<BREAKFAST WITH THE FOOL>

Tuesday, March 9, 1999

"Sometimes your best investments are the ones you don't make." -- Donald Trump

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Microsoft-DOJ Settlement?

Following on the heels of surprising news that Intel (Nasdaq: INTC) and the Federal Trade Commission (FTC) have reached a last-minute settlement of antitrust charges right before the case was scheduled to go to trial today, The Seattle Times is reporting that Microsoft (Nasdaq: MSFT) and the government are also looking for ways to settle the landmark suit against the Redmond, Washington-based software giant before that trial resumes next month after a six-week recess.

Quoting "a source close to the case," the newspaper reported, "It makes sense to explore settlement discussions." Microsoft Chief Operating Officer Bob Herbold said, "You never block out the notion of settlement, but we're not going to talk about it publicly." According to the paper, a person close to the government's case estimates a 60% chance of a settlement.

But don't expect any concrete developments anytime soon. Nothing is expected earlier than next week, when some of the attorneys return from vacations, according to The Seattle Times. Even then, there's no rush to settle since the trial won't resume until the second week in April and there will be at least two more breaks -- after rebuttal cases are presented and after closing arguments -- before the case winds down this summer. Plus, unlike the Intel case, the trial against Microsoft already has been going on for months, and both sides seem to think they have scored points in court.

News to Go

Throwing a wrench in USA Networks' (Nasdaq: USAI) proposed acquisition of Internet portal Lycos (Nasdaq: LCOS), David Wetherell, head of Internet investment firm CMGI Inc. (Nasdaq: CMGI), the largest shareholder in Lycos, resigned from Lycos' board of directors, calling the deal "inadequate" for the company's shareholders. Wetherell said he will "explore the best options available to Lycos shareholders, including the possibility of Lycos remaining independent."

You can bet it's bad news if a company in one day issues two separate press releases, an earnings warning and a corporate restructuring. Chipmaker Advanced Micro Devices (NYSE: AMD) warned that it will fall short of its goal of shipping 5.5 million units of AMD-K6 family processors in the first quarter ending March 28, which will result in a "significant loss" for the quarter. The company also said it plans to cut around 300 jobs, roughly 2.2% of its workforce, over the next two quarters to increase its focus on microprocessors.

The Federal Trade Commission is expanding its probe of drug companies to determine whether they are unfairly stifling generic competition, according to The Wall Street Journal. The agency's investigation now involves Eli Lilly & Co. (NYSE: LLY), DuPont (NYSE: DD), Abbott Laboratories (NYSE: ABT), and Hoechst AG (NYSE: HOE). The drugs under examination have combined annual sales in excess of $5 billion.

Sony Corp. (NYSE: SNE) will close 15 factories, reduce its work force by 10%, and raise its stake to 100% in three Japanese subsidiaries -- Sony Music Entertainment (Japan) Inc., Sony Chemical Corp., and Sony Precision Technology Inc. -- as part of a broad consolidation of its global businesses to better respond to the growth of the Internet and other network-driven computer businesses.

Teenage clothing and accessories retailer Gadzooks Inc. (Nasdaq: GADZ) reported a fiscal fourth quarter loss of $0.10 a share, down from a profit of $0.54 a year ago and worse than analysts' projections of a loss of $0.03 a share. Same-store sales dropped 10.9% during the quarter.

Furniture maker O'Sullivan Industries Holdings (NYSE: OSU) said it expects third quarter earnings to top $0.40 a share, ahead of First Call's analysts' mean estimate of $0.31 and last year's $0.23, thanks to stronger-than-expected sales and improvements in manufacturing productivity.

Mattel Inc.'s (NYSE: MAT) Barbie turns 40 today. The toymaker plans to release a 40th anniversary doll, a Butterfly Art Barbie -- with a butterfly tattoo on her stomach -- and Working Woman Barbie, which comes with a play laptop and cell phone. Meanwhile, the U.S. Postal Service will issue an official Barbie stamp.

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