Comment
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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.
David Togut Industry Overview September 7, 2003
+1 (1)212 761 6388
david.togut@morganstanley.com
Evan Bloomberg
+1 (1)212 761 3659
evan.bloomberg@morganstanley.com
Morgan Stanley CIO Survey
Series: Release 4.2
GICS SECTOR INFORMATION TECHNOLOGY
US Strategist Weight 16.9%
S&P 500 Weight 17.9%
MORGAN STANLEY US TECHNOLOGY TEAM
Computer Services & IT Consulting:
david.togut@morganstanley.com
elizabeth.vigano@morganstanley.com
Electronics Manufacturing Services:
scott.craig@morganstanley.com
Enterprise Software
evan.bloomberg@morganstanley.com
Internet & PC Applications Software:
mary.meeker@morganstanley.com
brian.pitz@morganstanley.com
Networking & Telecom Equipment:
alkesh.shah@morganstanley.com
arindam.s.basu@morganstanley.com
Semiconductors:
mark.edelstone@morganstanley.com
louis.gerhardy@morganstanley.com
Semiconductor Capital Equipment:
steven.pelayo@morganstanley.com
bill.lu@morganstanley.com
Specialized IT Services:
julie.santoriello@morganstanley.com
Systems & PC Hardware:
rebecca.runkle@morganstanley.com
april.henry@morganstanley.com
Survey
cio
• Slight Improvement to 2003 IT Budget Outlook—CIOs Expect 1% Y-o-Y Growth
Our July, 2003 Survey of 225 Fortune 1000 CIOs (chief information
officers) points to flat to modestly improved IT budgets this year
compared with our June, 2003 Survey. In July, our CIOs anticipated
1% growth in 2003, compared with flat to down spending in our June,
2003 Survey.
• 7% Reduction in Number of IT Spending Priorities Signals Continued Cost
Pressure
In July, 2003 the number of CIO spending priorities fell 7% compared
to last month, and 15% year-over-year to 1,545, or an average of 6.8
per CIO, down from 7.4 per CIO in June, 2003.
• CIOs More Optimistic About Their Own Business Outlook…
Consistent with slightly improved IT spending plans, 9% more CIOs
were positive about their company’s business prospects than in June.
• …But CIOs Continue to Postpone Expectations for an Economic Recovery
For 3Q/03, the percentage of CIOs predicting an economic recovery
fell to 11% from 18% in our June Survey. For 4Q/03 and 2004, the
results were flattish compared with June, with the balance in 2005.
• Top IT Spending Priorities
For 2003, CIOs top five priorities are: 1) application integration; 2)
Windows 2000 / XP upgrade — desktop; 3) ERP software / ERP
upgrade; 4) security software; and 5) business intelligence tools.
• Improving Network Equipment Growth Potential
Our July, 2003 Survey indicates that Network Equipment spending
should grow 3% in 2003, better than 1% for IT budgets as a whole. In
July, 2003 CIOs expected to see better growth this year than they did in
June.
• 17% Month-to-Month Decline in Number of IT Services Spending Priorities, but
Offshore Improves
51 CIOs listed offshore IT services as a spending priority. Over the
next 12-months, 21 CIOs are planning a project, while 77 CIOs are
already using offshore IT services.
Technology
Technology – September 7, 2003
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Page 2
Morgan Stanley CIO Survey Series: Release 4.2
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 July 14 to July 25, 2003. 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.
Exhibit 1
Table of Contents
Demographics of the Survey Page 2
Executive Summary 3
Industry and Company Highlights 5
Recent Figures from the BEA 6
S&P 500 Index Indicators 7
2003 IT Budgets and Priorities 8
Company Outlook 16
Economic Outlook and Sentiment 17
IT Services 19
Data Networking 21
Business Intelligence Software 26
PC Spending 28
Enterprise Hardware 31
Exhibit 2
Respondents — By Company Revenues
Over $31 billion 4%
$21-31 billion 5%
$11-21 billion 7%
$6-11 billion 10%
$1-5 billion 46%
Under $1 billion 25%
Unable to comment 3%
Source: Morgan Stanley CIO Survey, July 2003.
Exhibit 3
Respondents — By Industry
Manufacturing 26%
Financial Services 23%
Services 7%
Healthcare and Managed Healthcare 6%
Distribution 6%
Communication/Network 4%
Conglomerate 3%
Telecom ASP 3%
Retail 3%
Professional Service/Engineering Design 3%
Software Development 3%
Entertainment 2%
Government 2%
Media 2%
Multiple Industries 2%
Non-Profit 1%
Aerospace 1%
Education 1%
Utilities 1%
Environmental/Waste 0%
Consumer Products 0%
Marketing 0%
Oil & Gas 0%
Pharmaceutical 0%
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
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Page 3
Executive Summary
2003 IT Spending Plans Have Slightly Improved — Our
July 2003 Survey of Fortune 1000 CIOs forecasts 1% IT
budget growth this year, modestly better than the flat to
slightly down reading in our June 2003 Survey. In our July
2003 Survey, 47% of CIOs expected their IT budgets to
increase year-over-year, nicely better than 14% in June,
2003; 17% expect flat budgets, down from 50% in June;
and 36% see decreasing budgets, in-line with 36% in June.
While there was a significant mix shift to increasing
budgets, we expect minimal spending growth this year.
2H03 IT Spending Plans Appear Flat — Our CIOs expect
2H03 IT budgets to be flat versus 1H03. In our July 2003
Survey, 31% of CIOs expect their 2H03 IT budgets to
increase sequentially, 40% expect flat budgets, and 28% see
decreasing budgets. Such finding suggests no significant
4Q/03 IT budget flush, and is consistent with CIOs’ full
year expectation of 1% growth.
Up-to-Down Budget Ratio Suggest 2003 IT Spending
Will Be Flattish — In our July, 2003 Survey, the up-todown
budget ratio recovered to levels that are more
consistent with recent history. Such ratio reached 1.28, up
sharply from 0.39 in June, 2003--a result that now appears
to be an outlier--removing concerns about further
contraction in IT spending. We believe that an up-to-down
ratio of at least 1.50 would point to clear expansion in IT
budgets. For historical perspective, the up-to-down IT
budget ratio reached a low of 0.39x in our June 2003 Survey,
down from 1.03 in our April 2003 Survey, 1.63 in
November 2002, 1.28 in October 2002, and 1.81 in
September 2002.
Exhibit 4
Up-to-Down Budget Ratio History
Survey Period Up-to-Down Year-over-Year
Budget Ratio Growth Period
Nov-00 3.83 2001 vs. 2000
Nov-01 0.58 2002 vs. 2001
Jan-02 0.71 2002 vs. 2001
Feb-02 0.67 2002 vs. 2001
Mar-02 0.63 2002 vs. 2001
Jun-02 0.75 2002 vs. 2001
Sept-02 1.81 2003 vs. 2002
Oct-02 1.28 2003 vs. 2002
Nov-02 1.63 2003 vs. 2002
Apr-03 1.03 2003 vs. 2002
Jun-03 0.39 2003 vs. 2002
Jul-03 1.28 2003 vs. 2002
Source: Morgan Stanley CIO Survey, July 2003.
We use the up-to-down budget ratio as a proxy to see
whether IT budgets are expanding or contracting. For
example, a measure of 1.5 indicates that budgets are
expanding, since for each CIO that expects a decrease, 1.5
expects an increase. In contrast, a measure of 0.5 indicates
that budgets are contracting since for each CIO that expects
a decrease, only 0.5 expect an increase.
Improved Business Climate and Credit Cost/Availability
Are Not Impacting CIO Spending Plans —CIOs
indicated that potentially improved 2H/03 business
conditions and lower cost of capital/increased credit
availability will not affect their 2H/03 capital spending
plans.
When asked if recent improvement in the US business
climate had positively influenced 2003 IT budgets, only 3%
of the CIOs said yes, while 14% indicated that spending
plans remain in-line with 1H03 expectations, but are more
likely to be revised upward. The remaining 83% of the
responses implied that: 1) the improved business conditions
are not leading to any change in spending, or 2) that
spending plans have actually been revised downward, or 3)
that spending is more likely to be revised downward.
When asked if the recent decline in the cost of capital and
increased credit availability has encouraged its management
team to make new IT investments, more than 3 out of 4
CIOs told us that they do not consider these variables when
making IT spending decisions.
7% Reduction in Number of IT Spending Priorities
In July 2003 the number of CIO spending priorities fell 7%
compared to last month, and 15% year-over-year to 1,545,
or an average of 6.8 per CIO, down from 7.4 per CIO in
June, 2003. The decline in spending priorities indicates that
CIOs are being asked to reduce costs and to focus on fewer,
more important IT areas. Although the slight improvement
observed in 2003 IT budgets is positive, the reduction in
spending priorities is more cautionary in nature, pointing to
limited 2H/03 upward budget revisions.
Top IT spending priorities in 2003 — CIOs indicated that
their top five priorities in 2003 are: 1) application
integration; 2) Windows 2000 / XP upgrade — desktop; 3)
ERP software / ERP upgrade; 4) security software; and 5)
business intelligence tools.
Technology – September 7, 2003
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Page 4
CIOs Are More Optimistic About Their Own Business
Outlook — In July 2003: 59% of CIOs had a positive
current outlook for their own company’s business prospects,
up from 50% in June; 36% were neutral, down from 40% in
June; and only 5% were negative, down from 10% in June.
Sentiment About the Economy Is Neutral, but the
Timing of a Rebound is Postponed
When asked about their views of the US economy, 66%
offered a neutral assessment of the current conditions of the
US economy, 16% said economic conditions are good, and
18% indicated that economic conditions are bad.
Supportive of the majority view, none of the respondents
indicated that the conditions of the economy are either very
good or very bad.
While sentiment on the economy is neutral, CIOs are
deferring their expectations for a recovery. For example,
for 3Q/03, only 11% of CIOs expect the economy to
strengthen, down from 18% in June. For 4Q/03, 30% see
the economy getting better, up from 29% in April. For
2004, 43% forecast an improving economy, down from
45% in April. In the July Survey, for the first time, we
added the option for an economic recovery in 2005 and
beyond, and 7% of CIOs selected this.
Greatest Areas of Improvement and Deterioration
Linux-based servers, business intelligence tools and storage
software posted the greatest improvement in CIO spending
priorities on a month-to-month basis.
Exhibit 5
Greatest Areas of Improvement
# of
Technology M.M Y.Y Resp.
Linux-based servers 80% 59% 27
Business intelligence tools 72% 29% 62
Storage software 35% 35% 42
Source: Morgan Stanley CIO Survey, July 2003.
Note: Growth rates are based on the number of responses reported by CIOs.
In contrast, Intel servers, E-commerce initiatives, customer
service applications, Web site enhancements and Microsoft
Office upgrade posted the greatest deterioration on a monthto-
month basis. Although few CIOs offered a response (19),
Intel servers saw a -32% decline month-to-month and a
-30% decline year-over-year.
Exhibit 6
Greatest Areas of Deterioration
# of
Technology M.M Y.Y Resp.
E-commerce initiatives -30% -40% 44
Customer service applications -24% -37% 22
Web site enhancements -22% -31% 38
Microsoft Office upgrade -20% -44% 37
Source: Morgan Stanley CIO Survey, July 2003.
Note: Growth rates are based on the number of responses reported by CIOs.
Approach for Defining Greatest Areas of Improvement
and Deterioration — The objective of this section is to
identifying directional changes in the trend of priorities for
CIOs. We have conducted a thorough analysis of the
changes in CIO priorities using the historical data that has
been collected over the last year. For an area to be included
in the greatest areas of improvement (deterioration) list, we
require a minimum of a 10% increase (10% decrease) on
both a sequential (month-to-month in this case) and yearover-
year basis. In addition, we have only included areas
with a minimum of 20 responses for the current period.
Technology – September 7, 2003
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Page 5
Industry and Company Highlights
Improving Network Equipment Growth Outlook —
Network Equipment continues to gain share in the IT
budgets of our CIOs. Our July 2003 Survey indicates that
Network Equipment spending should grow 3% in 2003,
better than 1% for IT budgets as a whole. In July 2003
CIOs expected to see better 2003 growth than they did in
June. In July 2003, 15% more CIOs expect to increase their
2003 network equipment spending by 6% to 10% year-overyear
than they did in June. Most of the increased growth
expectation emanated from the flat and 0-5% expansion
categories. The areas showing the best growth include: 1)
Security, 2) Storage area networks, 3) Wireless LAN, and 4)
Gigabit Ethernet.
Cisco remains the dominant vendor with a satisfied
customer base, according to our survey results. Nortel
Networks maintains a large customer base relative to the
rest of the group, but customer dissatisfaction is high again
in our July results. Changes on the margin between our
June and July survey include an increase in customer
satisfaction for IBM and a decrease in customer satisfaction
for 3Com.
Microsoft Well Positioned for Business Intelligence
Spending — Microsoft appears to be gaining traction in the
business intelligence software market. We believe that this
poses a meaningful competitive threat to market leaders
such as Cognos, Business Objects and Crystal Decisions.
Over the next 12-months, 9% of CIOs plan to buy new
business intelligence software from Microsoft. This
compares to 12% for Cognos, 9% for Business Objects, 9%
for Crystal Decisions and 6% for Hyperion Solutions. In
terms of replacements, 33% of the respondents are likely to
replace another vendor’s product over the next twelve
months. The top three vendors which are most likely to see
replacements include Crystal Decisions (5%), Hyperion
Solutions (4%) and Business Objects (4%).
17% Month-to-Month Decline in IT Services Priorities
With the exception of consulting, we have few historical IT
services data points in our CIO Survey, so it is too early to
interpret the substantial decline of IT services among CIO
spending priorities. Within the declining IT services mix,
Offshore Services posted an improvement. In July, 2003,
51 CIOs listed offshore IT services as a spending priority,
while 21 CIOs are planning a project over the next 12
months.
PC Trends Favoring Notebooks — Notebooks make up
28% of the PC installed base within our CIOs organizations
today. The top reason why CIOs shift from desktop PCs to
notebook PCs is mobility needs. When we asked our CIOs
what drives a shift from desktop to notebook purchases,
51% noted increased mobility needs, 15% highlighted
improved pricing for notebooks, 11% selected wireless
technologies and 9% emphasized improved
performance/specs of notebooks. The remaining 14% are
not purchasing more notebooks than they have historically.
Technology – September 7, 2003
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Page 6
Recent Figures from the BEA
Data from the Bureau of Economic Analysis turned positive
four quarters ago in terms of year-over-year, quarterly
technology capital spending growth, while five of the last
six quarters have shown positive sequential Q/Q growth.
Such growth followed two consecutive years of declining
technology capital spending ending in 2002.
On August 28, 2003, revised 2Q03 technology capital
spending data was reported. On a year-over-year basis 8%
growth was reported and on a sequential quarterly basis 4%
growth was reported (see exhibits 7-9).
Exhibit 7
Y/Y Growth of Tech CapEx (Annual)
Y/Y Growth: Tech CapEx Spending (Annual)
2%
3%
9% 9% 9%
12%
10%
13%
12%
11% 11%
-10%
-1%
-15%
-10%
-5%
0%
5%
10%
15%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
First Y/Y decline in Tech CapEx
since 1958 -- other Y/Y declines
occurred in 1949 & 1954.
Source: Bureau of Economic Analysis.
Exhibit 8
Y/Y Growth of Tech CapEx (Quarterly)
Y/Y Growth: Tech CapEx Spending (Quarterly)
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
1995/Q1
1996/Q1
1997/Q1
1998/Q1
1999/Q1
2000/Q1
2001/Q1
2002/Q1
2003/Q1
Since 1946, 25 quarters (11%) have resulted in Y/Y decreases in
Tech CapEx growth … the longest consecutive stretch of
negative Y/Y growth was the 6 quarters from 1Q01 to 2Q02.
Historically, there have been consecutive stretches of negative
Y/Y growth of 5 quarters (1954/55), 4 quarters (1949/50) and 3
quarters (1958 & 1990/91).
Source: Bureau of Economic Analysis.
Exhibit 9
Sequential Growth of Tech CapEx
Q/Q Growth: Tech CapEx
-6%
-4%
-2%
0%
2%
4%
6%
8%
1995/Q1
1996/Q1
1997/Q1
1998/Q1
1999/Q1
2000/Q1
2001/Q1
2002/Q1
2003/Q1
Since 1946, 42 quarters (18%) have resulted in sequential
decreases in Tech CapEx growth … the longest sustained
stretch of Q/Q negative growth was the 5 quarters from
4Q00 to 4Q01. There have been 4 periods of 3 quarters of
sequentials declines ... 1953/54, 1957/58, 1975 & 1990.
Source: Bureau of Economic Analysis.
Technology – September 7, 2003
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Page 7
S&P 500 Index Indicators
According to Steve Galbraith, Morgan Stanley’s Chief
Investment Officer, in 3Q/02, the average S&P 500
company began to post revenue and earnings growth, after a
few quarters of contraction. Meanwhile, in 2002, S&P 500
capital spending-to-sales and capital spending-todepreciation
ratios were well below trend-line (see exhibits
10-12). Taken together, such data suggest that potential
declines in IT budgets this year may be limited.
Exhibit 10
Y/Y Growth of S&P500 Revenue and Earnings
Revenue Earnings
1Q01 10.2% -1.9%
2Q01 3.8% -15.4%
3Q01 -3.9% -26.0%
4Q01 -5.0% -30.8%
1Q02 -4.3% -26.3%
2Q02 0.8% -11.6%
3Q02 3.9% 4.8%
4Q02 3.3% 18.5%
1Q03 9.4% 22.3%
2Q03E 6.6% 18.8%
3Q03E NA 16.8%
4Q03E NA 16.6%
Source: Morgan Stanley Research, Compustat, First Call Consensus Estimates,
Standard and Poors
Notes: Revenue figures exclude financials. EPS figures are on an operating
basis. Estimates are based on First Call Consensus
Exhibit 11
S&P500 CapEx to Sales (Quarterly)
Source: Morgan Stanley Research, Compustat
Note: Thin line is linear trendline.
Exhibit 12
S&P500 CapEx to Depreciation (Quarterly)
Source: Morgan Stanley Research, Compustat
Note: Thin line is linear trendline.
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Exhibit 13
2003 IT Budgets
By what % will your 2003 IT budget change vs. 2002?
17%
21%
17% 17%
5%
8%
14%
0%
5%
10%
15%
20%
25%
Increase by
greater than
10%
Increase by 6%
to 10%
Increase by 0%
to 5%
Flat Decrease by 0%
to 5%
Decrease by 6%
to 10%
Decrease by
greater than
10%
% of Responses
In 2003, our CIOs expect to see 1%
growth in IT spending. This is a
modest improvement compared to
their previous outlook for flat to
down IT spending in 2003.
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
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Page 9
Exhibit 14
2003 IT Budgets
By what % will your 2H03 IT budget change vs. 1H03?
8%
18%
40%
9%
3%
5%
16%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Increase by
greater than
10%
Increase by 6%
to 10%
Increase by 0%
to 5%
Flat Decrease by 0%
to 5%
Decrease by 6%
to 10%
Decrease by
greater than
10%
% of Responses
In 2H03, our CIOs expect to see flat
growth in IT spending compared to
1H03.
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
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Page 10
Exhibit 15
2003 IT Budgets
Up-to-Down Budget Ratio
1.81
1.28
1.63
1.03
0.39
1.28
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Sept-02 Oct-02 Nov-02 Apr-03 Jun-03 Jul-03
In July, the Up-to-Down Budget Ratio
improved nicely, indicating that the
weak June result was probably an
outlier.
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
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Page 11
Exhibit 16
2003 Priorities
Total Number of Spending Priorities Reported by 225 CIOs
1,889 1,838 1,827 1,897
2,041
1,659
1,545
0
500
1,000
1,500
2,000
2,500
May-02 June-02 July-02 Sept-02 April-03 June-03 July-03
# of Responses
In July, CIO spending
priorities continued to
decline, signaling
persistent cost pressure.
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
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Page 12
Exhibit 17
2003 IT Budgets
Has the improvement in the US business climate influenced
your budget/spending plans for 2003?
46%
16%
14%
14%
3%
7%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
No change, but monitoring the
situation closely and evaluating
whether to revise spending plans
Spending plans have been
revised downward relative to
1H03 expectations
Spending plans remain in-line
relative to 1H03 expectations, but
are more likely to be revised
downward
Spending plans remain in-line
relative to 1H03 expectations, but
are more likely to be revised
upward
Yes, spending plans have been
revised upward relative to 1H03
expectations
We don’t think the business
climate has improved
% of Responses
The most likely outcome
for 2003 is that IT budgets
remain flat and no major
revisions occur in the
2H03.
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
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Page 13
Exhibit 18
2003 Priorities
In your organization, are any of the following top priorities in 2003? (Please mark all that apply)
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Ap p lic a tio n s e rve rs 3 4 2 0 u p 1 3 4 2 1 5 2 1 9 4 9 1 7 3 7 2 1 2 9 2 7 T
XML -b a s e d a p p lic a tio n s 3 3 2 1 d o w n 1 1 5 8 1 0 4 0 2 5 5 0 1 6 2 8 2 8 6 8 7
C o n ve rg e d vo ic e a n d d a ta n e tw o rk s 2 9 2 2 u p 1 0 2 1 3 2 2 2 3 5 3 1 2 8 2 9 2 6 T 3 4 2 4 T
U n ix s e rve rs 2 8 2 3 d o w n 4 3 6 1 9 T 3 1 3 0 2 1 3 5 T 2 5 3 3 2 9 2 7 T
N e tw o rk a n d a p p lic a tio n m a n a g e m e n t s o ftw a re 2 7 2 4 T u p 1 1 1 8 3 5 T 4 2 2 4 3 2 2 7 2 7 2 9 T 3 4 2 4 T
L in u x-b a s e d s e rve rs 2 7 2 4 T u p 1 4 1 5 3 8 5 5 1 6 2 2 3 4 1 7 4 1 T 1 8 3 5 T
C o n s u ltin g 2 5 2 6 d o w n 4 3 2 2 2 1 7 3 9 T 3 0 2 9 T 1 5 4 4 1 8 3 5 T
J a va -b a s e d e n te rp ris e a p p lic a tio n s 2 4 2 7 u p 4 2 2 3 1 2 1 3 6 2 1 3 5 T 1 3 4 5 T 1 5 4 0 T
C a l l c e n te r s o ftw a re 2 3 2 8 d o w n 2 2 7 2 6 5 7 1 3 T 4 0 2 2 2 4 3 4 T 4 2 1 6 T
C u s to m e r s e rvic e a p p lic a tio n s 2 2 2 9 T d o w n 5 2 9 2 4 6 2 1 0 3 0 2 9 T 3 5 2 2 3 9 2 0 T
D a ta b a s e s o ftw a re 2 2 2 9 T d o w n 1 2 4 2 8 T 4 7 2 2 5 4 1 2 T 3 1 2 4 T 2 4 3 0 T
S u p p ly c h a in m a n a g e m e n t s o ftw a re 2 2 2 9 T d o w n 1 2 4 2 8 T 3 7 2 7 2 0 3 7 2 6 3 1 T 2 4 3 0 T
Ma rk e tin g /c u s to m e r a n a lytic s s o ftw a re 2 1 3 2 u p 1 2 1 1 4 4 9 4 4 1 3 4 5 2 4 3 4 T 1 8 3 5 T
N e w c u s to m d e ve lo p m e n t 2 0 3 3 - - - 2 0 3 3 1 9 3 7 2 4 3 3 3 8 2 0 4 2 1 6 T
S a le s fo rc e a u to m a tio n s o ftw a re 1 9 3 4 T d o w n 1 8 4 0 1 6 3 4 2 9 1 8 3 8 T 3 4 2 3 3 9 2 0 T
In te l s e rve r s 1 9 3 4 T d o w n 9 2 8 2 5 5 3 1 7 T 1 7 4 0 T 2 7 2 9 T 2 1 3 3
W e b d e ve lo p m e n t to o ls o r p ro d u c ts 1 8 3 6 T d o w n 9 2 5 2 7 3 9 2 6 4 4 2 1 4 0 1 9 4 7 1 3
W e b /In tra n e t to le g a c y in te g ra tio n to o ls o r p ro d u c ts 1 8 3 6 T d o w n 1 1 8 3 5 T 1 7 3 9 T 3 6 2 4 1 1 4 8 2 3 3 2
K n o w le d g e m a n a g e m e n t 1 6 3 8 T d o w n 1 1 7 3 7 2 5 3 4 2 9 3 1 2 6 3 1 T 1 3 4 2 T
W e b s e rve r s o ftw a re 1 6 3 8 T u p 3 1 3 4 1 T 1 3 4 2 T 1 7 4 0 T 1 7 4 1 T 2 0 3 4
P ro c u re m e n t s o ftw a re 1 5 4 0 u p 6 9 4 6 4 4 8 2 5 3 2 2 2 3 6 T 9 4 8
E -m a i l re s p o n s e s o ftw a re 1 3 4 1 u p 1 0 0 5 1 1 5 4 1 1 5 4 2 T 2 2 3 6 T 1 0 4 5 T
Ma in fra m e h a rd w a re 1 0 4 2 u p 8 2 5 0 1 3 4 2 T 1 2 4 6 T 1 2 4 7 1 0 4 5 T
Ma in fra m e s o ftw a re 9 4 3 T d o w n 4 1 4 3 9 T 0 5 1 1 2 4 6 T 1 8 3 8 T 7 5 1
P R M/C h a n n e l m a n a g e m e n t s o ftw a re 9 4 3 T u p 5 4 4 8 8 4 5 T 6 4 9 4 5 1 8 4 9 T
In fra s tru c tu re re s o u rc e m a n a g e m e n t s o ftw a re 8 4 5 T d o w n 1 1 1 9 3 4 2 7 3 2 1 8 3 8 T 1 8 3 8 T 1 6 3 8 T
In ve n to ry m a n a g e m e n t/p ro vis io n in g 8 4 5 T - - - 1 0 4 5 3 4 9 1 5 4 2 T 1 6 4 3 1 5 4 0 T
C o n te n t d e l ive ry n e tw o rk s 7 4 7 d o w n 6 1 3 4 1 T 2 9 3 1 3 3 2 6 1 3 4 5 T 1 6 3 8 T
E -s to re s o ftw a re fo r W e b s ite 6 4 8 d o w n 9 1 4 3 9 T 1 8 3 8 1 4 4 4 7 5 0 8 4 9 T
C AD /C AM, E D A s o ftw a re 5 4 9 T d o w n 6 1 2 4 3 2 5 0 0 5 1 1 8 3 8 T 1 3 4 2 T
Ma in fra m e s ys te m s m a n a g e m e n t 5 4 9 T d o w n 2 5 4 7 7 4 7 2 5 0 2 9 2 6 T 1 0 4 5 T
P e rs o n a liza tio n s o ftw a re fo r E -b u s in e s s 4 5 1 d o w n 2 3 4 9 8 4 5 T 1 1 4 8 9 4 9 1 1 4 4
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 14
Exhibit 19
2003 Priorities — Top 5 Priorities Based on Number of CIO Responses
Technology Ranking M.M Q.Q Y.Y Responses
(July 2003)
1) Marketing/customer analytics software 91% 133% -13% 21
2) Linux-based servers 80% -51% 59% 27
3) Business intelligence tools 72% -15% 29% 62
4) Content Management software for Web site 57% 3% -27% 36
5) Network and application management software 50% -36% 0% 27
Source: Morgan Stanley CIO Survey, July 2003.
Note: Growth rates are based on the number of responses reported by CIOs. M.M compares July 2003 to June 2003. Q.Q compare July 2003 to April 2003. Y.Y compares July 2003 to July 2002.
Exhibit 20
2003 Priorities — Bottom 5 Priorities Based on Number of CIO Responses
Technology Ranking M.M Q.Q Y.Y Responses
(July 2003)
1) XML-based applications -43% -18% 18% 33
2) Wireless initiatives -36% -30% 9% 48
3) E-commerce initiatives -30% -21% -40% 44
4) Customer service applications -24% -65% -37% 22
5) Document management software -24% -26% -2% 45
Source: Morgan Stanley CIO Survey, July 2003.
Note: Growth rates are based on the number of responses reported by CIOs. M.M compares July 2003 to June 2003. Q.Q compare July 2003 to April 2003. Y.Y compares July 2003 to July 2002.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 15
Exhibit 21
2003 IT Budgets
Has the recent decline in the cost of capital and increased credit availability
encouraged your management team to make new IT investments?
5%
18%
17%
12%
49%
0% 10% 20% 30% 40% 50% 60%
Yes, that partly explains why our IT investments will accelerate
No, but monitoring the situation closely and evaluating whether to
accelerate spending plans as a result
No, but IT investments are expected to accelerate in the 2H03 for
other reasons such as improved operating results, better financial
market conditions and under investment in technology over the past
few years
No, but monitoring the situation closely and evaluating whether to
decelerate spending plans as a result
No, capital costs do not influence our budget/spending plans
% of Responses
More than 3 out of 4 CIOs do
not consider the cost of capital
and credit availability when
making IT spending decisions.
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 16
Exhibit 22
Company Outlook
What is your current outlook on your company’s
business prospects? (over the next 6 months)
56%
34%
9%
56%
38%
7%
61%
31%
8%
50%
40%
10%
59%
36%
5%
0%
10%
20%
30%
40%
50%
60%
70%
Positive Neutral Negative
% of Responses
Sep-02 Oct-02 Apr-03 Jun-03 Jul-03
Comparing July to June,
CIOs' outlook for their own
company's business
prosepects improved.
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 17
Exhibit 23
Economic Outlook
When do you expect the economy to improve?
54%
24%
22%
0% 0%
42%
36%
21%
1%
38%
29%
13%
19%
0%
2%
31%
11%
56%
0%
8%
18%
45%
0%
10%
11%
30%
43%
7%
0%
29%
0%
10%
20%
30%
40%
50%
60%
2Q03 or Prior 3Q03 4Q03 2004 2005 and
Beyond
% of Respondents
Sep-02 Oct-02 Nov-02 Apr-03 Jun-03 Jul-03
CIOs are deferring their expectations for
economic recovery. For example, for 3Q/03,
only 11% of CIOs expect the economy to
strengthen, down from 18% in June. For
4Q/03, 30% see the economy getting better, up
from 29% in April.
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 18
Exhibit 24
Economic Sentiment
What is your assessment of the current conditions of
the US economy?
38%
46%
16%
41%
39%
20%
35%
37%
28%
43%
47%
10%
16%
66%
18%
0%
10%
20%
30%
40%
50%
60%
70%
Positive Neutral Negative
% of Responses
Sep-02 Oct-02 Apr-03 Jun-03 Jul-03
Comparing July to June,
CIOs' became more
negative on the current
conditions of the US
economy.
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 19
Exhibit 25
IT Services
Please select which areas represent IT services spending priorities in 2003
for your organization? (Please mark all that apply)
12%
4%
7%
11%
13%
17%
36%
14%
6%
0%
19%
12%
16%
32%
0% 5% 10% 15% 20% 25% 30% 35% 40%
None / Not Applicable
Business Process
Outsourcing
Other IT Outsourcing
Offshore Services
Application Outsourcing
Infrastructure
Outsourcing
Consulting & Systems
Integration
% of Responses
Jun-03 Jul-03
The number of IT services priorities
from June to July decreased by
17%. Offshore Services was a
notable area of improvement.
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 20
Exhibit 26
IT Services
Do you currently utilize offshore IT Services?
56%
5%
4%
34%
0% 10% 20% 30% 40% 50% 60%
No, currently not in use and
not planning project within
the next 12 months
No, but planning project
within the next 6-12 months
No, but planning project
within the next 0-6 months
Yes, currently in use
% of Responses
In July, 51 CIOs listed offshore
IT services as a spending
priority. Over the next 12-
months, 21 CIOs are planning
a project, while 77 CIOs are
currently using offshore IT
service.
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 21
Exhibit 27
Data Networking
How do you see your 2003 network equipment
spending differing from 2002?
10%
24%
36%
7%
6%
0%
8%
27%
40%
8% 7% 6%
1%
14%
18% 17%
28%
5% 6%
9%
1%
13%
4%
3%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Increase by
greater than
10%
Increase by
6% to 10%
Increase by
0% to 5%
Flat Decrease by
0% to 5%
Decrease by
6% to 10%
Decrease by
greater than
10%
Unsure
% of Responses
Apr-03 Jun-03 Jul-03
The most significant change
comparing July-03 to June-03: an
additional 15% of CIOs expect to see
a 6% to 10% spending increase in
2003. The source of this increase in
spending comes from the flat and
0% to 5% increase categories.
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 22
Exhibit 28
Data Networking
Which of the following networking applications/products do you believe
will see increased, decreased, or flat spending in 2003 over 2002?
(Please mark all that apply)
11%
13%
22%
22%
27%
27%
37%
56%
60%
70%
80%
81%
71%
74%
67%
65%
62%
39%
36%
26%
10%
6%
7%
4%
7%
8%
1%
5%
4%
3%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Layer-2 switching
Optical transport
Layer-3 switching
Content networking
LAN telephony
Routing
Gigabit Ethernet
Wireless LAN
Storage area networks
Security
% of Responses
Increase Remain the Same Decrease
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 23
Exhibit 29
Data Networking
Who is your largest vendor of networking equipment?
77%
17%
0%1% 1%1% 0%1% 0%1% 3%0% 2% 0% 0%2% 0% 1%
11%
83%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Cisco
Nortel Networks
Lucent Technologies
Compaq
IBM
Foundry Networks
3Com
Dell
Other
Unsure
% of Responses
Jun-03 Jul-03
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 24
Exhibit 30
Data Networking
How likely are competitors to displace this vendor?
4% 5%
8%
32%
51%
11%
36%
40%
11%
3%
0%
10%
20%
30%
40%
50%
60%
Very likely Somewhat likely Not sure Somewhat
unlikely
Very unlikely
% of Responses
Jun-03 Jul-03
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 25
Exhibit 31
Data Networking
Which vendor are you most disappointed with?
21%
0%
11%
3%
12% 12%
7%
1%
0%
3%
5%
14%
17%
21%
1%
34%
32%
1%
2% 3%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Compaq
Dell
IBM
Cisco
Nortel Networks
Lucent Technologies
3Com
Other
Unsure
Not Applicable
% of Responses
Jun-03 Jul-03
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 26
Exhibit 32
Business Intelligence Software
Which of the following software vendors are you most likely to buy new business
intelligence software from over the next 12 months? (multiple responses)
6%
2%
2%
3%
3%
3%
4%
4%
5%
6%
9%
9%
9%
12%
17%
6%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Other
Microstrategy
Siebel
Actuate
Informatica
Brio
SAS
Oracle
SAP
IBM
Hyperion
Crystal Decisions
Business Objects
Microsoft
Cognos
Not Applicable / No Plans
% of Responses
The other category includes vendors with a response rate
below 2%. These vendors include Ascential, Computer
Associates, E.piphany, Information Builders, McKesson,
PeopleSoft. Proclarity, Terradata, and Webridge.
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 27
Exhibit 33
Business Intelligence Software
If you are purchasing business intelligence software, which of the following software vendors
are you most likely to replace over the next 12 months? (multiple responses)
7%
2%
2%
2%
2%
3%
3%
4%
4%
67%
5%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Other
Brio
SAS
Information Builders
SAP
Microsoft
Cognos
Business Objects
Hyperion
Crystal Decisions
Not Applicable / No Plans to Replace
% of Responses
Note: The other category includes
vendors with a response rate below
2%. These vendors include Actuate,
Ascential, IBM, Microstrategy,
PeopleSoft, Oracle and Siebel.
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 28
Exhibit 34
PC Spending
What % of your PC installed base are notebooks today?
53%
29%
14%
2% 2%
0%
10%
20%
30%
40%
50%
60%
Less than 25% 25%-49% 50%-75% More than 75% Unsure
% of Responses
Notebooks make up 28% of the
PC installed base within our
CIOs organizations today.
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 29
Exhibit 35
PC Spending
What drives your shift from desktop to notebook purchases?
(multiple responses)
0%
14%
9%
11%
15%
51%
0% 10% 20% 30% 40% 50% 60%
Unsure
Not purchasing more
notebooks than
historically
Improved
performance/specs of
notebooks
Wireless technologies
Improved pricing for
notebooks
Increased mobility needs
% of Responses
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 30
Exhibit 36
PC Spending
Intel's Pentium M processor has proven to offer increased performance and longer
battery life for the latest generation of notebook PCs. Will this combination cause you
to standardize on notebook PCs that use this processor?
12%
24%
55%
8%
1%
0%
10%
20%
30%
40%
50%
60%
Yes No Depends on
pricing in
comparison to the
alternatives
We have no
processor
preference
Unsure
% of Responses
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 31
Exhibit 37
Enterprise Hardware
Have you considered Dell laser printers for your enterprise?
2%
5%
18%
58%
6% 4%
7%
0%
10%
20%
30%
40%
50%
60%
70%
Yes, decided
to purchase
Yes, decided
not to
purchase
Yes, still
deciding
No, still a
Hewlett-
Packard
user
No, still a
Lexmark
user
Unsure Not
Considering
% of Responses
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 32
Exhibit 38
Enterprise Hardware
Do you currently run Itanium-based servers in your enterprise?
14%
72%
14%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Yes No Unsure
% of Responses
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 33
Exhibit 39
Enterprise Hardware
How likely are you to consider Itanium-based servers in your
enterprise going forward?
38%
44%
12%
1%
3%
1%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Likely Maybe Unlikely Never Not Applicable Unsure
% of Responses
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 34
Exhibit 40
Enterprise Hardware
Which OEM vendor is/would be your vendor of choice for Itaniumbased
servers? (multiple responses)
32%
27%
22%
0%
17%
2%
0%
5%
10%
15%
20%
25%
30%
35%
Hewlett-
Packard
Dell IBM Other Unsure Not Applicable
% of Responses
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 35
Exhibit 41
Enterprise Hardware
Do you intend to purchase third generation Itanium processorbased
servers for your enterprise?
22% 22%
53%
2%
0%
10%
20%
30%
40%
50%
60%
Yes No Evaluating Unsure
% of Responses
Note: Intel recently introduced its third-generation Itanium processor, and Dell, Hewlett Packard, and IBM have all launched products
based on this 64-bit architecture.
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 36
Exhibit 42
Enterprise Hardware
Do you currently run blade servers in your enterprise?
37%
55%
8%
0%
10%
20%
30%
40%
50%
60%
Yes No Unsure
% of Responses
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 37
Exhibit 43
Enterprise Hardware
Are you currently considering blade servers for your enterprise?
63%
24%
12%
0%
10%
20%
30%
40%
50%
60%
70%
Yes No Unsure
% of Responses
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 38
Exhibit 44
Enterprise Hardware
Which OEM vendor is/would be your vendor of choice
for blade servers? (multiple responses)
Hewlett-Packard,
25%
Other, 1%
Unsure, 15%
Not Applicable /
No Plans, 4%
IBM, 20%
Dell, 26%
Sun
Microsystems, 8%
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Please see analyst certification and other important disclosures starting on page 40
Page 39
Exhibit 45
Enterprise Hardware
Will the addition of Intel’s HyperThreading technology
in PCs and servers add value to your enterprise?
12% 12%
61%
16%
47%
24%
10%
19%
0%
10%
20%
30%
40%
50%
60%
70%
Definitely No Not sure Unfamiliar with
Hyper-Threading
% of Responses
Apr-03 Jul-03
Source: Morgan Stanley CIO Survey, July 2003.
Technology – September 7, 2003
Page 40
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 M. Togut and Evan Bloomberg.
Important US Regulatory Disclosures on Subject Companies
The information and opinions in this report were prepared by Morgan Stanley & Co. Incorporated and its affiliates (“Morgan
Stanley”).
As of July 31, 2003, Morgan Stanley beneficially owned 1% or more of a class of common equity securities of the following
companies covered in this report: 3Com, Cisco Systems, DELL, Hewlett-Packard, Lawson.
Within the last 12 months, Morgan Stanley managed or co-managed a public offering of securities of Hewlett-Packard, IBM,
Lucent Technologies Inc..
Within the last 12 months, Morgan Stanley has received compensation for investment banking services from 3Com, Cisco
Systems, DELL, Hewlett-Packard, IBM, Lucent Technologies Inc., Microsoft.
In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from
3Com, Cisco Systems, DELL, Hewlett-Packard, IBM, Lucent Technologies Inc., Microsoft, Nortel Networks, SAP AG, Sun
Microsystems.
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 DELL, IBM.
Morgan Stanley & Co. Incorporated makes a market in the securities of 3Com, Cisco Systems, DELL, Lucent Technologies
Inc., Microsoft, Sun Microsystems.
Technology – September 7, 2003
Page 41
Global Stock Ratings Distribution
(as of August 31, 2003)
Coverage Universe Investment Banking Clients (IBC)
Stock Rating Category Count
% of
Total Count
% of
Total IBC
% of Rating
Category
Overweight 558 30% 232 37% 42%
Equal-weight 862 47% 281 45% 33%
Underweight 416 23% 106 17% 25%
Total 1,836 619
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; Equalweight
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 to be attractive vs. the relevant
broad market benchmark over the next 12-18 months.
In-Line (I). The analyst expects the performance of his or her industry coverage universe to be in line with the relevant broad
market benchmark over the next 12-18 months.
Cautious (C). The analyst views the performance of his or her industry coverage universe with caution vs. the relevant broad
market benchmark over the next 12-18 months.
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.
Technology – September 7, 2003
Page 42
Other Important Disclosures
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
available through your sales representative or on Client Link at www.morganstanley.com and other electronic systems.
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