<BREAKFAST WITH THE FOOL>

Friday, January 22, 1999

"A throne is only a bench covered with velvet." -- Napoleon Bonaparte

Latest Market Numbers

New Home for WorldNet?

AT&T (NYSE: T) reportedly may sell its Internet-access business, including its WorldNet Internet dial-up service, to @Home Corp. (Nasdaq: ATHM). 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 (NYSE: IBM).

Any deal between AT&T and @Home would be contingent on the completion of AT&T's pending acquisition of Tele-Communications Inc. (Nasdaq: TCOMA), 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 (Nasdaq: XCIT) 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 (NYSE: IBM) 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 (NYSE: GMH), a unit of General Motors (NYSE: GM), 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 (Nasdaq: USSB) 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 (NYSE: BKS) 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 (NYSE: AKS) -- Q4 EPS: $0.73 vs. $0.61 last year; estimate: $0.56

Anchor Gaming (Nasdaq: SLOT) -- fiscal Q2 EPS: $1.34 vs. $1.20 last year; estimate: $1.34

BMC Software (Nasdaq: BMCS) -- fiscal Q3 EPS: $0.44 vs. $0.30 last year; estimate: $0.39

C-Cube Microsystems (Nasdaq: CUBE) -- Q4 EPS: $0.31 vs. $0.30 last year; estimate: $0.31

CDW Computer Centers (Nasdaq: CDWC) -- Q4 EPS: $0.84 vs. $0.64 last year; estimate: $0.81

Dentsply International (Nasdaq: XRAY) -- Q4 EPS: $0.46 (before charges) vs. $0.43 last year; estimate: $0.47

Dollar Tree Stores (Nasdaq: DLTR) -- Q4 EPS: $0.63 (before charges) vs. $0.47 last year; estimate $0.59

Electronic Arts (Nasdaq: ERTS) -- fiscal Q3 EPS: $1.15 vs. $0.84 last year; estimate: $1.09

Excite (Nasdaq: XCIT) -- Q4 EPS: profit of $0.04 (pro forma) vs. loss of $0.26 last year; estimate: $0.04

Forte Software (Nasdaq: FRTE) -- fiscal Q3 EPS: profit of $0.03 vs. loss of $0.32 last year; estimate: $0.03

Gateway (NYSE: GTW) -- Q4 EPS: $0.81 vs. $0.59 last year; estimate: $0.78

Hambrecht & Quist Group (NYSE: HQ) -- fiscal Q1 EPS: $0.47 vs. $0.42 last year; estimate: $0.23

i2 Technologies (Nasdaq: ITWO) -- Q4 EPS: $0.12 (before charges) vs. $0.07 last year; estimate: $0.12

Iomega (NYSE: IOM) -- Q4 EPS: $0.07 vs. $0.13 last year; estimate: $0.05

Knight Ridder (NYSE: KRI) -- Q4 EPS: $0.86 (before charges) vs. $0.74 last year; estimate: $0.85

Lattice Semiconductor (Nasdaq: LSCC) -- fiscal Q3 EPS: $0.45 vs. $0.57 last year; estimate: $0.43

Preview Travel (Nasdaq: PTVL) -- Q4 EPS: loss of $0.61 (before charges) vs. loss of $0.63 last year; estimate loss of $0.66

QLogic Corp. (Nasdaq: QLGC) -- fiscal Q3 EPS: $0.76 vs. $0.43 last year; estimate: $0.70

Starbucks Corp. (Nasdaq: SBUX) -- fiscal Q1 EPS: $0.29 vs. $0.23 last year; estimate: $0.29

Sun Microsystems (Nasdaq: SUNW) -- fiscal Q2 EPS: $0.67 (before charges) vs. $0.57 last year; estimate $0.66

Sybase Inc. (Nasdaq: SYBS) -- Q4 EPS: profit of $0.10 (before charges) vs. loss of $0.32 last year; estimate: profit of $0.05

Tribune Co. (NYSE: TRB) -- Q4 EPS: $0.72 (before one-time items) vs. $0.62 last year; estimate: $0.70

USX-U.S. Steel Group (NYSE: X) -- Q4 EPS: $0.63 (before one-time items) vs. $1.52 last year; estimate: $0.32

Xylan Corp. (Nasdaq: XYLN) -- Q4 EPS: $0.23 vs. $0.14 last year; estimate: $0.23

More Foolishness

"Eyes on the Press": Louis (TMF Seymor) examines the hype job many publications did during last fall's market drop... Who's going to win the Super Bowl? Will Jamal dance the Dirty Bird? Will a referee get knocked down? Play Foolball by entering your predictions and you could win a $2,000 trading account courtesy of Datek... And check out our latest Daily Double: TurboChef Technologies.

-- Thursday's Evening News
-- Fool Community
-- Post of the Day
-- Latest Fribble

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 at 9 a.m.

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