<BREAKFAST WITH THE FOOL>
Thursday, October 22, 1998
"In business, competition is never as healthy as total domination." -- Peter Lynch
Star Performer
Houston-based Conoco <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COC)") else Response.Write("(NYSE: COC)") end if %> will be a headline act today as it makes its trading debut after selling $4.4 billion in shares at $23 a pop last night, easily upstaging Lucent Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %> as the biggest initial public offering (IPO) ever in the U.S. Lucent had played that role since April 1996, when it raised $3.03 billion in its IPO. Conoco's $23-a-share ticket price was at the top of the $20 to $24 range indicated by parent DuPont <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:DD)") else Response.Write("(NYSE:DD)") end if %>.
The eighth largest oil producer and refiner got rave reviews last night. The company sold out of about 191.5 million shares, up from the 150 million (plus up to a 15% over-allotment option) it had initially planned to offer. The performance was particularly impressive in light of the recent drought in the IPO market, instability on the global economic stage, and a 12-year low in oil prices.
Of course, unlike most IPOs, Conoco is a well-known brand that's hardly new to the public. Also, the oil company is priced at around 15 times estimated 1999 earnings, which is below the average valuation on the S&P 500 and below that of most diversified oil companies. Another added appeal is the company's dividend yield, which looks to be between 3% and 4%.
DuPont, which retains ownership of about 70% of Conoco common shares and 92% of the total voting power, plans to spin off the rest of Conoco within the next year as it remakes itself into a life sciences company focused on agricultural biotechnology and pharmaceuticals. This is actually not Conoco's first appearance on the IPO stage. It was publicly listed before being acquired by DuPont in 1981 for $8.8 billion.
News to Go
AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> is negotiating a deal with Time Warner <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TWX)") else Response.Write("(NYSE: TWX)") end if %> that would give the largest U.S. long-distance company access to Time Warner's more than 12 million cable subscribers, nearly doubling the number of consumers AT&T could target in its bid to take on the Bell operating companies in the local phone market, according to The Wall Street Journal. Time Warner is also reportedly in preliminary talks with America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> that could result in instantaneous access to the Web via cable for AOL customers.
The world's largest toy maker Mattel Inc.'s <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MAT)") else Response.Write("(NYSE: MAT)") end if %> Fisher-Price division will recall and repair up to 10 million battery-powered Power Wheels cars and trucks due to a serious fire risk, according to The Washington Post. The Consumer Product Safety Commission reportedly will announce what will be largest recall of any toy sold in stores later today.
Coke's largest bottler Coca-Cola Enterprises <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCE)") else Response.Write("(NYSE: CCE)") end if %> announced it has signed letters of intent to acquire six independent U.S. bottlers for a total of $770 million (price plus assumed debt). The bottlers are Wolslager Group, Cameron Coca-Cola Bottling Co., Montgomery Coca-Cola Bottling Co., Bryan Coca-Cola Bottling Co., Nacogdoches Coca-Cola Bottling Co., and Sulphur Springs Coca-Cola Bottling Co. Coca-Cola Enterprises also reported Q3 earnings of $0.21 a share, blowing the top off of analysts' mean estimate of $0.16.
Latest Earnings Announcements:
Bankers Trust <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BT)") else Response.Write("(NYSE: BT)") end if %> -- Q3 EPS: loss of $4.98 vs. $2.19 last year; Estimate: loss of $3.70
Callaway Golf Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ELY)") else Response.Write("(NYSE: ELY)") end if %> -- Q3 EPS: $0.08 vs. $0.52 last year; Estimate: loss of $0.01
Cirrus Logic <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CRUS)") else Response.Write("(Nasdaq: CRUS)") end if %> -- fiscal Q2 EPS: $0.02 (before charges) vs. $0.13; Estimate: loss of $0.03
Dollar Tree Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DLTR)") else Response.Write("(Nasdaq: DLTR)") end if %> -- Q3 EPS: $0.18 vs. $0.13 last year; Estimate: $0.17
GeoCities <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GCTY)") else Response.Write("(Nasdaq: GCTY)") end if %> -- Q3 EPS: loss of $0.14 vs. loss of $0.12 last year; Estimate: loss of $0.24
Houghton Mifflin <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HTN)") else Response.Write("(NYSE: HTN)") end if %> -- Q3 EPS: $3.06 vs. $2.91 last year; Estimate: $3.03
ICOS Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ICOS)") else Response.Write("(Nasdaq: ICOS)") end if %> -- Q3 EPS: loss of $0.24 vs. loss of $0.11 last year; Estimate: loss of $0.24
Inhale Therapeutic Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INHL)") else Response.Write("(Nasdaq: INHL)") end if %> -- Q3 EPS: loss of $0.32 vs. loss of $0.19 last year; Estimate: loss of $0.32
Lucent Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %> -- fiscal Q4 EPS: $0.41 (before charges) vs. $0.28 last year; Estimate: $0.39
NetGravity Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NETG)") else Response.Write("(Nasdaq: NETG)") end if %> -- Q3 EPS: loss of $0.22 vs. loss of $0.22 last year; Estimate: loss of $0.24
Office Depot <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ODP)") else Response.Write("(NYSE: ODP)") end if %> -- Q3 EPS: $0.32 (before charges) vs. $0.24 last year; Estimate: $0.31
Royal Caribbean Cruises <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RCL)") else Response.Write("(NYSE: RCL)") end if %> -- Q3 EPS: $0.82 vs. $0.48 last year; Estimate: $0.75
3M <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MMM)") else Response.Write("(NYSE: MMM)") end if %> -- Q3 EPS: $0.97 vs. $1.03 last year; Estimate: $0.98
UCAR International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UCR)") else Response.Write("(NYSE: UCR)") end if %> -- Q3 EPS: $0.47 (before charges) vs. $0.77 last year; Estimate: $0.50
Xerox Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: XRX)") else Response.Write("(NYSE: XRX)") end if %> -- Q3 EPS: $1.05 vs. $0.89 last year; Estimate: $1.04
More Foolishness
See what Fools are saying about U.S. v. Microsoft and Microsoft's Q1 earnings on our message boards... Is News Corp. good news or bad news? You decide by reading this week's Dueling Fools and casting your vote... Rob trashes Microsoft and praises Amazon.com in Wednesday's Cash-King report... Louis talks ERP in last night's Fool on the Hill... And last but not least, Part 3 in our long-anticipated series on social security -- it's being made into a television movie!
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Yi-Hsin Chang (TMF Puck), Writer
Jennifer Silber (TMF Amused), Editor
</BREAKFAST WITH THE FOOL>