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Still Hold Xerox

Xerox Corp (XRX): Maintains 3 STARS (hold)

Analyst: Richard Stice

The company announced an agreement with the SEC to restate 1997-2000 financials and adjust 2001 results. The changes brought about are due to Xerox's method of applying lease revenue recognition. It may involve reallocating more than $2 billion in revenue. Xerox says there will be no impact on cash received or due from leases. The company also agreed to a $10 million penalty without admitting wrongdoing. S&P sees the potential end to this investigation eliminating a significant element of uncertainty. However, with office products being a low IT spending priority, S&P would not add to positions.

Nvidia (NVDA): Maintains 4 STARS (accumulate)

Analyst: Thomas Smith

The leading maker of graphics processor units (GPUs) used in PCs, lap tops and video games was knocked by a Barron's article. Competitive challenges from Intel and ATI Technology were cited, but these are ever present challengers. S&P concurs that competitive risk is a valid concern, but Dow Jones Newswires reported Nvidia is standing by its revenue estimates as recently as March 28. At 24 times S&P's $1.75 fiscal 2003 (Jan.) EPS estimate and 18 times S&P's $2.30 fiscal 2004 estimate, shares are valued near the market despite stronger growth. Intel is loftier, at 43 times S&P's $0.70 2002 estimate and 30 times the $1.00 2003 estimate, while playing catch up in GPUs.

Providian Financial (PVN): Downgrades to 2 STARS (avoid) from 3 STARS (hold)

Analyst: Robert McMillan

Shares are up over 110% year to date. Although S&P thinks that asset sales and good execution of a turnaround plan will eventually lead to improved results, there are concerns that the shares have advanced too rapidly. Also, S&P feels that Providian's larger competitors will be better positioned to increase their market share and profits in an improving economy, while Providian focuses on operational issues. S&P expects the company to have a 2002 per share loss of $0.07, and see the shares underperforming the S&P 500 in the next six to 12 months.

Georgia-Pacific (GP): Maintains 2 STARS (avoid)

Analyst: B. Korutz

Georgia-Pacific plans to separate its consumer products and packaging businesses from its building products business. The board intends to approve a final plan at its meeting in May. S&P is still concerned with Georgia-Pacific's high debt level, and its lackluster outlook for building products business and asbestos liability. Although consumer products results have been strong, S&P remains concerned with Georgia-Pacific's ability to compete with its rivals' marketing efforts. Shares are costly at 33 times S&P's 2003 EPS estimate of $0.90.

HCA (HCA): Maintains 4 STARS (accumulate)

Analyst: Phillip Seligman

On March 28, the company announced it will pay the Centers for Medicare & Medicaid Services $250 million to resolve all cost report, home office cost statement, and appeal issues. The resolution is dependent on an O.K. by the Dept. of Justice. The agreement excludes a resolution of civil issues with the DOJ with respect to cost reports and physician relations. The company is taking a $0.30 per share fourth quarter 2001 charge. S&P says the development of this second item of good news will help to dissipate more of the cloud overhanging the shares, as the long-running government investigation of the company moves towards a final resolution. At 18 times S&P's 2002 EPS estimate of $2.38, shares should outperform.

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