<BREAKFAST WITH THE FOOL>
Thursday, January 28, 1999
"If you take risks, you may still fail. But if you do not take risks, you will surely fail. The greatest risk of all is to do nothing." -- Robert Goizueta
Ford to Buy Volvo Cars
The world's second largest automaker Ford Motor Co. (NYSE: F) this morning announced it will acquire AB Volvo's (Nasdaq: VOLVY) worldwide car business for 50 billion kronor, or $6.45 billion, in cash. Ford, which outmaneuvered other potential suitors such as Italy's Fiat SpA (NYSE: FIA), anticipates the deal will result in higher annual earnings due to an "expanded product lineup, volume growth, global economies of scale in engineering resources and purchasing, and platform and manufacturing synergies."
Volvo will continue to be run out of Gothenburg, Sweden, by the same management. Ford will take over three major Volvo assembly plants and two powertrain plants in Europe, as well as Volvo's passenger vehicle product development center in Gothenburg. The deal gives Ford permanent rights to use the Volvo brand for cars, minivans, sport utility vehicles, and light trucks, leaving Volvo with use of the brand for commercial vehicles and its non-automotive-related products. Ford's stable of brands already includes Aston Martin, Jaguar, Lincoln, Mazda and Mercury.
The announcement puts to rest months of speculation regarding a possible deal involving Ford and Volvo since the company then known as Daimler-Benz announced plans to buy the No. 3 U.S. automaker, Chrysler, last May. While this deal seems puny next to the $37 billion DaimlerChrysler (NYSE: DCX) merger, Ford's purchase of Europe's seventh largest automaker adds 400,000 cars to its annual production of 6.5 million cars and light trucks and increases its European market share a tad to 11.9% from 10.2%. That puts it behind Volkswagen AG but ahead of General Motors (NYSE: GM), which owns 50% of Volvo's Swedish rival Saab AB.
News to Go
Yahoo! (Nasdaq: YHOO) said it will acquire online community GeoCities (Nasdaq: GCTY) in an all-stock deal valued at about $3.56 billion, or $113.66 a share, a 52% premium to GeoCities' closing price yesterday of $75. The deal will strengthen Yahoo!'s position online as rival America Online (NYSE: AOL) completes its acquisition of Netscape Communications (Nasdaq: NSCP) and Excite (Nasdaq: XCIT) becomes a part of high-speed Internet access provider @Home (Nasdaq: ATHM). Check out the Fool's StockTalk interview earlier this month with GeoCities President and CEO Tom Evans.
America Online (NYSE: AOL) late yesterday reported fiscal second quarter earnings of $0.17 a share, up from $0.04 last year and beating analysts' mean estimate of $0.14. The online services provider also said it will split its stock 2-for-1 effective February 22.
Earnings, Earnings, Earnings:
Allegheny Teledyne (NYSE: ALT) -- Q4 EPS: $0.39 (before one-time items) vs. $0.42 last year; estimate: $0.35
BroadVision (Nasdaq: BVSN) -- Q4 EPS: profit of $0.08 vs. loss of $0.05 last year; estimate: profit of $0.08
Centocor (Nasdaq: CNTO) -- Q4 EPS: $0.14 (before charges) vs. $0.04 last year; estimate: $0.12
Dendrite International (Nasdaq: DRTE) -- Q4 EPS: $0.18 vs. $0.11 last year; estimate: $0.15
Dura Pharmaceuticals (Nasdaq: DURA) -- Q4 EPS: $0.07 (before charges) vs. $0.37 last year; estimate: $0.07
Eli Lilly & Co. (NYSE: LLY) -- Q4 EPS: $0.51 vs. $0.40 last year; estimate: $0.51
ESS Technology (Nasdaq: ESST) -- Q4 EPS: profit of $0.11 vs. loss of $0.30 last year; estimate: profit of $0.09 (one analyst)
Exodus Communications (Nasdaq: EXDS) -- Q4 EPS: loss of $1.00 (before charges) vs. (net) loss of $5.91 last year; estimate: loss of $1.00
GeoCities (Nasdaq: GCTY) -- Q4 EPS: loss of $0.27 vs. loss of $0.14 last year; estimate: loss of $0.34
Gilead Sciences (Nasdaq: GILD) -- Q4 EPS: loss of $0.53 vs. loss of $0.42 last year; estimate: loss of $0.59
Greg Manning Auctions (Nasdaq: GMAI) -- Q4 EPS: profit of $0.04 vs. loss of $0.14 last year
Informix Corp. (Nasdaq: IFMX) -- Q4 EPS: $0.14 (before charges) vs. $0.05 last year; estimate: $0.11
Inprise Corp. (Nasdaq: INPR) -- Q4 EPS: $0.06 vs. $0.01 last year; estimate: $0.04
Kerr-McGee (NYSE: KMG) -- Q4 EPS: $0.09 (before charges) vs. $0.73 last year; estimate: loss of $0.03
Macromedia (Nasdaq: MACR) -- fiscal Q3 EPS: profit of $0.12 vs. loss of $0.19 last year; estimate: $0.10
M.A. Hanna Co. (NYSE: MAH) -- Q4 EPS: $0.05 vs. $0.34 last year; estimate: $0.13
Mindspring Enterprises (Nasdaq: MSPG) -- Q4 EPS: $0.07 (before tax benefit) vs. $0.02 last year; estimate: $0.07
PairGain Technologies (Nasdaq: PAIR) -- Q4 EPS: $0.07 (before valuation adjustment) vs. $0.17 last year; estimate: $0.08
Ticketmaster Online-CitySearch (Nasdaq: TMCS) -- Q4 EPS: loss of $0.26 vs. loss of $0.35 last year; estimate: loss of $0.31
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