Robertson Stephens Daily Growth Stock Update on ACS, ARBA, BVSN, EPNY, BWEB, BHE, DCTM, INKT, NATI, NTRO, RBAK, BMET, CKFR, LLY, VRSN

Apr 03, 2001, 01:00 ET from Robertson Stephens, Inc.

    SAN FRANCISCO, April 3 /PRNewswire/ -- The following is being issued by
 Robertson Stephens:
 
     Initiation of Coverage:
 
     Affiliated Computer Services, Inc.
     (NYSE:   ACS) $61.89
     Buy
     F2000 EPS: $2.05, Actual
     F2001E EPS: $2.45, New
     F2002E EPS: $2.92, New
 
     Joseph Vafi, eServices
     Steven Birer, eServices
     "Founded in 1988, Affiliated Computer Services (ACS) is a diversified
     provider of a wide range of information technology (IT) and related
     services across the private and public sectors," said Vafi and Birer. "The
     company's core market strategy is to focus on long-term, recurring revenue
     opportunities consisting primarily of IT outsourcing and business process
     outsourcing (BPO) contracts.  Approximately 88% of ACS's revenue is
     recurring in nature, derived from providing services integral to the daily
     functions of customers. Coming off two quarters of record bookings, we are
     introducing coverage of ACS with a Buy rating. With high recurring
     revenue, dependable performance, and steady cash flow, we see ACS as a
     great defensive growth stock for the current, uncertain economic climate.
     Our one-year price target of $76 represents the average of both our
     comparable company and DCF analyses for ACS.  Our comparable company
     analysis focuses on P/E ratios for ACS and its competitors relative to
     their earnings growth, return on equity and our views on each company's
     unique business risks.  This analysis produces a price target of $78, or
     23x our preliminary FY:2003 EPS of $3.40.  Our five-year DCF analysis
     results in a price target of approximately $74."
 
     Ratings Changes:
 
     Ariba, Inc.
     (Nasdaq: ARBA) $6.50
     Downgrading to Market Performer from Buy
     F2001E EPS: ($0.35), down from $0.18
     F2002E EPS: ($0.01), down from $0.38
 
     Eric Upin, Business-to-Business eCommerce
     "On Monday after the close, Ariba pre-announced a significant Q1:01
     shortfall," said Upin. "Ariba missed our most recently published estimates
     by 43% on the top-line and by $0.23 on the bottom-line. Of equal
     significance, Ariba announced the termination of the pending Agile merger
     announced in January. We viewed Agile as the lynchpin in the company's
     value chain solution offerings that it recently unveiled at an Analyst Day
     at the end of February. With a limited proprietary footprint in direct
     goods and advanced supply chain collaboration, we believe Ariba
     increasingly runs the risk of being positioned as a niche provider of
     indirect goods procurement applications moving forward. Ariba attributed
     the Q1:01 shortfall to weakness in all parts of the business and all
     geographies (other than Japan). In particular, Ariba highlighted a decline
     in its B2B marketplace business -- where the company indicated that
     virtually no business was completed. While unquestionably a global
     retrenchment in IT spending played a role in the company's major
     shortfall, we believe many of the company's core markets (i.e., B2B
     marketplaces) have essentially evaporated and are not soon to return. At
     this point, we are making significant downward revisions to our model and
     we are lowering our rating to Market Performer from Buy."
 
     Broadvision, Inc.
     (Nasdaq: BVSN) $4.50
     Downgraded to Long-Term Attractive from Buy
     2001E EPS: ($0.18), down from $0.13
     2002E EPS: $0.15, down from $0.26
 
     Alex Baluta, Internet & eCommerce Applications
     Mark Perutz, eBusiness Infrastructure
     "BroadVision reports a significant shortfall in Q1 results, and limited
     near term visibility," said Baluta and Perutz. "We believe that demand in
     the eCommerce applications space is being negatively affected by three
     issues: Near-term market saturation, a move to strategic versus
     reactionary decisions and economic uncertainty. All three of these events
     are conspiring to make near-term revenue growth challenging, and forward
     revenue visibility equally challenging, in our view.  While we continue to
     believe in the long-term viability of the market, and BroadVision's place
     as a leader within that market, we are lowering our estimates and rating
     to reflect our opinion that near-term stock upside in the current
     environment is limited."
 
     E.piphany, Inc.
     (Nasdaq: EPNY) $9.75
     Downgraded to Long-Term Attractive from Buy
     F2001E EPS: $(0.94), down from $(0.13)
     F2002E EPS: $0.01, down from $0.35
 
     Eric Upin, Business-to-Business eCommerce
     "On Monday, after the market close, E.piphany pre-announced a significant
     Q1:01 revenue and EPS shortfall," said Upin. "E.piphany attributed the
     miss to lengthening sales cycles in a weaker economic environment,
     particularly in North America. We believe the following issues will
     continue to impact the stock over the near term: Cash burn, slowing
     revenue growth, negative services margins, fewer deals, and more limited
     backlog. Although management did not provide guidance for Q2:01, we are
     lowering our revenue and EPS estimates at this time. We are also revising
     our 2001 and 2002 estimates. Based on our substantial estimate revisions
     and more limited visibility over the next several quarters, we are
     lowering our rating to Long-Term Attractive from Buy."
 
     Estimate Changes:
 
     BackWeb Technologies Ltd.
     (Nasdaq: BWEB) $1.41
     Long-Term Attractive
     2001E EPS: Under Review, from ($0.18)
 
     Mark Perutz, eBusiness Infrastructure
     Alex Baluta, Internet & eCommerce Applications
     "BackWeb Technologies pre-announced results for the recently completed
     Q1:01 that fell short of our estimates," said Perutz and Baluta. "This
     shortfall is BackWeb's second consecutive miss.  While we expect the weak
     IT spending environment to plague the entire eBusiness software space,
     BackWeb's miss is notable as it follows a Q4:00 miss, and we had already
     scaled back our estimates. As the company did not hold a conference call,
     release any further details on the quarter, or provide details on
     anticipated changes to the spending plan or pipeline of deals going
     forward, we are taking our estimates to "Under Review" at this time.
     Despite BackWeb's disappointing results, we believe there is significant
     value to BackWeb's technology. However, due to the lack of visibility into
     when we might see positive catalysts for renewed organic growth, we
     reiterate our LTA rating."
 
     Benchmark Electronics, Inc.
     (NYSE:   BHE) $18.06
     Buy
     2001E Cash EPS: $1.35, down from $2.00
     2002E Cash EPS: $1.70, down from $2.50
 
     J. Keith Dunne, Electronic Manufacturing Products & Services
     "Following the company's pre-announcement we are further reducing our
     earnings estimates, which were already the lowest on the Street at 7%
     below consensus, to reflect an accelerating slow down as evidenced by
     sluggish demand, order push outs and cancellations," said Dunne. "We
     believe that the slow down is affecting all end markets, but especially
     noticeable in the telecommunications and high end computing markets due to
     inventory build ups at major customers which have been reeling from
     significant cutbacks in companies' IT budgets.  We believe that push outs
     in the medical segment also contribute to the revenue shortfall in the
     second quarter. In spite of our reduced estimates we are reiterating our
     Buy rating as valuations levels, in our opinion, are near the bottom.  The
     company is trading for 10.6x 2002 cash EPS, or about 6% discount to the
     group and about 5.5 CYO1E EBITDA, or 36% discount to the group.  We
     believe the outsourcing trend is here to stay and expect EMS companies to
     continue to benefit from it as more outsourcing deals ramp into production
     volume. However, we have limited visibility as to the timing and ramping
     of such programs in the near future, making near-term valuation catalysts
     difficult to identify."
 
     Documentum, Inc.
     (Nasdaq: DCTM) $9.53
     Buy
     F2001E EPS: $(0.44), down from $0.49
     F2002E EPS: $0.38, down from $0.83
 
     Mark Perutz, eBusiness Infrastructure
     "Documentum pre-announced negative results for Q1:01 yesterday," said
     Perutz. "The company announced that revenue would be in the range of $46MM
     to $43MM for the quarter, a shortfall of 22-27% off our estimate of
     $59.3MM.  While a range was not given for operating EPS, based on the
     revenue shortfall and the expenses budgeted for the quarter, we estimate
     that EPS will be approximately $(0.29), vs. our estimate of $0.08.  We
     believe this shortfall to be a result of the extraordinarily weak IT
     spending environment plaguing the entire software sector, and not a result
     of weakening fundamentals.  While we are reducing our estimates
     substantially, based on DCTM's solid fundamentals and comparative
     valuation, we are maintaining our Buy rating on the stock."
 
     Inktomi Corporation
     (Nasdaq: INKT) $6.22
     Long-Term Attractive
     F2001E EPS: ($0.40), down from $0.06
 
     Dane Lewis, Infrastructure: Systems & Software
     Alex Baluta, Internet & eCommerce Applications
     "Inktomi pre-announced a significant shortfall to FQ2:01 revenues and
     earnings," said Lewis and Baluta. "The company is now expecting revenues
     of $36-38 million and EPS in the range of $(0.23)-$(0.25).  This is
     significantly below our estimate of $66.2 million and EPS of $(0.03).
     While Inktomi's search business was flat quarter/quarter, the revenue
     shortfall was primarily due to weakness in Inktomi's Network Products
     division, which declined approximately 70% sequentially.  Network Products
     sales have been affected by the slowing in spending of service providers
     and CDNs as well as enterprises. Macroeconomic conditions and the current
     IT spending environment impacted Inktomi's sales strength this quarter.
     Consistent with our views, macroeconomic conditions in North America
     caused service providers and enterprises to halt or delay IT spending.  We
     believe that caching companies such as Inktomi are especially susceptible
     to sales weakness in a tight IT spending environment because caching and
     content delivery are want-to-have rather than need-to-have technologies.
     Furthermore, Inktomi's customer base has a large service-provider
     component who are experiencing particular weakness and have limited access
     to capital. Management will not provide forward-looking guidance until the
     company reports Q2 results on April 19th.  However, based on weakness this
     quarter and lack of visibility, we are lowering our FQ2 revenue estimate
     from $66.2.1 million to $36.8 million and EPS estimate from $(0.03) to
     $(0.23).  For F2001, we are lowering our revenue estimate from $305.0
     million to $187.5 million and our F2001 EPS from $0.06 to $(0.40).  We
     maintain our Long-Term Attractive rating."
 
     National Instruments Corporation
     (Nasdaq: NATI) $31.63
     Buy
     2001E EPS: $1.12, down from $1.20
     2002E EPS: $1.34, down from $1.42
 
     John Barr, Design Enabling Technologies
     "Last night, NI pre-announced 1Q01 results consistent with our model
     revision of March 21," said Barr. "Operating margin and income are
     expected to be slightly above our estimate.  However, a $1.5 million
     foreign exchange charge necessitated by SFAS 133 reduces EPS to $0.27,
     below our $0.28 estimate. NI announced 1Q01 revenue of approximately $108
     million, below our $112 million estimate.  However, NI stated the strength
     of the Dollar versus the Euro reduced revenue by $3.5 million. Based on a
     slowing economy and company guidance, we are further reducing our
     estimates for 2001 and 2002. We reiterate our Buy rating."
 
     Netro Corporation
     (Nasdaq: NTRO) $4.31
     Market Performer
     2001E EPS: ($0.46), down from ($0.39)
 
     Paul Silverstein, Communications/Networking
     "Before the open of the market on Monday, April 2, 2001 Netro announced
     that it expects to report financial results for its March quarter below
     our and Street consensus expectations," said Silverstein. "Netro
     attributed the revenue shortfall this quarter to the macroeconomic
     environment and slowdown in carrier spending, as well as to a disruption
     in orders from Lucent's product group.  Lucent OEM revenues are expected
     to decline sequentially from $18.7 million, or 85% of revenues in the
     fourth quarter of 2000 to approximately $4.3 million, or 50% of total
     sales in the March quarter. The company noted that gross margins would be
     at the high end of the projected 15-20% range in the first quarter due to
     a favorable shift in product mix from OEM sales to direct sales, which
     typically carry higher margins.  The company however indicated it plans to
     write-off obsolete inventory that it expects will significantly adversely
     impact gross margins for the quarter. Given the lack of visibility going
     forward, we are significantly lowering our financial forecasts for fiscal
     2001.  We are maintaining our rating on Netro's shares at Market Performer
     given the further deterioration in general market conditions and in
     Netro's particular business conditions."
 
     Redback Networks Inc.
     (Nasdaq: RBAK) $11.70
     Buy
     2001E EPS: ($0.26), down from $0.55
     2002E EPS: $0.05, down from $1.00
 
     Paul Johnson, Communications/Networking
     "After the close of the market on Monday, April 2, Redback announced that
     it expects to report financial results for its March quarter below Street
     consensus expectations," said Johnson. "Redback attributed the majority of
     the revenue shortfall this quarter to two key SMS customers delaying their
     purchases in the last two weeks.  The company also announced that it would
     reduce its workforce by approximately 150 people, which represents twelve
     percent of its total employee base.  The company will take restructuring
     charges of approximately $23 million related to excess facilities in the
     first quarter and $4 million in employee-related termination costs in the
     second quarter -- actions that management believes will cut operating
     expenses by $6 million per quarter going forward. In addition, Redback
     plans to take first quarter charges of approximately $24 million for
     excess inventory as a result of product design enhancements made on the
     SmartEdge in the first quarter. We estimate that in the face of a
     difficult telecommunications environment, the company produced positive
     revenue growth from the SmartEdge products, while SMS displayed
     essentially all of the downside in the quarter.  We expect revenues from
     the optical products to continue to produce similar levels of growth in
     the next few quarters while visibility into the SMS product's future is
     low. Given the lack of visibility going forward, we are significantly
     lowering our financial forecasts for fiscal 2001 and 2002.  These
     forecasts are based on what we believe to be very conservative assumptions
     regarding Redback's future growth and profitability.  We believe our
     estimates to be conservative. We are reiterating our Buy rating on the
     stock."
 
     Comments:
 
     Biomet, Inc.
     (Nasdaq: BMET) $39.13
     Buy
 
     Wade King, Medical Technologies
     "We believe that Biomet's quarter is tracking nicely and that the company
     is on course to meet our expectations for the quarter ending May, 2001,"
     said King. "The company continues to see strong demand for its
     reconstructive implant line, with particular strength in revision hip
     products and its higher end implants such as the M2a hip and the Repicci
     knee systems. Additional areas of strength include sales of bone cement
     and accessories and spinal implants. As the baby boom generation ages, we
     believe Biomet will see strong demand for its reconstructive implants. In
     our view, Biomet is a safe investment harbor. We believe that BMET offers
     a strong investment opportunity for those seeking superior returns with
     controlled risk. Our price target for Biomet is $48, based upon a 32x
     multiple of our estimated C2002 EPS of $1.50. This offers investors the
     potential for almost 25% ROI in a premier medical technology company. We
     reiterate our Buy rating on Biomet."
 
     Checkfree Corporation
     (Nasdaq: CKFR) $27.69
     Strong Buy
 
     Andrew Jeffrey, eProcessing/ePayment
     "We believe CheckFree shares have come under pressure more as a result of
     broad market weakness and a relative premium valuation, instead of any
     fundamental problems," said Jeffrey. "In addition, we believe some
     industry observers have been nervously awaiting a presentation by
     erstwhile EBPP competitor Spectrum at a conference in San Francisco
     yesterday. We remain confident in our financial outlook for CheckFree.  We
     estimate that the company will deliver 3Q01 revenues of $111.3 million and
     EPS of $(0.05).  Our fiscal 2001 revenue estimate is $428.1 million and
     our 2002 projection is $572.8 million. We believe those investors who have
     strong conviction in the company's financial outlook can discount future
     growth and pretax ROIC over a period of three-to-five years to support a
     current valuation significantly above the stock's current level.  Our
     analysis suggests that CKFR should trade at a level at least 100% higher
     than today."
 
     Eli Lilly and Company
     (NYSE:   LLY) $75.46
     Buy
 
     Robert Hazlett, Large Capitalization/Specialty Pharmaceuticals
     "Eli Lilly and Alkermes signed an agreement to develop pulmonary insulin
     for the treatment of diabetes that utilizes Alkermes AIR drug delivery
     system," said Hazlett. "Lilly will have the exclusive global rights to
     both long and short acting insulins being developed in this collaboration.
     This agreement also covers other potential products for the treatment of
     diabetes; we believe one of these to be the peptide GLP-1, an insulin
     production stimulator with significant therapeutic potential.  Financial
     arrangements were not disclosed. We reiterate our Buy rating on LLY shares
     due to our view of the potential of the company's late stage pipeline, one
     we consider the best in the industry.  Upcoming events include: FDA
     approvals for Zovant for sepsis and Forteo for osteoporosis, and filings
     for Cialis for erectile dysfunction, atomoxetine for ADHD, duloxetine for
     depression/incontinence."
 
     Verisign, Inc.
     (Nasdaq: VRSN) $35.75
     Long-Term Attractive
 
     Dane Lewis, Infrastructure: Systems & Software
     "Yesterday, ICANN's governing board approved the new proposed agreement
     between VeriSign and ICANN regarding the management of the .com, .net and
     .org registries," said Lewis. "The deal is still subject to approval by
     the U.S. Department of Commerce. Under the new proposed agreement:
     VeriSign will operate the .com Registry until November 10, 2007 and the
     .net Registry until January 1, 2006. The new agreement also removes the
     divestiture requirement in the earlier agreement where VeriSign had to
     divest its Registrar in order to keep the Registry. We believe this
     approval helps remove the uncertainty about how the divestiture of the
     Registar would have affected VeriSign's income statement going forward. We
     believe this is a very positive agreement for the company and VRSN stock."
 
     Industry Updates:
 
     Gaming Industry
 
     Harry Curtis, Gaming & Lodging
     "Gaming win at Atlantic City's 12 casinos was essentially flat in March
     2001 at $360.1 million versus $358.2 million a year ago," said Curtis.
     "Likewise, win for 1Q:01 was also flat at $997 million. Slot win increased
     a sluggish 1.8% in March to $267 million, while table win declined nearly
     3% to $92.7 million. First quarter typically accounts for 23% of annual
     revenues in Atlantic City, with second and third quarters accounting for
     more than 60% of win. Thus, assuming favorable weather trends, we
     anticipate modest growth of 2%-3% through the balance of the year."
 
     Unless otherwise noted, prices are as of Monday, April 2, 2001.
 
     Robertson Stephens maintains a market in the shares of Ariba, Broadvision,
 E.piphany, Backweb, Documentum, Inktomi, National Instruments, Netro Corp.,
 Redback, Biomet, Checkfree, Alkermes and Verisign and has been managing or
 comanaging underwriter for or has privately placed securities of Broadvision,
 E.piphany, Backweb, Benchmark Electronics, Netro Corp., Redback, Alkermes and
 Verisign within the past three years.
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SOURCE Robertson Stephens, Inc.
    SAN FRANCISCO, April 3 /PRNewswire/ -- The following is being issued by
 Robertson Stephens:
 
     Initiation of Coverage:
 
     Affiliated Computer Services, Inc.
     (NYSE:   ACS) $61.89
     Buy
     F2000 EPS: $2.05, Actual
     F2001E EPS: $2.45, New
     F2002E EPS: $2.92, New
 
     Joseph Vafi, eServices
     Steven Birer, eServices
     "Founded in 1988, Affiliated Computer Services (ACS) is a diversified
     provider of a wide range of information technology (IT) and related
     services across the private and public sectors," said Vafi and Birer. "The
     company's core market strategy is to focus on long-term, recurring revenue
     opportunities consisting primarily of IT outsourcing and business process
     outsourcing (BPO) contracts.  Approximately 88% of ACS's revenue is
     recurring in nature, derived from providing services integral to the daily
     functions of customers. Coming off two quarters of record bookings, we are
     introducing coverage of ACS with a Buy rating. With high recurring
     revenue, dependable performance, and steady cash flow, we see ACS as a
     great defensive growth stock for the current, uncertain economic climate.
     Our one-year price target of $76 represents the average of both our
     comparable company and DCF analyses for ACS.  Our comparable company
     analysis focuses on P/E ratios for ACS and its competitors relative to
     their earnings growth, return on equity and our views on each company's
     unique business risks.  This analysis produces a price target of $78, or
     23x our preliminary FY:2003 EPS of $3.40.  Our five-year DCF analysis
     results in a price target of approximately $74."
 
     Ratings Changes:
 
     Ariba, Inc.
     (Nasdaq: ARBA) $6.50
     Downgrading to Market Performer from Buy
     F2001E EPS: ($0.35), down from $0.18
     F2002E EPS: ($0.01), down from $0.38
 
     Eric Upin, Business-to-Business eCommerce
     "On Monday after the close, Ariba pre-announced a significant Q1:01
     shortfall," said Upin. "Ariba missed our most recently published estimates
     by 43% on the top-line and by $0.23 on the bottom-line. Of equal
     significance, Ariba announced the termination of the pending Agile merger
     announced in January. We viewed Agile as the lynchpin in the company's
     value chain solution offerings that it recently unveiled at an Analyst Day
     at the end of February. With a limited proprietary footprint in direct
     goods and advanced supply chain collaboration, we believe Ariba
     increasingly runs the risk of being positioned as a niche provider of
     indirect goods procurement applications moving forward. Ariba attributed
     the Q1:01 shortfall to weakness in all parts of the business and all
     geographies (other than Japan). In particular, Ariba highlighted a decline
     in its B2B marketplace business -- where the company indicated that
     virtually no business was completed. While unquestionably a global
     retrenchment in IT spending played a role in the company's major
     shortfall, we believe many of the company's core markets (i.e., B2B
     marketplaces) have essentially evaporated and are not soon to return. At
     this point, we are making significant downward revisions to our model and
     we are lowering our rating to Market Performer from Buy."
 
     Broadvision, Inc.
     (Nasdaq: BVSN) $4.50
     Downgraded to Long-Term Attractive from Buy
     2001E EPS: ($0.18), down from $0.13
     2002E EPS: $0.15, down from $0.26
 
     Alex Baluta, Internet & eCommerce Applications
     Mark Perutz, eBusiness Infrastructure
     "BroadVision reports a significant shortfall in Q1 results, and limited
     near term visibility," said Baluta and Perutz. "We believe that demand in
     the eCommerce applications space is being negatively affected by three
     issues: Near-term market saturation, a move to strategic versus
     reactionary decisions and economic uncertainty. All three of these events
     are conspiring to make near-term revenue growth challenging, and forward
     revenue visibility equally challenging, in our view.  While we continue to
     believe in the long-term viability of the market, and BroadVision's place
     as a leader within that market, we are lowering our estimates and rating
     to reflect our opinion that near-term stock upside in the current
     environment is limited."
 
     E.piphany, Inc.
     (Nasdaq: EPNY) $9.75
     Downgraded to Long-Term Attractive from Buy
     F2001E EPS: $(0.94), down from $(0.13)
     F2002E EPS: $0.01, down from $0.35
 
     Eric Upin, Business-to-Business eCommerce
     "On Monday, after the market close, E.piphany pre-announced a significant
     Q1:01 revenue and EPS shortfall," said Upin. "E.piphany attributed the
     miss to lengthening sales cycles in a weaker economic environment,
     particularly in North America. We believe the following issues will
     continue to impact the stock over the near term: Cash burn, slowing
     revenue growth, negative services margins, fewer deals, and more limited
     backlog. Although management did not provide guidance for Q2:01, we are
     lowering our revenue and EPS estimates at this time. We are also revising
     our 2001 and 2002 estimates. Based on our substantial estimate revisions
     and more limited visibility over the next several quarters, we are
     lowering our rating to Long-Term Attractive from Buy."
 
     Estimate Changes:
 
     BackWeb Technologies Ltd.
     (Nasdaq: BWEB) $1.41
     Long-Term Attractive
     2001E EPS: Under Review, from ($0.18)
 
     Mark Perutz, eBusiness Infrastructure
     Alex Baluta, Internet & eCommerce Applications
     "BackWeb Technologies pre-announced results for the recently completed
     Q1:01 that fell short of our estimates," said Perutz and Baluta. "This
     shortfall is BackWeb's second consecutive miss.  While we expect the weak
     IT spending environment to plague the entire eBusiness software space,
     BackWeb's miss is notable as it follows a Q4:00 miss, and we had already
     scaled back our estimates. As the company did not hold a conference call,
     release any further details on the quarter, or provide details on
     anticipated changes to the spending plan or pipeline of deals going
     forward, we are taking our estimates to "Under Review" at this time.
     Despite BackWeb's disappointing results, we believe there is significant
     value to BackWeb's technology. However, due to the lack of visibility into
     when we might see positive catalysts for renewed organic growth, we
     reiterate our LTA rating."
 
     Benchmark Electronics, Inc.
     (NYSE:   BHE) $18.06
     Buy
     2001E Cash EPS: $1.35, down from $2.00
     2002E Cash EPS: $1.70, down from $2.50
 
     J. Keith Dunne, Electronic Manufacturing Products & Services
     "Following the company's pre-announcement we are further reducing our
     earnings estimates, which were already the lowest on the Street at 7%
     below consensus, to reflect an accelerating slow down as evidenced by
     sluggish demand, order push outs and cancellations," said Dunne. "We
     believe that the slow down is affecting all end markets, but especially
     noticeable in the telecommunications and high end computing markets due to
     inventory build ups at major customers which have been reeling from
     significant cutbacks in companies' IT budgets.  We believe that push outs
     in the medical segment also contribute to the revenue shortfall in the
     second quarter. In spite of our reduced estimates we are reiterating our
     Buy rating as valuations levels, in our opinion, are near the bottom.  The
     company is trading for 10.6x 2002 cash EPS, or about 6% discount to the
     group and about 5.5 CYO1E EBITDA, or 36% discount to the group.  We
     believe the outsourcing trend is here to stay and expect EMS companies to
     continue to benefit from it as more outsourcing deals ramp into production
     volume. However, we have limited visibility as to the timing and ramping
     of such programs in the near future, making near-term valuation catalysts
     difficult to identify."
 
     Documentum, Inc.
     (Nasdaq: DCTM) $9.53
     Buy
     F2001E EPS: $(0.44), down from $0.49
     F2002E EPS: $0.38, down from $0.83
 
     Mark Perutz, eBusiness Infrastructure
     "Documentum pre-announced negative results for Q1:01 yesterday," said
     Perutz. "The company announced that revenue would be in the range of $46MM
     to $43MM for the quarter, a shortfall of 22-27% off our estimate of
     $59.3MM.  While a range was not given for operating EPS, based on the
     revenue shortfall and the expenses budgeted for the quarter, we estimate
     that EPS will be approximately $(0.29), vs. our estimate of $0.08.  We
     believe this shortfall to be a result of the extraordinarily weak IT
     spending environment plaguing the entire software sector, and not a result
     of weakening fundamentals.  While we are reducing our estimates
     substantially, based on DCTM's solid fundamentals and comparative
     valuation, we are maintaining our Buy rating on the stock."
 
     Inktomi Corporation
     (Nasdaq: INKT) $6.22
     Long-Term Attractive
     F2001E EPS: ($0.40), down from $0.06
 
     Dane Lewis, Infrastructure: Systems & Software
     Alex Baluta, Internet & eCommerce Applications
     "Inktomi pre-announced a significant shortfall to FQ2:01 revenues and
     earnings," said Lewis and Baluta. "The company is now expecting revenues
     of $36-38 million and EPS in the range of $(0.23)-$(0.25).  This is
     significantly below our estimate of $66.2 million and EPS of $(0.03).
     While Inktomi's search business was flat quarter/quarter, the revenue
     shortfall was primarily due to weakness in Inktomi's Network Products
     division, which declined approximately 70% sequentially.  Network Products
     sales have been affected by the slowing in spending of service providers
     and CDNs as well as enterprises. Macroeconomic conditions and the current
     IT spending environment impacted Inktomi's sales strength this quarter.
     Consistent with our views, macroeconomic conditions in North America
     caused service providers and enterprises to halt or delay IT spending.  We
     believe that caching companies such as Inktomi are especially susceptible
     to sales weakness in a tight IT spending environment because caching and
     content delivery are want-to-have rather than need-to-have technologies.
     Furthermore, Inktomi's customer base has a large service-provider
     component who are experiencing particular weakness and have limited access
     to capital. Management will not provide forward-looking guidance until the
     company reports Q2 results on April 19th.  However, based on weakness this
     quarter and lack of visibility, we are lowering our FQ2 revenue estimate
     from $66.2.1 million to $36.8 million and EPS estimate from $(0.03) to
     $(0.23).  For F2001, we are lowering our revenue estimate from $305.0
     million to $187.5 million and our F2001 EPS from $0.06 to $(0.40).  We
     maintain our Long-Term Attractive rating."
 
     National Instruments Corporation
     (Nasdaq: NATI) $31.63
     Buy
     2001E EPS: $1.12, down from $1.20
     2002E EPS: $1.34, down from $1.42
 
     John Barr, Design Enabling Technologies
     "Last night, NI pre-announced 1Q01 results consistent with our model
     revision of March 21," said Barr. "Operating margin and income are
     expected to be slightly above our estimate.  However, a $1.5 million
     foreign exchange charge necessitated by SFAS 133 reduces EPS to $0.27,
     below our $0.28 estimate. NI announced 1Q01 revenue of approximately $108
     million, below our $112 million estimate.  However, NI stated the strength
     of the Dollar versus the Euro reduced revenue by $3.5 million. Based on a
     slowing economy and company guidance, we are further reducing our
     estimates for 2001 and 2002. We reiterate our Buy rating."
 
     Netro Corporation
     (Nasdaq: NTRO) $4.31
     Market Performer
     2001E EPS: ($0.46), down from ($0.39)
 
     Paul Silverstein, Communications/Networking
     "Before the open of the market on Monday, April 2, 2001 Netro announced
     that it expects to report financial results for its March quarter below
     our and Street consensus expectations," said Silverstein. "Netro
     attributed the revenue shortfall this quarter to the macroeconomic
     environment and slowdown in carrier spending, as well as to a disruption
     in orders from Lucent's product group.  Lucent OEM revenues are expected
     to decline sequentially from $18.7 million, or 85% of revenues in the
     fourth quarter of 2000 to approximately $4.3 million, or 50% of total
     sales in the March quarter. The company noted that gross margins would be
     at the high end of the projected 15-20% range in the first quarter due to
     a favorable shift in product mix from OEM sales to direct sales, which
     typically carry higher margins.  The company however indicated it plans to
     write-off obsolete inventory that it expects will significantly adversely
     impact gross margins for the quarter. Given the lack of visibility going
     forward, we are significantly lowering our financial forecasts for fiscal
     2001.  We are maintaining our rating on Netro's shares at Market Performer
     given the further deterioration in general market conditions and in
     Netro's particular business conditions."
 
     Redback Networks Inc.
     (Nasdaq: RBAK) $11.70
     Buy
     2001E EPS: ($0.26), down from $0.55
     2002E EPS: $0.05, down from $1.00
 
     Paul Johnson, Communications/Networking
     "After the close of the market on Monday, April 2, Redback announced that
     it expects to report financial results for its March quarter below Street
     consensus expectations," said Johnson. "Redback attributed the majority of
     the revenue shortfall this quarter to two key SMS customers delaying their
     purchases in the last two weeks.  The company also announced that it would
     reduce its workforce by approximately 150 people, which represents twelve
     percent of its total employee base.  The company will take restructuring
     charges of approximately $23 million related to excess facilities in the
     first quarter and $4 million in employee-related termination costs in the
     second quarter -- actions that management believes will cut operating
     expenses by $6 million per quarter going forward. In addition, Redback
     plans to take first quarter charges of approximately $24 million for
     excess inventory as a result of product design enhancements made on the
     SmartEdge in the first quarter. We estimate that in the face of a
     difficult telecommunications environment, the company produced positive
     revenue growth from the SmartEdge products, while SMS displayed
     essentially all of the downside in the quarter.  We expect revenues from
     the optical products to continue to produce similar levels of growth in
     the next few quarters while visibility into the SMS product's future is
     low. Given the lack of visibility going forward, we are significantly
     lowering our financial forecasts for fiscal 2001 and 2002.  These
     forecasts are based on what we believe to be very conservative assumptions
     regarding Redback's future growth and profitability.  We believe our
     estimates to be conservative. We are reiterating our Buy rating on the
     stock."
 
     Comments:
 
     Biomet, Inc.
     (Nasdaq: BMET) $39.13
     Buy
 
     Wade King, Medical Technologies
     "We believe that Biomet's quarter is tracking nicely and that the company
     is on course to meet our expectations for the quarter ending May, 2001,"
     said King. "The company continues to see strong demand for its
     reconstructive implant line, with particular strength in revision hip
     products and its higher end implants such as the M2a hip and the Repicci
     knee systems. Additional areas of strength include sales of bone cement
     and accessories and spinal implants. As the baby boom generation ages, we
     believe Biomet will see strong demand for its reconstructive implants. In
     our view, Biomet is a safe investment harbor. We believe that BMET offers
     a strong investment opportunity for those seeking superior returns with
     controlled risk. Our price target for Biomet is $48, based upon a 32x
     multiple of our estimated C2002 EPS of $1.50. This offers investors the
     potential for almost 25% ROI in a premier medical technology company. We
     reiterate our Buy rating on Biomet."
 
     Checkfree Corporation
     (Nasdaq: CKFR) $27.69
     Strong Buy
 
     Andrew Jeffrey, eProcessing/ePayment
     "We believe CheckFree shares have come under pressure more as a result of
     broad market weakness and a relative premium valuation, instead of any
     fundamental problems," said Jeffrey. "In addition, we believe some
     industry observers have been nervously awaiting a presentation by
     erstwhile EBPP competitor Spectrum at a conference in San Francisco
     yesterday. We remain confident in our financial outlook for CheckFree.  We
     estimate that the company will deliver 3Q01 revenues of $111.3 million and
     EPS of $(0.05).  Our fiscal 2001 revenue estimate is $428.1 million and
     our 2002 projection is $572.8 million. We believe those investors who have
     strong conviction in the company's financial outlook can discount future
     growth and pretax ROIC over a period of three-to-five years to support a
     current valuation significantly above the stock's current level.  Our
     analysis suggests that CKFR should trade at a level at least 100% higher
     than today."
 
     Eli Lilly and Company
     (NYSE:   LLY) $75.46
     Buy
 
     Robert Hazlett, Large Capitalization/Specialty Pharmaceuticals
     "Eli Lilly and Alkermes signed an agreement to develop pulmonary insulin
     for the treatment of diabetes that utilizes Alkermes AIR drug delivery
     system," said Hazlett. "Lilly will have the exclusive global rights to
     both long and short acting insulins being developed in this collaboration.
     This agreement also covers other potential products for the treatment of
     diabetes; we believe one of these to be the peptide GLP-1, an insulin
     production stimulator with significant therapeutic potential.  Financial
     arrangements were not disclosed. We reiterate our Buy rating on LLY shares
     due to our view of the potential of the company's late stage pipeline, one
     we consider the best in the industry.  Upcoming events include: FDA
     approvals for Zovant for sepsis and Forteo for osteoporosis, and filings
     for Cialis for erectile dysfunction, atomoxetine for ADHD, duloxetine for
     depression/incontinence."
 
     Verisign, Inc.
     (Nasdaq: VRSN) $35.75
     Long-Term Attractive
 
     Dane Lewis, Infrastructure: Systems & Software
     "Yesterday, ICANN's governing board approved the new proposed agreement
     between VeriSign and ICANN regarding the management of the .com, .net and
     .org registries," said Lewis. "The deal is still subject to approval by
     the U.S. Department of Commerce. Under the new proposed agreement:
     VeriSign will operate the .com Registry until November 10, 2007 and the
     .net Registry until January 1, 2006. The new agreement also removes the
     divestiture requirement in the earlier agreement where VeriSign had to
     divest its Registrar in order to keep the Registry. We believe this
     approval helps remove the uncertainty about how the divestiture of the
     Registar would have affected VeriSign's income statement going forward. We
     believe this is a very positive agreement for the company and VRSN stock."
 
     Industry Updates:
 
     Gaming Industry
 
     Harry Curtis, Gaming & Lodging
     "Gaming win at Atlantic City's 12 casinos was essentially flat in March
     2001 at $360.1 million versus $358.2 million a year ago," said Curtis.
     "Likewise, win for 1Q:01 was also flat at $997 million. Slot win increased
     a sluggish 1.8% in March to $267 million, while table win declined nearly
     3% to $92.7 million. First quarter typically accounts for 23% of annual
     revenues in Atlantic City, with second and third quarters accounting for
     more than 60% of win. Thus, assuming favorable weather trends, we
     anticipate modest growth of 2%-3% through the balance of the year."
 
     Unless otherwise noted, prices are as of Monday, April 2, 2001.
 
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 E.piphany, Backweb, Documentum, Inktomi, National Instruments, Netro Corp.,
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 comanaging underwriter for or has privately placed securities of Broadvision,
 E.piphany, Backweb, Benchmark Electronics, Netro Corp., Redback, Alkermes and
 Verisign within the past three years.
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