<BREAKFAST WITH THE FOOL>

Wednesday, January 13, 1999

"I never give them hell; I just tell the truth, and they think it's hell." -- Harry Truman

Latest Market Numbers

Brazil Troubles

Get ready for some salsa in the stock market today.

U.S. stocks are poised to head lower as concern that the Brazilian government is allowing its currency, the real, to be revalued in the world's currency markets has stock traders the world over running for cover. According to reports, the real has lost as much as 9% of its value compared to the dollar on news that Brazil's central bank chief and top real defender has resigned his post, allowing for a rapid revaluation of the currency. The country is hoping the devaluation will allow Brazil's benchmark 30% interest rates to fall, giving a shot in the arm to Brazilian businesses and to its economy, the largest in South America. Such a gambit has been tried over the past few years by several struggling Southeast Asian countries such as Thailand, producing less than encouraging results and transmitting shockwaves throughout the world's other financial markets.

At 9:50 a.m. Eastern time, major European stock market indices were trading 3% to 9% lower, setting the tone for what will probably be a busy day of trading for Wall Street's Wise. Look for updates on the U.S. stock market from The Motley Fool News Team throughout the day.

Lucent to Acquire Ascend

Lucent Technologies (NYSE: LU) this morning announced it will acquire data networking equipment company Ascend Communications (Nasdaq: ASND) in an all-stock deal valued at around $19.3 billion, or $89 a share, based on Lucent's closing price yesterday of $107 7/8. That's an 18.8% premium to Ascend's latest close of $74 15/16. For every Ascend share, stockholders will receive 0.825 of a Lucent share.

The companies expect to close the transaction in Lucent's fiscal third quarter, ending June 30. The leading telecommunications equipment giant anticipates the acquisition will be neutral to its fiscal 1999 earnings but start adding to the bottom line the following year. Lucent CEO Rich McGinn said the combination will make the company a "clear leader in communications networking." Indeed, the new combined company will be a formidable competitor to networking equipment firm Cisco Systems (Nasdaq: CSCO).

As part of the deal, Lucent will meld Ascend with its existing Data Networking Systems, Optical Networking, and Communications Software divisions to form a Broadband Networks Group, which will be headed by Lucent chief operating officer (COO) Dan Stanzione. Ascend CEO Mory Ejabat will stay on for a "transition period" to "assure a successful integration of the businesses." The Ascend acquisition is the latest in an aggressive buying spree and follows Lucent's announcement that it will buy privately held billing-software maker Kenan Systems Corp. for $1.45 billion in stock.

News to Go

The world's leading computer chip maker Intel (Nasdaq: INTC) reported an 18% increase in fourth quarter earnings to $2.06 billion on strong demand from PC makers. Q4 earnings came in at $1.19 a share, up from $0.98 last year and ahead of the First Call analysts' mean estimate of $1.07. For more insight, see the latest Drip Portfolio Report.

Internet portal Yahoo! (Nasdaq: YHOO) also posted better-than-expected Q4 EPS of $0.21, excluding acquisition charges and the effects of amortization of intangible assets. That's up from $0.02 a year ago and higher than analysts' projections of $0.16. Yahoo! also announced a 2-for-1 stock split payable February 5.

Books-A-Million Inc. (Nasdaq: BAMM) said same-store sales for the five-week holiday season ended January 2 fell 0.4%. Total sales gained 3.4% to $62.3 million. For the quarter to date, comparable-store sales have dropped 1.9%.

More Earnings Announcements:

BB&T Corp. (NYSE: BBT) -- Q4 EPS: $0.46 vs. $0.39 last year; estimate: $0.46
Ethan Allen Interiors (NYSE: ETH) -- fiscal Q2 EPS: $0.75 vs. $0.65 last year; estimate: $0.73
Linear Technology (Nasdaq: LLTC) -- fiscal Q2 EPS: $0.59 vs. $0.55 last year; estimate: $0.57
MicroAge Inc. (Nasdaq: MICA) -- fiscal Q4 EPS: $0.18 vs. $0.39 last year; estimate: $0.15
Republic Bancorp (Nasdaq: RBCAA) -- Q4 EPS: $0.16 vs. $0.15 last year; estimate: $0.16
Seagate Technology (NYSE: SEG) -- fiscal Q2 EPS: $0.42 vs. loss of $0.08 last year; estimate: $0.26
Visx Inc. (Nasdaq: VISX) -- preliminary Q4 EPS: $0.71 to $0.73 vs. $0.30 last year; estimate: $0.66

Today's Earnings to Watch:

Advanced Micro Devices (NYSE: AMD) -- Q4 EPS estimate: $0.18; last year: loss of $0.09
Apple Computer (Nasdaq: AAPL) -- fiscal Q1 EPS estimate: $0.69; last year: $0.33
Motorola (NYSE: MOT) -- Q4 EPS estimate: $0.23; last year: $0.65

More Foolishness

The Rule Maker Portfolio contemplates a possible market correction and the effects of the Year 2000 problem... Before you order Industry Focus '99, see how the stocks in last year's publication did in retrospect... Read all about our latest Daily Trouble, Gencor Industries.

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