Still Avoid Maytag

Also: analysts' opinions on Avaya and Integrated Device Technology

Maytag (MYG ): Maintains 2 STARS (avoid)

Analyst: Efraim Levy

The company warned of a June-quarter earnings shortfall, but S&P says the news isn't much of a surprise, given the softness in the appliance industry, increasing pricing pressure and a shift in Maytag's mix to value brands. Maytag also is suffering from shipment delays ahead of new products, such as improved Hoover brand floor products, as well as softening demand for commercial soft drink can and bottle vending machines. S&P is lowering the below-consensus 2001 EPS estimate from $1.96 to $1.77, which excludes a $0.53 tax benefit in Q1. S&P also expects continued industry softness into the second half.

Avaya (AV ): Maintains 3 STARS (hold)

Analyst: Ari Bensinger

Avaya sees June-quarter sales growth declining 4%-6% from a year ago, but sees EPS doubling from $0.11. S&P had estimated 2% sales growth, and $0.30 EPS. The company also projects September-quarter revenue to decline 4%-8%, and EPS to increase six-fold from $0.07 year-ago EPS, versus 3% sales growth, and $0.45 EPS S&P had projected. S&P is lowering the fiscal 2001 (Sept.) estimate to $1.05 from $1.15. Avaya is accelerating a restructuring plan to complete by the end of fiscal 2002, one year earlier than planned. The company is eliminating 11% of its workforce, reducing non R&D costs and transistioning from a mature product mix to next-generation products.

Integrated Device Technology (IDTI ): Maintains 3 STARS (hold)

Analyst: Thomas Smith

The company laid off 900 peple, 18% of its global workforce, mostly in foreign manufacturing operations. One-time costs will be $2.5 million in the June quarter and should save $11 million annually. The cuts follow the company's May 31 announcement that it expects June-quarter revenues down 44% from the March quarter. Job cuts therefore are not surprising, although they are an ugly reminder of the severity of the industry downturn for chipmakers serving telecom equipment companies. For Lucent, Cisco and Nortel -- the news should already be in their share prices. June and September quarters are likely the worst period. S&P thinks the company's shares are okay to hold for an upturn.

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