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Three analysts and top management from nine sector firms examine the paper & forest products sector in this special 42-page Paper & Forest Products issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info507.htm.

TWST: Would you begin by giving us an overview of what you cover in the paper and forest products industry at Deutsche Bank?

Mr. Wilde: I cover most of the mid- to large cap US paper companies, and this would include names like International Paper (NYSE:IP), Weyerhaeuser (NYSE:WY), and Georgia-Pacific (NYSE:GP).

TWST: How are you approaching the group today?

Mr. Wilde: Like many observers, I keep looking for a bottom in the economy, and hence a bottom in earnings performance for this group. The paper companies have really been in recession for somewhere between a year and a half and two years. Conditions in most of the domestic paper markets were actually quite soft going all the way back into early 2000. They continued to slow as we moved through 2000, and by the fourth quarter of 2000 we were in a very deep slowdown in all paper markets. That dramatic slowing has carried all the way through 2001 into early 2002. That’s just in terms of the domestic demand. The industry for about four years has been fighting a very strong dollar, so that’s really a second key issue.

TWST: Are there any sections of the paper and forest group that are doing well, even though we haven’t seen the bottom yet?

Mr. Wilde: There are segments of the industry where, even while demand has been weak, pricing is in pretty good shape. These would include businesses like containerboard, as well as uncoated white paper. In these markets, demand has been just as bad as it has been everywhere else, but, unlike prior downturns, we haven’t seen a pricing collapse.

TWST: When do you anticipate seeing the bottom?

Mr. Wilde: I’m hoping that by mid-year we’re starting to see clear evidence of a pickup in the US economy. If that’s the case, I would expect to see it first in the packaging side of the paper businesses. These businesses tend to be among the first places you usually start to see evidence of an economic pickup in the paper markets.

TWST: How are investors reacting to the group right now? How would you rate investor interest?

Mr. Wilde: Investor interest has picked up over the last six or eight weeks. If you look over the last 15 or 16 months, investors have pretty consistently been anticipating a recovery in the economy and in this sector. Paper stocks bottomed back in October 2000, and the big move in this group took place coming off of those lows in the fourth quarter of 2000. All through 2001, even as we kept pushing the turnaround further and further out, these stocks held up remarkably well. I was surprised during 2001 that we didn’t see a couple of opportunities to buy these stocks lower. They really were, I thought, remarkably durable through most of 2001.

TWST: Do any consolidations make sense to you going forward?

Mr. Wilde: Lots of different combinations make sense. I don’t think we’re going to see all of them at once. But at the end of the day, an increasing number of CEOs in this industry, either publicly or privately, are expressing a view that the industry needs to consolidate globally to about five to 10 very large players. Today, the biggest player in the world in this industry is International Paper, and it has less than a 5% global market share. This is still a very, very fragmented business relative to other capital-intensive manufacturing companies, whether it’s chemicals, aluminum or autos. We’re in early innings here.

This special issue includes:

1) Paper & Forest Products - In an in-depth (5,900 words) Analyst Interview, Matthew Berler, Managing Director at Morgan Stanley, examines the outlook for the sector including and shares specific stock recommendations.

2) Paper & Forest Products - In an in-depth (3,100 words) Analyst Interview, Anna E. Torma, North American Paper & Forest Products Analyst at Merrill Lynch Global Securities, examines the outlook for the sector including and shares specific stock recommendations.

3) Paper & Forest Products - In an in-depth (3,500 words) Analyst Interview, Mark Wilde, Managing Director at Deutsche Banc Alex. Brown, examines the outlook for the sector including and shares specific stock recommendations.

4) CEO interviews (average 2,500 words). Top management of nine sector firms examine the outlook for their firm and the sector.