The information used in The Wall Street Journal's All-Star Analysts Survey is collected throughout the year, then subjected to a lengthy verification process that gives the analysts and/or their firms repeated opportunities to point out errors and make suggestions.

That process began in earnest in December, when the Journal and Zacks Investment Research Inc., Chicago, sent the first of four mailings to 106 securities firms.  That mailing highlighted the changes made in expanding the number of industries covered in the survey to 55 from 50 in the 1998 survey, and included a 103-page booklet listing the industries and their component companies. The list also was made available via e-mail.

Subsequent mailings in January, February and March listed the analysts at each firm who were believed to be eligible and ineligible, and detailed the data collected about each eligible analyst's stock picks and earnings estimates.

In every case, the firms and analysts were asked to check the information and notify Zacks or the Journal if they had any questions or concerns. They were asked to speak up if, for example, they disagreed with how a company was classified, or believed that any analyst had been wrongly included or excluded. They were asked to confirm the information collected by Zacks about stock recommendations and earnings estimates, and to report any corrections, with appropriate documentation.

Many complaints and suggestions were, in fact, made. These were evaluated, and a number of changes were accepted. In some other cases, further discussion with securities firms and analysts confirmed the information as collected by Zacks. In early May, Zacks delivered the preliminary results to the Journal. A team of more than 50 reporters contacted the tentative winners, while other staffers cross-checked and scrubbed the data.

Discrepancies were checked, and changes in the data were made where appropriate. In early June, the information was considered final, the last computer runs were made and the ultimate rankings for analysts and firms were prepared.

Eligible Analysts
The survey's eligibility requirements are intended to ensure that only analysts who seriously and thoroughly cover an industry are considered as potential All-Stars. The requirements are the same for every analyst, whether a well-known veteran at a major Wall Street securities firm or an eager unknown from a small regional firm. Making the cut for the 1999 survey: 1,197 analysts from all of the major Wall Street houses and many smaller firms as well.

To be eligible, an analyst generally must have followed at least five stocks in an industry during 1998. Coverage also had to include at least two of the biggest stocks in an industry, typically defined as companies with market capitalizations of $1 billion or more as of Jan. 1, 1998. The reasoning behind the two-of-the-biggest rule is that no one can truly understand an industry without a thorough knowledge of at least some of its biggest players.

Analysts were required to have covered their industries for the full calendar year and to be senior analysts. That is, they couldn't be subordinate to another analyst. Thus, if two names appeared on a report, the first-named analyst got the credit -- or the blame -- for the recommendations or estimates unless Zacks or the Journal was advised otherwise in advance.

Analysts who changed employers during 1998 typically weren't eligible. There was a limited exception for senior analysts whose firms were absorbed in mergers and who continued to be senior analysts covering their industries at the successor firms; the coverage had to be uninterrupted.

Eligible Stocks
Analysts were evaluated on their recommendations and earnings estimates on 4,590 stocks. To be eligible, stocks were required to have had market capitalizations exceeding $50 million as of Jan. 1, 1998, or, in the case of initial public offerings during 1998, initial market capitalizations exceeding $50 million.

Industries and Companies
The eligible stocks were issued by companies in 55 industries, up from 50 in the 1998 All-Star Analysts Survey. The net increase of five categories reflects the following changes:

• Two new groups, Internet and real-estate investment trusts, were added.

• The cable & broadcasting and entertainment categories were reconfigured into three industry groupings -- broadcasting, cable & entertainment and leisure & recreation.

• The separate computer-networking and telecommunications-equipment categories were combined into a single telecommunications & network-equipment category.

• The computer software & services category was split into two groups -- computer services and computer software.

• The semiconductors category was split into separate semiconductor-equipment and semiconductors categories.

• The telecommunications-carriers category was divided into two groups: telecommunications, carriers; and telecommunications, wireless.

At the same time, the computer-hardware and computer-peripherals & PCs categories were reconfigured by moving personal-computer makers into the hardware group. The new groupings are computer hardware & PCs and computer peripherals. Another significant change for 1999 is in the banks category, where the number of eligible companies was greatly expanded.

The changes resulted from suggestions from many sources, including research directors, analysts and Journal reporters and editors. They are expected to make the survey more interesting and useful to Journal readers.

Rankings by Zacks
The calculations for the All-Star Analysts Survey were performed by Zacks Investment Research, which specializes in disseminating and analyzing brokerage-house research. Questions about the rankings can be directed to Rick Chrabaszewski, consulting manager, at 800-767-3771, extension 122.
--C. Frederic Wiegold

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