<BREAKFAST WITH THE FOOL>

Wednesday, March 10, 1999

"I haven't had a quote on See's Candy since we bought it in 1972 but I know the business is doing OK. I don't need a quote on it." -- Warren Buffett

Latest Market Numbers

CMGI May Take Over Lycos

Internet investment firm CMGI Inc. (Nasdaq: CMGI) may offer to buy Internet portal Lycos outright to prevent the company from completing a planned acquisition by USA Networks (Nasdaq: USAI), a deal CMGI says is "inadequate" for Lycos shareholders. As Lycos' largest shareholder with a roughly 20% stake, CMGI has hired investment bank Morgan Stanley Dean Witter to seek other possible buyers or merger partners, according to The Wall Street Journal.

A CMGI takeover of Lycos isn't as far-fetched an idea now as it would've seemed a month ago, when Lycos announced plans to merge with USA Networks' Home Shopping Network, Ticketmaster, Internet Shopping Network/First Auction, and Ticketmaster Online-Citysearch (Nasdaq: TMCS) to form a new venture called USA/Lycos Interactive Networks Inc. At that time, Lycos had a market capitalization of around $5.3 billion, about $1 billion more than CMGI. Today, CMGI's market cap has soared to some $9 billion, while Lycos shares are now valued at about $4 billion.

Lycos shares, which closed as high as $103 1/4 right after the merger announcement, dropped nearly $20 in value, or 19%, to $83 7/8 Monday, before CMGI Chairman David Wetherell resigned from Lycos' board of directors to "explore the best options available to Lycos shareholders." Disappointed by the USA deal, Lycos investors had been hoping that the company would obtain a merger bid at a significant premium to the company's market price, similar to the roughly 90% premium @Home (Nasdaq: ATHM) agreed to pay for portal Excite (Nasdaq: XCIT) in late January.

News to Go

Watch out, Starbucks (Nasdaq: SBUX). Consumer products giant Procter & Gamble (NYSE: PG) has agreed to acquire the assets of gourmet coffee wholesaler Brothers Gourmet Coffees Inc., now in bankruptcy reorganization, for $22.8 million in cash and assumed debt.

General Electric's (NYSE: GE) CEO Jack Welch said the company won't sell its NBC unit and expects a report from its businesses in May on their plans for the Internet. Yesterday, NBC and GE Equity units announced the acquisition of a 19.9% stake in home-shopping network ValueVision International (Nasdaq: VVTV) for about $56 million. The two GE units have an option to up their stake to 39.9% and will each hold a seat on ValueVision's board.

PC maker and direct seller Dell Computer's (Nasdaq: DELL) founder and CEO Michael Dell filed with the SEC to sell 4 million shares, his third sale in two weeks. The total sale of 8 million shares represents about 2% of the CEO's 370 million shares.

SunGard Data Systems
(NYSE: SDS) announced it will buy Israeli-based software maker Oshap Technologies (Nasdaq: OSHSF) for about $210 million, or $15 1/2 a share, in stock. Oshap closed yesterday at $10 1/2.

Rural phone services provider Century Telephone Enterprises (NYSE: CTL) will replace Rubbermaid Inc. (NYSE: RBD) in the Standard & Poor's 500 Index after Rubbermaid completes its merger deal with S&P 500 component Newell Co. (NYSE: NWL). USG Corp. (NYSE: USG) will take Century Telephone's place in the S&P MidCap 400 Index.

Meanwhile, auto parts maker Tower Automotive (NYSE: TWR) will replace Sequus Pharmaceuticals (Nasdaq: SEQU) in the S&P SmallCap 600 after the close of business on March 16. Sequus is being acquired by S&P 500 Index component ALZA Corp. (NYSE: AZA).

Consumer financial services company Household International (NYSE: HI) said it plans to repurchase up to $2 billion of its stock. At current prices, that represents about 10% of the company's outstanding shares.

Biotech firm Chiron Corp. (Nasdaq: CHIR) announced plans to buy back up to 2.5 million shares over the year to offset the dilutive effect of the company's stock-based employee compensation plans.

A former CFO of soon-to-go public iVillage Inc., a New York Internet service for women, has filed court documents accusing the company of "inappropriate" accounting practices, The New York Times reported. Joanne O'Rourke Hindman said that almost immediately after she became CFO in September 1997, she raised questions about the company's accounting methods, saying that iVillage recognized revenues prematurely in its financial statements.

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