintain Outperform rating.

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Dow Chemical Company (DOW / NYSE)
Warburg Dillon Read
Lowering estimates to reflect last week's earnings warning. Details remain limited about the company's asbestos litigations, which is a concern. Maintain Strong Buy rating and $45 price target.

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Equifax Incorporated (EFX / NYSE)
NEWS
confirmed that it expects to report solid 4Q results, "driven by its North American consumer reporting business." Earnings for the quarter are expected to come in at 32c/share, in-line with consensus views.

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FleetBoston Financial (FBF / NYSE)
Dain Rauscher
Company may delay its earnings release due to currentevents in Argentina. Based upon the conservative nature of mangement combined with its integrity, Fleet will want to have greater clarity on how recent government actions will affect its Argentinean operations.

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General Dynamics (GD / NYSE)
SG Cowen
Decreasing 2002 and 2003 EPS estimates to $5.05 and $5.95. Gulfstream demand is holding up, but service slide continues and likely to have impact on 2002.

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Hanover Compressor Co. (HC / NYSE)
Bank of America Montgomery
Lowering 2002 EPS estimate to reflect the depletion of oil company budgets, caution on spending by customers and some marginally related weakness in the drilling rig count. Aside these concerns, we believe that HC is a Strong Buy where at current levels is undervalued.

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Interpublic Group of Cos. (IPG / NYSE)
Merrill Lynch
Lowering estimates to reflect continue weakness in advertising. We now expect the company to earn $0.95 per share in 2002.

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Lennar Corporation (LEN / NYSE)
Deutsche Banc Alex Brown
Raising 2002 estimate to $6.10 per share, after the company beat our fourth quarter estimate. Reiterate Strong Buy rating.

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Lennar Corporation (LEN / NYSE)
Bank of America Montgomery
Uping price target and 2002 EPS estimates to $65 and $6.15. Once again, LEN exceeds expectations in their latest company pre-announcement. Strong gross margins, increased deliveries, a higher ASP, and higher joint venture income contribution drove the upside.

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Eli Lilly & Co. (LLY / NYSE)
ABN Amro
Maintain HOLD rating after LLY announced 4Q01 sales of approx.$21MM for its recently launched sepsis drug Xigris. This is in-line with our $20MM forecast, which we believe was conservative relative to the Street. The premium valuation for LLY leaves little margin for error, and consequently find the risk/reward ratio unfavorable at current price levels.

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Merrill Lynch & Co. (MER / NYSE)
Salomon Smith Barney
Announced $2.2 billion restructuring charge in 4Q. Preannounced at-consensus EPS of 48c-50c. Expected on-going savings of 60c per share. Raising target from $58 to $72.

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Motorola (MOT / NYSE)
NEWS
announced it plans to cut 1,200-1,300 semiconductor jobs in Austin, Texas and Sendai, Japan as part of its corporate and plant consolidation initiatives.

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M&T Bank Corp. (MTB / NYSE)
Salomon Smith Barney
Reported 4Q EPS of $1.05 vs. $1.01 consensus and our $1.02 estimate. Great quarter, strong revenue growth. Reiterate Buy and $85 target.

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Nautica Enterprises (NAUT / Nasdaq)
Warburg Dillon Read
Lowering fiscal 2002 estimate to $0.78 per share, to match the company's new earnings guidance. Maintain Hold rating.

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New York Times Co. (NYT / NYSE)
Robertson Stephens
Raising target to $54 from $49. Normal ad market expected by 2003. 2002 could still be tough. Lowering 2002 EPS from $2.05 to $1.80. Reiterate Buy.

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PepsiCo (PEP / NYSE)
NEWS
Reiterated previous guidance for 2001, indicating it "had an excellent year," and is comfortable with the current consensus earnings estimate of $1.66/share.

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Pioneer Natural Resources (PXD / NYSE)
Morgan Stanley Co.
Lowering our fourth quarter estimate, because of eroding margins in Argentina. Maintain Outperform rating and $24 price target.

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Raytheon Company (RTN / NYSE)
Bank of America Montgomery
Increasing price target to $38 based on RTN's strategic position for revenue growth as defense expenditures accelerate.

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SunTrust Banks (STI / NYSE)
Salomon Smith Barney
4Q01 EPS of $1.24 beat consensus by 2c. Confirmed consensus for 2002 and laid out fairly bullish assumptions for next year. Reiterate Neutral and $65 target.

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Sunoco (SUN / NYSE)
Morgan Stanley Co.
Lowering 2002 estimate to $4.75 per share, following the company's analyst day meeting.

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Sunoco (SUN / NYSE)
Bear Stearns
Lowering 2001 earnings estimate to $4.87 from $4.95 per share and our cash flow estimate to $9.37 from $9.45 per share. This is in line with company's guidance released yesterday, for breakeven fourth quarter results. Maintain Neutral; Projected Price Range $26-$43

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Sabre Holdings Corp. (TSG / NYSE)
JP Morgan Chase & Co.
Adding TSG to the Focus List on recent 10% pullback and 03 estimate of $2.65. Story should look better as 2002 unfolds + higher growth rates. Short Term catalysts include above expected travel volumes and potential upside to our street-high 2002 estimate of $1.92 (consensus $1.84) if traffic continues 4Q recovery trend.

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United Parcel Service (UPS / NYSE)
Merrill Lynch
We believe the company will exceed fourth quarter earnings estimates by a penny per share. The company's logistics business will post impressive gains, while lower fuel costs and solid expense management will add to profitability.

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Veritas Software Corp. (VRTS / Nasdaq)
SG Cowen
Raising 2002 EPS estimates to $0.70 as demand is on the rise. Maintain Strong Buy.

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Yahoo! (YHOO / Nasdaq)
Bear Stearns
reporting on January 16th, we expect the company not only to make the quarter and our $171 million in revenues and $0.01 in proforma EPS but also to indicate continued comfort with the progress of its turnaround effort. Yahoo! is surviving the down cycle and is positioned to grow. Reiterate Buy Rating.

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Prudential Securities (Oil)
Compared with 4Q:00, adjusted industry EPS should be down about 60%. All key profit drivers except for West Coast marketing margins were down significantly versus last year's fourth quarter. The worst comparisons will likely be for the companies most leveraged to oil and gas prices, namely COC, MRO,and P.

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Lehman Bros (REITs)
Lowering our ratings of many firms in the sector, as we expect total returns of 7% for 2002. VNO remains are only Strong Buy-rated stock in our coverage universe.

Deutsche Banc Alex Brown (Insurance)
Property and casualty stocks should be bought, even though they've underperformed the markets year-to-date. Fundamentals are improving and we believe current valuations are very attractive. Fourth quarter earnings could still be weak though, as we believe reserves will be increased to reflect September 11 and Enron losses.

Bear Stearns (Sentiment)
Technically the market is on the verge of a short term buy signal. Historically when the 40 and 200 day moving averages cross, it's an inflection point. NDX 40 and 200 day are both 1614 and SPX closed ten points below the 200 and 10 points above the 40. Bullish Sentiment backs off: SPX 48%, NDX 62%, 5 day moving average 70 and 71%. EQUITY P/C .64, SPX P/C 1.94.

Lehman Bros (Semiconductors)
We believe the companies under our coverage will meet fourth quarter earnings estimates, and guidance should be flat or slightly higher. In our opinion, chip stocks have priced in a faster recovery, and we believe a 20% sell-off is possible.

Merrill Lynch (Hardline Retail)
We believe there is earnings upside potential for select industry players that demonstrate superior inventory management. The bottoming of the economy and mortgage refinancing activity should also boost overall spending. CC, SPLS, ODP, HD, and LOW remain our top picks.

Credit Suisse First Boston (Publishing & Information Services)
We still think newspapers have significant upside, but are less bulish than a year ago. The early part of the cyclical upturn is over with 80% of the upside captured on 2002 multiples, but with 50% still to go on 2003 earnings potential. Expecting advertising trends to start moving in an upward direction by late first quarter, however do not expect strong positive growth until the fourth quarter. Our top picks for the group are: NYT, GCI, TRB and SSP.

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Oscillator: 4.3

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8:30 a.m. Initial Jobless Claims (Jan 5) 425k

10:00 a.m. Wholesale Inventories (Nov) -0.5%

3:45 PM: Federal Reserve Chairman Alan Greenspan will offer remarks pertaining to financial literacy at an economic summit in Oakland CA.

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Handspring, Inc. Meeting (sponsored by BAC)

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ABI Analyst Meeting

HRLY Shareholders Meeting

MacWorld Conference & Expo

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