US Technology (page 1 of 3)

US Stocks

Apple Computer Inc. (AAPL, $16.85, CSFB recommendation: Hold) announced revenues and earnings shortfall for 3Q 02 ending this month. Revenues are expected to range between $1.40-1.45 billion vs. $1.6 billion expected, while EPS is expected to be between $0.08-0.10 vs. $0.11 previously estimated. Consumer demand for PCs was weak during the current quarter. The company also cited Europe and Japan as regions where trends have turned significantly down across all market segments. Apple expects some seasonal strength as the back to school season kicks into full power. However U.S. State budgets are in red and should give problems for companies dependent on a big back to school kick. Apple's professional exposure to advertising and publishing do not help the company due to economic pressure on these segments. For the time being we remain cautious on the computer maker industry. The company is expected to make public its results on July 16th.Hold.

American International Group, Inc. (AIG, $67.00, CSFB recommendation: Strong buy) stock price remains weak due to concerns related to unclear CEO succession and general doubts on companies with complicated financial system. On June 18th, the company held its first ever analyst meeting, showing that the company would increase transparency. Furthermore, after Enron's disaster, the company was one of the first large caps to announce more disclosure in its balance sheet. Finally, unpredictable further terrorism attacks are still possible. Nevertheless AIG remains one of our favourite stocks. In spite of its relative high P/E, historically current valuation should be attractive. In general, for the industry, property-casualty insurance pricing is rising. This improvement is now both strong and broad based. The corporation's strengths include innovative product development to satisfy specific market needs, a high level of pricing and underwriting discipline. The company should be well positioned for future growth based on the strength of its balance sheet, its scope and profitability world-wide, and the capability of its management. AIG is now number three in the domestic life insurance industry. Its objective is to attain the largest life insurance company in the U.S., the same position that it enjoys in commercial lines property-casualty insurance.

On foreign markets, AIG has a far stronger position than other U.S. based insurers. The scope of AIG's worldwide operations allows capital to be allocated to faster growing, less competitive, more attractive markets. AIG possesses the highest credit ratings from each major agency. This is a precious asset in these nervous markets and AIG's balance sheet strength is an important competitive advantage. Another advantage is AIG's human resources policy. Management's wealth is directly related to that of its shareholders. AIG's management owns or controls about 23% of its stock. AIG has historically provided its staff with sufficient incentives. This gives AIG's capability to recruit and retain highly capable managers.

Goodrich Corp. (GR, $27.05, CSFB recommendation: Restricted) announced that it entered into definitive agreement to acquire TRW's aeronautical systems businesses. GR will pay $1.5 billion in cash to be financed by debt ($1.1 billion) and equity-linked securities. This would increase the debt/cap ratio from 51% to 63%. TRW's aeronautical systems business designs and manufactures high-integrity systems and equipment in the following product areas: cargo systems, engine controls, flight controls, power generations and management, hoists and winches, missile actuation, and equipment services.