Keeping Hold on Sanmina

Also: analysts' opinions on Morgan Stanley and Ball Corp.

Sanmina (SANM ): Maintains 3 STARS (hold)

Analyst: James Corridore Sanmina expects June-quarter EPS of $0.10, below the Street's consensus of $0.21. The company forecasts revenues at $760-$775 million, sharply lower than expected. Sanmina says it's being impacted by a slowdown in end-user markets. The news is not at all surprising, however, S&P thinks the extent of the earnings miss is disturbing and is putting the EPS estimates under review for downward revision. S&P also feels that most of Sanmina's problems are related to industrywide conditions beyond its control, rather than poor execution. However, the company is highly exposed to the telecom sector, which is not expected to pick up for some time. Given worsening conditions, do not add to positions.

Morgan Stanley Dean Witter (MWD ): Maintains 4 STARS (accumulate)

Analyst: Michael Schneider

May quarter EPS came in at $0.82 vs. $1.26 one year earlier, $0.03 above the Wall Street consensus estimate. Net revenues fell 15%, as lower securities and asset management revenues more than offset slightly higher credit services revenues. Equity-related businesses were all down measurably, reflecting weak markets and a lack of investor activity. S&P thinks business conditions will improve as the year progresses, driven by interest rate cuts, stabilizing equity markets, and a rebound in corporate earnings. Secular trends also remain very favorable. S&P sees fiscal 2001 (Nov.) EPS at $3.75.

Ball Corp. (BLL ): Maintains 3 STARS (hold)

Analyst: Stewart Scharf The company's announcement that it will dispose of it general-line metal-can unit in China is no surprise, as Ball had been weighing its options amid weak markets there. Also, Ball will divest two U.S. aerospace developmental product lines. The company will continue to make beverage cans in China, but is reducing its overhead to offset overcapacity and soft demand. Ball will take $195 million Q2 charge, and sees its actions adding $10 million to annual after-tax earnings. The stock is trading near recent highs, and now is at 13 times the $3.70 EPS S&P sees in 2001. But with beverage markets competitive, S&P views shares as fairly valued.

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