<BREAKFAST WITH THE FOOL>

Wednesday, March 17, 1999

"It seems to me you do not care what banality a man expresses so long as he expresses it in Irish." -- James Joyce [Happy St. Patrick's Day, Fools!]

Latest Market Numbers

New Frontier for Global Crossing

Undersea fiber-optic telecommunications systems builder Global Crossing (Nasdaq: GBLX) will acquire Rochester, New York-based local and long-distance phone company Frontier Corp. (NYSE: FRO) for about $11.2 billion, or $62 a share, in stock. That represents a 39% premium over Frontier's closing price yesterday of $44 5/8. The deal gives Bermuda-based Global Crossing entry into the U.S. telecommunications market, the world's largest, and a "next generation" network based on Internet technology similar to the one it's trying to build. The company aims to develop an independent, integrated network to deliver voice and data traffic worldwide.

The deal is expected to be immediately accretive to Global Crossing's operating cash flow. Frontier shareholders will receive $62 in Global Crossing shares per Frontier share, provided that they trade between a "collar" of $34.56 and $56.78 a share. Global Crossing finished the day yesterday at $51 1/2. Under the agreement, Global Crossing shareholders will own two-thirds of the combined company, leaving Frontier shareholders with the remaining one-third. Even if the deal falls through, Global Crossing would have the right to buy up to 19.9% of Frontier stock at $62 a share.

Global Crossing CEO Robert Annunziata said the merger brings together two "complementary companies with no overlap." Frontier CEO Joseph Clayton, who is slated to become vice chairman of the combined company, added that the new company "will be in a unique position to capitalize on the booming global Internet business." Frontier President and Chief Operating Officer Rolla Huff will become president and COO of Global Crossing's North American operations.

The companies will hold a conference call today at 11 a.m. Eastern time. To participate, dial (888) 564-1649 at 10:45 a.m. (International callers should dial 1-415-904-7382.) A replay of the call will be available from 1 p.m. today through 6 p.m. Friday. Dial (800) 633-8284 (1-619-812-6440 for international callers) -- reservation number: 11980990.

News to Go

Rival PC direct sellers Dell Computer (Nasdaq: DELL), Gateway (NYSE: GTW) and Micron Electronics (Nasdaq: MUEI) won a contract worth up to $400 million to sell PCs to the U.S. Air Force and other Department of Defense (DOD) units. The companies will compete for the DOD's business by offering promotions, custom computers, and other services.

Hughes Electronics (NYSE: GMH) announced it will invest $1.4 billion in its new Spaceway satellite system, thus committing the satellite maker to spend a total of $4 billion on the first phase of the project that will put eight satellites into orbit to serve most of the world. The company will hold a conference call today at 11 a.m. Eastern time. Dial (800) 256-6003. To access the replay, which will be available from 1 p.m. today until 1 p.m. Friday, dial (800) 633-8625 or (619) 812-6450 and enter reservation code 11957591.

Investment banking firm Donaldson, Lufkin & Jenrette (NYSE: DLJ) said it has filed a preliminary registration statement with the SEC for an initial public offering of a new tracking stock for DLJdirect, its online brokerage business, that would trade under the symbol "DIR." (See Warren Gump's Fool on the Hill column last night on tracking stocks.)

Photography giant Eastman Kodak (NYSE: EK) plans to sell its office-imaging unit to German printing giant Heidelberger Druckmaschinen AG for around $200 million, The Wall Street Journal reported. The sale would end Kodak's nearly 25-year effort of trying to compete with Xerox Corp. (NYSE: XRX) in the copier business.

Online network for women iVillage Inc. (Nasdaq: IVIL) jacked up its initial offering price by 77% to $22 to $24 a share, up from the previous range of $12 to $14. It now plans to sell 3.65 million shares to gross $84 million before expenses. (Don't miss the Fool's new feature on IPOs.)

Outbidding investment firm Blackstone Group, automotive supplier Lear Corp. (NYSE: LEA) announced it will acquire United Technologies Corp.'s (NYSE: UTX) UT Automotive Inc. subsidiary, a maker of electrical and electronic products, for $2.3 billion. The deal is expected to add to Lear's earnings by $0.05 this year and $0.35 next year.

Saks Fifth Avenue parent Saks Inc. (NYSE: SKS) said it is "comfortable" with 1999 earnings guidance of $2.10 to $2.25 a share -- down from previous forecasts of $2.20 to $2.25. The department store operator reported fiscal fourth quarter earnings of $0.97 (before charges), up from $0.77 a year ago and in line with analysts' estimates.

Oil and natural gas equipment maker Daniel Industries (NYSE: DAN) said it has hired investment banking firm Simmons & Co. International to evaluate its strategic options after rejecting an unsolicited acquisition bid from an unidentified suitor for $15 a share, which the company viewed as "inadequate." The company's shares closed yesterday at $12 1/16.

Pizza delivery chain Papa John's International (Nasdaq: PZZA) will replace ASA Holdings (Nasdaq: ASAI) on the Standard & Poor's MidCap 400 Index after the close of trading on Friday. ASA Holdings, the parent of Atlantic Southeast Airlines, is being acquired by Delta Air Lines (NYSE: DAL).

More Foolishness

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