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COOPERS & LYBRAND 'TRENDSETTER BAROMETER': PRODUCT SECTOR COMPANIES MORE SQUEEZED BY ECONOMY, LESS AGGRESSIVE IN SPENDING PLANS THAN SERVICE COs.

COOPERS & LYBRAND 'TRENDSETTER BAROMETER': PRODUCT SECTOR COMPANIES MORE SQUEEZED BY ECONOMY, LESS AGGRESSIVE IN SPENDING PLANS THAN SERVICE COs.
 NEW YORK, Aug. 31 /PRNewswire/ -- While CEOs of all types of growth companies have scaled back their anticipated 1992 growth projections, CEOs at product companies appear to be more cautious about the future than their counterparts in service businesses, according to Coopers & Lybrand's latest "Trendsetter Barometer" survey.
 Overall, growth company CEOs have reduced their 1992 growth rate projections to 24.6 percent at midyear from the 27.0 percent rate predicted in March, the survey reveals. Product companies, however, have scaled back their estimates by 4 percentage points while service company estimates dropped by only 1 percentage point.
 "Product companies appear to be caught in a tight squeeze," said Tom Basilo, a partner with Coopers & Lybrand's Emerging Business Services group. "Although CEOs most often cited the sluggish economy as the most significant barrier to growth, it is clear that the impact is more pervasive for the product sector."
 In fact, according to "Trendsetter Barometer," 31 percent of product company CEOs say a lack of market demand is their most significant hurdle, while only 18 percent of service company CEOs cite the same problem.
 "In an effort to stimulate market demand in the second quarter, 19 percent of product companies lowered their prices. Only half as many service companies -- 9 percent -- did the same," Basilo explained.
 For product companies, this aggressive pricing has taken a toll on profitability, according to the survey. Gross margins improved for a net of 10 percent of service companies compared to a net of only 1 percent of product companies in the second quarter, "Trendsetter Barometer" finds.
 Economic wariness is also evident in growth company capital spending plans, which have decreased since last quarter. CEOs planning major new capital investments in the next 12 months decreased from 57 percent in the first quarter to 52 percent in June, nearly 9 percent period-to- period reduction. The percentage of annual revenues growth company CEOs plan to invest has also slipped from 11.8 percent to 11.2 percent, according to the survey.
 Although both product and service company CEOs are planning fewer investments, product companies have scaled down to a greater extent. According to "Trendsetter Barometer," from March to June, product companies planning major new capital investments in the year ahead dropped by 7 percent while service companies planning investments dropped by only 1 percent. And product companies plan to invest a smaller percentage of annual revenues: 10.6 percent, compared to 12.0 percent by service companies, the survey found.
 Coopers & Lybrand's "Trendsetter Barometer" is developed and compiled by the firm's Emerging Business Services group with assistance from the opinion and economic research firm of Business Science International. At each Coopers & Lybrand office, an Emerging Business Services team is available to serve the needs of growing and midsize companies.
 One of the world's leading accounting, tax, and consulting firms, Coopers & Lybrand provides solutions for businesses in a wide range of industries. The firm offers its clients the expertise of more than 17,000 professionals and staff in 100 U.S. offices and more than 67,000 people in 121 countries worldwide.
 NOTE: Graphic art available upon request.
 -0- 8/31/92
 /NOTE TO EDITORS: Coopers & Lybrand's "Trendsetter Barometer" interviewed CEOs of 328 product and service companies identified in the media as the fastest growing U.S. businesses over the last five years. The surveyed companies range in size from approximately $1 million to $50 million in revenues-sales./
 /CONTACT: Maggie O'Donovan, 212-536-3174, or Clare DeNicola, 212-536-1700, both of Coopers & Lybrand/ CO: Coopers & Lybrand ST: New York IN: FIN SU: ECO


SM-SH -- NY016 -- 4869 08/31/92 10:16 EDT
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Date:Aug 31, 1992
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