<BREAKFAST WITH THE FOOL>

Thursday, February 25, 1999

"It's an iron law of history that power passes from debtor to creditor." -- Daniel Patrick Moynihan

Latest Market Numbers

Setbacks for Glaxo, Monsanto

Two drug developers experienced setbacks late yesterday. A Food and Drug Administration (FDA) advisory panel voted 13-4 not to recommend approval of Glaxo Wellcome's (NYSE: GLX) Relenza flu medication, while Monsanto (NYSE: MTC) ended development of two experimental cancer drugs, one of which was in the last stage of testing required for FDA approval. For Monsanto, the news follows its announcement last month that it would stop working on two clot-preventing heart drugs already in advanced testing.

The FDA advisory panel said Glaxo failed to prove that its inhaled drug was effective in fighting flu symptoms. Apparently, positive results from two small studies in Europe and the Southern Hemisphere weren't enough to counter inconclusive findings from a North American study. The world's second largest drug maker said it would work with the FDA to win approval for the drug, which is being developed by Australian drug company Biota Holdings and marketed by Glaxo.

Meanwhile, Monsanto said it dropped development of Daniplestim because results didn't justify continued testing on the drug. The other drug, Promegapoietin, was abandoned because some patients developed resistance to it. The company is still testing its hot-selling new arthritis drug Celebrex for use in preventing colon cancer. It is also experimenting with another potential cancer drug, Leridistim, which is in the last stage of required testing and aims to stimulate bone marrow recovery in chemotherapy patients.

News to Go

Further spreading its tentacles, "Books, Music and More" Internet retailer Amazon.com (Nasdaq: AMZN) announced it has acquired a 40% stake (on a fully diluted basis) in Drugstore.com, a new online store that offers more than 15,000 brand name personal healthcare and beauty products and a licensed pharmacy. Based in Redmond, Washington, Drugstore.com is headed by former senior Microsoft executive Peter Neupert and boasts investments by tech venture capital firm Kleiner Perkins Caufield as well as by Liberty Media. Drugstore.com and Amazon.com plan to cross promote each other's sites. Visit the Amazon message board for more insight.

Cigarette maker Philip Morris (NYSE: MO) said it will phase out production at its Louisville, Kentucky plant and consolidate manufacturing at its two facilities in Richmond and Cabarrus, North Carolina by December of next year. The company expects to take a pre-tax charge of about $200 million in the first half of this year mainly to cover "generous" severance packages for some 1,400 employees.

DaimlerChrysler (NYSE: DCX) turned in 1998 earnings of $6.54 a share (before merger charges), up 30% from $4.28 a year ago and in line with estimates. The automaker also announced that around 80,775 of its U.S. hourly and salaried represented employees will receive profit sharing payments averaging $7,400, a 61% increase compared with last year's average of $4,600.

More Earnings Announcements:

ACT Manufacturing (Nasdaq: ACTM) -- Q4 EPS: profit of $0.17 vs. loss of $1.15 last year; estimate: profit of $0.16
Advanced Digital Information (Nasdaq: ADIC) -- fiscal Q1 EPS: $0.30 vs. $0.24 last year; estimate: $0.20
Autodesk (Nasdaq: ADSK) -- fiscal Q4 EPS: $0.54 (before charges) vs. $0.59 last year; estimate: $0.54
CHS Electronics (NYSE: HS) -- Q4 EPS: $0.47 (preliminary) vs. $0.45 last year; estimate: $0.66
Comfort Systems USA (NYSE: FIX) -- Q4 (pro forma) EPS: $0.33 vs. $0.22 last year; estimate: $0.31
Gap Inc. (NYSE: GPS) -- fiscal Q4 EPS: $0.53 vs. $0.36 last year; estimate: $0.50
J.C. Penney (NYSE: JCP) -- fiscal Q4 EPS: $0.77 vs. $0.76 last year; estimate: $0.73
Medtronic (NYSE: MDT) -- fiscal Q3 EPS: $0.36 (before charges) vs. $0.29 last year; estimate: $0.37
SCM Microsystems (Nasdaq: SCMM) Q4 EPS: $0.26 (before) vs. $0.16 last year; estimate: $0.25
THQ Inc. (Nasdaq: THQI) -- Q4 EPS: $0.95 vs. $0.56 last year; estimate: $0.71
Windmere-Durable Holdings (NYSE: WND) -- Q4 EPS: $0.02 vs. $0.45 last year; estimate: $0.20

More Foolishness

David Gardner dispels the myth about the importance of stock splits... Don't miss this week's Dueling Fools, where Yi-Hsin (TMF Puck) and Paul (TMF Parlay) duke it out over Wal-Mart... See what Tom Gardner has to say on whether Dell Computer is making the rules in a profitably expanding industry.

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