<BREAKFAST WITH THE FOOL>

Monday, April 5, 1999

"You'll never have all the information you need to make a decision. If you did, it would be a foregone conclusion, not a decision." -- David Mahoney Jr.

Latest Market Numbers

Strike at Newport News

Thousands of steelworkers at Newport News Shipbuilding (NYSE: NNS) in Newport News, Va. -- as much as half of the company's workforce -- went on strike early this morning for the first time in 20 years as their union contract expired. The workers are demanding "some respect from management" in the form of higher wages and pension benefits, arguing that the management's final offer in contract talks didn't even restore the wages that workers had sacrificed during leaner times. Newport News Shipbuilding is the nation's only maker of nuclear aircraft carriers.

The union says members are upset that recent high profits at the company have meant huge rewards for top managers. In addition, despite a $150 million pension fund surplus, it says that management also made a "stingy" pension offer lagging those of its competitors. On the flip side, the company maintains that its final offer is "highly competitive within the shipbuilding industry." The company has offered immediate wage increases of 7% for higher-level workers and 6% for all others. This would be followed by a 3% increase in the second year and 4% in the third year. The union wants hourly raises of $1.95, $1, and $1 over three years.

Last week, Newport News Shipbuilding said it would not be "materially impacted" by a strike by hourly workers, as salaried workers would be ready to take up the slack. The company said it is prepared for the possibility of a lengthy strike and anticipates limited impact on its financial performance.

News to Go

Gillette (NYSE: G) said that buyout firm Kohlberg Kravis Roberts & Co. plans to sell up to 29.5 million shares in the company in a proposed secondary offering to provide liquidity for other investments. Henry Kravis is expected to remain on the company's board. The sale, currently valued at as much as $1.75 billion, would reduce KKR's stake in Gillette to roughly 2% from 4.6%.

North America's largest equipment rental company United Rentals (NYSE: URI) announced it has launched an unsolicited $22.75-a-share cash tender offer for rival Rental Service Corp. (NYSE: RSV), the third-largest player in the sector. That represents a 32% premium over Rental Service's last closing price of $17.25. United Rentals would also assume $810 million in debt. United Rentals is trying to break up a pending acquisition of NationsRent Inc. (NYSE: NRI) by Rental Service and expects its proposed purchase of Rental Service to add about $0.10 a share to Year 2000 earnings, even including merger breakup costs.

Home improvement retailer Lowe's Cos. (NYSE: LOW) said it will take a first-quarter charge of $20 million to $25 million for its purchase of Eagle Hardware & Garden (Nasdaq: EAGL), trimming earnings by $0.04 to $0.05 a share.

Shares of computer printer maker Lexmark International Group (NYSE: LXK) could rise to $130 on earnings of $5.10 a share next year, a Salomon Smith Barney analyst told Barron's. Lexmark closed down $2 3/4 to $109 1/8 Thursday.

Women's apparel designer Donna Karan International (NYSE: DK) CEO John Idol dismissed speculation of an acquisition bid by Liz Claiborne (NYSE: LIZ), saying no part of the company is for sale, Women's Wear Daily reported. Liz Claiborne Chairman Paul Charron said he's "cool" to the idea of buying Donna Karan but that the companies have talked about further collaborations.

Dallas-based home-equity lender Amresco (Nasdaq: AMMB) said it has hired Goldman Sachs to advise on "various strategic alternatives," including raising capital.

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