NEW YORK (CNNfn) - Analysts focused on bellwether technology companies IBM and Intel Wednesday, their earnings reports inspiring a variety of reactions. Analysts also anticipated a report from Texas Instruments and commented on the immediate future of retail sales.
Lehman Brothers kept its "buy" rating and $65 price target for Intel (INTC: Research, Estimates), which reported better-than-expected third-quarter earnings Tuesday.
Lehman raised its 2000 earnings estimate for Intel, to $1.69 a share from $1.63.
Credit Suisse First Boston, on the other hand, cut its rating on Intel to "buy" from "strong buy."
SG Cowen kept its "neutral" rating on Intel, saying it remained cautious about the first half of 2001 due to price pressure.
ABN Amro raised its rating on Intel to "outperform" from "hold" and set a 12-month price target of $44 for the stock.
Intel shares were up $1.44 to $37.63 in early trading.
Lehman Brothers cut its rating on Texas Instruments (TXN: Research, Estimates) -- which is expected to report earnings Wednesday after the market close -- to "neutral" from "outperform," saying it thought revenue growth would be flat from the third quarter to the fourth.
Lehman said it expected it would need to lower its earnings estimates for the semiconductor company in the near future.
SG Cowen also raised its earnings estimates for another chip stock, Cypress Semiconductor (CY: Research, Estimates), which it rates a "strong buy." Cowen raised its 2000 estimate to $2.39 a share from $2.22 and its 2001 estimate to $3.05 from $2.75.
SG Cowen also raised estimates for chip maker Xilinx (XLNX: Research, Estimates), which it rates a "buy." It raised its third-quarter 2001 estimate to $1.31 to $1.27 and its third-quarter 2002 estimate to $1.83 from $1.68.
Credit Suisse First Boston downgraded wireless equipment maker RF Micro Devices (RFMD: Research, Estimates) to "buy" from "strong buy," and CIBC World Markets lowered it to "hold" from "strong buy."
Big Blues
Bear Stearns reiterated its "buy" rating on IBM (IBM: Research, Estimates) after the world's biggest computer maker posted disappointing third-quarter sales.
Bear Stearns analyst Andrew Neff cut his revenue estimates for 2000 to $87.8 billion from $90.3 billion and his 2001 revenue estimate to $95.2 billion from $98.8 billion, essentially due to improvements in operating expense levels.
He maintained his earnings estimates of $4.45 per share in 2000 and $5 per share in 2001.
Bear Stearns said that despite a major shortfall in revenue, IBM's third-quarter earnings of $1.08 per share were in line with its expectations and the consensus estimate compiled by First Call.
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Revenue of $21.78 billion, up 3 percent from a year earlier, was $1 billion below Bear Stearns' expectations, but the brokerage said IBM met earnings expectations with better-than-expected operating expense control.
It said that while it was "disappointed that the revenue growth is not coming in as quickly as we expected," it does see "several business positives going into 2001."
"IBM should be able to show accelerating revenue growth in 2001 from services, mainframe, personal computers, OEM Technology and UNIX servers," which together represent 80 to 90 percent of its revenue, Bear Stearns said. "But IBM will have to do better to get investors to believe that it can show sustainable revenue growth."
Bear Stearns said improvement in PC profitability should give an uptick to earnings per share. But, the brokerage added, with the potential for new product transition issues to affect the fourth quarter and the possibility of aggressive pricing by PC vendors, IBM's near-term results could carry an element of surprise.
Paine Webber kept its "buy" rating and $140 price target on IBM and raised its 2000 earnings estimate to $4.45 a share from $4.41.
Prudential Securities, on the other hand, cut its rating on IBM to "hold" from "accumulate."
SG Cowen maintained its "strong buy" rating on IBM, saying it was optimistic on the fourth quarter and 2001.
IBM shares were being punished in early trading, down $21 to $92.
Gap for the holidays
Merrill Lynch raised its near-term rating on Gap (GPS: Research, Estimates) to "buy" from "neutral," saying it thought the apparel retailer would take "an aggressive approach to becoming the Gap again over the holiday season."
Merrill Lynch said early delivery of pre-holiday merchandise looks good and a mid-November marketing campaign should generate excitement. It said third-quarter earnings could suffer as Gap clears the dead wood out of its stores to make room for holiday merchandise, but performance should improve in the fourth quarter.
Merrill Lynch analyst Peter Caruso also made general predictions about the holiday retail season, saying he thought sales in 1998 and 1999 were artificially bloated and should be more normal this year, especially given the high price of oil.
"Within this environment, retailing stocks overall may continue to
underperform the S&P 500 for at least the next one to two quarters as investors try to avoid the slowdown," Caruso said.
And Merrill Lynch analyst Dan Barry said, "We are expecting a Christmas characterized by two seemingly contradictory and dynamic themes: (First), the worst Christmas for sales and profits since 1995; and, (second), an end to the broadline retailing sales slowdown and to the relative decline in broadline retailing stock prices."
UBS Warburg initiated coverage of retailers Nordstrom (JWN: Research, Estimates), Sears (S: Research, Estimates), J.C. Penney (JCP: Research, Estimates), May Department Stores (MAY: Research, Estimates), Federated Department Stores (FD: Research, Estimates) and Saks (SKS: Research, Estimates), giving them a "hold" rating.
UBS Warburg said the ratings "largely reflect our view that industry sales momentum, as forecasted by the Retail Sales Predictor (RSP), will be sluggish through the remainder of the year and into 2001."
Market share losses to discount and specialty share will continue to have an impact on industry earnings growth, the investment bank said.
It also said it remains cautious about strategy at J.C. Penney, Nordstrom and Saks, restructuring at Saks and senior management changes at Nordstrom.
Merrill, AXA, EFI, Caterpillar
Morgan Stanley Dean Witter upgraded Merrill Lynch (MER: Research, Estimates), the world's No. 1 brokerage, to "outperform" from "neutral," with a $71 price target.
Goldman Sachs lowered earnings estimates on AXA Financial (AXF: Research, Estimates), the holding company that owns life insurer Equitable Life.
Analyst Joan Zief lowered the 2000 earnings estimate to $2.03 per share from $2.95 per share. For 2001, Zief expects AXA to report earnings of $2.39, down from a previous estimate of $3.35.
AXA shares remain on Goldman's list of U.S. stocks recommended for purchase.
Lehman Brothers slashed its price target for Electronics for Imaging (EFII: Research, Estimates) to $20 from $34, but maintained an "outperform" rating on the shares after the company lowered its profit forecast for the fourth quarter and 2001.
In a report dated Oct. 17 and released on Wednesday, Lehman also said it lowered estimated fourth-quarter earnings per share to 6 cents a share from 46 cents and cut fiscal 2001 EPS estimates to 90 cents from $2.
"EFI is experiencing softer demand across the board," the report said. "We will need to see a firming of end-market demand before we can get excited over the stock again."
EFI, which makes printer connectivity software, closed at $11.94 on Tuesday.
ABN Amro cut its 12-month price target for machinery company Caterpillar (CAT: Research, Estimates) after it announced a plan to streamline its operations. ABN Amro cut its target to $51 from $54 and its 2001 earnings estimate to $3.65 a share from $3.70.
Up with Peoplesoft
Lehman Brothers raised its earnings estimates for business management software maker PeopleSoft (PSFT: Research, Estimates) after the company reported third-quarter earnings that beat analysts' expectations.
Lehman raised its 2000 earnings estimate to 28 cents a share from 27 cents and its 2001 estimate to 60 cents a share from 50 cents. It also raised its price target on the stock to $44 from $30.
ING Barings upgraded its rating on PeopleSoft to "buy" from "hold."
European earnings
Deutsche Bank said it restarted coverage of domestic appliance maker Electrolux (ELUX: Research, Estimates) with a "market performer" rating.
In a research note ahead of third-quarter earnings due from the company on Oct. 27, analysts at the investment bank said their cautious view reflected worsening business conditions.
"Input prices are rising, growth is slowing down and price pressure is increasing in Europe and North America," the note said.
"The new management at the European white goods operations is likely to put more efforts into cutting sales costs," the note said. "This will hurt earnings in the short run, but we are optimistic about the result in the longer term."
 Deutsche Bank also cut earnings estimates for Philips Electronics (PHG: Research, Estimates), but kept its recommendation unchanged at "buy."
Some analysts felt Philips Electronics failed to give sufficient details of its future earnings prospects while reporting third-quarter earnings that met analysts' expectations.
Deutsche said Philips' third-quarter results had been solid, but insufficient to quell recent market nervousness, adding the stock was expected to remain volatile.
Cutting Forest, Mountain
Prudential Securities cut its rating on Forest Laboratories (FRX: Research, Estimates) to "accumulate" from "strong buy," based on what it called "relatively limited upside from current levels."
The drug maker on Tuesday posted second quarter earnings well above analysts' expectations, on soaring sales of its antidepressant drug Celexa.
Despite the downgrade, Prudential called the earnings "high quality" in a note, adding: "We do continue to believe however, that fundamentally, Forest Labs is still among the best in its peer group, and is currently trading at a premium to its peers.
Prudential said that Celexa came in better than expectations, once again, at $169 million compared with their estimate of $165 million for the quarter.
Shares of Forest Labs were off $2.75 to $114.38 in early trading.
US Bancorp slashed its fourth-quarter earnings outlook for digital-subscriber line company Copper Mountain (CMTN: Research, Estimates), to 4 cents a share from 27 cents, and its 2001 earnings outlook to 18 cents a share from $1.36 a share. 
-- compiled by Mark Gongloff from staff and wire reports
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