Lowes. That's real issue. Analysts and investors alike are holding Home Depot up to Lowes, comparing two as if they were fine bottles of wine, holding glass up to light inspecting its amber glow, sniffing those corks as if that's gonna tell you anything. They should take that same view when comparing HD to LOW. These stores may be in same business but they're not that alike.

Lets look at facts, store against store and talk dollars not lightly lit isles. Lowes inventory is higher in major appliances. While to some that may seem a good strategy and yes, isles are wider at Lowes. Its true too that Home Depot's stores look more like a warehouse. That's because they are!

These are retailers, LOW and HD, and they should be judged like retailers judge themselves; floor space and turn over. HD carries more inventory per square foot of store space than LOW. HD carries less of bulky, slow turning appliances than LOW. They've also got a whole lot more in buying power with 1,500 stores than LOW and that means lower costs in volume purchases. If it came down to a price war it would be bloody, but Home Depot's clearly got upper hand.

Chief Executive Robert Nardelli who arrived from General Electric two years ago, was already under intense pressure from investors. Home Depot's stock had fallen 53 percent in 2002, making it worst performer among components of Dow Jones industrial average.

Nardelli, some analysts say, has focused too much on cost cutting at expense of a critical element of retailing -- customer. Moreover, they say, stores have a poor layout, merchandise that appeals too much to traditional male do-it-yourselfer rather than women who make many of spending decisions, and a sales staff whose strong suit is not customer service.

A Japanese warship equipped with a high-tech Aegis missile detection system left for Indian Ocean on Dec 9, a controversial move some analysts say signals support for a possible U.S.-led attack on Iraq.

Japan now has four of ships, another is on order and funds have been requested for one more.

In other high tech circles, accounting software makers are trying to capitalize on a string of high profile scandals by developing computer programs that flag unusual bookkeeping and launch investigations with little human intervention.

As technology advances few components are as vital as circuitry being used and most of that technology is U. S. property. During boom and bust days of semi conductor industry, trade swung from U.S. dominance to Asian markets and back again.

China too has been getting more involved as a world player in these fast-paced shifts of economies, providing many labor intensive tasks for lower wages that manufactures have chased around world to find. In every shift of that economy, countries have been left with idle workers as competitive prices forced component manufactures to seek new sources.

While high tech economies continue to shift, American circuit manufacturing is still dominant player. According to Standard & Poor's, their investment outlook for S&P Electronic Equipment and Instruments Index is neutral overall, but they view positively electronic contract manufacturing component of Index. S&P also believes economic recovery may not occur until second half of 2003, as sub-industry group's recent 13-week decline supports their view that overall business spending will not recover that quickly.

S&P View of Electronic Contract Manufacturing Remains Positive

Industry fundamentals are improving; inventory levels have declined considerably, book-to-bill ratio for printed circuit boards is well above trough levels, and production of goods is being shifted to lower cost world regions.

A trend toward out sourced manufacturing is gaining momentum, as companies seek to reduce costs while focusing on marketing and R&D efforts.

Over long-term, technological and process innovations continue to spur demand for more advanced tools, aiding future earnings growth in industry.

For electronic contract manufacturers, there has been a significant shift by computer hardware, networking and other vendors toward out sourcing manufacturing, and this trend shows no signs of abating.

Several companies are already showing signs of this shifting market, Jabil Circuit (NYSE: JBL) shares have climbed 14% in last 30 days to close Friday at $18.30 after steadily declining from their 52 week high of $27.

A smaller player in circuit board field, Integrated Performance Systems (OTCBB: IPFS) has shown similar swings in market trading to Equipment and Instruments Index, closing up Friday 13.4% after being added to Axcess Business News "best picks" Stock Guide that morning. IPFS closed Friday at $1.10.

Although Integrated Performance had a 52 week high of $2.25, its shares faired better than JBL over that period showing similar declines but recovering on news of improved sales. The company had announced record volume of new orders on Nov 13 and announced an additional order on Nov 26, outpacing its Industry Groups overall performance.

(The above chart compares IPFS to JBL for prior 52 weeks, IPFS is shown in black and JBL is in brown)

Where is market going

Defense giants typically out source many component requirements to small companies. Axcess Business News had touched on that area in our prior Top Story, "From Smart Bombs to Smart Bags - technology is in demand."