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Friday, December 11, 1998
"Neither man nor woman can be worth anything until they have discovered that they are [F]ools." -- Lord Melbourne
Coke Sees Weak Q4
Coca-Cola Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KO)") else Response.Write("(NYSE: KO)") end if %> warned that due to continuing economic problems overseas, it expects fourth quarter earnings of $0.24 to $0.25 per share, compared with analysts' First Call mean estimate of $0.30. Late yesterday, the company invited analysts to an unscheduled meeting today in New York for a major "strategic announcement." Coke Chairman and CEO Doug Ivester called a meeting in a similar fashion in September at which he warned of flat Q3 earnings as well as lower Q4 earnings. At that time, the company had remained confident that it would achieve its oft-stated goal of 7% to 8% annual worldwide volume growth.
Meanwhile, Coke said it is buying most of Cadbury Schweppes PLC's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CSG)") else Response.Write("(NYSE: CSG)") end if %> soft drink brands outside of the U.S., including Schweppes, Canada Dry, Dr Pepper, Crush, and other regional brands, for $1.85 billion -- $1.75 billion in cash and $100 million in notes. The deal covers more than 120 countries but excludes the U.S. -- where Cadbury makes two-thirds of its soft drink sales and controls 15% of the market -- and leaves out France (so Coke can avoid upsetting regulators who earlier rejected its initial bid to buy Orangina on anti-competitive concerns) and South Africa. The businesses involved accounted for $96 million, or 9%, of Cadbury's earnings last year.
The deal gives the world's largest soft drink company ownership of strong brands in new beverage types, namely tonic waters, club sodas, and ginger ales through Schweppes and Canada Dry. At the same time, Cadbury, the world's third largest soda maker behind Coke and PepsiCo <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PEP)") else Response.Write("(NYSE: PEP)") end if %>, exits markets where its business growth has been slow and can use the funds to buy back shares, expand its U.S. soft drink presence, and acquire candy and chocolate businesses worldwide. Cadbury is also in talks with potential buyers for its non-U.S. bottling businesses.
News to Go
Clinical trials of drug maker Eli Lilly & Co.'s <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LLY)") else Response.Write("(NYSE: LLY)") end if %> osteoporosis drug Evista show a 55% reduction in the risk of breast cancer after more than three years of use by women, The Wall Street Journal reported. The trials involve 10,575 women and have shown about 1.7 cases of breast cancer per 1,000 women taking Evista compared with 3.8 cases per 1,000 women taking a placebo.
Information technology services company EDS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EDS)") else Response.Write("(NYSE: EDS)") end if %> late yesterday named Cable & Wireless CEO Richard Brown as its new chairman and CEO, effective January 15. In his 29 months at Cable & Wireless, Brown brokered some 21 deals valued at more than $20 billion, most recently the purchase of MCI WorldCom's <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WCOM)") else Response.Write("(Nasdaq: WCOM)") end if %> entire Internet backbone and client base.
Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> plans to invest $5 million to $10 million each in as many as 10 high-tech venture capital firms, The Wall Street Journal reported, citing "people close to the plans." Such deals could help the software giant track new technology and potential partners. Microsoft has already invested with CMG Information Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CMGI)") else Response.Write("(Nasdaq: CMGI)") end if %> and Accel Partners and is in talks with Benchmark Capital, among others, according to the Journal.
The European Union reportedly approved British Petroleum's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BP)") else Response.Write("(NYSE: BP)") end if %> planned acquisition of Amoco Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AN)") else Response.Write("(NYSE: AN)") end if %> after Amoco agreed to sell its European polyisobutylene unit in Belgium, which distributes fuel additives, to Royal Pakhoed NV of the Netherlands.
Standard & Poor's said cruise-line operator Carnival Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCL)") else Response.Write("(NYSE: CCL)") end if %> will replace General Re Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GRE)") else Response.Write("(NYSE: GRE)") end if %>, which is being acquired by Berkshire Hathaway <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BRK.A and BRK.B)") else Response.Write("(NYSE: BRK.A and BRK.B)") end if %>, in the Standard & Poor's 500 Index on an undetermined date. Meanwhile, diagnostic and testing software developer Compuware Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CPWR)") else Response.Write("(Nasdaq: CPWR)") end if %> will take the place of SunAmerica <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SAI)") else Response.Write("(NYSE: SAI)") end if %>, which is being bought by American International Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AIG)") else Response.Write("(NYSE: AIG)") end if %>, in the S&P 500.
Latest Earnings Announcements:
Ciena Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CIEN)") else Response.Write("(Nasdaq: CIEN)") end if %> fiscal Q4 EPS: loss of $0.03 (before charges) vs. $0.37 last year; Estimate: loss of $0.04
Gart Sports Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GRTS)") else Response.Write("(Nasdaq: GRTS)") end if %> fiscal Q3 EPS: loss of $0.67 (before charges) vs. loss of $0.51 last year
Oracle <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %> fiscal Q2 EPS: $0.28 vs. $0.19 last year; Estimate: $0.24
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Yi-Hsin Chang (TMF Puck), Writer
Jennifer Silber (TMF Amused), Editor
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