<BREAKFAST WITH THE FOOL>
Friday, March 19, 1999
"Boredom is having to listen to someone talk about himself when I want to talk about me." -- Tom Paciorek
Gucci Gets $2.9 Billion Infusion
In another attempt to fend off LVMH Moet Hennessy Louis Vuitton's (Nasdaq: LVMHY) unwanted advances, Italian luxury accessories maker Gucci (NYSE: GUC) said Paris-based specialty retailer Pinault-Printemps-Redoute has made a strategic $2.9 billion investment in the company. Gucci will issue some 39 million shares, equal to 40% of its outstanding capital, at $75 a share -- a 13% premium over Gucci's average closing price for the last 10 trading days. The cash infusion allows Gucci to acquire other luxury goods brands.
The deal with Pinault-Printemps-Redoute is the latest development in an ongoing saga for Gucci. After LVMH took a 5% and later a 34.4% stake in Gucci, sparking takeover speculation, the Italian fashion house launched an employee stock-option issue that diluted LVMH's holding to 26%. Not surprisingly, LVMH then filed suit to block the move. In contrast, Pinault-Printemps-Redoute has agreed not to increase its stake in Gucci to more than 42% in the next five years, barring a 100% takeover attempt by a third party, in which case it would be free to make a competing offer for all Gucci shares.
Gucci will add another slot on its board and allow Pinault-Printemps-Redoute to appoint four of the five members. LVMH had sought to expand the board and nominate its own representative. Gucci said the deal with Pinault-Printemps-Redoute offers a "rare opportunity for long-term value creation for shareholders of both companies and allows Gucci to retain management independence and preserve its unique culture."
News to Go
Athletic footwear maker Nike (NYSE: NKE) posted fiscal third-quarter earnings of $0.44 a share, up from $0.25 last year and ahead of the First Call analysts' mean estimate of $0.38. But worldwide futures orders slid 4%, and revenues dropped 2% to $2.18 billion. Nike CEO Phil Knight said the company is beginning to see "signs of increased consumer demand for our footwear" but remains "cautious on our prospects for near-term growth."
The nation's largest tobacco companies -- Philip Morris (NYSE: MO), RJR Nabisco (NYSE: RN), British American Tobacco PLC (NYSE: BAT) unit Brown & Williamson Tobacco Corp., and Loews Corp.'s (NYSE: LTR) Lorillard Inc. unit -- notched a surprise victory as a federal jury in Akron, Ohio, found them not liable for damages to 114 union health funds in the state that were seeking repayment for benefits paid to injured smokers. The unions had sought $665 million in compensatory damages.
Online women's forum iVillage (Nasdaq: IVIL) raised $87.6 million in its initial public offering of 3.65 million shares -- or 16% of the company -- at $24 a share, the top of the expected price range. iVillage lost $43.7 million on revenues of $15 last year, compared with a $21.3 million loss on revenue of $6 million the previous year. America Online (NYSE: AOL) owns roughly 10% percent of iVillage, while General Electric's (NYSE: GE) NBC unit holds a 7% stake. See the Fool's guide to IPOs: "The ABCs of IPOs."
"Name your own price" airline ticketing site Priceline.com is planning to go public by offering 10 million shares to the public at $7 to $9 a share. The company would have almost 143 million shares outstanding after the IPO, with an initial market capitalization of $996 million to $1.28 billion, if all goes as planned.
Adobe Systems (Nasdaq: ADBE) reported fiscal Q1 EPS of $0.60, beating analysts' expectations of $0.52 and last year's $0.38. The desktop publishing software developer also said it expects Q2 EPS of $0.62 to $0.66 -- Wall Street had been projecting that the company would earn $0.56 a share.
Computer consulting firm Cambridge Technology Partners (Nasdaq: CATP) warned that its fiscal Q1 earnings will fall short of expectations. The company anticipates delivering Q1 EPS of $0.12 to $0.14, versus analysts' forecasts of $0.21 to $0.24, and revenues of $148 million to $151 million, compared with analysts' forecasts of $163 million to $170 million.
Toymaker Mattel Inc. (NYSE: MAT) announced it will acquire for an undisclosed sum CD-ROM computer games maker Purple Moon, which in February had said it would shut down but which has kept its website up and running. Purple Moon targets eight- to 12-year-old girls with nonviolent "friendship adventure" games.
Before you sit down to watch the Academy Awards Sunday night, play Oscar Wildness and win prizes... Get the lowdown on Apple co-founder Steve Jobs in this Fool Bio... Check out the latest StockTalk interview with executives from Egghead.com... Don't miss the ABCs of IPOs.
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