<BREAKFAST WITH THE FOOL>
Tuesday, March 23, 1999
"You are neither right nor wrong because the crowd disagrees with you." -- Benjamin Graham
OPEC to Cut Oil Supply
Members of the Organization of Petroleum Exporting Countries (OPEC) meeting in Vienna have agreed to cut oil production by 1.7 million barrels a day in an effort to boost world oil prices, which sank to 12-year lows in December. Including cutbacks by non-OPEC nations such as Mexico, Russia and Oman, the total reduction should reach about 2.1 million barrels a day, or about 3% of the global supply. Counting cuts pledged last June, oil producers will be slashing supply by more than 5 million barrels a day, or around 7%.
Provided that OPEC members follow through with the deal -- that's a big if since OPEC failed twice last year in efforts to curtail oil production as members reneged on their promised cuts -- the U.S. wholesale price of gasoline could be up 20% by July, according to an estimate by the Petroleum Industry Research Foundation in New York. Yesterday, the price of West Texas Intermediate crude for April delivery gained $0.26 to close at $15.50 a barrel on the New York Mercantile Exchange, the highest close since October 2. The active May contract increased $0.38 to $15.74 a barrel. The Saudi oil minister has said he would like to see the price rise to between $18 and $20 a barrel.
News to Go
Chemicals giant DuPont <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DD)") else Response.Write("(NYSE: DD)") end if %> plans to spin off its 70% remaining stake in oil company Conoco <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COC)") else Response.Write("(NYSE: COC)") end if %> to DuPont shareholders by the end of the third quarter. DuPont sold 30% of the shares back in October in an initial public offering that raised $4.4 billion, a new record. DuPont shareholders will be able to swap DuPont shares for shares in Conoco, though the exact exchange ratio has yet to be set.
Drug maker PathoGenesis Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PGNS)") else Response.Write("(Nasdaq: PGNS)") end if %> announced that due to fluctuations in the sales of its drug for managing pseudomonal lung infections in cystic fibrosis patients, it expects to post a loss of $0.30 a share for the first quarter, significantly short of analysts' mean estimate of a profit of $0.20. "We now think it will take longer to further penetrate the U.S. cystic fibrosis market and achieve the full sales potential," the company said.
Computer networking company Cabletron Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CS)") else Response.Write("(NYSE: CS)") end if %> returned to profitability by reporting fiscal fourth quarter earnings of $0.01 a share (before charges), compared with a loss of $0.04 a year ago, with revenues up 11% year-over-year. Analysts had been projecting a loss of $0.01. The company also announced a restructuring effort, called "Project Ignition," designed to save $80 million a year and "re-energize revenue momentum."
Drug maker Eli Lilly & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LLY)") else Response.Write("(NYSE: LLY)") end if %> will pay biotech firm Ribozyme Pharmaceuticals <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RZYM)") else Response.Write("(Nasdaq: RZYM)") end if %> $9.2 million this year plus as much as an additional $28.8 million as the two team up to develop treatments for hepatitis C. Lilly would pay Ribozyme royalties and manufacturing fees in exchange for exclusive worldwide marketing rights should they succeed in bringing a drug to market.
The world's largest electrical engineering company Asea Brown Boveri Ltd. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ABBBY)") else Response.Write("(Nasdaq: ABBBY)") end if %> and the world's second biggest maker of energy distribution equipment Alstom SA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALS)") else Response.Write("(NYSE: ALS)") end if %> of France have agreed to merge their power generation units, which will put them ahead of General Electric <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GE)") else Response.Write("(NYSE: GE)") end if %> as the world's largest power generator. Alstom will pay ABB $1.5 billion as part of the deal.
Atlantic Coast Airlines Holdings <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ACAI)") else Response.Write("(Nasdaq: ACAI)") end if %>, which operates United Express, warned that unusually inclement weather will reduce Q1 EPS by $0.03 to $0.05 to come in between $0.16 and $0.19, which would be below current consensus estimates of $0.20 and could be flat with the $0.16 it earned in the same period last year.
Computer virus detection software developer Symantec Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SYMC)") else Response.Write("(Nasdaq: SYMC)") end if %> announced plans to repurchase up to $75 million in its common stock, the second buyback in less than a year.
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Yi-Hsin Chang (TMF Puck), Writer
Jennifer Silber (TMF Amused), Editor