Still Hold eBay

Also: an analysts' opinion on Network Associates

eBay (EBAY ): Maintains 3 STARS (hold)

Analyst: Scott Kessler, Ari Bensinger

In an annual filing, eBay disclosed that the Justice Dept. closed antitrust its inquiry related to the comapany's licensing program with auction aggregators. Also, the filing described a $126 million synthetic lease, a form of off-balance sheet financing under which a related third-party funds 100% property cost and leases assets to the lessee. While this is legal, the lease has been criticized; the transaction offers a tax benefit, as if the company owned property, without having to put associated debt on its balance sheet. Despite strong operating momentum, at 76 times S&P's 2002 EPS estimate of $0.76 -- well above the market, S&P says hold eBay shares.

Network Associates (NET ): Maintains 3 STARS (hold)

Analyst: Jonathan Rudy

The company announced Tuesday that the SEC is conducting an investigation into the company's accounting practices in 2000. The investigation predates the current management team that joined in early 2001. Network Associates has reviewed its accounting for 2000 with outside auditors and believes that the accounting was proper. As a result of probe, the company will postpone its offer to acquire the remaining 25% of that it does not own. The new management team has done an excellent job of restoring company execution and credibility. With a strong brand name, and about $5.50 per share in cash, S&P would hold shares.

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