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Morgan Stanley CIO Survey Series (12 pages)
Comment
Please see analyst certification and other important disclosures starting on page 8
Page 1
Industry
Equity Research
North America
Morgan Stanley does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision. Customers of Morgan Stanley in the United States can receive independent, third-party
research on the company or companies covered in this report, at no cost to them, where such research is available. Customers can access
this independent research at www.morganstanley.com/equityresearch or can call 800-624-2063 to request a copy of this research.
David M. Togut, CFA Industry Overview June 22, 2005
+1 (1)212 761 6388
david.togut@morganstanley.com
Laurie Kennedy
+1 (1)212 761 7038
laurie.kennedy@morganstanley.com
Morgan Stanley CIO Survey:
Slowing IT Budget Growth
GICS SECTOR INFORMATION TECHNOLOGY
US Strategist Weight 13.9%
S&P 500 Weight 15.1%
MORGAN STANLEY US TECHNOLOGY TEAM
Communications Equipment:
scott.coleman@morganstanley.com
john.marchetti@morganstanley.com
Computer Services & IT Consulting:
david.togut@morganstanley.com
laurie.kennedy@morganstanley.com
charles.murphy@morganstanley.com
Electronics Supply Chain:
bernie.mahon@morganstanley.com
Enterprise Software:
ross.macmillan@morganstanley.com
Enterprise Systems & PC Hardware:
rebecca.runkle@morganstanley.com
kathryn.huberty@morganstanley.com
Internet & PC Applications Software:
mary.meeker@morganstanley.com
brian.pitz@morganstanley.com
brian.fitzgerald@morganstanley.com
Semiconductors:
mark.edelstone@morganstanley.com
louis.gerhardy@morganstanley.com
harlan.sur@morganstanley.com
Semiconductor Capital Equipment:
timm.schulze-melander@morganstanley.com
Specialized IT Services:
julie.santoriello@morganstanley.com
Survey
cio
• 2005 IT spending growth slips
Our May, 2005 CIO Survey forecasts 4.6% cash IT budget growth this year, down
from 5.1% in March. IT budget revisions are now almost as likely to be down as up, as
CIOs become more guarded in their outlook for the US economy.
• Most parts of tech stack to sustain decelerating spending growth
2005 cash spending on hardware expected to slow to 2.6%, down from 3.2% forecasted
in March, 2005, growth in software spending to slip to 3.5% from 3.8%, while IT
personnel gains could fall to 3.6% from 4.4%. Bucking the trend are network
equipment, up 30 basis points to 3.4%, and outsourced services, which could grow
2.8%, up from 2.4% estimated in March, 2005.
• Largest increases and declines in CIO spending priorities
Optical transport and business process outsourcing posted the strongest gain, while the
largest declines were registered by gigabit Ethernet, printers, consulting and systems
integration, portal software, application server software, infrastructure outsourcing, and
Layer-3 switching.
• Companion IT services report points to flat 2005 demand and pricing
CIOs are turning more cautious on IT services spending and pricing. Consulting and
systems integration show the strongest demand within the context of flat IT services
spending. For CIOs, price is the most important IT services vendor selection criteria.
We see continued earnings risk for the consulting firms given operating margin
pressure driven by 3% forecasted wage inflation yet only 1% billing rate increases.
Enterprise Technology
Enterprise Technology – June 22, 2005
Please see analyst certification and other important disclosures starting on page 8
Page 2
Morgan Stanley CIO Survey: Slowing IT Budget Growth
This report contains the latest results of our ongoing
CIO Survey Series, which we have published in its current
form since the beginning of 1999. The survey is conducted
by telephone and uses a respondent base of 300 IT
executives, of which 225 participate in the survey for each
round of interviews.
This report contains results from our latest round of surveys,
conducted from May 9 to May 20, 2005. All responses
were collected in strict confidence and were used only in
combination with all others in the survey sample. The
survey yields a total of 225 responses from IT executives of
the Fortune 1000. We present the results of the survey in
the exhibits on the following pages.
Our survey focuses on enterprise technology spending by
the Fortune 1000. The Morgan Stanley Technology
Research Team believes that small-and-medium businesses
(SMBs) and consumers are driving higher IT demand
growth than enterprises. Rebecca Runkle, Morgan Stanley's
hardware analyst notes that global PC unit shipment endmarket
demand is derived as follows: 35% from consumers,
25% from enterprises, 25% from SMBs, 8% from the
education market and 6% from government. Mary Meeker,
Morgan Stanley's Internet and PC Application Software
analyst, estimates that Microsoft derives 35% of its endmarket
revenue from consumers, 35% from enterprises and
30% from SMBs.
Exhibit 1
Respondents — By Industry
Industry % of Respondents
Financial Services 20%
Consumer Discretionary 12%
Information Technology 11%
Industrials 8%
Telecommunication Services 8%
Health Care 8%
Consulting / Services 8%
Consumer Staples 6%
Materials 3%
Manufacturing 2%
Public Sector 2%
Utilities 2%
Energy 2%
Other 8%
Source: Morgan Stanley CIO Survey, May 2005.
Exhibit 2
Respondents — By Company Revenues
Revenues % of Respondents
Under $1 Billion 6%
$1 – 5 Billion 37%
$6 – 10 Billion 21%
$11 – 20 Billion 19%
$21 – 30 Billion 8%
Greater than $30 Billion 9%
Unable to Comment 1%
Source: Morgan Stanley CIO Survey, May 2005.
Enterprise Technology – June 22, 2005
Please see analyst certification and other important disclosures starting on page 8
Page 3
Slight Downtick for 2005 IT Budgets, With Greater Likelihood of Revisions
Exhibit 3
For 2005, Forecasted Cash IT Budget Growth of 4.6%, Down 50 basis points Versus Mar-05 Expectations.
By what percentage will the cash outlays portion of
your IT Budget change for 2005 vs. 2004?
2%
6% 6%
1%
5%
7%
34%
22%
1%
5%
7%
36%
14%
23%
15%
33%
15% 16% 16% 14%
21%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Decrease
by greater
than 10%
Decrease
by 6% to
10%
Decrease
by 1% to
5%
Flat Increase
by 1% to
5%
Increase
by 6% to
10%
Increase
by greater
than 10%
% of Responses
Jan-05 Mar-05 May-05
For 2005, CIOs expect 4.6% cash IT budget
growth, down 50 basis points from
expectations in our Mar-05 survey.
Source: Morgan Stanley CIO Survey, May 2005.
Exhibit 4
2005 Budget Revisions Almost as Likely to be Down as Up, a Negative Change from March, 2005
What are your expectations regarding potential revisions to
2005 IT budget plans?
24%
14% 14%
1%
27%
17%
12%
42%
2%
25%
19% 20%
35%
1%
47%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Upward revision is
more likely
Upward or
downward have
equal chance of
occurring
Downward revision
is more likely
No changes to our
budget is more
likely
Not Sure
% of Respondents
Jan-05 Mar-05 May-05
For 2005, 64% of CIOs expect IT budget
revisions, with upward revisions only 30%
more likely than downward.
Source: Morgan Stanley CIO Survey, May 2005.
Enterprise Technology – June 22, 2005
Please see analyst certification and other important disclosures starting on page 8
Page 4
Higher Second Half Spending Possible, With Firming Pricing Trends
Exhibit 5
Second Half Spending Increase Appears More Likely than in 2004 and 2003
Do you plan to spend more or less on technology products and
services in the second half of the year than you did in the first half?
20%
56%
24%
0%
49%
30%
15%
7%
57%
29%
10%
4%
0%
10%
20%
30%
40%
50%
60%
70%
More Flat Less Unsure
% of Respondants
Sep-03 Sep-04 May-05
Preliminary results suggest a second half
budget flush appears more likely than in
2004 or 2003.
Source: Morgan Stanley CIO Survey, May 2005.
Exhibit 6
CIOs See Stabilization of Pricing Environment
33% 34%
28%
5%
35%
25%
34%
6%
23% 24%
48%
6%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
More
discounting
Less
discounting
No change
expected
Unsure
% of Responses
Jan-05 Mar-05 May-05
For 2005, nearly half of CIOs project flattish
vendor pricing versus earlier expectations
that forecasted less discounting.
What are your expectations regarding the level of discounting by IT
vendors in 2005 vs. 2004?
Source: Morgan Stanley CIO Survey, May 2005.
Enterprise Technology – June 22, 2005
Please see analyst certification and other important disclosures starting on page 8
Page 5
Confidence in Own Business Remains Strong, Economic Outlook Weakening
Exhibit 7
CIOs Continue to Have a Strong Positive Outlook for their Own Business
What is your outlook for your company’s business prospects
over the next 6 months?
15%
4%
20%
2%
82%
2%
82%
17%
1%
79%
19%
3%
81%
16%
3%
81% 78%
16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Positive Neutral Negative
% of Respondents
Jul-04 Sep-04 Nov-04 Jan-05 Mar-05 May-05
In May-05, 81% of CIOs remained optimistic
about their own company’s business
prospects, in-line with beginning of the year
expectations.
Source: Morgan Stanley CIO Survey, May 2005.
Exhibit 8
While CIOs Outlook for the U.S. Economy Continues to Soften
What is your outlook for the US economy over the next
6 months?
65%
3%
49%
47%
4%
64%
31%
5%
72%
24%
4%
58%
39%
4%
32%
62%
3%
35%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Positive Neutral Negative
% of Responses
Jul-04 Sep-04 Nov-04 Jan-05 Mar-05 May-05
In May-05, positive sentiment about the
economy fell 4 percentage points, with the
bulk of such CIOs shifting to a neutral
stance.
Source: Morgan Stanley CIO Survey, May 2005.
Enterprise Technology – June 22, 2005
Please see analyst certification and other important disclosures starting on page 8
Page 6
Executive Summary
2005 Enterprise IT Spending Growth Outlook Modestly
Contracts — Our May 2005 Survey of 225 Fortune 1000
CIOs (chief information officers) points to 2005 cash IT
budget growth of 4.6%, a 50 basis point reduction from
Jan-05 and Mar-05 Survey forecasts. Although CIOs
remain positive on the outlook for their own businesses,
their views on the economy and the direction of potential
budget revisions softened. In contrast, vendor pricing
trends appear to be stabilizing, and over half of CIOs
signaled higher spending over the next six months
compared to the first half of the year. Taken together, we
see softening North America IT spending over the next 2-3
quarters.
Underlying Indicators Suggest Continued Growth, But
Increasing Potential for Downward Revisions:
1. In May 2005, the Up-to-Down Budget Ratio remained
at a record 5.4, matching Jan-05 and Mar-05 levels,
surpassing the previous high of 4.4 posted in Nov-04.
2. However, 20% of CIOs expect negative budget
revisions, up from just 12% in Mar-05. In
May-05 upward budget revisions were only 30% more
likely than downward changes, whereas they were
twice as likely in Mar-05.
3. Over the next six months, 57% of CIOs expect to spend
more on technology products than during the first half
of the year, suggesting a greater likelihood for a second
half budget flush than in 2003 and 2004.
4. 2005 vendor pricing continues to stabilize as nearly
12% of CIOs shifted expectations from more vendor
discounting toward flat pricing. For example, in May-
05, only 23% of CIOs expect more vendor discounting
down from 35% in Mar-05.
5. Over the next six months, 79% of CIOs are optimistic
about their own company’s business prospects, slightly
less than the 82% in January 2005.
6. Our May 2005 survey demonstrated a downtick in the
outlook for the economy. For the next six months, 58%
of CIOs offered a positive outlook for the US economy,
down from 62% in Mar-05 and 72% in Jan-05.
Exhibit 9
Up-to-Down Budget Ratio History
Survey Period Up-to-Down Year-over-Year
Budget Ratio Growth Period
Feb-04 2.74 2004 vs. 2003
Jun-04 2.77 2004 vs. 2003
Jul-04 2.66 2004 vs. 2003
Sept-04 2.46 2004 vs. 2003
Nov-04 2.39 2004 vs. 2003
Jul-04 3.38 2005 vs. 2004
Sep-04 3.78 2005 vs. 2004
Nov-04 4.41 2005 vs. 2004
Jan-05 5.43 2005 vs. 2004
Mar-05 5.43 2005 vs. 2004
May-05 5.39 2005 vs. 2004
Source: Morgan Stanley CIO Survey, May 2005.
Weakened outlook for IT Personnel, Hardware and
Software spending, while Outsourcing demand
rebounds — For 2005, CIOs project approximately 3.5%
year-over-year growth each in spending for IT personnel
and software down from 4% increases in May-05. In
contrast, CIOs have slightly increased spending
expectations for outsourcing and network equipment, to
2.8% and 3.4% from 2.4% and 3.1% in May-05,
respectively.
Exhibit 10
IT Budget Growth By Major Category
By what percentage will your cash outlays portion of your IT
budget change for each of the following technology areas in
2005 vs. 2004?
4.9%
3.4%
3.3%
4.3%
2.5%
3.2% 3.1%
3.8%
4.4%
2.4%
2.8%
2.6%
3.4% 3.5% 3.6%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Hardware Network
Equipment
Software IT Personnel Outsourced
Services
% of Respondents
Jan-05 Mar-05 May-05
Source: Morgan Stanley CIO Survey, May 2005.
Most Significant Changes in Spending Priorities for
2005 — Since our March, 2005 survey, improvements in
CIO spending priorities were marginal and registered by:
Database (up 3), Optical Transport (up 3) and business
process outsourcing (up 3). In contrast, Gigabit Ethernet
demonstrated a sharp move down nine places to 21st.
Smaller priority decreases were posted by: Printers (down
5), Portal Software (down 4), Consulting & Systems
Integration (down 4) and Layer-3 Switching (down 4).
Enterprise Technology – June 22, 2005
Please see analyst certification and other important disclosures starting on page 8
Page 7
Exhibit 11
Technology Spending Priorities Over the Next Twelve Months
Question: Over the next twelve months, how do you expect your spending to change for each of the following technology priorities
relative to your current spending levels?
May-05 Mar-05 Jan-05 Nov-04
Technology Ranking Δ in Rank Ranking Δ in Rank Ranking Δ in Rank Ranking
Security (Network Equipment) 1 Up 1 2 --- 2 --- 2
Security (Software) 2 Down 1 1 --- 1 --- 1
Wireless LAN (access points & routers) 3 N/A N/A --- N/A --- N/A
Storage Hardw are 4 --- 4 --- 4 Up 3 7
VoIP 5 Up 1 6 --- 6 Up 2 8
Storage Area Netw orks (SANS) 6 Dow n 1 5 --- 5 Up 4 9
Storage Softw are 7 Up 1 8 --- 8 Dow n 4 4
Application Integration Softw are 8 Up 2 10 Up 1 11 --- 11
Document Management Softw are 9 --- 9 Up 1 10 Up 3 13
Business Intelligence Softw are 10 Up 1 11 Up 2 13 Up 3 16
Portal Software 11 Down 4 7 --- 7 Up 1 6
Database 12 Up 3 15 Down 3 12 --- 12
Window s 2000/2003 Upgrade - Server 13 --- 13 Dow n 4 9 Up 1 10
Wireless LAN (clients) 14 N/A N/A --- N/A --- N/A
Notebook PCs 15 Up 2 17 Dow n 2 15 Dow n 1 14
CRM - Customer Relationship Mgmt 16 --- 16 --- 16 Dow n 13 3
LAN Telephony 17 Up 1 18 Dow n 1 17 Up 2 19
Application Server Softw are 18 Dow n 4 14 Up 4 18 Dow n 3 15
Window s Servers 19 Up 1 20 Up 1 21 Up 4 25
Intel Servers 20 Dow n 1 19 Up 1 20 Up 3 23
Gigabit Ethernet 21 Down 9 12 Up 2 14 Up 7 21
Window s 2000/XP Upgrade - Desktop 22 --- 22 --- 22 --- 22
Linux Servers 23 --- 23 --- 23 Up 3 26
IT Education and Training 24 Dow n 3 21 Dow n 2 19 Up 1 20
Desktop PCs 25 Dow n 1 24 --- 24 Up 4 28
New Custom Development 26 --- 26 Up 2 28 Dow n 10 18
ERP - Enterprise Resource Planning 27 Up 1 28 Dow n 2 26 Dow n 9 17
Routing 28 Dow n 1 27 Dow n 2 25 Up 2 27
Consulting & Systems Integration 29 Down 4 25 Up 4 29 --- 29
SCM - Supply Chain Management 30 Up 1 31 Dow n 1 30 Up 1 31
Microsoft Office Upgrade 31 Dow n 2 29 Dow n 2 27 Dow n 3 24
Application Outsourcing 32 Up 1 33 Up 2 35 --- 35
E-commerce Softw are 33 Dow n 1 32 Dow n 1 31 Up 2 33
Layer-3 Sw itching 34 Down 4 30 Up 2 32 Down 2 30
Offshore Services 35 --- 35 Up 1 36 --- 36
Procurement and SRM Softw are 36 --- 36 Dow n 2 34 Dow n 2 32
Layer-2 Sw itching 37 Dow n 3 34 Dow n 1 33 Up 1 34
CAD/CAM & EDA Softw are 38 Up 1 39 Up 3 42 Dow n 1 41
Optical Transport 39 Up 3 42 Down 4 38 --- 38
Business Process Outsourcing 40 Up 3 43 --- 43 --- 43
Copiers 41 Dow n 3 38 Up 1 39 Up 1 40
Printers 42 Down 5 37 Up 3 40 Down 1 39
Unix Servers 42 Dow n 1 41 Dow n 4 37 --- 37
Infrastructure Outsourcing 44 Dow n 4 40 Up 1 41 Up 1 42
Mainframe Hardware 45 Down 1 44 --- 44 --- 44
Mainframe Software 46 Down 1 45 --- 45 --- 45
Source: Morgan Stanley CIO Survey, May 2005.
Enterprise Technology – June 22, 2005
Page 8
Analyst Certification
The following analysts hereby certify that their views about the companies and their securities discussed in this report are
accurately expressed and that they have not received and will not receive direct or indirect compensation in exchange for
expressing specific recommendations or views in this report: David Togut, CFA and Laurie Kennedy.
Important US Regulatory Disclosures on Subject Companies
The information and opinions in this report were prepared by Morgan Stanley & Co. Incorporated and its affiliates (collectively,
"Morgan Stanley").
The following analyst, strategist, or research associate (or a household member) owns securities in a company that he or she
covers or recommends in this report: David Togut, CFA - IBM (common stock); Laurie Kennedy - Accenture Ltd (common
stock). Morgan Stanley policy prohibits research analysts, strategists and research associates from investing in securities in
their sub industry as defined by the Global Industry Classification Standard ("GICS," which was developed by and is the
exclusive property of MSCI and S&P). Analysts may nevertheless own such securities to the extent acquired under a prior
policy or in a merger, fund distribution or other involuntary acquisition.
As of May 31, 2005, Morgan Stanley beneficially owned 1% or more of a class of common equity securities of the following
companies covered in this report: Affiliated Computer Services, BearingPoint, Inc., Hewlett-Packard, Cognizant Tech
Solutions, Infosys Technologies, Capgemini and Satyam Computer Services.
Within the last 12 months, Morgan Stanley managed or co-managed a public offering of securities of Affiliated Computer
Services, Computer Sciences Corp. and Tata Consultancy Services.
Within the last 12 months, Morgan Stanley has received compensation for investment banking services from Cisco Systems,
Polycom, Accenture Ltd, Affiliated Computer Services, BearingPoint, Inc., Computer Sciences Corp., Electronic Data Systems,
IBM, Hewlett-Packard, Keane Inc., Tata Consultancy Services, Capgemini and Satyam Computer Services.
In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from
Cisco Systems, Nortel Networks, Avaya Inc., Polycom, Accenture Ltd, Affiliated Computer Services, BearingPoint, Inc.,
Computer Sciences Corp., Electronic Data Systems, Perot Systems, IBM, Hewlett-Packard, Unisys, Keane Inc., Cognizant
Tech Solutions, Tata Consultancy Services, Wipro Ltd. and Capgemini.
Within the last 12 months, Morgan Stanley has received compensation for products and services other than investment banking
services from Cisco Systems, Accenture Ltd, IBM and Hewlett-Packard.
Within the last 12 months, Morgan Stanley has provided or is providing investment banking services to, or has an investment
banking client relationship with, the following companies covered in this report: Cisco Systems, Nortel Networks, Avaya Inc.,
Polycom, Accenture Ltd, Affiliated Computer Services, BearingPoint, Inc., Computer Sciences Corp., Electronic Data Systems,
Perot Systems, IBM, Hewlett-Packard, Unisys, Keane Inc., Cognizant Tech Solutions, Tata Consultancy Services, Wipro Ltd.,
Capgemini and Satyam Computer Services.
Within the last 12 months, Morgan Stanley has either provided or is providing non-investment banking, securities-related
services to and/or in the past has entered into an agreement to provide services or has a client relationship with the following
companies covered in this report: Cisco Systems, Nortel Networks, Polycom, Accenture Ltd, Affiliated Computer Services,
Computer Sciences Corp., Electronic Data Systems, IBM, Hewlett-Packard, Unisys, Keane Inc. and Capgemini.
The research analysts, strategists, or research associates principally responsible for the preparation of this research report have
received compensation based upon various factors, including quality of research, investor client feedback, stock picking,
competitive factors, firm revenues and overall investment banking revenues.
An employee or director of Morgan Stanley & Co. Incorporated and/or Morgan Stanley DW Inc. is a director of Electronic
Data Systems and IBM.
Morgan Stanley & Co. Incorporated makes a market in the securities of Cisco Systems, Polycom, Cognizant Tech Solutions
and Infosys Technologies.
Enterprise Technology – June 22, 2005
Page 9
Stock Ratings
Different securities firms use a variety of rating terms as well as different rating systems to describe their recommendations. For example,
Morgan Stanley uses a relative rating system including terms such as Overweight, Equal-weight or Underweight (see definitions below). A
rating system using terms such as buy, hold and sell is not equivalent to our rating system. Investors should carefully read the definitions of
all ratings used in each research report. In addition, since the research report contains more complete information concerning the analyst’s
views, investors should carefully read the entire research report and not infer its contents from the rating alone. In any case, ratings (or
research) should not be used or relied upon as investment advice. An investor’s decision to buy or sell a stock should depend on individual
circumstances (such as the investor’s existing holdings) and other considerations.
Global Stock Ratings Distribution
(as of May 31, 2005)
Coverage Universe Investment Banking Clients (IBC)
Stock Rating Category Count
% of
Total Count
% of
Total IBC
% of Rating
Category
Overweight/Buy 673 36% 269 41% 40%
Equal-weight/Hold 865 46% 299 45% 35%
Underweight/Sell 352 19% 91 14% 26%
Total 1,890 659
Data include common stock and ADRs currently assigned ratings. For disclosure purposes (in accordance with NASD and NYSE requirements), we note that
Overweight, our most positive stock rating, most closely corresponds to a buy recommendation; Equal-weight and Underweight most closely correspond to neutral and
sell recommendations, respectively. However, Overweight, Equal-weight, and Underweight are not the equivalent of buy, neutral, and sell but represent recommended
relative weightings (see definitions below). An investor's decision to buy or sell a stock should depend on individual circumstances (such as the investor's existing
holdings) and other considerations. Investment Banking Clients are companies from whom Morgan Stanley or an affiliate received investment banking compensation in
the last 12 months.
Analyst Stock Ratings
Overweight (O). The stock’s total return is expected to exceed the average total return of the analyst’s industry (or industry
team’s) coverage universe, on a risk-adjusted basis, over the next 12-18 months.
Equal-weight (E). The stock’s total return is expected to be in line with the average total return of the analyst’s industry (or
industry team’s) coverage universe, on a risk-adjusted basis, over the next 12-18 months.
Underweight (U). The stock’s total return is expected to be below the average total return of the analyst’s industry (or industry
team’s) coverage universe, on a risk-adjusted basis, over the next 12-18 months.
More volatile (V). We estimate that this stock has more than a 25% chance of a price move (up or down) of more than 25% in
a month, based on a quantitative assessment of historical data, or in the analyst’s view, it is likely to become materially more
volatile over the next 1-12 months compared with the past three years. Stocks with less than one year of trading history are
automatically rated as more volatile (unless otherwise noted). We note that securities that we do not currently consider "more
volatile" can still perform in that manner.
Unless otherwise specified, the time frame for price targets included in this report is 12 to 18 months. Ratings prior to March
18, 2002: SB=Strong Buy; OP=Outperform; N=Neutral; UP=Underperform. For definitions, please go to
www.morganstanley.com/companycharts.
Analyst Industry Views
Attractive (A). The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be
attractive vs. the relevant broad market benchmark named on the cover of this report.
In-Line (I). The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be in
line with the relevant broad market benchmark named on the cover of this report.
Cautious (C). The analyst views the performance of his or her industry coverage universe over the next 12-18 months with
caution vs. the relevant broad market benchmark named on the cover of this report.
Stock price charts and rating histories for companies discussed in this report are also available at
www.morganstanley.com/companycharts. You may also request this information by writing to Morgan Stanley at 1585
Broadway, 14th Floor (Attention: Research Disclosures), New York, NY, 10036 USA.
Enterprise Technology – June 22, 2005
Page 10
Other Important Disclosures
This research report has been published in accordance with our conflict management policy, which is available at
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For a discussion, if applicable, of the valuation methods used to determine the price targets included in this summary and the
risks related to achieving these targets, please refer to the latest relevant published research on these stocks. Research is
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Enterprise Technology – June 22, 2005
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