NEW YORK – Capital spending, particularly on information technology, may be slowing, but that doesn’t mean it will stop.

“We’re still seeing companies make investments,” says Kathryn Korostoff, president of Sage Research, a Natick, Mass.-based information technology market research firm. “Now it just takes longer to get purchases approved.”

Korostoff says companies are looking for technologies that can deliver more “bang for the buck” vis-à-vis their existing technology investments. Important considerations: cost savings and employee productivity.

One example is Cupertino, Calif.-based Packeteer (nasdaq: PKTR – news – people ), whose PacketShaper hardware and software allows businesses to monitor application performance over wide area networks. The PacketShaper system detects and classifies network traffic by several criteria, including application type, application content, user and URL. The company can then make sure that bandwidth-clogging programs, such as music-sharing applications, don’t derail important business applications. Packeteer customers include PricewaterhouseCoopers, Sony (nyse: SNE – news – people ) and privately held Domino’s Pizza.

Full story at Forbes.com

NEW YORK – Of the 210 IPOs between June 1 and Dec. 31 of 2000, only 53 stocks now trade above their offering price.

Though not a decisive indicator of a newly public company’s health, it is a good sign when, after several months, a stock trades above its offering price–particularly in the current market. “That shows the company has some investor backing,” says Richard Peterson, market strategist at Thomson Financial.

Peterson adds that investors should scrutinize the longer-term viability of such companies by taking a critical look at the business model, earnings prospects and competitive pressures.

One example: eFunds (nasdaq: EFDS – news – people ), formerly a subsidiary of check-printing concern Deluxe (nyse: DLX – news – people ), which provides electronic transaction processing services and risk management. In June 2000, eFunds went public with 5.5 million shares at $13.00 each. EFunds sank to $6 by October but staged a dramatic recovery. Its recent price: $22.50.

What’s behind the rebound? “I think you had a lot of short covering,” says Gary Prestopino, vice president and senior analyst at Barrington Research Associates, a Chicago-based brokerage firm. Short covering is when investors close out short-sale positions by purchasing the shares borrowed from brokers. “The company subsequently put out some good quarterly numbers,” adds Prestopino.

As for other positives, Prestopino notes that 90% of eFunds’ revenue is from multiyear contracts. In its latest fiscal year, reported in December, eFunds earned $4.6 million on sales of $418 million, or 11 cents per share. Security analysts expect profits of 85 cents per share this year and $1.23 in 2002, giving eFunds estimated price-to-earnings (P/E) multiples of 27 and 18 for 2001 and 2002, respectively.

Full story at Forbes.com

NEW YORK – With the second quarter of 2001 almost at a close, big capitalization stocks have moved off their lows from earlier in the year but are still in a funk. The Dow Jones industrials are up just 2% so far this year, while the broader-based Standard & Poor’s 500 is down 4%.

Allan Rudnick, president and chief investment officer of Kayne Anderson Rudnick Investment Management, a Los Angeles-based money manager with $7 billion in assets, cautions against abandoning large cap stocks. “Our message to clients is that you shouldn’t move from one asset class to another to play a cycle,” he says. In fact, Rudnick sees opportunities in large caps, particularly given the S&P’s 11% correction over the past year.

One stock Rudnick recommends is Gap (nyse: GPS – news – people ), which is off 17% from its 52-week high, due to investors’ concerns about weakness in same-store sales and declining earnings. In mid-May, Gap announced that quarterly earnings were off 51% versus the same quarter a year earlier.

Gap, however, satisfies several of Rudnick’s criteria, notably a healthy latest 12-month return on equity of 25% and annualized earnings growth of 27% over the last five fiscal years.

Full story at Forbes.com

NEW YORK – When it comes to earnings estimates, close agreement among analysts isn’t necessarily a good thing. “It makes me nervous when analysts are that sure of themselves,” says Joseph Kalinowski, equity strategist at Thomson Financial/IBES.

Close agreement among analysts should draw more suspicion when valuations are high in a particular sector and analysts are revising their estimates upward in lockstep. “In that situation, if a company starts to miss or gives downward guidance,” Kalinowski explains, “it can all come crashing down.”

On the other hand, too much divergence among analysts can signal a problem. For example, 2001 earnings-per-share (EPS) forecasts for Lucent Technologies (nyse: LU – news – people) range from 40 cents to -$1.25 per share. Given Lucent’s 3.4 billion common shares outstanding, this represents a difference of $2.9 billion in projected losses.

How do investors know when variation between earnings estimates is too great, too little, or just right? Kalinowski uses a statistic known as the coefficient of variation (CV), which measures how similar earnings forecasts are to each other. Generally, a small CV indicates strong agreement among analysts and a large CV indicates strong disagreement.

Kalinowski suggests that investors compare a company’s current CV against its historical CV, or against the industry average. “When the CV is in line with and above either of these numbers, earnings surprises tend to have less effect on the price of a company’s stock,” explains Kalinowski.

Full story at Forbes.com

As portfolio manager of the Prudent Bear Fund, David Tice has made a name for himself with bearish calls. Forbes gives his $165 million fund an A+ in down markets and an F in up markets. But Tice does more than short stocks, for even now 14% of his stock portfolio consists of long positions. What stocks is this bear buying now?

Gold and silver shares—because they tend to be countercyclical. Tice says the U.S. economy’s slowdown means trouble for the dollar and that’s good for dollar hedges like gold. He owns Harmony Gold (nasdaq: HGMCY – news – people ), a South African firm with sales of $491 million in its latest fiscal year. Tice describes Harmony as a well-managed and efficient integrator of acquisitions and notes that the stock trades at just nine times trailing profits. It yields 3%.

More speculative is Tice’s holding in Avigen, an Alameda, Calif.-based developer of gene-therapy products. He likes the science, not the bottom line—the company’s deep in the red. The attraction is Avigen’s “AAV Vector” gene therapy; this technology allows a modified virus to carry a therapeutic gene into a target cell and could cure hereditary emphysema and other diseases.

Henry Van der Eb is another chronic bear who is finally having his day. He is the manager of the Gabelli Mathers fund, which blends a large fixed-income portfolio with long and short equity positions. This earned his fund a Forbes grade of A in down markets and F in up ones. Last year the fund made 5%, putting it 14 points ahead of the S&P 500. He’s still bearish, figuring the market’s price/earnings multiple should fall from a recent 21 to 16. But for the moment he has closed out his short positions and has found a few stocks to like. Example: OfficeMax.

Full story at Forbes.com

NEW YORK – The significance of accounts receivable–money owed a company for merchandise or services provided on account–can be hard to pin down. For example, if accounts receivable show a decline over a given period, it could suggest a company isn’t bringing in enough new business.

But increases in accounts receivable can also indicate a problem; the general presumption is that the older a receivable gets, the less likely it is to get paid off.

How can investors interpret accounts receivable information? “If sales are improving while receivables are going down, that’s a sign that either the company’s customers are paying faster or it’s experiencing fewer collection problems,” says Douglas Carmichael, professor of accounting at the City University of New York’s Baruch College.

Carmichael suggests looking at the difference between the percentage decline in receivables and percentage gain in sales, as well as how the two figures stack up in relation to competitors.

Example: Adolph Coors (nyse: RKY – news – people), a Golden, Colo.-based brewer. In early February, the company reported that sales for the quarter ended in December 2000 had increased 7% versus the same quarter a year earlier. Meanwhile, receivables fell 16% during that time.

Full story at Forbes.com

NEW YORK – From July to October 2000, the euro slid 14% against the dollar, falling from 96 cents to an all-time low of 83 cents. The impact on companies with significant exports to Europe wasn’t pretty.

Take C.R. Bard (nyse: BCR – news – people), a manufacturer of medical supplies. In December 2000, the company complained that “dramatic declines in foreign currencies” had shaved $22 million from its fiscal 2000 sales. After the U.S., Europe is the company’s largest market, accounting for 17% of revenue.

So far, 2001 hasn’t proven much kinder to the euro. Against the dollar, the euro has fallen from a January high of 95 cents, to 89 cents. Actions by the European Central Bank haven’t helped. On April 11, the ECB, citing the continuing need to keep inflation in check, announced that key ECB interest rates would remain unchanged. The euro dropped 0.6% on the news.

Despite all this bad news for the euro, some experts think the currency is set to rebound. “In the short run, until the ECB clarifies exactly what it’s doing, the euro will be under pressure,” says Subodh Kumar, chief investment strategist at CIBC World Markets, “But I still believe the best location for the euro is around par to the dollar.”

Kumar predicts eurozone economies will expand between 2.5% and 3% this year. With that kind of growth–and eventual rate cuts by the ECB–he thinks the euro will approach parity with the dollar by the end of the year.

That scenario would benefit the companies in the medical devices sector, says Sandy Hollenhorst, senior medical technology analyst at Prudential Securities. Hollenhorst thinks a strengthening euro would add to the revenue of a company like C.R. Bard.

Full story at Forbes.com

NEW YORK – Insurer American General is in play with American International Group, recently outbidding Britain’s Prudential with a $23 billion offer for the company. On April 10, Prudential fired back by announcing an action against AIG for interfering with its plans.

Despite the litigation, analysts say the pace of insurance industry consolidation should increase from here.

“Insurance companies need to develop their brands as consumer financial services organizations,” explains Vanessa Wilson, analyst at Deutsche Bank Alex. Brown, “but many just don’t have the scale to finance the technology spending and advertising necessary to do that.”

One takeover candidate: Jefferson-Pilot (nyse: JP – news – people), a Greensboro, N.C.-based provider of insurance and annuities with $26 billion under management. Andrew Kligerman, analyst at Bear, Stearns, sees Jefferson being acquired by a bank, as opposed to another insurer. “Their management team believes in the bank assurance model, where banks are active in the sale of insurance products,” says Kligerman.

Enterprise value–a company’s market value plus total debt and the liquidation value of preferred stocks minus cash and equivalents–provides a snapshot of the minimum price for acquiring a company. Jefferson Pilot’s enterprise value stands at $8.1 billion.

Full story at Forbes.com