<BREAKFAST WITH THE FOOL>

Monday, March 8, 1999

"If I had to choose between my job and having great wealth, I'd choose the job. It's a much bigger thrill to lead a team of thousands of talented, bright people than it is to have a big bank account." -- Bill Gates

Latest Market Numbers

Trash Consolidation?

Waste management company Allied Waste Industries (NYSE: AW) is reportedly in talks to acquire Browning-Ferris Industries (NYSE: BFI) for about $10 billion in cash and assumed debt, according to The Wall Street Journal. Instead of using stock as currency in the deal, Allied Waste is enlisting the help of its two biggest shareholders, New York-based buyout firms Apollo Group and the Blackstone Group, to close the gap between it and industry leader Waste Management (NYSE: WMI). Apollo holds a 16% stake in Allied Waste, while Blackstone owns about 9% of the shares.

Browning-Ferris shares climbed last week on speculation of a possible takeover. The stock started the week at $31 1/2, traded up as high as $35 15/16, and finished the week at $34 3/4. Trading on the shares on Thursday and Friday was about 2.5 times more active than usual. In contrast, Allied Waste saw its shares plunge $5, or 25%, to $15 on Friday on trading that was almost six times its normal volume.

According to the Journal, Allied Waste courted Ferris-Browning last June but was rebuffed before a formal offer was made. The latest transaction is likely to be valued at roughly $8 billion in cash since Browning-Ferris had $1.8 billion in debt as of September 30.

News to Go

American Bankers Insurance Group (NYSE: ABI) has agreed to be acquired by Dutch insurance, banking, and investment group Fortis for $2.6 billion, or $109.857 per preferred share and $55 per common share in cash -- a 19% premium over American Bankers' closing price Friday of $46 3/8. Fortis will also assume $194 million in debt. The deal is expected to be immediately accretive to Fortis' earnings per share on an unleveraged basis and boost its overall earnings growth. Last October, American Bankers agreed to scrap a deal to merge with Cendant Corp. (NYSE: CD) after the consumer and business services company was slammed by issues of accounting irregularities. ABI had chosen Cendant's offer over a competing bid from American International Group (NYSE: AIG).

Oil concern Chevron Corp. (NYSE: CHV) announced it has revised its fourth quarter and full-year 1998 net earnings to include a special charge of $637 million related to the March 2 Oklahoma Supreme Court opinion in the Cities Service case. The charge reduced net earnings for the year $1.339 billion, or $2.04 per share, from the previously reported $1.976 billion. Q4 earnings was cut to a loss of $206 million, or $0.31 a share, from a profit of $431 million.

Software giant Microsoft (Nasdaq: MSFT) is expected to announce as early as today a $15 million equity investment in Reciprocal Inc., The Wall Street Journal reported. Reciprocal has developed major technologies for delivering music and other media content over the Internet, and the investment is part of an effort to boost Microsoft's e-commerce arsenal. Separately, Bloomberg reported that Microsoft will link up with at least six Chinese electronics firms to help extend its dominant position in one of the world's fastest-growing computer software markets.

Corporate network directory software developer Novell (Nasdaq: NOVL) is "now well positioned to cash in on the explosion of Internet business over the next few years," according to the latest Barron's cover story. The magazine quoted a technology analyst at Wasserstein Perella as saying that Novell's earnings will nearly double, from $0.29 a share last fiscal year to $0.55 this year.

Eastman Kodak (NYSE: EK) plans to sell its Eastman Software unit as part of an effort to shed poor-performing assets, The Wall Street Journal reported. The move comes two years after the photography giant paid Wang Laboratories $260 million to acquire the software unit to bolster its document-imaging software business.

Austin, Texas-based radio station operator Capstar Broadcasting (NYSE: CRB) said it will sell five radio stations in Wichita, Kansas to win antitrust clearance from the U.S. Justice Department for its $190 million acquisition of Triathlon Broadcasting Co. The Justice Department had expressed concerns that Capstar could have controlled more than 45% of radio revenue in that market and raised advertising prices.

Women's apparel retailer Paul Harris Stores (Nasdaq: PAUH) said it will buy privately held and bankrupt catalog and store retailer J. Peterman Co. for $10 million in cash. The Associated Press reported that Paul Harris fired J. Peterman's 57-year-old founder John Peterman, a former marketing executive and minor league baseball player who now plans to write a book and start another business.

More Foolishness

Last week in review: Get market numbers, top news stories, and Jerry Thomas's commentary on the sudden popularity of the Internet... Advanced Micro Devices is the latest Daily Trouble... See what two college buddies, fueled with a little pizza and a lot of drive, can do -- don't miss our StockTalk interview with theglobe.com's Co-CEOs.

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