<<MF April 20th 2001.pdf>>

			Good Friday Afternoon - Comments From The Local
Guys!

One of the reasons that we, the Local Guys are pretty exited about the
recent rate cut by the Federal Reserves is that we think it will make a real
difference. Over the last few months, there has been considerable talk that
while capital spending (especially information technology spending) has been
budgeted by corporations for 2001, it has, to a large extent, been 'frozen'
as the economic uncertainty had taken a grip of corporate comptrollers. We
believe that this latest rate cut  (and possible future cuts), could well
spur greater corporate confidence (as well as spur greater liquidity from
the capital markets) and thus free up already allocated budgets for
corporate spending.


The 30-year US T-Bond yield is 5.81%.
The 10-year yield is 5.30%.
The 5-year is trading at 4.81%.
Spot crude oil is trading at $28.03 p/b.
Natural Gas - Henry Hub -  is trading at $5.06 p/mcf.

AD Time:
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				Lehman's Research.

IMPACT CALLS

Network Associates(NETA) 2 - Buy I. Hernandez, .415.274.5395
Upgrading from Market Perform to Buy (C)
OLD NEW STREET P/E
Price: $9.27 EPS 2000 N/A -$0.16 N/A N/A
52 Wk Ra: $27 - 3 EPS 2001 -$0.22E -$0.16E -$0.30E N/A
Mkt Cap: $1.3B EPS 2002 N/A N/A -$0.29E N/A
FY: 12/31 Price Target N/A $16
Rank 3 2
*We are upgrading Network Associates from a 3-Market Perform to a 2-Buy. We
are also establishing a 12-month price target of $16-
$18 per share using a conservative sum of parts valuation.
*Improving visibility-after yesterday's solid 1Q results, we are raising our
FY01 revenue estimates from $755 million to $763 million
and reducing our loss estimates from ($0.22) to ($0.16).
*Closing the credibility gap: results indicate that new management is
focused on delivering on expectations which should drive
multiple expansion.
*New cost cutting initiatives and new strategic sales hires in Europe & Asia
should drive NETA towards 4Q profitability and improve
2002 sales outlook.
*Sniffer product can provide upside potential to top-line numbers as
enterprises look to optimize performance of existing network
infrastructure.
*Security sector outlook remains positive.

Cable Communications Services L. Warner, .202.452.4705
Cable 1Q01 Performance Should Turn Heads
*We believe 1Q01 results for the cable industry will serve as a major
catalyst for the group by reinforcing that new services growth
remains strong despite a slowing economy. As a result, cables revenue and
cash flow projections are not only intact, but may in fact
be conservative for 2001.
*We believe each of the cable operators will deliver new services net adds
between 3Q00 and 4Q00 levels with no signs of slowing
demand.
*As a result, revenue growth for 1Q01 will accelerate from 2000 levels by
100-200 basis points and is poised for 200-500 basis points
in acceleration by 4Q01.
*Cash flow growth in 1Q01 will represent the low water mark for the year
with 2H marking significant acceleration as new services
continue to scale and high speed data breaks even

Omnicom Group(OMC) 2 - Buy K. Sullivan, .212.526.2341
1Q01 Earnings Preview
OLD NEW STREET P/E
Price: $92.5 EPS 2000 N/A $2.40 N/A N/A
52 Wk Ra: $98 - 68 EPS 2001 $2.78E $2.78E $2.79E 33.3
Mkt Cap: $17.5B EPS 2002 $3.25E $3.25E N/A 28.5
FY: 12/31 Price Target $95 $95
Rank 2 2
*Omnicom is due to report 1Q results on Tuesday, April 24th before the
market opens.
*We are looking for earnings of $0.50 p/s (+12.8% Y/Y) on revenue of $1.58
billion (+14.3% Y/Y). Consensus forecast is $0.51 p/s.
*We continue to believe Omnicom has the best growth prospects in the
industry based on powerful new business wins during '00 and
1Q01.
*We project organic growth of 13%-14% and modest 20 bps improvement in
operating margins.
*The primary focus will be on forward guidance as the U.S. ad market has
clearly weakened and we suspect some marketing services
are under pressure.
*OMC is up 12% over the past two weeks and now trades at 31.8x our '01 est.
We believe earnings upside will be needed to maintain
current valuation levels.

eBay, Inc(EBAY) 3 - Market Perform H. Becker, .212.526.1764
eBay Reports Solid 1Q'01 (C)
OLD NEW STREET P/E
Price: $49.99 EPS 2000 N/A $0.24 N/A N/A
52 Wk Ra: $82 - 27 EPS 2001 $0.33E $0.36E $0.36E 138.9
Mkt Cap: $13.9B EPS 2002 $0.62E $0.62E $0.64E 80.6
FY: 12/31 Price Target N/A N/A
Rank 3 3
*As expected, eBay reported solid 1Q'01 results that were ahead of our
estimates.
*EPS came in at $0.11 ($0.03 better than our est which was in-line with
consensus) on revenue of $154 mm vs our estimate of $150
mm.
*Growth in key operating metrics was robust as well- gross merchandise sales
were up 72%YoY, registered users were up 135% YoY,
and auctions listed were up 66% YoY.
*We are increasing our 2001 revenue est. from $662 mm to $679 mm (up 58%
YoY) and maintaining EPS estimates for the next three
quarters.
*Despite these strong results, we continue to believe that at 136x 2001E
EPS, the risk reward of the stock is not favorable. We remain
concerned that new initiatives may struggle to take off and hold back
profitability.
*Given our concerns about growth and valuation, we are maintaining our 3
(Market Perform) rating.

INITIATING COVERAGE
KPMG Consulting(KCIN) 2 - Buy K. Keirstead, .212.526.0442
Initiate With 2-Buy Rating (C)
OLD NEW STREET P/E
Price: $16 EPS 2000 N/A $0.50 N/A N/A
52 Wk Ra: $24 - 11 EPS 2001 N/A $0.78E N/A 20.5
Mkt Cap: $2.5B EPS 2002 N/A $0.94E N/A 17.0
FY: 6/30 Price Target N/A $21
Rank N 2
*We initiate coverage of KPMG Consulting shares with a 2-Buy rating and a
12-month price target of $21 per share, based on an
assumed multiple of 20 times our CY02 EPS estimate of $1.05 per share. KPMG
Consulting is one of the worlds largest consulting
and IT services firms and completed a $2.3 billion IPO in early February at
$18 per share.
*Yesterday after the close KPMG pre-announced in-line March quarter revenues
and headcount cuts of 5% of the workforce. We
expect EPS of 24 cents, just below current consensus of 25 cents. In our
view, these results will be viewed as a positive. Our CY01
EPS estimate of 90 cents and our CY02 estimate of $1.05 (up 16%) are
moderately below Street consensus. KPMG expects to report
after the close on May 1st.
*At $16 per share, KPMG Consulting shares trade at 18 times our CY01 EPS
estimate and 15 times our CY02 EPS estimate. In our
view this multiple is very fair but unlikely to rally near-term due to the
difficult market conditions and challenges faced by KPMG's
major alliance partners Oracle, SAP and Cisco.

FOCUS STOCKS

Nortel Networks(NT) 2 - Buy T. Luke, .212.526.4993
Weak 1Q01, Limited Visibility, Ests Lowered (A)
OLD NEW STREET P/E
Price: $17.45 EPS 2000 N/A $0.74 N/A N/A
52 Wk Ra: $86 - 13 EPS 2001 $0.25E $0.05E $0.17E 349.0
Mkt Cap: $55.5B EPS 2002 $0.60E $0.50E $0.58E 34.9
FY: 12/31 Price Target $17 $17
Rank 2 2
*Post close yesterday, Nortel reported weak 1Q01 results following its
recent preannouncement. We consider NT's decision not to
provide guidance for FY01 & suggestion the usually seasonally stronger 2Q
could potentially below 1Q underlines ongoing weakness
in the service provider comm equipment market. We are once again lowering
our ests & see few n-term catalysts for shares at current
levels.
*Sales of $6.2B down 2%YoY reflected particular weakness in long haul
optical (-30% impacted by excess capacity/pricing) &
circuit switching with optical metro & wireless (+38% YoY) seeing solid
growth. US -23%, ROW +38%. Book to Bill 0.80.
*Gross margins down from 45.5% 4Q00 to 30.1% 1Q01 with n-term outlook
uncertain, announced further 5,000 job cuts now @
20,000 in total. Bal sheet broadly intact, slight QoQ decline in
receivables, inventories
*Ests Move to $0.05 in 01 & $0.50 in 02 from $0.25 & $0.60. 01 revs $27B
-11%. With shares at 35xCY02 would be more aggressive
at $12-13 range

Microsoft Corp(MSFT) 1 - Strong Buy M. Stanek, .650.289.6027
MSFT 3Q Results - A Penny Saved Is A Penny Earned (C)
OLD NEW STREET P/E
Price: $65.43 EPS 2000 N/A $1.70 N/A N/A
52 Wk Ra: $83 - 40 EPS 2001 $1.78E $1.81E $1.78E 36.1
Mkt Cap: $362.4B EPS 2002 $1.87E $1.91E $2.01E 34.3
FY: 6/30 Price Target $115 $115
Rank 1 1
*MSFT beat our estimate by $200M and $0.02 with results of $6.4B and $0.44
EPS. The diff vs. our estimates was recognition of
$130M ($0.02) in deferred revs.
*Guidance for Q4 called for $6.4B and $0.42. FY02 estimates 12% topline
growth (about 2% better than expected) and 6% EPS
growth. We expect to see some operating margin pressure due to Windows XP
and XBox marketing blitzes.
*Overall the product line-up is strong, and the financial leverage to MSFT
apparent. But while unit growth still remains weak now, we
do expect a pick-up in seasonal PC shipments into the high single digit
range.
*To rationalize the current valuation, MSFT needs to get to 12-15% EPS
growth we believe they can achieve this going into the
holiday selling season. Given that the stock is up 10% in a week, and 40%
YTD, we would accumulate on weakness knowing that it
will be a slow summer.

Sun Microsystems(SUNW) 1 - Strong Buy G. Elling, .212.526.3823
Disappointing Q, with More Tough Comps Ahead (C)
OLD NEW STREET P/E
Price: $20.71 EPS 2000 N/A $0.51 N/A N/A
52 Wk Ra: $65 - 13 EPS 2001 $0.48E $0.44E $0.47E 47.1
Mkt Cap: $69.5B EPS 2002 $0.60E $0.52E $0.85E 39.8
FY: 6/30 Price Target $40 $40
Rank 1 1
*Yesterday Sun reported 3Q01 results, with revs below our ests., and EPS
in-line. Sun faced a trying quarter, with a combination of
several pressures weighing in, including tough comps & weak US demand. The
quarter was disappointing, with the shorter-term
outlook still tenuous. Nonetheless, looking out to CY02, our belief is that
several catalysts can drive Sun to renewed momentum.
These include U-III portfolio of products, storage, Internet Infrastructure,
iPlanet and Cobalt-based products. While worldwide IT
spending upturn may be a few quarters away, in our view, Sun's shares are
among those to own once the cycle turns. We continue to
view Sun as well-positioned and maintain our 1-Strong Buy rating.
*Due to near term uncertainty, we are reducing our current estimates. For
4Q01, we are estimating revs to decline by 16.9% and EPS
at $0.05, down 75%, making FY01 ests.17.2% rev growth and EPS at $0.44. In
FY02, we are lowering our rev growth est. to 15.1%
and EPS est. to $0.52.

Textron Inc(TXT) 3 - Market Perform D. Zwyer, .212.526.2008
Lowers Guidance For 2001; Reports 1Q01 Results (A)
OLD NEW STREET P/E
Price: $56.76 EPS 2000 N/A $4.65 N/A N/A
52 Wk Ra: $66 - 41 EPS 2001 $4.05E $4.05E $4.74E 14.0
Mkt Cap: $8.1B EPS 2002 $4.45E $4.45E $5.26E 12.8
FY: 12/31 Price Target $48 $48
Rank 3 3
*Although 1Q01 EPS of $1.00 (vs. $1.06 a yr. ago) was above our $0.88 est.,
TXT lowered its EPS guidance for the yr. and now
expects EPS for 2001 at $4.65, flat with 2000 levels vs. its previous 5%
growth forecast. Textron expects 2Q01 EPS to be about
$1.10, down 11% from last year. We are keeping our 2001 est. at $4.05 and
maintain our cautious 3 Market Perform rating. We
believe investors are too complacent about the negative impact of the weak
economy on TXT's businesses.
*Aircraft results improved in 1Q01 vs. last yr. However this is the first
qtr. since '98 where backlog at Cessna dropped on a sequential
basis. Backlog at Bell declined for the 5th consecutive qtr. These trends
support our cautious view on the segment although the
current backlog is still quite strong.
*Automotive sales were down 19% & profits dropped 25%. Fastening Systems
sales declined 14% with profits down 19%. Results in
these segments were essentially in-line with our expectations. Textron
Financial revenues were below our expectations, but profits
were higher than our forecast.

COMPANY/INDUSTRY UPDATES
International Game Tech(IGT) 3 - Market Perform J. Minor, .617.342.4120
Reiterate 3-Rating, Smaller Jackpot in 2H01 (A)
OLD NEW STREET P/E
Price: $54.56 EPS 2000 N/A $1.77 N/A N/A
52 Wk Ra: $59 - 24 EPS 2001 $2.55E $2.72E $2.57E 20.1
Mkt Cap: $4.2B EPS 2002 $2.85E $3.00E $2.88E 18.2
FY: 9/30 Price Target N/A N/A
Rank 3 3
*Yesterday, IGT reported F2Q01 EPS of $0.70 vs. $0.34 in F2Q00, $0.04 above
us and $0.05 above consensus (less than the $0.13
surprise of F1Q01). The quarter was strong, but the 2H jackpot won't be as
large as it: 1) will not have the pricing spike of 1Q, 2)
has no unit growth (vs. +43% in 1H), and, 3) has less demand from Native
Americans in California. In addition, we remain
unconvinced that cashless will accelerate replacement. With a historically
high valuation despite earnings growth deceleration, we
maintain our 3-Market Perform rating.
*Better than expected pricing was responsible for the $0.05 upside surprise.
IGT expressed comfort with the high end of consensus for
2001. We are upping our estimates to reflect the surprise and somewhat less
conservative pricing assumptions, though we forecast
pricing below the spiked level of F2Q01.
*Unit growth will no longer provide a boost to earnings, as production of
30,000 or so is flat Q/Q going forward vs. up 43% in F1H01.

IDEC Pharmaceuticals(IDPH) 2 - Buy M. Wood, .212.526.4035
IDEC 1Q EPS Consistent with Pre-Announcement (A,C)
OLD NEW STREET P/E
Price: $54.65 EPS 2000 N/A $0.30 N/A N/A
52 Wk Ra: $78 - 19 EPS 2001 $0.55E $0.52E $0.56E 105.1
Mkt Cap: $8.1B EPS 2002 $0.77E $0.67E $0.78E 81.6
FY: 12/31 Price Target $49 $49
Rank 2 2
*IDEC quarter consistent with pre-announced numbers. We are adjusting our
model to reflect delayed Zevalin launch.
*IDEC reported 1Q 2001 EPS of $0.12 per share, representing a profit of
$20.8 million. This was consistent with the numbers pre-announced
on April 12th.
*Sales for lead product Rituxan were $168 million in the 1st quarter, making
it the fourth consecutive impressive quarter for the drug.
*IDEC management confirmed that it expects to receive a Complete Review
Letter on Zevalin from the FDA in early May, and it does
not anticipate an invitation to the June advisory panel meeting. We are now
assuming Zevalin launch in 1Q 2002.
*Our EPS forecasts are at $0.52, $0.67, and $0.82 per share in the years
2001-2003, down from $0.55, $0.77 and $0.86. Our EPS
changed because of reductions in our Zevalin forecast and increases in our
expense projections.


David C. Morris
Sr. VP Lehman Brothers
713-652-7112/800-227-4537
dcmorris@lehman.com

Disclosure Legend: A-Lehman Brothers Inc. managed or co-managed within the
past three years a public offering of securities for this company. B-An
employee of Lehman Brothers Inc. is a director of this company. C-Lehman
Brothers Inc. makes a market in the securities of this company. G-The
Lehman Brothers analyst who covers this company also has position in its
securities.
Key to Investment Rankings: This is a guide to expected total return (price
performance plus dividend) relative to the total return of the stock's local
market over the next 12 months. 1 = Strong Buy (expected to outperform the
market by 15 or more percentage points); 2=Buy (expected to outperform
the market by 5-15 percentage points); 3=Market Perform (expected to perform
in line with the market, plus or minus 5 percentage points); 4=Market
Underperform (expected to underperform the market by 5-15 percentage
points); 5=Sell (expected to underperform the market by 15 or more
percentage
points).
This document is for information purposes only. We do not represent that
this information is complete or accurate. All opinions are subject to
change.
The securities mentioned may not be eligible for sale in some states or
countries. This document has been prepared by Lehman Brothers Inc., Member
SIPC, on behalf of Lehman Brothers International (Europe), which is
regulated by the SFA. ?Lehman Brothers, Inc.


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 - MF April 20th 2001.pdf