US Technology mid-quarter updates cloud the expectations of a recovery. (page 3 of 3)

Aspirin alone was the cheapest, at a cost of USD 11000 for every year of life saved compared to USD 130000 for Plavix alone or in combination with aspirin. We believe that studies like that are a very controversial way to judge a drug that has shown excellent test results and as such we do not expect that prescriptions will suffer significantly on the back of these results. However, the study does reflect the market's current focus on costs and patent protection. We doubt the usefulness of this study, as new drugs are inevitably more expensive than existing ones (especially if compared with aspirin!).

Despite no new evidence, this report is likely to keep sentiment for the stock and the industry negative. However, we remain convinced that the patent protection for Plavix remains very strong and expect the stock to rebound once the company proves its earnings resilience. We expect earnings growth to remain very strong and even see some potential for earnings upgrades, which confirms our view that the stock is currently traded below its long-term potential.

Serono (SEO VX; CHF 1150) received the allowance to launch a needle-free device used for the delivery of a human growth hormone in Europe. The product is already approved in the USA. However, Serono remains negatively affected by the overall biotechnology weakness and traded below our worst-case stop-loss of CHF 1200. Despite a positive long-term outlook for the company after the approval of Rebif in the US market, we believe that it will take some more time for the product to feed through to the bottom line. Hence we have decided to cut loss and remove the stock from our recommendation list.

This week's focus will be on Nokia's (NOK1V FH; EUR 13.04) mid-quarter trading statement on June 11. The company is widely expected to lower its sales forecast while EPS guidance should remain unchanged. After last week's statement from Ericsson, that the recovery in the infrastructure industry cannot be expected before 2004 and last Friday's profit warning of RF Micro Devices, we remain cautious on the sector. Additionally, the Finish Communcations Supplier Association released figures that showed that sales of mobile phones to retailers in Finland fell 23% in May. In the past years, the Finish mobile market was watched closely for indications of trends in sales. Nokia's 2H02 outlook might well cause disappointment although we would stress that at current levels, a great deal of bad news is reflected in today's valuations.