<BREAKFAST WITH THE FOOL>

Tuesday, November 24, 1998

"Nothing strengthens the judgment and quickens the conscience like individual responsibility." -- Elizabeth Cady Stanton

Latest Market Numbers

AOL and Netscape Finalize Merger

As was foreshadowed by reports yesterday, online services conglomerate America Online (NYSE: AOL) agreed to buy Internet portal and software firm Netscape Communications (Nasdaq: NSCP) this morning in a stock swap valued at $4.2 billion. AOL also signed a three-year development and marketing alliance with Sun Microsystems (Nasdaq: SUNW) aimed at promoting the growth of e-commerce and the use of Sun's Java programming technology in new Internet-related devices. For a Foolish take on the AOL-Netscape deal, please see yesterday's feature article by TMF Nico.

Also in the News

Proving that a tobacco settlement comes at the expense of cigarette smokers, the nation's two largest tobacco companies, Philip Morris (NYSE: MO) and RJR Nabisco Holdings (NYSE: RN), wasted no time to announce they will raise wholesale cigarette prices by $0.45 a pack starting today. The widely expected increase, the largest in industry history, comes on the heels of a historic settlement under which the four biggest U.S. tobacco companies agreed to cough up $206 billion over 25 years to 46 states to help cover smoking-related public health costs.

The upside for cigarette makers is that the sweeping settlement effectively snuffs out health-related lawsuits brought by states -- the biggest legal threat the industry had faced. The companies had earlier reached settlements totaling $40 billion with the four remaining states not involved in this deal.

The bad news for smokers is that the price hike they see at the cash register may be even higher than $0.45, as retailers might pad the wholesale price increase. Retail prices for cigarettes could be $0.50 to $0.55 higher per pack on average. An unexpected side effect of the tobacco settlement may be that pricier smokes will cause a more rapid decline in cigarette consumption than the recent average rate of 2%. Or we could simply see a boom in discount cigarettes.

News to Go

Recent IPO theglobe.com (Nasdaq: TGLO) reported a third quarter operating loss of $0.85 per share (before charges), wider than the loss of $0.27 in the year-earlier quarter and the loss of $0.58 in the preceding quarter. The company, whose website allows users to build their own free personalized websites and hosts chats on various topics, had revenues of $1.6 million, up from $0.2 million a year ago and $0.8 million sequentially, due to increased advertising revenue as a result of higher traffic.

Telecommunications company Sprint (NYSE: FON) finished the recapitalization of its common stock, giving shareholders a half share of Sprint PCS (NYSE: PCS) stock for each Sprint share. Sprint PCS begins regular trading today on the New York Stock Exchange and will be a component of the Standard & Poor's 500 Index.

Aerospace and auto parts maker AlliedSignal (NYSE: ALD) said it won't try to top diversified manufacturing and service company Tyco International's (NYSE: TYC) $11.3 billion "white knight" bid for electronic connectors maker AMP Inc. (NYSE: AMP).

Life sciences company Monsanto (NYSE: MTC) priced a 22.5 million share offering at $40 share and a public offering of 17.5 million adjustable conversion-rate equity security units at $40 a unit. The company is expected to net $1.55 billion from the two offerings to help pay for several seed company acquisitions and to refinance outstanding commercial paper.

The Wall Street Journal reported that the flight attendants' union at the nation's ninth largest airline, America West Airlines (NYSE: AWA), has asked the federal government to release it from contract negotiations with the company, moving the air carrier one step closer to a strike in the crucial holiday travel season.

Burlington Coat Factory Warehouse Corp. (NYSE: BCF) said same-store sales fell 2.6% in the first 12 weeks of its fiscal second quarter ending Nov. 28 as coat sales were hurt by mild weather. Comparable store sales of coats dropped 22%. Coat sales accounted for 26% of total sales during the 12 weeks, down from 32% for the second quarter of last year.

Customer relationship management software maker Pegasystems Inc. (Nasdaq: PEGA) late yesterday announced it is delaying the SEC filing of Form 10-Q for the quarter ended September 30 to review "certain revenue transactions with the assistance of its external auditors." The company expects to adjust operating revenues and earnings as a result.

More Foolishness

It's the Fool's second annual holiday charity drive! David Gardner explains why we're doing it, how it all works, and why we teamed up with Share Our Strength. We also have a new initiative this year called "Here's My Two Cents," where in addition to an initial $5,000 donation, the Fool pledges to donate $0.02 for every message posted on our Web message boards from now through December 31. So post away, Fools, for a Foolish cause, and also make a personal contribution today!

-- Monday's Evening News
-- Fool Community
-- This Day in Wall Street History

Also, check out the Lunchtime News at 12:30 p.m. for updates on the top stories of the day, and remember to start each business day with Breakfast With the Fool.

Let us know what you think of this feature. Send all comments and suggestions (including Foolish quotes) to the Breakfast Fools.

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

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