<BREAKFAST WITH THE FOOL>
Friday, January 22, 1999
"A throne is only a bench covered with velvet." -- Napoleon Bonaparte
New Home for WorldNet?
AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> reportedly may sell its Internet-access business, including its WorldNet Internet dial-up service, to @Home Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ATHM)") else Response.Write("(Nasdaq: ATHM)") end if %>. According to The Wall Street Journal, a potential deal would involve the high-speed cable Internet-access company paying $1 billion in stock to AT&T for WorldNet's 1.3 million residential customers and close to 1 million business customers, which AT&T recently acquired from IBM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %>.
Any deal between AT&T and @Home would be contingent on the completion of AT&T's pending acquisition of Tele-Communications Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TCOMA)") else Response.Write("(Nasdaq: TCOMA)") end if %>, which is expected to close in mid-February. If all goes as planned, AT&T would still have significant influence over WorldNet through TCI's controlling interest in @Home -- TCI owns 58% of the voting stock of @Home. Plus, AT&T would be able to shift the costs of running the Internet-access service from its income statement and balance sheet, while at the same time getting a higher valuation on the Internet business.
Acquiring WorldNet would instantly boost @Home's membership roll, which now stands at roughly 330,000. Provided that @Home's proposed acquisition of Excite <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XCIT)") else Response.Write("(Nasdaq: XCIT)") end if %> goes through, the Internet portal and search company would provide directory services and programming for WorldNet. The Journal reported that the prospect of buying WorldNet was an important consideration in the @Home-Excite deal and that AT&T Chairman Michael Armstrong was consulted throughout the talks over the acquisition.
News to Go
IBM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %> reported fourth quarter earnings of $2.47 a share, up from $2.11 in the same year-earlier period and ahead of analysts' mean estimate of $2.45. But Big Blue missed the most optimistic forecasts amid a 2% decline in hardware sales and a 3% drop in maintenance revenues, ongoing softness in memory chip prices, and continued weakness in Asia and Latin America. The company's gross profit margin fell to 39% from 40.1% a year ago. IBM shares, which closed at $197 yesterday, fell $6 to $7 in after-hours and European trading.
Hughes Electronics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GMH)") else Response.Write("(NYSE: GMH)") end if %>, a unit of General Motors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %>, announced it will acquire direct-broadcast satellite company PrimeStar Inc. for about $1.82 billion in cash and stock (mostly cash). This, combined with the acquisition of U.S. Satellite Broadcasting <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USSB)") else Response.Write("(Nasdaq: USSB)") end if %> announced last month, will give Hughes' DirecTV operations a total of 7 million U.S. subscribers and more than 370 entertainment channels. Hughes and DirecTV will hold a conference call today at 11 a.m. ET -- (800) 621-5344. A replay will be available from 1 p.m. ET today through 5 p.m. Monday -- (800) 633-8284, reservation # 11589806.
Barnes & Noble <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BKS)") else Response.Write("(NYSE: BKS)") end if %> will revamp efforts next month for an initial public offering of its online bookstore barnesandnoble.com, according to Business Week's "Up Front" column. The Fool talked to barnesandnoble.com CEO Jonathan Bulkeley in this week's StockTalk interview -- check it out.
Earnings -- The Breakfast of Champions:
AK Steel Holding <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AKS)") else Response.Write("(NYSE: AKS)") end if %> -- Q4 EPS: $0.73 vs. $0.61 last year; estimate: $0.56
Anchor Gaming <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SLOT)") else Response.Write("(Nasdaq: SLOT)") end if %> -- fiscal Q2 EPS: $1.34 vs. $1.20 last year; estimate: $1.34
BMC Software <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BMCS)") else Response.Write("(Nasdaq: BMCS)") end if %> -- fiscal Q3 EPS: $0.44 vs. $0.30 last year; estimate: $0.39
C-Cube Microsystems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CUBE)") else Response.Write("(Nasdaq: CUBE)") end if %> -- Q4 EPS: $0.31 vs. $0.30 last year; estimate: $0.31
CDW Computer Centers <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CDWC)") else Response.Write("(Nasdaq: CDWC)") end if %> -- Q4 EPS: $0.84 vs. $0.64 last year; estimate: $0.81
Dentsply International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XRAY)") else Response.Write("(Nasdaq: XRAY)") end if %> -- Q4 EPS: $0.46 (before charges) vs. $0.43 last year; estimate: $0.47
Dollar Tree Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DLTR)") else Response.Write("(Nasdaq: DLTR)") end if %> -- Q4 EPS: $0.63 (before charges) vs. $0.47 last year; estimate $0.59
Electronic Arts <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ERTS)") else Response.Write("(Nasdaq: ERTS)") end if %> -- fiscal Q3 EPS: $1.15 vs. $0.84 last year; estimate: $1.09
Excite <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XCIT)") else Response.Write("(Nasdaq: XCIT)") end if %> -- Q4 EPS: profit of $0.04 (pro forma) vs. loss of $0.26 last year; estimate: $0.04
Forte Software <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FRTE)") else Response.Write("(Nasdaq: FRTE)") end if %> -- fiscal Q3 EPS: profit of $0.03 vs. loss of $0.32 last year; estimate: $0.03
Gateway <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GTW)") else Response.Write("(NYSE: GTW)") end if %> -- Q4 EPS: $0.81 vs. $0.59 last year; estimate: $0.78
Hambrecht & Quist Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HQ)") else Response.Write("(NYSE: HQ)") end if %> -- fiscal Q1 EPS: $0.47 vs. $0.42 last year; estimate: $0.23
i2 Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ITWO)") else Response.Write("(Nasdaq: ITWO)") end if %> -- Q4 EPS: $0.12 (before charges) vs. $0.07 last year; estimate: $0.12
Iomega <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IOM)") else Response.Write("(NYSE: IOM)") end if %> -- Q4 EPS: $0.07 vs. $0.13 last year; estimate: $0.05
Knight Ridder <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KRI)") else Response.Write("(NYSE: KRI)") end if %> -- Q4 EPS: $0.86 (before charges) vs. $0.74 last year; estimate: $0.85
Lattice Semiconductor <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LSCC)") else Response.Write("(Nasdaq: LSCC)") end if %> -- fiscal Q3 EPS: $0.45 vs. $0.57 last year; estimate: $0.43
Preview Travel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PTVL)") else Response.Write("(Nasdaq: PTVL)") end if %> -- Q4 EPS: loss of $0.61 (before charges) vs. loss of $0.63 last year; estimate loss of $0.66
QLogic Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QLGC)") else Response.Write("(Nasdaq: QLGC)") end if %> -- fiscal Q3 EPS: $0.76 vs. $0.43 last year; estimate: $0.70
Starbucks Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SBUX)") else Response.Write("(Nasdaq: SBUX)") end if %> -- fiscal Q1 EPS: $0.29 vs. $0.23 last year; estimate: $0.29
Sun Microsystems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SUNW)") else Response.Write("(Nasdaq: SUNW)") end if %> -- fiscal Q2 EPS: $0.67 (before charges) vs. $0.57 last year; estimate $0.66
Sybase Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SYBS)") else Response.Write("(Nasdaq: SYBS)") end if %> -- Q4 EPS: profit of $0.10 (before charges) vs. loss of $0.32 last year; estimate: profit of $0.05
Tribune Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRB)") else Response.Write("(NYSE: TRB)") end if %> -- Q4 EPS: $0.72 (before one-time items) vs. $0.62 last year; estimate: $0.70
USX-U.S. Steel Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: X)") else Response.Write("(NYSE: X)") end if %> -- Q4 EPS: $0.63 (before one-time items) vs. $1.52 last year; estimate: $0.32
Xylan Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XYLN)") else Response.Write("(Nasdaq: XYLN)") end if %> -- Q4 EPS: $0.23 vs. $0.14 last year; estimate: $0.23
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Yi-Hsin Chang (TMF Puck), Writer
Jennifer Silber (TMF Amused), Editor