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Zurich's US unit, Farmers Insurance Group, and Bank of America agreed to form a partnership to develop and sell insurance and banking products in the US. The main goals are cost synergies and higher product penetration. ZURN shares were heavily traded and fell 23% for the week and 46% year-to-date. We downgraded ZURN to a hold on Friday, March 16. CSFB issued their first official comment on Friday last week downgrading the stock to hold from buy and removing it from the CSFB focus list. While we will be reviewing ZURN this week, we stick to our HOLD recommendation for the time being.

Phillips (PHIL NA, EUR 30.56) warned that profits from its semiconductor division would fall 10% and that both its components and consumer electronics units would post a loss in Q1 2001. PHIL is affected by the tough macro-environment for wireless, PCs and consumer electronics in the US in a dual way as a slowdown in system sales is compounded by the over-capacity situation that has emerged in components such as semiconductors, displays and storage systems. Long-term clients are advised to hold positions given a potential recovery in chip manufacturing late 2H01. Recent pristabilisation in DRAM prices is a first indication that the storm is weakening.

Nokia (NOK1V FH, EUR 29.47) set ambitious targets at its annual general meeting stating that it aims to boost its handset market share to 40% from 32% last year without, however, setting a time frame. It also said that it targets 35% of the global market for third-generation wireless networks. Ericsson (LMEB SS, SEK 58.5) lowered its forecast for industry sales this year to between 450m and 525m handsets as fewer people replace their phones. This brought Ericssons' forecast in line with Nokia's reduced numbers (450-500m). We retain our HOLD on both stocks.
Swisscom shareholders approved the purchase of a 25% stake in its mobile phone unit by Vodafone (VOD LN, GBP 1.94). Vodafone is expected to finance the USD 2.6bn deal in a cash and share transaction. Vodafone will expand its reach and reaffirm its number 1 position in Europe.

We a take loss of 13.28% on Nordea (NDA1V FH, EUR 6.80) since it broke our stop-loss level at EUR 6.53. Given the continued uncertainties in the fundamentals of future earnings from banking divisions, we decided to execute our stop-loss level.