<BREAKFAST WITH THE FOOL>
Wednesday, October 7, 1998

"We have no idea where the market is headed over the next three years. Neither does anyone else." -- David and Tom Gardner, You Have More Than You Think

Latest Market Numbers

AMD in the Black Ahead of Schedule

Surprise! It's time to report third quarter earnings, and Advanced Micro Devices (NYSE: AMD) just announced late yesterday a profit -- yes, that's right, a profit one quarter ahead of expectations, and in spite of intense competition and weak industry demand -- of a penny a share. Wall Street had been expecting a loss of $0.11 a share, compared with a $0.22 loss a year earlier and a $0.45 loss a quarter ago. The computer chipmaker also saw revenues jump 30% from the previous quarter and 15% from the same period a year ago to $685.9 million, with sales of its new AMD-K6-2 processor leading the way.

AMD attributed its return to the black to "rapid market acceptance of our AMD-K6-2 processor with 3DNow! Technology," which was launched in late May. The product was the biggest contributor to a 70% sequential increase in sales of the company's AMD-K6 processor family, whose shipments grew by more than a million units to 3.8 million. What's more, AMD appears to be gaining market share. According to PC Data, the chipmaker's share of the rapidly growing sub-$1,000 PC market rose to a new high of 54%, taking market share from rival Intel (Nasdaq: INTC). At the same time, systems powered by AMD-K6 processors captured 31% of the total U.S. desktop PC retail market.

"Anecdotal evidence suggests the worst is behind us," CEO W.J. "Jerry" Sanders was quoted as saying in The Wall Street Journal. Sanders also said the company will likely ship 4.5 million units in the fourth quarter, the Journal reported. Next week, at the annual Microprocessor Forum in San Jose, Calif., AMD plans to release details about a new processor, code-named K7, which is expected to launch in the first half of next year.

News to Go

Japan's Nikkei surged 803.97 points, or 6.2%, to 13825.61 on expectations that the government would approve guidelines for recapitalizing banks to help stimulate the country's troubled economy. Other Asian markets followed Tokyo's lead. Hong Kong's Hang Seng gained 2.4% to 7742.72, while the Thailand SET jumped 6.1% to 263.23.

Securities firm Merrill Lynch & Co. (NYSE: MER) plans to cut up to 2,000 jobs, or 5% of its traders, analysts, and investment bankers, as its profits fall and as it racks up trading losses in emerging markets, Bloomberg reported.

Things are heating up in the online bookselling world. German media giant Bertelsmann AG has agreed to pay $200 million for a 50% stake in Barnes & Noble's (NYSE: BKS) online bookstore, barnesandnoble.com. Each company also will contribute $100 million to the joint venture. As a result, the planned initial public offering of barnesandnoble.com will be "temporarily postponed."

Internet music retailers CDnow Inc. (Nasdaq: CDNW) and N2K Inc. (Nasdaq: NTKI) plan to merge to form the largest music website, according to The Wall Street Journal, quoting "people with knowledge of the talks." CDNow will acquire N2K, which operates Music Boulevard, in a stock swap, and the combined company will operate under the CDnow name.

The Wall Street Journal reported that AT&T (NYSE: T) launched a new brand, Lucky Dog Telephone Co., to compete against "dial-around" phone carriers, such as rival MCI WorldCom's (Nasdaq: WCOM) Telecom USA, which have taken business from the telecommunications giant by encouraging customers to dial a special code (i.e. 10-10-321) to bypass their home carrier. Lucky Dog's code is 10-10-345.

Computer anti-virus software developer Symantec Corp. (Nasdaq: SYMC) warned after yesterday's close that it expects Q2 revenues to be about 10% below analysts' forecasts and EPS of roughly $0.18, before one-time charges.

Electronic connectors maker AMP Inc.'s (NYSE: AMP) political campaign took a turn yesterday that could mean AlliedSignal (NYSE: ALD) will be able to go ahead with its unsolicited $9.8 billion takeover offer. The House in AMP's home state of Pennsylvania approved conflicting amendments on corporate takeovers, supporting both sides. The ball is now in the Senate's court.

Earnings Announcements Today:

Yahoo! (Nasdaq: YHOO) -- Q3 mean EPS estimate: $0.09; last year: $0.02
SLM Holdings (NYSE: SLM) -- Q3 mean EPS estimate: $0.59; last year: $0.74
Rexall Sundown (Nasdaq: RXSD) -- Q4 mean EPS estimate: $0.28; last year: $0.15
Tenet HealthCare (NYSE: THC) -- Q1 mean EPS estimate: $0.43; last year: $0.38
Winn-Dixie Stores (NYSE: WIN) -- Q1 mean EPS estimate: $0.28; last year: $0.32

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Yi-Hsin Chang (TMF Puck), Writer
Jennifer Silber (TMF Amused), Editor

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