Updated from 9:02 a.m. EDT

Wall Street tech analysts sung a rare chorus of unified discouragement Tuesday, again shooting down lingering optimism about an imminent recovery in the sector.

The bad news began with a sectorwide downgrade by Merrill Lynch of semiconductor equipment stocks. Merrill cut its estimate for growth in capital spending by semiconductor makers to a range of 20% to 25% from 30% and noted that performance of the individual companies within the equipment sector is, for the most part, a function of order expectations.

The firm now expects a second half pause in orders, so it cut its rating on 13 prominent names within the sector.

Applied Materials

(AMAT) - Get Report

,

KLA-Tencor

(KLAC) - Get Report

,

Lam Research

(LRCX) - Get Report

,

Novellus

(NVLS)

,

Asyst Technologies

( ASYT),

MKS Instruments

(MKSI) - Get Report

,

Veeco

(VECO) - Get Report

, and

Entergris

(ENTG) - Get Report

were all cut to near-term buy from strong buy, while

Advanced Energy

(AEIS) - Get Report

,

Therma-Wave

( TWAV), and

Ultratech Stepper

(UTEK)

were lowered to near-term neutral from buy. Finally,

Dupont Photomask

( DPMI) and

Emcore

(EMKR) - Get Report

were downgraded to buy from strong buy and neutral from strong buy, respectively.

That piece of bad news was quickly followed by Bear Stearns, which initiated coverage of

Siebel Systems

( SEBL) with a none-too-flattering unattractive rating. The firm said Siebel's enterprise applications software business may not improve this year or even next, and that current Wall Street consensus estimates for Siebel are too optimistic. Bear Stearns estimated 2002 EPS of 34 cents and 2003 EPS of 37 cents for the company, well below the consensus estimates of 44 cents and 52 cents provided by Thomson Financial/First Call.

Bear's analyst also set a price target of $9 on Siebel, well below the stock's Monday close of $13.19. Shares of Seibel Systems fell about 4.5% to $12.60 in premarket trading on the downgrade.

Finally, Salomon Smith Barney slashed its estimates and price target on

Intel

(INTC) - Get Report

, saying the issues that hurt the company's performance in 2002 will probably carry over into 2003. Salomon expects Intel to earn 55 cents a share in 2002, down from 60 cents, and 90 cents in 2003, down from $1.00.

The firm also cut its price target on the stock to $27 from $45, despite noting upticks in Taiwanese mobile shipments and firming DRAM prices, which could signal the beginning of a modest upturn in the personal computer parts business.

About the only piece of good news for the battered sector came from Bernstein's review of

Microsoft's

(MSFT) - Get Report

fourth-quarter prospects. The firm believes Microsoft will beat the current analyst consensus of 42 cents on strong bookings and the XP cycle upgrade. For the longer term, Bernstein sees Microsoft benefiting from deferred revenue and the impending IT spending recovery

Despite that rosy outlook, Bernstein still cut its 2003 Microsoft estimate to earnings of $2.04, down from its earlier forecast of $2.09, but still ahead of the $1.92 concsensus. The new target reflects the slower-than-expected recovery, according to the firm.