Merrill Lynch Report Surveys Y2K Readiness

In a new report that aims to help investors judge the year 2000 readiness of 3,800 public companies around the globe, analysts at Merrill Lynch & Co. put only 13 in the categories of "less likely" or "unlikely" to be ready for year 2000.

More than 95 percent of the companies in the survey released today are listed as "will be compliant" or "likely" to be ready. But 157 are listed in the category of "don't know" because a response couldn't be obtained or information wasn't conclusive.

"In general, companies appear reasonably confident of their own Y2K issues but uncertain about those same issues at their suppliers and customers," said Jeanne Terrile, an analyst and vice president at Merrill Lynch in New York. "Few companies expect earnings to be noticeably impacted by Y2K expenses, although the cost of compliance is reported to be much higher in the U.S. than elsewhere."

The 440-page survey, "Y2K: Implications for Investors" lists no U.S.-based companies that Merrill Lynch follows as unlikely to be ready, but it does list as "less likely" The Sabre Group in Fort Worth, Texas, and Sequent Computer Systems Inc., in Beaverton, Oregon. Sabre announced an earnings shortfall because of higher-than-expected year 2000 spending, and the survey reports that Sequent expects to have less than 90 percent of its systems compliant in time.

Analysts also said several major hardware makers declined interviews, and as a result, IBM Corp., Hewlett-Packard Co., Silicon Graphics Inc. and Stratus Computer Inc., are listed as "don't know."

Domestic preparations made by voice and data carriers have been a concern for their customers, but Merrill Lynch lists 29 voice and data carriers based in the U.S. as either "will be compliant" or "likely" to be compliant. The carrier situation is spotty abroad, with half the carriers in Latin America listed as "don't know." These include the Brazilian Telebras system, which was listed as "woefully uncompliant at this stage."

In Asia, excluding Japan, telecommunications regulators haven't imposed year 2000 compliance schedules, leading to more uncertainty. Merrill Lynch's Terrile said the utilities in Pakistan, Malaysia and China "seem least prepared" for the date change.

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