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U.S. stocks fell after a sales forecast by Wal-Mart and the threat of terrorist attacks raised doubts that the market's rally will continue. Wal-Mart, the world's biggest retailer, said revenue growth will slow this month, raising concern that consumer spending will stall later this year, crimping the economic growth that has underpinned a rise in corporate profits. Reports that terrorist may strike a Paris rail line extended the decline. The Dow lost 38 points (-0.38%) to 10,4429. The S&P 500 shed 1 point (-0.1%) to finish at 1139 led by a decline in health-care and consumer companies. The benchmark is up 29 percent over the past year. The Nasdaq gained 2 points (+0.1%) to 2052. Almost two stocks fell for every one that rose on the New York Stock Exchange. Some 1 billion shares changed hands on the Big Board, 21 percent less than the same time a week ago. Markets will be closed tomorrow for Good Friday. The Dow has shed 0.6 percent, while the S&P 500 is down 0.5 percent this week. The Nasdaq Composite Index has dropped 0.4 percent since last Friday.

Strong Sectors: internet, semiconductor, computer services, insurance, advertising, oil services
Weak Sectors: gold, retail, aluminum, non-metal mining, homebuilding

Top Stories . . . The number of Americans filing initial claims for jobless benefits fell to 328,000 last week, the lowest in more than three years, a government report showed.

Inventories at U.S. wholesalers jumped 1.2 percent in February, the most in four years, signaling that companies may have stepped up production enough to rebuild stockpiles as demand rises.

General Electric, the world's largest company by market value, said first-quarter profit rose 8 percent, helped by acquisitions in health care and consumer finance and orders for industrial goods like plastics and jet engine parts.

Putnam Investments, the sixth-largest U.S. mutual fund manager, agreed to pay $110 million to settle federal and state allegations for failing to disclose improper trading by money managers.

Quotes of Note . . . ``If you want to worry about something, worry about second- half earnings,'' said Greg Tuorto, who helps manage more than $3.5 billion for Guardian Park Avenue Funds in New York. ``People are paying for the future, and not the present.''

Of Note . . . The WSJ's "Heard on the Street" column discusses the Dow Jones Industrial Average "facelift" that begins today. American International Group, Pfizer and Verizon Communications join the 30-stock Dow industrials. They replace AT&T, Eastman Kodak and International Paper. According to the article, betting on the new stocks would have been the wrong way to go the last time the Dow was revised, in Nov 1999. The four stocks that joined the blue-chip average held up for only about four months after they entered. Then, they flopped and, as a group, were eventually overtaken by the stocks they had replaced, the four stocks that were dropped from the index in 1999 have done better. "When stocks are removed it can be the low point and that can set them up to rebound," says Charles Carlson, a money manager. "My sense is that you probably are going to see Eastman Kodak and AT&T do pretty well this year after they get past this little quagmire," Mr. Carlson says.

Eco Speak . . . The average number of weekly filings for state unemployment benefits over the past four weeks fell 3,250 to 336,750, the lowest since November 2000, the Labor Department reported Thursday. Initial claims for benefits in the latest week fell 14,000 to 328,000. The four-week average is considered a better gauge of job destruction trends than the more-volatile weekly number, which is subject to large revisions and which can be distorted by special one-time factors, such as weather.

Financials . . . Bernstein upgrades Allstate to Outperform from Market Perform and raises their target to $58 from $48 after the company raised guidance last night. While their upgrade may be late, they think that the company's pricing discipline and market valuation discipline presents the possibility of some sustainable upside.

T. Rowe Price expects 1st quarter EPS to increase by about 80% versus the $0.31 earned in 1st quarter 2003 which computes to 0.56, just slightly below the $0.57 consensus. 1st quarter revenues are expected to grow 40% which computes to $306.6 million, slightly above $301 million consensus.

SunTrust Banks reported earnings of $1.26 per share, $0.03 better than the consensus of $1.23. Revenues fell 0.2% year/year to $1.46 billion versus the $1.46 billion consensus.

General Electric reported earnings of $0.32 per share, $0.01 better than the consensus of $0.31. Revenues rose 9.5% year/year to $33.35 billion versus the $32.22 billion consensus.

The WSJ's "Ahead of the Tape" column highlights General Electric, which is generating roughly half its earnings from making stuff and the other from financial activities. According to the article, the stock has been muted this year, thanks in part to pressure from arbitrageurs. The bullish case on GE is that as the premier industrial conglomerate in the world, with a dividend yield of slightly more than 2.5%. Its stock is trading at a discount to similarly large companies such as Honeywell and 3M, when looking at earnings forecasts for 2005. And if the credit-ratings concerns didn't downgrade GE last year, the bulls argue, then what chance is there that they will do so now, in a relatively benign financial environment. The bulls contend that the fruits of GE's new growth initiatives will bear out next year. That is, provided there is nothing to upend the finance side of the business between now and then.

Oil & Gas . . . The Baker Hughes international rig count for March 2004 was 799, up 9 rigs from the previous month and up 52 rigs from March 2003. The cycle low for the international rig count was in August 1999 when only 556 rigs were drilling outside North America. The Latin America rig count rose by 9 rigs in March to reach 278 active rigs. The rig count in Latin America was 23% higher in March 2004 than in March 2003. European rig activity (primarily the North Sea) was unchanged compared with activity levels recorded in the prior year’s period. The Middle East rig count was 4% higher in March 2004 compared with March 2003. The African rig count was 41, 25% lower than in March 2003. The Asia Pacific rig count was 183 or 3% higher compared with year ago levels.

South America continues to rebound following a period of major economic and political upheaval in Argentina and Venezuela. The Argentine rig count has rebounded from a low of 44 rigs in April 2002 to 66 rigs in March 2004. The rig count in Argentina was up 3 rigs in March from the previous month. The drilling rig count in Venezuela was up one rig from February to March and stands at 53, above the pre-strike level of 43 active rigs last achieved in November 2002. While Venezuelan oilfield activity should improve from current levels, it will likely do so at a more modest pace and is subject to future disruption if Venezuela’s political situation destabilizes further. Mexico remains the strongest market for rigs and oilfield services in Latin America and we see no signs of a 56 slackening in activity in 2004. Pemex (the national oil company of Mexico) continues to spend heavily on boosting oil and natural gas production capacity and we expect further increases in rig activity there in the months ahead. The rig count in Mexico surged from 79 rigs in March 2003 to reach 107 rigs in March 2004, a year-on-year gain of 35%.

In the North Sea, the Norwegian rig count rose by two rigs from the previous month while the rig count in the U.K. sector increased by three rigs. Norway is showing signs of rebounding from a protracted slump in oilfield activity following recent rig hires by Norsk Hydro and Statoil. The same cannot be said of the U.K. sector of the North Sea, where the drilling slump that began in late 2001 remains very much in evidence today. The number of active rigs drilling in the Danish and Dutch North Sea sectors was flat from February to March. We expect gradually improving activity levels this spring as seasonal drilling picks up.

The Asia Pacific rig count fell by one rig in March after falling by 6 rigs in February. The Middle East rig count rose by 2 rigs after a 6 rig drop in February. The March rig count in Africa was down 7 rigs from the previous month at 41 rigs. Drilling activity offshore West Africa decreased by 5 rigs in March following a 4 rig increase in February. The international offshore rig count was flat with February at 236 active rigs. On a worldwide basis, the international offshore rig count was 13% higher in March 2004 compared with

March 2003.

Transports . . . The Wall Street Journal reports that Ford's chairman and CEO Bill Ford Jr. said it is "unreasonable" for auto makers to expect a return to low gasoline prices in the U.S., and indicated that he is stepping up Ford's commitment to gas-electric hybrid vehicles to improve the efficiency of Ford's U.S. fleet. Mr. Ford said he is basing Ford's product strategy for North America on the assumption that U.S. fuel prices will remain higher than they have been in the recent past. He also expressed support for higher gasoline taxes or tax breaks for fuel-efficient vehicles as a way to curb U.S. demand for gasoline, though he noted measures such as a proposed tax break of $3,000 a vehicle for hybrids could be more palatable to consumers. Mr. Ford said the co will build three hybrid gas-electric vehicles for the U.S. market by the 2007 model year, two sport-utility vehicles and a midsize car. Mr. Ford said he has created a group in Ford's product-development organization to develop more hybrids, and other alternatives to conventional gasoline technology.

Retail . . . CSFB upgrades Jones Apparel to Outperform from Neutral, raises their 2004-05 ests, and raises their target to $42 from $39. The firm believes there is a good possibility that Q1 earnings beats guidance of $0.55-$0.60, and they are confident that momentum in the second half will carry into next year.

bebe stores reports comps store sales up 20.5% versus the consensus of 10.4%. The company sees 3rd quarter EPS of $0.16-0.19 versus the consensus of $0.14.

Healthcare . . . JP Morgan out with a negative note on Cardinal Health saying the recent appreciation in share price places the stock at a premium to historical multiples in relation to the manufacturers, at a time when there is considerable earnings uncertainty going forward. Although the firm believes the company is likely to meet Street consensus estimates as a result of the $1.5 billion in share buybacks instituted over the past twelve months, core earnings growth and the quality of earnings remain at risk as distributors are still transitioning from a buy-and-hold model to a just-in-time model.

Drugs . . . A small study has found an experimental Pfizer drug can more than double the level of "good" cholesterol in the body and may herald a new way of fighting heart disease. The study of six volunteers, funded by Pfizer, found that the drug torcetrapib, given twice a day for eight weeks, boosted the amount of high-density lipoprotein (HDL) by 106 percent. HDL clears "bad" cholesterol from the body. Many scientists believe that raising HDL levels is as important in fighting heart disease as cutting levels of "bad cholesterol", or LDL, although further studies are needed to conclusively show this and some researchers say the benefits of HDL may be overstated.

Abbott Labs reported earnings of $0.57 per share, $0.01 better than the consensus of $0.56. Revenues rose 13.9% year/year to $5.22 billion versus the $5.04 billion consensus. The company sees 2nd quarter EPS of $0.57-0.59 versus consensus $0.59, reaffirms 2004 EPS of $2.40-2.48, consensus $2.46

Barron's Online highlights Eli Lilly suggesting its pipeline is worth a fortune. Having launched several new drugs over the last 15 months, Lilly should introduce two more this year and another three by 2006, including some potential blockbusters. It also doesn't have any major drugs coming off patent for several years. "This is a stock that people need to own," says Trevor Polischuk, an analyst with Orbimed Advisors. "Historically, when pharmaceutical co's are undergoing a new product cycle, you always see share price movement." "Eli Lilly has by far the best sales growth prospects among U.S. major pharmaceuticals over the next five years," analyst David Risinger of Merrill Lynch wrote last week when he upgraded the stock to Buy from Neutral. Lilly's stock changes hands at 23.6x estimated earnings of $2.94 over the next four qrtrs, below its median P/E multiple of 26.2x forward earnings, according to Baseline Thomson Financial. The shares trade at a premium to the Standard & Poor's 500 index and the drug industry, but based on 2005 consensus earnings estimate of $3.32 per share, Lilly's P/E growth ratio is 1.49x, which falls below the group average (excluding Schering-Plough), according to Morgan Stanley. Merrill Lynch's Risinger says it should fetch 24x his expected 2005 earnings of $3.31 a share, which suggests a share price of 80 in the next 12 months.

Biotech . . . Analysts neutral to positive after Genentech posted strong Q1 results, exceeding consensus estimates. Although the recently approved Avastin seems to be off to a good start with sales of $38.1 million versus $26 million consensus, the company's other major drug Rituxan fell short of expectations on lower inventory and temporary disruption in usage with start of Medicare cut in 1/04. Also, the sales of Rapitva was below consensus with $9 million versus $6 million, respectively. Lehman noting that although they see upside to DNA guidance of 20-25 pct growth in 2004 EPS, they believe the upside is more than accounted for in the current valuation.

Genentech reported 1st quarter 2004 adjusted non-GAAP EPS of $0.38, above estimates of $0.31 and consensus estimate of $0.32. This was largely driven by lower than expected expenses. Of note, Avastin sales of $38.1 million exceeded our estimate of $29.5M and consensus estimate of ~$27 million. Furthermore, Rituxan sales of $401 million were ~$20 million lower than estimate and consensus estimate of ~$420 million as a result of lower inventory levels (~$8 million) at distributors and initial caution among physicians due to new reimbursement rates under Medicare (95% AWP to 81% AWP). Genentech increased adjusted non-GAAP EPS from a minimum of 20% year/year growth to 20% to 25% year/year growth (implied EPS of $1.44 to $1.50). Anlaysts have increased 2004 Avastin estimate from $295 million to $350 million and decreased US Rituxan estimate from $1.61 billion to $1.57 million. 2004 EPS remains unchanged at $1.58 after these adjustments and reflects 1Q04 reported earnings. On a P/E and P/S basis, Genentech continues to trade at a significant premium to the group (68x 2004 EPS vs group average of 38x and 16x 2004 sales vs group average of 8x). Expect pipeline and Avastin news flow to

continue to drive Genentech shares. Upcoming events include results from the Phase III Tarceva monotherapy refractory NSCLC trial in partnership with OSI and Roche in early 2Q04 and multiple presentations at ASCO in early June.

Hotel & Leisure . . . Buckingham downgrades Ameristar Casinos to Neutral from Strong Buy based on valuation as well as increasing legislative risks facing the company's Council Bluffs property, particularly in the form of potential new competition across the river in Omaha, Nebraska, The firm says the legislative drive to put a casino referendum on the Nov ballot in Nebraska has heated up and passage of a bill could occur as soon as next week, and they think the legislative issues in Nebraska and Iowa will rightly take center stage and could pressure the stock over the near-term and provide an overhang on the stock until November.

Media . . . Wedbush Morgan upgrades Infospace to Buy from Hold, raises their 2004-05 ests well above consensus, and raises their target to $48 from $38; firm believes that mgmt has been ultra-conservative with guidance for the Moviso acquisition, and demand for media downloads such as ringtones continues to increase at a rapid pace; also, given Yahoo's positive earnings announcement yesterday and bullish comments regarding its search biz from the Overture acquisition, they believe there is upside in INSP's Search & Directory segment; in addition, firm is now less skeptical that INSP will be able to monetize the Switchboard acquisition.

XM Satellite announced that Saab will offer XM Radio in its vehicle models, beginning with the brand-new 2005 Saab 9-7X sport utility vehicle.

Yahoo! reported impressive quarterly results, demonstrating particularly strong growth in all aspects of online advertising. Organic revenue growth in the core marketing services division increased 48% with strong contributions from both search and branded advertising. Revenues excluding TAC increased 91% to $550m, or 41% organically. EBITDA jumped 125% to $201m, and FCF reached $197m, bringing the trailing 12-month total to $500m. EPS beat expectations by two cents, coming in at $0.13 excluding a one-time gain from unredeemed third-party loyalty programs. The number of unique users continued its steady ramp in the quarter, to 274m globally. The number of unique paid relationships nearly doubled year-over-year to 5.8 million, further building a pipeline for future growth. Importantly, the ratio of operating cash flow to gross profit was 50%, demonstrating the impressive leverage in this model. Analysts are raising estimates reflecting the strong momentum in the quarter and management's new guidance. For 2004 expect revenues ex-TAC, EBITDA, and EPS of $2,490m, $912m, and $0.62, respectively. For 2005 re tweaking up expectations to $3,040m in revenues, $1,038m in EBITDA, and $0.78 in EPS. Analysts are encouraged by the strong revenue growth, the impressive operating leverage and the many data points that suggest this growth should continue. Upward revisions in earnings may create some near-term upside to the stock, although meaningful outperformance may be limited by valuation.

The Yahoo! analyst community is positively surprised by the amount by which Yahoo managed to exceed even the most optimistic estimates and the magnitude of positive guidance for 2004. Although no upgrades, most firms are raising their price targets. CSFB out saying they believe that Yahoo represents an attractive investment opportunity as faster than expected recovery in the online advertising market and stronger than expected share gains encourage them to raise estimates and price target to $65 from $57. Goldman out raising their target to $60 from $55 noting they think Yahoo! could trade at a 2005 P/E of 45-50x. They do note that positive online ad trends should benefit others but not to the magnitude of Yahoo's growth rate as they think Yahoo! is gaining share of branded advertising and b/c the upside in revenue relative to their estimate was driven by paid for search, which is not a driver of their other covered companies including CNET, DCLK and RNWK. Deutsche reiterating their Buy rating and expects the stock to trade up to the mid-$50 range in the near term and would be buyers at current levels. Prudential being the most conservative saying that although it appears that many of the company's businesses are performing nicely, at current valuation, they recommend that investors wait for a more attractive entry point. The firm is reiterating their Neutral rating, while raising target to $55 from $45.

Telecom . . . The Washington Post's technology section reports that the Federal Communications Commission is prepared to rule against AT&T's request that it be exempted from paying local telephone company's hundreds of millions of dollars in fees because the long-distance calls traveled partly over the Internet. According to the article, the decision could prove costly for AT&T, which has withheld some payments to regional telephone co's for as long as two years, claiming that calls carried for even short distances over the largely unregulated Internet should not be subject to traditional phone fees. A majority of at least three of the agency's five commissioners has voted to reject AT&T's argument, sources at the agency confirmed yesterday.

Wavecom and Orange announce a strategic partnership between the two companies to provide a joint machine-to-machine industry solution. The agreement calls for co-marketing and co-selling the first end-to-end communication and development platform for wireless M2M applications, encompassing Orange's M2M Connect platform and a fully compatible M2M module from Wavecom.

Electronics . . . Avnet announced that its sales and earnings, excluding a charge associated with the early extinguishment of debt, for 3td quarter (Mar) will exceed the high end of previous guidance. Sales for the quarter are estimated to be approximately $2.64 billion (previously $2.5-2.6 billion) and EPS, excluding a charge associated with the early extinguishment of debt, is expected to be in the range of $0.27-0.30 (previously $0.22-0.25), consensus is $2.56 billion and $0.25, respectively .

Network Equipment . . . Smith Barney recommends that investors buy Advanced Fibre ahead of its April 28 earnings report, as they believe that stronger than expected narrowband demand (primarily from Verizon) could allow the co to exceed their forecast. The firm also believes that AFCI has seen a significant uptick in orders for narrowband blades in 1st quarter from Verizon, which is especially constructive for the qtr's outlook, considering that narrowband contributes roughly 65% of AFCI's revenues. Maintains Buy rating and $30 target.

UBS upgrades Lucent to Neutral from Reduce and raises its target to $4.30 from $3.75 due to further strengthening of its wireless business, particularly in the US. The firm's checks suggest strong wireless momentum for Lucent, in part driven by aggressive network upgrades by Verizon and Sprint PCS. The firm maintains 2nd quarter EPS estimate at $0.04, but raises revenue estimate to $2.25 billion from $2.15 billion. 2004-05 EPS estimates move to $0.17 and to $0.22 from $0.15 and $0.20, respectively. The firm remains concerned about Lucent's large healthcare obligations for union retirees, which they see as a major overhang in the stock value if not addressed.

Research In Motion reported another solid quarter aided by higher than expected gross margin, although the magnitude of upside was not as great as in the past. There are a number of positive catalysts ahead for RIM, including geographic and carrier expansion, new products, BlackBerry Connect licensees’ launches, BlackBerry Web Client's growth, and a lack of competition. On the other hand, concerns include 4th quarter’s earnings quality, an inability to accurately forecast growth, and potential conflict between RIM's hardware and licensing businesses. While RIM's growth potential remains strong with multiple catalysts, Bear Sterns maintains a Peer Perform rating saying that stock is fully valued. The company's revs of $210.6 million came in just a tad above CIBC's $210 million estimate, and gross margins of 49.1% were 210 bp ahead of estimate due to a better mix of revenues. The firm is raising target to $150 from $115. Merrill Lynch increases estimates due to greater forecast demand and enhanced profitability; for 2005 goes to $2.95 from $2.82, for 2006 to $3.40 from $3.29 and rev estimates for 2005 to $1.16bn from $1.13bn and for 2006 to 1.38 billion from $1.34 billion. The firm reiterates Buy rating and increases price target to $121.

Storage . . . Consistent with risks we've highlighted in the drive industry, STX pre-announced March quarter shortfall at EPS of $0.06-$0.08 vs. previous guidance at the “low end” of $0.20-$0.30. While Maxtor and Western Digital have not pre-announced shortfalls and their results may not be as weak as Seagate's, the near-term risks for the industry remain -- seasonally soft demand and no supply constraints. Seagate cited desktop and notebook (slightly lower demand and inventory corrections) segments as the reasons for shortfall. While Seagate's desktop channel inventories are down from 7.5 weeks in 4th quarter to 4 weeks, caution that there's risk to near-term industry conditions -- June quarter is seasonally soft, there're no supply constraints, and there's more competition in mobile/enterprise. Given the cyclical nature of the industry, investor focus for the group should be on the change at the margin -- i.e., when earnings forecasts stop trending lower. As for collateral impact, while investors have focused on component pricing like DRAM firming, other areas (LCDs/Drives) are trending down -- higher degree of competition in hard drives is positive for the PC/Enterprise vendors. Analysts are lowering estimates on STX for 2004 (June) from $1.20 (vs. $1.43) to $0.93 and for 2005 from $1.05 to $0.60. For the March quarter, our estimates are at $0.07 (vs. $0.37) in EPS (in-line with Seagate's $0.06-$0.08 preannouncement) and revenues of $1.4 billion. Given the sharp declines in Seagate's revenues/profits, the company could take restructuring actions in the near-future.

Boxmakers . . . Dell modestly raised April Quarter revenue guidance to $11.4B from $11.2B yesterday ahead of this morning's analyst meeting. According to mgmt, the upside was driven by international markets and all product lines. The company also boosted April Quarter share repurchase to $1.1 billion from $600 million, slightly more than 100% of cash flow from operations. Smith Barney raises 2006 EPS estimate to $1.50 from $1.45 to reflect the likelihood of continued declines in tax rate as international becomes a larger part of the mix and accretive share repurchase. The firm also increases price target to $38 from $36, reiterates Hold. First Albany increases revenue estimate to 11.4 billion from 11.3 billion, maintains their EPS est of $0.29 (a penny above the consensus), but lowers gross margin est slightly. The firm sees three factors that could cause EPS to round up: 1) strength in international (lower tax rate) and enterprise (higher margins); 2) impact from the higher share buyback; 3) any additional revenue upside. Analyst reiterates Buy and remains price target at $40.

UBS maintains their Buy rating on Lexmark, raises their 2004-05 estimates above consensus, and raises their target to $107 from $98; firm cites: 1) continued benefits from the Dell OEM agreement, 2) relatively stable hardware ASP's near-term, 3) prospects for higher consumable sales, and 4) stable to increasing market share for LXK-branded products.

Semiconductors . . . The San Jose Mercury News reports Intel and National Semiconductor said they will take steps to remove the metal lead, which has been a main ingredient for decades in chip making. Lead, which can seep out of old, discarded computers into ground water, can cause a host of problems, including learning disabilities in children as well as neurological and reproductive disorders. Beginning this year, Intel will eliminate 95 percent of the lead used in its microprocessors and chip sets. National Semiconductor will offer lead-free packages for its complete line of chips. Currently, 90 percent of its analog and mixed-signal chips are available in lead-free packages.

RF Micro Device confirmed March 2004 quarterly revenue guidance in an interview Wed afternoon with Reuters. The company anticipated March quarterly revenue will be at high end of range of approx $152-163 million (originally provided in its Jan. 20) versus the Reuters Research consensus of $160.9 million.

The WSJ reports that Japan's Fair Trade Commission raided the Japanese offices of Intel on Thursday on suspicion the company pressured PC manufacturers not to use its competitors' products, a commission official said. Regulators suspect Intel improperly urged clients not to include CPU's, the key chip in PC mother boards, manufactured by Advanced Micro Devices and other company's, said Masaru Matsuo, a manager at the Fair Trade Commission. The raid began Thursday morning and continued into the afternoon, Mr. Matsuo said. The commission investigated three of Intel's locations throughout Japan including the Tokyo headquarters, an Intel spokeswoman said on condition of anonymity.

CIBC is cutting Powerwave’s 1st quarter estimates for revs to $63 million (previously $75 million) and EPS to a loss of $0.06 (previously a loss of $0.01), which is at the low end of mgmt guidance, Reuters consensus is $69 million and a loss of $0.02, respectively. Also cutting 2004 revenue estimate to $301 million (previously $313 million). Firm believes that potentially 15% of the revs are at risk due to the AT&T Wireless/Cingular Wireless merger and that reduced cap-ex spending in certain markets for both carriers has affected revs. Normal seasonal softness with the OEM channel in the March Quarter, coupled with some ramping issues at NOK (SP), may have also affected 1st quarter sales. The firm remains concerned that gross margins continue to be under pressure and cite significant ASP erosion on GSM products for Nortel (SP) as an example.

Intel will report 1st quarter 2004 results on Tuesday 4/13 after the market close, and will host a conference call at 5:30pm ET. Analysts are forecasting revenues of $8.20 billion (down 6.2% Quarter over Quarter), at the high end of the mid-quarter guidance range of $8.0-$8.2 billion (mid-point down 7.3% Quarter over Quarter). Analysts are estimating gross margin at 60.8%, also at the high end of the guidance range of 60%+/-1%, and EPS of $0.27. Based on recent informal checks with motherboard makers, expect shipments to decline by about 7-8% Quarter over Quarter in 2nd quarter 2004, slightly lower than our prior forecast of 5%, due to incremental weakness on the clone side. This is in line with a normal seasonal decline of 5-10% for 2nd quarter. On the notebook side, recent datapoints continue to indicate that excess channel inventory has cleared and demand is picking up. Based on the incrementally lower motherboard outlook, we are trimming our 2nd quarter 2004 estimates for Intel. Analysts are now forecasting revenues of $8.050 billion (-1.8% Quarter over Quarter), versus $8.125 billion previously. Note that we expect a sequential revenue change better than the past-five-year average of a 2.5% QoQ decline. Estimate gross margins to increase to 62.2% in 2nd quarter as the 300mm/90nm ramps continue. Analysts have adjusted our full-year gross margin assumption slightly from 63.7% to 63.5% as the 90nm ramp appears to be progressing at a slightly slower pace than expected, and also in part due to the tweaking of our revenue estimate. This does not have a material impact on our estimates however and we would highlight that gross margin, at 63.5%, remains above company guidance and consensus of 62%.

Software . . . Intuit reported Turbotax unit sales for the period ending April 3, where total unit sales came in at +8% Year over Year and direct came in at -8% Year over Year. JP Morgan expected units to decline, and said +8% unit growth is at the lower end of their unit target of 8-10% in order to reach their revenue estimate of 15% Year over Year for Consumer Tax for the tax season. While firm continues to believe that INTU is tracking to reach their revenue estimate for the quarter and the season, they estimate that the co is now at 0% unit growth for qtr, and the steady decline of unit growth over the last several weeks continues to raise questions about long-term growth. Maintains Neutral rating.

JMP Securities upgrades Hyperion Solutions to Market Perform from Underperform and raises their 2004-05 EPS estimates slightly above consensus. While they continue to have long-term concerns about HYSL's Essbase business and lack of a unified architecture, checks have revealed a number of positive data points: 1) customers continue to buy Hyperion products, sometimes without even looking at the competitive alternatives; 2) checks uncovered a number of data points where sales representatives had made their 3rd quarter numbers and felt good about their visibility on their numbers for Q4; and 3) firm believes that the overall demand levels for business intelligence and budgeting projects are increasing substantially. Firm also believes that some of the competitive pressures they had expected in 2004 have abated, at least in the near-term.

WR Hambrecht says that the departure of Electronic Arts Pres and COO Mr. Riccitiello is a clear loss, "unspinable" as anything else, even by the frothiest ERTS bulls, a deep management bench should allow the company to absorb the loss without major disruption. The firm expects solid 4th quarter (Mar) results and 1st quarter (Jun) guidance well above consensus as just two of several upcoming catalysts. The firm views recent weakness as an opportunity and thus reiterate its Buy rating and $59 price target.

The Wall St Journal reports that the former CFO of Computer Associates has agreed to plead guilty today to at least two criminal charges in the federal probe of the company's accounting. Mr. Zar would become the highest-ranking officer yet charged in the continuing probe of CA. Prosecutors have spent at least two years examining whether the co lied about its accounting to boost results. The pleas would bring to four the number of high-ranking finance executives netted in the probe, which has lasted more than two years.

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