Robertson Stephens Daily Growth Stock Update on CYBE FMKT ICPT BWEB CRNT CPQ SMDI STN DMRC ELN FISV NAUT

Apr 24, 2001, 01:00 ET from Robertson Stephens, Inc.

    SAN FRANCISCO, April 24 /PRNewswire Interactive News Release/ -- The
 following is being issued by Robertson Stephens:
 
     Rating Changes:
 
     CyberOptics Corporation
     (Nasdaq:   CYBE) $11.25
     Downgrading to Long-Term Attractive from Buy
     2001E EPS: $0.28, down from $0.45
     2002E EPS: $0.50, down from $0.77
 
     Sue Billat, Semiconductor Equipment/Foundries
     "CyberOptics reported operating EPS of $0.16, slightly ahead of our $0.15
     estimates, on revenues of $16.7 million, which were in line with our
     projections," said Billat. "The core SMT sensor segment declined 13%
     sequentially reflecting the weakness in electronics assembly market.
     Orders for the semiconductor group also declined in the quarter, which we
     believe is in line with the softness in the semiconductor equipment
     industry. We are pleased to see that SMT inspection systems, which have
     historically been less cyclical, grew 5% sequentially driven by the
     company's new products. The SMT systems business consists primarily of
     solder paste inspection systems for end-user, electronic manufacturing
     services (EMS) and automated optical inspection systems (AOI) equipment.
     We believe initial customer acceptance for new products is strong and
     anticipate this segment to grow modestly in 2001. To reflect the outlook,
     we are lowering our EPS estimates for 2001 to $0.28 (from $0.45) on
     revenues of $56.7 million (formerly $61.5 million) and for 2002 to $0.50
     (from $0.77) on revenues of $62.0 million (formerly $70.8 million). At
     22.5x our CY02 estimates, the stock is trading at a premium to comparable
     peers such as Orbotecha (ORBK $32.30) which, rated Long-Term Attractive,
     trades at a 14.5 multiple. Given the sharp downturn in the electronic
     assembly business, we do not expect significant upside to our estimates
     for CyberOptics. Although some of the companies under our coverage are
     seeing a bottom in one or two quarters, we believe CyberOptics is likely
     to lag the recovery. Accordingly, we are downgrading CYBE to a Long-Term
     Attractive rating."
 
     FreeMarkets, Inc.
     (Nasdaq:   FMKT) $10.29
     Downgrading to Long-Term Attractive from Buy
     2002E EPS: $0.11, down from $0.47
 
     Eric Upin, Business-to-Business eCommerce
     "FreeMarkets delivered mixed Q1:01 results-beating Street consensus EPS by
     $0.02, but falling short of our revenue and auction volume estimates,"
     said Upin. "Although we have always liked the FreeMarkets story and the
     company has accomplished a great deal, we are downgrading the stock to
     Long-Term Attractive from Buy based on the following: material new risks
     to the investment picture, more limited visibility into the 2001 and 2002
     numbers based on the challenging business climate, and cash position and
     potential burn"
 
     InterCept Group, Inc. (The)
     (Nasdaq:   ICPT) $24.99
     Upgrading to Strong Buy from Buy
     2002E EPS: $1.10, New
 
     Andrew Jeffrey, eProcessing/ePayment
     "We are raising our rating on InterCept Group to Strong Buy from Buy,"
     said Jeffrey. "We base our increased enthusiasm on the shares' relatively
     attractive valuation and a clear indication from market leader Fiserv that
     demand for outsourced financial institution core data processing services
     remains robust. We believe ICPT shares will benefit from the strong
     operating results posted by Fiserv yesterday after the market closed.  We
     view InterCept as a "mini" Fiserv as it boasts similarly high recurring
     revenues and an undiluted focus on outsourced bank data processing.
     Despite the strength of end market demand and superior internal growth,
     however, ICPT shares continue to lag FISV's valuation.  ICPT closed
     yesterday at 28.1x our $0.89 2001 EPS estimate.  By contrast, FISV trades
     at 31.3x.  We argue that ICPT will trade back toward its historical
     forward 12 month P/E over the next year, implying a target price of $40."
 
     Estimate Changes:
 
     BackWeb Technologies Ltd.
     (Nasdaq:   BWEB) $1.61
     Long-Term Attractive
     2001E Operating EPS: ($0.62), from Under Review
     2002E Operating EPS: ($0.30), New
 
     Mark Perutz, eBusiness Infrastructure
     Alex Baluta, Internet & eCommerce Applications
     "BackWeb reported Q1:01 results that were in line with its disappointing
     pre-announcement," said Perutz and Baluta. We believe that BackWeb's sales
     have been hit extremely hard by the IT budget crunch. Sales metrics were
     flat to down across the board. We are re-establishing significantly more
     conservative estimates for the balance of 2001.  Our estimates of $31.0
     million in revenue and ($0.62) in EPS are substantially lower than the
     estimates we had for BackWeb before its Q1:01 shortfall.  We are
     initiating preliminary estimates of $40.2 in revenue and ($0.30) in
     operating EPS for 2002. Given BackWeb's results and the current IT
     spending conditions, we believe that adoption of push delivery on an
     enterprise-wide basis has been pushed off indefinitely.  We reiterate our
     LTA rating."
 
     Ceragon Networks
     (Nasdaq:   CRNT) $3.14
     Buy
     2001E EPS: ($0.52), down from $0.10
     2002E EPS: ($0.19), down from $0.34
 
     Paul Silverstein, Communications/Networking
     "Ceragon reported March quarter results in line with their pre-announced
     guidance given April 11, 2001," said Silverstein. "The company also
     significantly reduced its revenue guidance for the June quarter, and now
     forecasts revenues of approximately $6-7 million, well below our previous
     estimate of approximately $15 million.  Operating results for the March
     quarter have been-and we project that future operating results will be-
     adversely impacted by the rapid deterioration in the operating and
     financial health of the four most prominent U.S. broadband wireless
     service providers, three of which were Ceragon customers in the March
     quarter. On a positive note, the company signed a fourth OEM agreement
     during the quarter--for cellular backhaul applications.  We believe the
     OEM is a large international cellular equipment provider.  The cellular
     backhaul application represents a large, untapped potential market
     opportunity for the company. The company burned $13.2 million in cash in
     the March quarter, or $0.64 per share, and we project that the company
     will have a similar cash burn rate in the second quarter of 2001 before
     the company's operating expense reductions take effect.  Ceragon intends
     to reduce operating expenses by 30-40% from their March quarter level, to
     take effect in the third quarter of 2001. We are lowering our fiscal 2001
     and 2002 estimates given the rapid deterioration in the U.S. broadband
     wireless service provider market.  We continue to rate the shares of
     Ceragon Networks a Buy."
 
     Compaq Computer Corporation
     (NYSE:   CPQ) $20.68
     Buy
     2001E EPS: $0.50, down from $0.80
     2002E EPS: $0.80, down from $1.10
 
     Eric Rothdeutsch, Semiconductors/Computer Hardware
     "Compaq reported 1Q01 operating EPS of $0.12, in line with our estimate
     and a penny below the Consensus, although in line with the company's
     revised EPS guidance of $0.12-$0.14," said Rothdeutsch. "Revenues were
     $9.2 billion, down 3% YoY and 20% QoQ, $160 million ahead of our estimate
     of $9.0 billion.  Given the challenging macroeconomic environment and the
     company's accelerated restructuring, we are revising our F2001 revenue and
     EPS estimates from $42.4 billion and $0.85 to $38.6 billion and $0.50,
     respectively.  Our F2002 revenue and EPS estimates are going from $46.6
     billion and $1.10 to $41.3 billion and $0.80, respectively. We continue to
     believe that the longer the PC market stays weak, the wider the door is
     opened for Dell (DELL $29.35) to accelerate the rate at which it gains
     market share given the strength of its direct model and superior operating
     structure that enables it pass cost savings along to customers quickly,
     particularly given its industry-low five days of inventory. However, once
     spending resumes and IT budget lockdowns are lifted, we believe Compaq is
     better positioned within the enterprise given its strong server, storage,
     and services offerings that should drive its gross and operating margins
     higher.  We believe Compaq is taking prudent steps given the weak demand
     environment-slashing inventories, reducing structural costs, and pricing
     aggressively-to insure that it emerges a stronger company once end market
     demand improves.  As a result, we are maintaining our Buy rating on CPQ
     and 12-month price target of $24, or 30 times our new F2002 EPS estimate
     of $0.80, a level we feel is reasonable given where the stock has traded
     on a historical P/E mean EPS estimate looking out twelve months."
 
     Stanford Microdevices, Inc.
     (Nasdaq:   SMDI) $13.09
     Long-Term Attractive
     2001E EPS: ($0.06), down from $0.05
     2002E EPS: $0.02, down from $0.20
 
     Arun Veerappan, Communications Components/Semiconductor Devices
     "Stanford Microdevices reported essentially in-line results with respect
     to its pre-announced range," said Veerappan.  "Revenues came in at the
     mid-point of the range, but reported a penny loss on the bottom line as
     compared to the break-even pre-announced guidance. We believe that
     Stanford's business is undergoing a difficult period. Distributor
     inventory remains at unreasonably high levels; meanwhile, the sluggish
     economy is incapable of providing a near-term catalyst. Given these
     developments, we believe this period of uncertainty for Stanford
     Microdevices will continue through Q2:01 at a minimum and possibly into
     Q3:01. For the June quarter, the company now expects revenues to drop 20-
     30% Q-Q; the wide range of estimates represents the company's lack of any
     clear visibility.  We would note however, that Stanford's expected decline
     during the June quarter is essentially in-line with that of the declines
     being experienced by the company's wireline IC peers. We are taking a more
     conservative position with respect to the financial guidance. Our model
     suggests a 27% year-over-year decline in revenues to $25.2M and a loss of
     $0.06 in 2001.  Over the intermediate term, we continue to believe that
     Stanford Microdevices is one of the best positioned companies in the
     wireless infrastructure IC space, with a clear advantage in high power,
     high linearity RF components. In summary, our investment thesis is for
     caution in the near-term. But, we believe that any improvement in the
     business fundamentals of wireless service providers and/or wireless
     infrastructure OEMs will serve as the catalyst for Stanford's recovery
     over the long term."
 
     Station Casinos, Inc.
     (NYSE:   STN) $14.19
     Long-Term Attractive
     2001E EPS: $0.82, down from $0.88
     2002E EPS: $1.00, down from $1.10
 
     Harry Curtis, Gaming & Lodging
     "Station Casinos reported 1Q:01 operating EPS of $0.19, which was in line
     with our $0.20 estimate and consensus," said Curtis. "Same-store EBITDA at
     the company's core Las Vegas properties declined 12% in the quarter to
     $51.2 million from $57.9 million a year ago, and corresponding revenues
     declined 6.4% to $150.6 million from $160.3 million. The decline in same-
     store operations was in line with our forecast. The company experienced
     difficult comparisons to 1Q:00, when the Las Vegas properties posted
     record operating results. We are reducing our 2001 EPS estimate to $0.82
     from $0.88, and revising our 2002 estimate to $1.00 from $1.10. Trading at
     7.5x estimated 2001 EBITDA of $244 million and 6.5x estimated 2002 EBITDA
     of $268.5 million, we maintain our Long Term Attractive rating on shares
     of Station Casinos. Long term, we believe the company is well positioned
     to continue to dominate the locals gaming market in Las Vegas. However,
     near term, we forecast negative same-store comparisons and a slower ramp
     up at the company's recently acquired properties. Given these factors, and
     the likelihood of declining EPS consensus, we do not anticipate
     significant multiple expansion from current levels."
 
     Comments:
 
     Digimarc Corporation
     (Nasdaq:   DMRC) $13.99
     Buy
 
     Aleksandar Sasa Zorovic, Online Media Infrastructure
     "Digimarc announced yesterday that it has licensed to Philips its patents
     for use in the Philips WaterCast Broadcast Monitoring system," said
     Zorovic. "This is the first product announcement the company has made
     following its partnership with-and investment from-Philips and it
     simultaneously represents Digimarc's entry into video. The companies will
     jointly market and promote the product. We believe that this announcement
     is only the first in the string of announcements Digimarc will make in the
     video arena and as a part of the Millennium Group (including Philips and
     Macrovision in addition to Digimarc). We reiterate our Buy rating on
     Digimarc."
 
     Elan Corp PLC
     (NYSE:   ELN) $48.11
     Long-Term Attractive
 
     Robert Hazlett, Large Capitalization/Specialty Pharmaceuticals
     "Yesterday, Elan reported 1Q01 EPS of $0.41, an increase of 71% over 1Q00
     and a penny ahead of both our estimate and that of consensus," said
     Hazlett. "We are raising our full-year EPS estimate by a penny to $1.89 to
     reflect this quarter's outperformance.  Our FY2002 EPS estimate remains
     unchanged at $2.32.  We consider Elan attractive for longer-term
     investors, given the current valuation of ELN shares relative to the
     company's estimated 23% long-term EPS growth, and also due to the long-
     term potential of Antegren and the company's beta secretase collaboration
     for Alzheimer's disease with Pharmacia (PHA, 48.5, NR).  Though script
     growth of certain drugs continues to be impressive for Elan, we remain
     cautious with regard to growth of recently launched Myobloc, and final
     labeling and approval timing of Ziconotide for pain and Frovelan, both
     potentially due in 2001."
 
     Fiserv, Inc.
     (Nasdaq:   FISV) $50.67
     Buy
 
     Andrew Jeffrey, eProcessing/ePayment
     "Fiserv reported excellent bank processing revenues and consolidated
     profitability last night as it met our $0.39 EPS estimate and handily
     exceeded our $442.7 million revenue estimate," said Jeffrey. "We estimate
     that internal revenue growth was approximately 7.5% in the period, which
     was also ahead of our 6.9% projection.  In light of the most recent
     results, we are raising our 2001 revenue estimate to $1.852 billion from
     $1.838 billion.  Our Street-high EPS estimate remains unchanged at $1.62.
     In addition, we are modestly increasing our 2002 revenue estimate to
     $2.093 billion from $2.079 billion and leaving unchanged our $1.93 EPS
     estimate.  We recommend that investors aggressively accumulate FISV shares
     in light of the company's continued exemplary performance in its core bank
     processing business.  It is our opinion that Fiserv is steadily capturing
     market share from less well-positioned participants while benefiting from
     lower incremental transaction costs and greater economies of scale. We
     maintain a $68 12-month target price for FISV, which assumes a 35.0x P/E
     applied to our 2002 EPS estimate of $1.93.  We believe this is an
     achievable objective as it would put the stock roughly in line with its
     historical valuation (see Figure 1) and would reflect the company's
     steadily expanding pretax ROIC."
 
     Nautica Enterprises, Inc.
     (Nasdaq:   NAUT) $15.30
     Buy
 
     Janet Joseph Kloppenburg, Specialty Retailing/Apparel Manufacturers
     "As we published in our February 1, 2001, upgrade of Nautica Enterprises
     to Buy from Long-Term Attractive, we believed Nautica would complete an
     accretive acquisition which would enable the company to accelerate revenue
     and earnings growth and enhance shareholder value," said Kloppenburg.
     "Today after the market close, Nautica received clearance under the Hart-
     Scott-Rodino Act to acquire fashion-hot Earl Jeans Company. We expect
     Nautica to announce the acquisition along with Q4:01 and F2001 EPS results
     tomorrow morning. We view the acquisition as a significant positive for
     Nautica, as Nautica's large cash balance, strong cash flow capability, and
     existing jeanswear businesses should, we believe, allow the acquisition to
     be accretive to F2002 (C2001) earnings. Although Nautica's women's jeans
     line had a disappointing debut for Fall 2000, we believe fashion input and
     design synergies resulting from the Earl Jean acquisition could help
     improve the styling and positioning of women's Nautica jeans line. We
     believe Nautica shares remain undervalued, trading at only 10.3x our $1.49
     F2002 (C2001) EPS estimate and 8.8x our $1.74 F2003 (C2002) EPS estimate-a
     significant discount to the shares' average valuation of 14.7x forward
     one-year EPS. Furthermore, on an EV/EBITDA basis, Nautica shares are
     trading at 4.0x our C2001 EBITDA forecast-a significant discount to both
     the shares' average valuation of 7.4x forward EBITDA and to the branded
     apparel manufacturing peer group average valuation of 6x EV/EBITDA.  Given
     Nautica management's determination to enhance shareholder value and
     accelerate revenue and earnings growth-as demonstrated by what we expect
     to be the company's accretive acquisition of Earl Jeans-we re-iterate our
     Buy rating and $24 price target on Nautica shares."
 
     Industry Updates:
 
     Semiconductor Capital Equipment Update
 
     Sue Billat, Semiconductor Equipment/Foundries
     "The March preliminary book-to-bill ratio was 0.64 down from February
 0.73. Overall bookings declined 23% to $1.31 billion from $1.69 billion
 reported in February," said Billat. "Orders for front end equipment declined
 22% sequentially to end up at $1.1 billion. Industry orders for the three
 months ending March declined 45% compared to the three months ending in
 December. As expected, back end bookings fared worse, declining 26%
 sequentially to $349 million. The back end equipment sector, we believe, is
 likely to remain in a digestive phase for a longer period of time due to
 industry slowdown as well as excess capacity at packaging and test houses in
 Asia. The three-month average SEMI bookings are the aggregated version of
 individual company bookings reported for the quarter that ended in March.
 Since several of our companies under coverage, in both front end and back end,
 have already reported, the incremental value of these SEMI numbers is low, in
 our view. Most of our stocks, we believe, have already factored in these
 numbers. Accordingly, we expect no significant impact on our stocks as a
 result of these SEMI booking numbers. We expect the sharp contraction in
 bookings to result in a bottom as early as June for some of our companies or
 September for most others. In addition, we believe the front end industry
 growth will benefit in 2H:01 and in 2002 driven by adoption of advanced
 technologies, such as the copper module and low-k dielectrics, as well as the
 transition to 300mm wafers."
 
     Unless otherwise noted, prices are as of Monday, April 23 2001.
 
     Robertson Stephens maintains a market in the shares of CyberOptics Corp.,
 FreeMarkets, InterCept Group, BackWeb Technologies, Ceragon Networks, Dell
 Computer, Stanford Microdevices, Digimarc Corp., Fiserv and Nautica and was a
 managing or co-managing underwriter for or has privately place securities of
 Intercept Group, Backweb Technologies, Ceragon Networks, Stanford
 Microdevices, and Digimarc Corp. within the past three years.
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 Stephens") is the leading full-service investment bank focused exclusively on
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 Inc., Cabletron Systems, Inc., Cash America International, Inc., Catellus
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SOURCE Robertson Stephens, Inc.
    SAN FRANCISCO, April 24 /PRNewswire Interactive News Release/ -- The
 following is being issued by Robertson Stephens:
 
     Rating Changes:
 
     CyberOptics Corporation
     (Nasdaq:   CYBE) $11.25
     Downgrading to Long-Term Attractive from Buy
     2001E EPS: $0.28, down from $0.45
     2002E EPS: $0.50, down from $0.77
 
     Sue Billat, Semiconductor Equipment/Foundries
     "CyberOptics reported operating EPS of $0.16, slightly ahead of our $0.15
     estimates, on revenues of $16.7 million, which were in line with our
     projections," said Billat. "The core SMT sensor segment declined 13%
     sequentially reflecting the weakness in electronics assembly market.
     Orders for the semiconductor group also declined in the quarter, which we
     believe is in line with the softness in the semiconductor equipment
     industry. We are pleased to see that SMT inspection systems, which have
     historically been less cyclical, grew 5% sequentially driven by the
     company's new products. The SMT systems business consists primarily of
     solder paste inspection systems for end-user, electronic manufacturing
     services (EMS) and automated optical inspection systems (AOI) equipment.
     We believe initial customer acceptance for new products is strong and
     anticipate this segment to grow modestly in 2001. To reflect the outlook,
     we are lowering our EPS estimates for 2001 to $0.28 (from $0.45) on
     revenues of $56.7 million (formerly $61.5 million) and for 2002 to $0.50
     (from $0.77) on revenues of $62.0 million (formerly $70.8 million). At
     22.5x our CY02 estimates, the stock is trading at a premium to comparable
     peers such as Orbotecha (ORBK $32.30) which, rated Long-Term Attractive,
     trades at a 14.5 multiple. Given the sharp downturn in the electronic
     assembly business, we do not expect significant upside to our estimates
     for CyberOptics. Although some of the companies under our coverage are
     seeing a bottom in one or two quarters, we believe CyberOptics is likely
     to lag the recovery. Accordingly, we are downgrading CYBE to a Long-Term
     Attractive rating."
 
     FreeMarkets, Inc.
     (Nasdaq:   FMKT) $10.29
     Downgrading to Long-Term Attractive from Buy
     2002E EPS: $0.11, down from $0.47
 
     Eric Upin, Business-to-Business eCommerce
     "FreeMarkets delivered mixed Q1:01 results-beating Street consensus EPS by
     $0.02, but falling short of our revenue and auction volume estimates,"
     said Upin. "Although we have always liked the FreeMarkets story and the
     company has accomplished a great deal, we are downgrading the stock to
     Long-Term Attractive from Buy based on the following: material new risks
     to the investment picture, more limited visibility into the 2001 and 2002
     numbers based on the challenging business climate, and cash position and
     potential burn"
 
     InterCept Group, Inc. (The)
     (Nasdaq:   ICPT) $24.99
     Upgrading to Strong Buy from Buy
     2002E EPS: $1.10, New
 
     Andrew Jeffrey, eProcessing/ePayment
     "We are raising our rating on InterCept Group to Strong Buy from Buy,"
     said Jeffrey. "We base our increased enthusiasm on the shares' relatively
     attractive valuation and a clear indication from market leader Fiserv that
     demand for outsourced financial institution core data processing services
     remains robust. We believe ICPT shares will benefit from the strong
     operating results posted by Fiserv yesterday after the market closed.  We
     view InterCept as a "mini" Fiserv as it boasts similarly high recurring
     revenues and an undiluted focus on outsourced bank data processing.
     Despite the strength of end market demand and superior internal growth,
     however, ICPT shares continue to lag FISV's valuation.  ICPT closed
     yesterday at 28.1x our $0.89 2001 EPS estimate.  By contrast, FISV trades
     at 31.3x.  We argue that ICPT will trade back toward its historical
     forward 12 month P/E over the next year, implying a target price of $40."
 
     Estimate Changes:
 
     BackWeb Technologies Ltd.
     (Nasdaq:   BWEB) $1.61
     Long-Term Attractive
     2001E Operating EPS: ($0.62), from Under Review
     2002E Operating EPS: ($0.30), New
 
     Mark Perutz, eBusiness Infrastructure
     Alex Baluta, Internet & eCommerce Applications
     "BackWeb reported Q1:01 results that were in line with its disappointing
     pre-announcement," said Perutz and Baluta. We believe that BackWeb's sales
     have been hit extremely hard by the IT budget crunch. Sales metrics were
     flat to down across the board. We are re-establishing significantly more
     conservative estimates for the balance of 2001.  Our estimates of $31.0
     million in revenue and ($0.62) in EPS are substantially lower than the
     estimates we had for BackWeb before its Q1:01 shortfall.  We are
     initiating preliminary estimates of $40.2 in revenue and ($0.30) in
     operating EPS for 2002. Given BackWeb's results and the current IT
     spending conditions, we believe that adoption of push delivery on an
     enterprise-wide basis has been pushed off indefinitely.  We reiterate our
     LTA rating."
 
     Ceragon Networks
     (Nasdaq:   CRNT) $3.14
     Buy
     2001E EPS: ($0.52), down from $0.10
     2002E EPS: ($0.19), down from $0.34
 
     Paul Silverstein, Communications/Networking
     "Ceragon reported March quarter results in line with their pre-announced
     guidance given April 11, 2001," said Silverstein. "The company also
     significantly reduced its revenue guidance for the June quarter, and now
     forecasts revenues of approximately $6-7 million, well below our previous
     estimate of approximately $15 million.  Operating results for the March
     quarter have been-and we project that future operating results will be-
     adversely impacted by the rapid deterioration in the operating and
     financial health of the four most prominent U.S. broadband wireless
     service providers, three of which were Ceragon customers in the March
     quarter. On a positive note, the company signed a fourth OEM agreement
     during the quarter--for cellular backhaul applications.  We believe the
     OEM is a large international cellular equipment provider.  The cellular
     backhaul application represents a large, untapped potential market
     opportunity for the company. The company burned $13.2 million in cash in
     the March quarter, or $0.64 per share, and we project that the company
     will have a similar cash burn rate in the second quarter of 2001 before
     the company's operating expense reductions take effect.  Ceragon intends
     to reduce operating expenses by 30-40% from their March quarter level, to
     take effect in the third quarter of 2001. We are lowering our fiscal 2001
     and 2002 estimates given the rapid deterioration in the U.S. broadband
     wireless service provider market.  We continue to rate the shares of
     Ceragon Networks a Buy."
 
     Compaq Computer Corporation
     (NYSE:   CPQ) $20.68
     Buy
     2001E EPS: $0.50, down from $0.80
     2002E EPS: $0.80, down from $1.10
 
     Eric Rothdeutsch, Semiconductors/Computer Hardware
     "Compaq reported 1Q01 operating EPS of $0.12, in line with our estimate
     and a penny below the Consensus, although in line with the company's
     revised EPS guidance of $0.12-$0.14," said Rothdeutsch. "Revenues were
     $9.2 billion, down 3% YoY and 20% QoQ, $160 million ahead of our estimate
     of $9.0 billion.  Given the challenging macroeconomic environment and the
     company's accelerated restructuring, we are revising our F2001 revenue and
     EPS estimates from $42.4 billion and $0.85 to $38.6 billion and $0.50,
     respectively.  Our F2002 revenue and EPS estimates are going from $46.6
     billion and $1.10 to $41.3 billion and $0.80, respectively. We continue to
     believe that the longer the PC market stays weak, the wider the door is
     opened for Dell (DELL $29.35) to accelerate the rate at which it gains
     market share given the strength of its direct model and superior operating
     structure that enables it pass cost savings along to customers quickly,
     particularly given its industry-low five days of inventory. However, once
     spending resumes and IT budget lockdowns are lifted, we believe Compaq is
     better positioned within the enterprise given its strong server, storage,
     and services offerings that should drive its gross and operating margins
     higher.  We believe Compaq is taking prudent steps given the weak demand
     environment-slashing inventories, reducing structural costs, and pricing
     aggressively-to insure that it emerges a stronger company once end market
     demand improves.  As a result, we are maintaining our Buy rating on CPQ
     and 12-month price target of $24, or 30 times our new F2002 EPS estimate
     of $0.80, a level we feel is reasonable given where the stock has traded
     on a historical P/E mean EPS estimate looking out twelve months."
 
     Stanford Microdevices, Inc.
     (Nasdaq:   SMDI) $13.09
     Long-Term Attractive
     2001E EPS: ($0.06), down from $0.05
     2002E EPS: $0.02, down from $0.20
 
     Arun Veerappan, Communications Components/Semiconductor Devices
     "Stanford Microdevices reported essentially in-line results with respect
     to its pre-announced range," said Veerappan.  "Revenues came in at the
     mid-point of the range, but reported a penny loss on the bottom line as
     compared to the break-even pre-announced guidance. We believe that
     Stanford's business is undergoing a difficult period. Distributor
     inventory remains at unreasonably high levels; meanwhile, the sluggish
     economy is incapable of providing a near-term catalyst. Given these
     developments, we believe this period of uncertainty for Stanford
     Microdevices will continue through Q2:01 at a minimum and possibly into
     Q3:01. For the June quarter, the company now expects revenues to drop 20-
     30% Q-Q; the wide range of estimates represents the company's lack of any
     clear visibility.  We would note however, that Stanford's expected decline
     during the June quarter is essentially in-line with that of the declines
     being experienced by the company's wireline IC peers. We are taking a more
     conservative position with respect to the financial guidance. Our model
     suggests a 27% year-over-year decline in revenues to $25.2M and a loss of
     $0.06 in 2001.  Over the intermediate term, we continue to believe that
     Stanford Microdevices is one of the best positioned companies in the
     wireless infrastructure IC space, with a clear advantage in high power,
     high linearity RF components. In summary, our investment thesis is for
     caution in the near-term. But, we believe that any improvement in the
     business fundamentals of wireless service providers and/or wireless
     infrastructure OEMs will serve as the catalyst for Stanford's recovery
     over the long term."
 
     Station Casinos, Inc.
     (NYSE:   STN) $14.19
     Long-Term Attractive
     2001E EPS: $0.82, down from $0.88
     2002E EPS: $1.00, down from $1.10
 
     Harry Curtis, Gaming & Lodging
     "Station Casinos reported 1Q:01 operating EPS of $0.19, which was in line
     with our $0.20 estimate and consensus," said Curtis. "Same-store EBITDA at
     the company's core Las Vegas properties declined 12% in the quarter to
     $51.2 million from $57.9 million a year ago, and corresponding revenues
     declined 6.4% to $150.6 million from $160.3 million. The decline in same-
     store operations was in line with our forecast. The company experienced
     difficult comparisons to 1Q:00, when the Las Vegas properties posted
     record operating results. We are reducing our 2001 EPS estimate to $0.82
     from $0.88, and revising our 2002 estimate to $1.00 from $1.10. Trading at
     7.5x estimated 2001 EBITDA of $244 million and 6.5x estimated 2002 EBITDA
     of $268.5 million, we maintain our Long Term Attractive rating on shares
     of Station Casinos. Long term, we believe the company is well positioned
     to continue to dominate the locals gaming market in Las Vegas. However,
     near term, we forecast negative same-store comparisons and a slower ramp
     up at the company's recently acquired properties. Given these factors, and
     the likelihood of declining EPS consensus, we do not anticipate
     significant multiple expansion from current levels."
 
     Comments:
 
     Digimarc Corporation
     (Nasdaq:   DMRC) $13.99
     Buy
 
     Aleksandar Sasa Zorovic, Online Media Infrastructure
     "Digimarc announced yesterday that it has licensed to Philips its patents
     for use in the Philips WaterCast Broadcast Monitoring system," said
     Zorovic. "This is the first product announcement the company has made
     following its partnership with-and investment from-Philips and it
     simultaneously represents Digimarc's entry into video. The companies will
     jointly market and promote the product. We believe that this announcement
     is only the first in the string of announcements Digimarc will make in the
     video arena and as a part of the Millennium Group (including Philips and
     Macrovision in addition to Digimarc). We reiterate our Buy rating on
     Digimarc."
 
     Elan Corp PLC
     (NYSE:   ELN) $48.11
     Long-Term Attractive
 
     Robert Hazlett, Large Capitalization/Specialty Pharmaceuticals
     "Yesterday, Elan reported 1Q01 EPS of $0.41, an increase of 71% over 1Q00
     and a penny ahead of both our estimate and that of consensus," said
     Hazlett. "We are raising our full-year EPS estimate by a penny to $1.89 to
     reflect this quarter's outperformance.  Our FY2002 EPS estimate remains
     unchanged at $2.32.  We consider Elan attractive for longer-term
     investors, given the current valuation of ELN shares relative to the
     company's estimated 23% long-term EPS growth, and also due to the long-
     term potential of Antegren and the company's beta secretase collaboration
     for Alzheimer's disease with Pharmacia (PHA, 48.5, NR).  Though script
     growth of certain drugs continues to be impressive for Elan, we remain
     cautious with regard to growth of recently launched Myobloc, and final
     labeling and approval timing of Ziconotide for pain and Frovelan, both
     potentially due in 2001."
 
     Fiserv, Inc.
     (Nasdaq:   FISV) $50.67
     Buy
 
     Andrew Jeffrey, eProcessing/ePayment
     "Fiserv reported excellent bank processing revenues and consolidated
     profitability last night as it met our $0.39 EPS estimate and handily
     exceeded our $442.7 million revenue estimate," said Jeffrey. "We estimate
     that internal revenue growth was approximately 7.5% in the period, which
     was also ahead of our 6.9% projection.  In light of the most recent
     results, we are raising our 2001 revenue estimate to $1.852 billion from
     $1.838 billion.  Our Street-high EPS estimate remains unchanged at $1.62.
     In addition, we are modestly increasing our 2002 revenue estimate to
     $2.093 billion from $2.079 billion and leaving unchanged our $1.93 EPS
     estimate.  We recommend that investors aggressively accumulate FISV shares
     in light of the company's continued exemplary performance in its core bank
     processing business.  It is our opinion that Fiserv is steadily capturing
     market share from less well-positioned participants while benefiting from
     lower incremental transaction costs and greater economies of scale. We
     maintain a $68 12-month target price for FISV, which assumes a 35.0x P/E
     applied to our 2002 EPS estimate of $1.93.  We believe this is an
     achievable objective as it would put the stock roughly in line with its
     historical valuation (see Figure 1) and would reflect the company's
     steadily expanding pretax ROIC."
 
     Nautica Enterprises, Inc.
     (Nasdaq:   NAUT) $15.30
     Buy
 
     Janet Joseph Kloppenburg, Specialty Retailing/Apparel Manufacturers
     "As we published in our February 1, 2001, upgrade of Nautica Enterprises
     to Buy from Long-Term Attractive, we believed Nautica would complete an
     accretive acquisition which would enable the company to accelerate revenue
     and earnings growth and enhance shareholder value," said Kloppenburg.
     "Today after the market close, Nautica received clearance under the Hart-
     Scott-Rodino Act to acquire fashion-hot Earl Jeans Company. We expect
     Nautica to announce the acquisition along with Q4:01 and F2001 EPS results
     tomorrow morning. We view the acquisition as a significant positive for
     Nautica, as Nautica's large cash balance, strong cash flow capability, and
     existing jeanswear businesses should, we believe, allow the acquisition to
     be accretive to F2002 (C2001) earnings. Although Nautica's women's jeans
     line had a disappointing debut for Fall 2000, we believe fashion input and
     design synergies resulting from the Earl Jean acquisition could help
     improve the styling and positioning of women's Nautica jeans line. We
     believe Nautica shares remain undervalued, trading at only 10.3x our $1.49
     F2002 (C2001) EPS estimate and 8.8x our $1.74 F2003 (C2002) EPS estimate-a
     significant discount to the shares' average valuation of 14.7x forward
     one-year EPS. Furthermore, on an EV/EBITDA basis, Nautica shares are
     trading at 4.0x our C2001 EBITDA forecast-a significant discount to both
     the shares' average valuation of 7.4x forward EBITDA and to the branded
     apparel manufacturing peer group average valuation of 6x EV/EBITDA.  Given
     Nautica management's determination to enhance shareholder value and
     accelerate revenue and earnings growth-as demonstrated by what we expect
     to be the company's accretive acquisition of Earl Jeans-we re-iterate our
     Buy rating and $24 price target on Nautica shares."
 
     Industry Updates:
 
     Semiconductor Capital Equipment Update
 
     Sue Billat, Semiconductor Equipment/Foundries
     "The March preliminary book-to-bill ratio was 0.64 down from February
 0.73. Overall bookings declined 23% to $1.31 billion from $1.69 billion
 reported in February," said Billat. "Orders for front end equipment declined
 22% sequentially to end up at $1.1 billion. Industry orders for the three
 months ending March declined 45% compared to the three months ending in
 December. As expected, back end bookings fared worse, declining 26%
 sequentially to $349 million. The back end equipment sector, we believe, is
 likely to remain in a digestive phase for a longer period of time due to
 industry slowdown as well as excess capacity at packaging and test houses in
 Asia. The three-month average SEMI bookings are the aggregated version of
 individual company bookings reported for the quarter that ended in March.
 Since several of our companies under coverage, in both front end and back end,
 have already reported, the incremental value of these SEMI numbers is low, in
 our view. Most of our stocks, we believe, have already factored in these
 numbers. Accordingly, we expect no significant impact on our stocks as a
 result of these SEMI booking numbers. We expect the sharp contraction in
 bookings to result in a bottom as early as June for some of our companies or
 September for most others. In addition, we believe the front end industry
 growth will benefit in 2H:01 and in 2002 driven by adoption of advanced
 technologies, such as the copper module and low-k dielectrics, as well as the
 transition to 300mm wafers."
 
     Unless otherwise noted, prices are as of Monday, April 23 2001.
 
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 Microdevices, and Digimarc Corp. within the past three years.
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