Monday, March 1, 1999

"A businessman is a hybrid of a dancer and a calculator." -- Paul Valery

Latest Market Numbers

eBay Under Investigation

Online auctioneer eBay (Nasdaq: EBAY) announced late Friday that about a month ago, it received requests from the federal government to produce certain records and information as part of an investigation of possible illegal transactions on the website. On February 19, the San Jose, California-based company said it would stop listing firearms and ammunitions on the site effective this Friday because sellers can't "readily guarantee that buyers meet all the qualifications and comply with the laws governing firearm sales." Considering that the policy change came just a few weeks after the government's request for records on January 29, it seems likely that gun sales -- and probably pornography -- are among the "possible illegal transactions" being targeted in the investigation.

In addition, Microsoft (Nasdaq: MSFT) is demanding that eBay take responsibility for sales of pirated software on the popular website, according to The Financial Times Friday. More than 6,000 copies of the latest version of Microsoft Office reportedly were offered for sale in at least 140 separate eBay auctions last week. Most were priced at $19.99, compared with $599 for genuine copies at Microsoft's online shop. eBay recently launched a "legal buddy" system through which software and music publishers can alert the company of counterfeit goods, prompting the site to stop any offending auctions.

Still, the company maintains that it is "not responsible for monitoring" the goods sold on its site. On its website, eBay stresses that it is "only a venue." "We just provide the automated bidding system. We do not authenticate users, and we do not verify items, we do not guarantee that you will receive payment or the item." Last week, the National Consumers League, a consumer advocacy group, reported a sharp rise in complaints about Internet fraud, with online auctions accounting for 68% of fraud reports. The government has prohibited eBay from disclosing details regarding the investigation.

News to Go

The Wall Street Journal reported that the founder of Patriot American Hospitality (NYSE: PAH), Paul Nussbaum, will step down as chairman and CEO, and that the hotel holding company will change its name to Wyndham International Inc. and drop its status as a real estate investment trust. Plus, Patriot has reached an agreement to receive an equity infusion of up to $1 billion from an investor group headed by Apollo Real Estate Advisors of New York.

Telecommunications giant MCI WorldCom (Nasdaq: WCOM) said it will spend $6.5 billion this year on global expansion, boosting its presence in Asia, where countries are beginning to open state-controlled telecommunications industries.

Satellite TV operator EchoStar Communications (Nasdaq: DISH) offered to buy some of Primestar's high-power satellite assets and its medium-power satellite operations for $600 million, topping a bid by rival DirecTV Inc., a subsidiary of Hughes Electronics (NYSE: GMH). Primestar's owners include TCI Satellite Entertainment (Nasdaq: TSATA), Time Warner (NYSE: TWX), Comcast Corp. (Nasdaq: CMCSA), MediaOne Group (NYSE: UMG), Cox Communications (NYSE: COX), and privately held Newhouse Broadcasting Corp.

Medical products maker MiniMed Inc. (Nasdaq: MNMD) announced that an expert panel voted to give the company a "conditional recommendation" for approval of its continuous blood-sugar monitor for diabetics by the Food and Drug Administration (FDA). The company says it plans to address the conditions stipulated by the panel "immediately."

Duke Realty Investments (NYSE: DRE) announced it will acquire Weeks Corp. (NYSE: WKS), creating a diversified real estate investment trust with more than 90 million square feet of primarily industrial and office properties operating under the name Duke-Weeks Realty Corp. Weeks shareholders will receive 1.38 Duke shares, or $30.10, for each Weeks share, representing a premium of 11.5% over the closing price Friday of $27.

Retail propane marketer UGI Corp. (NYSE: UGI) announced it is acquiring Unisource Worldwide (NYSE: UWW), the largest marketer and distributor of printing and imaging paper and supply systems in North America, in an all-stock deal valued at around $1.5 billion. Unisource shareholders will receive 0.566 UGI share for each Unisource share, representing a price of $11.50 per Unisource share, or a premium of roughly 65% over Friday's close.

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