<BREAKFAST WITH THE FOOL>
Tuesday, December 8, 1998
"It is better that a man should tyrannize over his bank balance than over his fellow-citizens and whilst the former is sometimes denounced as being but a means to the latter, sometimes at least it is an alternative." -- John Maynard Keynes
In the Pink
Several companies are seeing pink -- pink slips, that is. The wave of restructuring comes after last week's announcements of restructuring and job cuts by Boeing <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BA)") else Response.Write("(NYSE: BA)") end if %> and Johnson & Johnson <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JNJ)") else Response.Write("(NYSE: JNJ)") end if %>.
Directly tied to the planned production cutbacks at Boeing, one of its largest suppliers, aerospace and defense company Northrop Grumman <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NOC)") else Response.Write("(NYSE: NOC)") end if %>, said it will eliminate another 1,100 jobs next year on top of the previously announced 8,000 cuts through the year 2000. Along with parts for almost all of Boeing's jetliners, Northrop supplies the fuselage for the 747, the production of which will be significantly scaled back from 3.5 a month to two per month by late next year and perhaps just one a month in 2000 if market conditions don't improve. Sales to Boeing make up 12% of Northrop's total revenue.
In the troubled oil sector, the 13th biggest oil concern Amerada Hess <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AHC)") else Response.Write("(NYSE: AHC)") end if %> plans to reduce capital spending to $900 million next year from this year's $1.45 billion. It will also cut 400 jobs, representing 20% of its U.S. and U.K. exploration crew and 4.4% of its global workforce. The company plans to take a $150 million charge in the fourth quarter in addition to the previously announced $150 million charge related to a new joint venture in St. Croix, the Virgin Islands.
Meanwhile, in the world of retail, women's fashion apparel maker Liz Claiborne <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LIZ)") else Response.Write("(NYSE: LIZ)") end if %> will take an after-tax charge of $13 million to $17 million to cut 400 jobs and shut down 30, or 13%, of its 230 stores, including underperforming Liz Claiborne, Elisabeth and Claiborne stores. The move will reduce fourth quarter earnings per share by $0.20 to $0.26.
News to Go
AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> this morning announced it will buy IBM's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %> Global Network business for $5 billion in cash. As part of the deal, about 5,000 IBM employees will join AT&T. In addition, IBM will outsource a large portion of its global networking needs to the telecommunications giant in a contract worth $5 billion over five years, while AT&T, in turn, will outsource applications processing and data center management operations to IBM in a deal valued at $4 billion over the next decade. The companies will hold a press conference this morning at 11 a.m. Eastern, which can be accessed at (800) 700-8174. A replay will be available at 3 p.m. Eastern at (800) 248-7600.
Gary Wendt, the chairman and CEO of General Electric's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GE)") else Response.Write("(NYSE: GE)") end if %> financial services unit GE Capital Services, plans to resign at the end of the year and will be succeeded by Dennis Dammerman, the CFO of the parent company and a close adviser to GE Chairman Jack Welch.
Computer workstations maker Sun Microsystems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SUNW)") else Response.Write("(Nasdaq: SUNW)") end if %> will stop charging licensing fees in an effort to spur the adoption of its Java programming language as a standard in the computer industry. Instead, Sun will ask for royalties on software products made using Java, which is used to write programs that can run on different operating systems. The company will also release a new and improved version of Java today called Java 2.
Internet service provider MindSpring Enterprises <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSPG)") else Response.Write("(Nasdaq: MSPG)") end if %> said it has filed a registration statement with the SEC to sell up to 2.3 million common shares this month.
Furniture retailer Heilig-Meyers Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HMY)") else Response.Write("(NYSE: HMY)") end if %> reported a 1.5% drop in same-store sales in November and warned that earnings for its fiscal third quarter (ended November 30) will be "significantly below current analyst's expectations" due to slower-than-expected sales in its Rhodes stores.
Publisher of the "For Dummies" book series IDG Books Worldwide <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IDGB)") else Response.Write("(Nasdaq: IDGB)") end if %> announced late yesterday it will acquire privately held Cliffs Notes, which puts out popular literary study guides, for around $14.2 million in cash.
Aviation petroleum products, cargo services, information technology, and support services provider Mercury Air Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: MAX)") else Response.Write("(AMEX: MAX)") end if %> disclosed late yesterday that it is in preliminary talks with an unnamed company interested in acquiring the company.
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Yi-Hsin Chang (TMF Puck), Writer
Jennifer Silber (TMF Amused), Editor
</BREAKFAST WITH THE FOOL>