The Technology Survey

Almost 90% of large corporate technology buyers have become more confident about their own Y2K compliance. The switch to the Euro currency last year has increased confidence on the continent and vendors note the high level of new systems installed in the Asian Tigers, though some vendors thought that Japan might experience some problems.

The Global Research Directors' Surveys

The common theme throughout the Global Research Directors' surveys is: the longer entities have been addressing Y2K issues the more confident they are of meeting compliance deadlines.

In the United States, worries about Y2K are so few (the typical exception -- the government) that it is beginning to look like the "Millennium shrug."

Companies in Australia and New Zealand report that they are on track and even look forward to increased investor interest, in case nervous Southeast Asian investors are seeking a safe haven. They also anticipate a big post-2000 Internet wave as IT resources are redirected to e-Commerce.

In Canada, the costs of compliance have risen somewhat but that may be because compliance deadlines were moved forward from September to June 1999. Small businesses have been surveyed and it was discovered that 83% of them will be ready by 1 January.

In Asia Pacific, 80% of companies are confident of their own internal compliance. The major focus of concern in the region is government-owned utilities in Indonesia, Thailand and the Philippines where high debt service requirements may have limited the amount those entities could spend to ensure compliance. There is also anxiety about how well the billing and settlement

functions will perform, and as a result, some anticipate potential problems with receivables in the first half of 2000.

Compliance statistics are improving every month in Europe, although some share the universal fear of government and small company problems. Merger and acquisition activity has accelerated in the region, which might not have happened if companies were very worried about compliance.

Finally, in Latin America confidence is highest in Y2K readiness in Argentina, Chile and Mexico. In some sectors, disclosure is poor so investors may assume the worst. Even though we believe that Latin America will successfully negotiate the millennium turnover, we suspect that a high level of skepticism may influence investor attitudes and actions as we approach year-end.

Conclusion

"The turn of the millennium is a big event which will surely get more and more media coverage and some of that coverage will no doubt raise fears. The famous Franklin D. Roosevelt quote, 'We have nothing to fear but fear itself' is very applicable to the Y2K issue," said Rosemary T. Berkery and Andrew J. Melnick, Directors of Global Securities Research and Economics. "To the extent that those fears are acted upon, investment and funds flows could be altered. To paraphrase one of our analysts in London: the costs of Y2K failure could be very large but they must be measured against a probability which is actually very small."

Merrill Lynch Global Securities Research and Economics has more than 700 analysts in 27 countries. Merrill Lynch is the only firm to place first in five of the six "Institutional Investor" research team surveys (U.S. Equity, U.S. Fixed Income, Latin America, Europe and Asia.) In addition, the firm ranked first in "The Wall Street Journal" 1999 All-Star Analysts Survey, and the 1998 "Financial News'" "Poll of Polls," a summary of nine equity research surveys from around the world.