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Still Avoid UAL Corp.

UAL Corp. (UAL): Maintains 2 STARS (avoid)

Analysts: Leo Larkin, Richard Stice

The stock is up following the news UAL plans to drop its takeover of US Airways in a deal valued at $4.3 billion.

UAL cites uncertainty over regulatory approval. S&P thinks the weakening economy also is a concern, and projects a per-share loss of $8.10 for UAL in 2001 on higher labor costs, higher fuel costs and declining sales. The broken deal is positive for UAL's stock price in the short term but S&P is maintaining a negative view as the projected 2001 loss could ultimately be greater than the current estimate.

Minnesota Mining & Manufacturing (MMM): Maintains 3 STARS (hold)

Analysts: Steven Scharf, Robert Friedman

The company cited the weak U.S. economy, and the slowdown in Europe and Asia. 3M sees $1.10-1.14 Q2 EPS (after a $0.07 negative foreign exchange impact) vs. $1.19 consensus, and expects 1% higher sales before a 4%-5% negative foreign exchange impact. 3M is focusing on cost cuts and its ongoing restructuring plan, which includes a 7% workforce reduction -- about 5,000 workers, and $300 million in annualized savings. With soft markets likely to continue, S&P is cutting the 2001 estimate by $0.25 to $4.65 (before $1.00 in restructing charges). At 24 times S&P's 2001 EPS estimate, and slightly lower EPS growth, S&P views shares as fairly valued.

Sapient (SAPE): Reiterates 1 STAR (sell)

Analyst: Mark Basham

The company will reduce current headcount by 390, or 14%, and take a $50 million charge. With earlier reductions, this brings

the workforce 32% below the year-end 2000 level. Sapient also announced a shift to a "global distributed delivery model."

This move will shift some work to the lower-cost India IT market through the New Delhi office, but the news is mostly "smoke and mirrors" to hide an even more severe deterioration in business. Sapient's most valuable asset is its $250 million in cash, about $2 per share. S&P still sees takeunder value at $5.00-$5.50.

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