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S&P Says Hold PeopleSoft

PeopleSoft (PSFT): Maintains 3 STARS (hold)

Analyst: Jonathan Rudy

Business software maker PeopleSoft says it expects third-quarter license revenue, total revenue, and earnings per share to exceed its recently updated guidance, but gave no further details. S&P thinks the recent acquisition of J.D. Edwards gave PeopleSoft the ability to produce an upside revenue and earnings surprise. But S&P 's above-Street estimates remain at 12 cents earnings per share for the third quarter, and 55 cents for full fiscal 2003. S&P look for 86 cents in 2004. Despite the positive news, S&P remains skeptical about the long-term success of the J.D. Edwards acquisition, and would not add to PeopleSoft postions despite shares trading at discount to peers on a

price-earnings basis.

Motorola (MOT): Maintains 1 STAR (sell)

Analyst: Kenneth Leon, Megan Graham Hackett

In a Monday morning conference call, Motorola announced plans to spin off its semiconductor products business as a separately traded company. Motorola shared few details, however, pending an S-1 filing. The company is mulling an initial public offering of a part of the unit and the distribution of the rest to shareholders in a tax-free transaction. S&P believes Motorola is targeting a spin off now in an attempt to capture favorable valuation of semiconductor firms amid an unfolding up-cycle. With the stock above S&P's 12-month target price of $7, based on

discounted cash flow and price/sales analyses, S&P says sell.

ATMI (ATMI): Reiterates 5 STARS (strong buy)

Analyst: Richard Tortoriello

Chip-equipment maker ATMI sees a third-quarter loss per share of 33 cents to 36 cents, including up to a 25 cents charge to restructure its equipment operations. Also, ATMI expects $58 million sales, below S&P's $60 million projection. The materials segment (69% of second-quarter sales) suffered from timing issues and notably changed distribution for a Taiwan customer. ATMI will also close two equipment facilities, with an asset writedown. S&P is cutting the 2003 estimate to a loss of 15 cents per share, from 7 cents earnings per share, and is trimming the 2004 estimate to 45 earnings per share, from 67 cents. S&P believe that with an industry up-cycle underway, the dip in shares is an opportunity, with shares trading at 3.3 times sales, vs. the past average of 3.2.

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