business

Still Hold Fannie Mae

Also: Analyst opinions on Ford, GM, DaimlerChrysler, Microsoft and Simon Property Group

Fannie Mae (FNM ): Still 3 STARS (hold)

Analyst: Erik Eisenstein

The mortgage lender posted fourth quarter operating earnings per share of $1.40 vs. $1.12, which was a penny above consenus. The results exclude variability in market value of purchased options. Eisenstein says Fannie Mae continued to benefit from a steep yield curve and a busy mortgage origination market.

Higher long-term rates should sustain former and threaten latter, Eisenstein says. Still, the firm should enjoy solid portfolio growth on carry-over effect for the next few quarters, he says. He is raising his 2002 earnings per share estimate to $6.18, from $6.00. He believes FNM is fairly valued now at 13 times its 2002 estimate, given long-term political

Ford F , General Motors (GM ) and DaimlerChrsyler (DCX ): Still 3 STARS (hold) on Ford, still 3 STARS (hold) on DaimlerChrysler, still 2 STARS (avoid) on GM

Analyst: Efraim Levy

After reviewing the 2002 Detroit auto show, Levy is maintaining his opinions on the big three automakers. While overshadowed by Ford's restructuring, the world's major auto makers introduced and highlighted many well-styled and feature-laden vehicles that reflect intensified competition in industry. General Motors and Daimler Chrysler created buzz with concept cars such as the Pontiac Solstice and the Chrysler Pacifica for possible future production. But Japan continues to attack one Big-3 stronghold with its armada of sport-utility vehicles.risk.

Microsoft (MSFT ): Still 4 STARS (accumulate)

Analyst: Johnathan Rudy

A judge rejected the potential settlement of a class action suit that would have the world's No. 1 software maker donating approximately $1 billion in cash and software to needy public schools. Rudy says the rejection of the deal is no surprise because anti-competitive concerns were raised immediately with the deal announcement in November.

Microsoft will likely have to put up more cash as a percentage of the settlement. But with about $36 billion in cash and investments on its balance sheet, this should not be a significant issue for the company, Rudy says.

Simon Property Group (SPG ) Still 3 STARS (hold)

Analyst: Raymond Mathis

Along with Westfield America Trust and Rouse Co., Simon, a real estate investment trust, agreed to buy Rodamco North America for $5.3 billion, which ends a six-month battle for control of the fourth largest owner of U.S. shopping malls. Mathis says he views the transaction as positive, since Rodamco's malls are very productive, with some generating sales of $450 per square foot, almost 50% above industry average.

However, with 2002 growth in funds from operations and dividend yield in line with REIT industry averages and Simon shares near 52-week high, Mathis says he feels that the stock remains fairly valued.

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