<BREAKFAST WITH THE FOOL>

Tuesday, April 13, 1999

"I always turn to the sports pages first, which records people's accomplishments. The front page has nothing but man's failures." -- Earl Warren

Latest Market Numbers

Delphi to Leave GM's Nest

Confirming news reports yesterday, General Motors (NYSE: GM) announced late in the day that its board voted to approve plans to spin off the rest of its 82.3% stake in Delphi Automotive Systems (NYSE: DPH), the world's largest auto-parts maker. The plan calls for GM to distribute 452.6 million Delphi shares, or 80.1% of the company, to GM shareholders tax-free on May 28. The remaining 2.2% -- pending a favorable ruling from the IRS -- will go to a Voluntary Employee Beneficiary Association trust, which then could be used to fund benefits for hourly retirees. If GM doesn't receive a positive IRS ruling, the 2.2% stake will also be distributed to shareholders.

For its part, Troy, Michigan-based Delphi said that gaining full independence will boost sales to non-GM auto makers, increase its financial and strategic flexibility, and potentially further improve labor relations. CEO J.T. Battenberg said in a conference call that the company aims to grow earnings by 10% annually for the next several years, achieve 5% net income margins and 12.5% return on net assets, and raise non-GM sales at a compound annual rate of 10%.

Delphi intends to move aggressively to "fully implement its plans to enhance shareholder value" by developing new and advanced automotive technologies, broadening its customer base, improving manufacturing operations, and creating new business relationships through acquisitions or partnerships. Of course, independence for Delphi won't mean a complete break from its parent company. GM will continue to be Delphi's biggest customer for some time to come.

News to Go

Internet networking firm Cisco Systems (Nasdaq: CSCO) this morning announced it will acquire Lowell, Massachusetts-based voice call centers software maker GeoTel Communications (Nasdaq: GEOC) in a stock swap valued at about $2 billion. The deal values GeoTel at $60 1/2, based on yesterday's close, which represents a 37% premium over GeoTel's close of $44 1/4.

Following the news of Compaq's (NYSE: CPQ) first-quarter earnings warning, Hewlett-Packard (NYSE: HWP) said late yesterday that it's not experiencing any similar weakness and actually has managed to reach its goal of "growing its PC business revenue while also building profitability." In fact, PC profits are "above plan." The computing, services, and communications and measurement products company is expected to report fiscal second-quarter results after the close of trading on May 17.

In an effort to change its image and accelerate a turnaround, Silicon Graphics (NYSE: SGI) plans to call itself "SGI" and emphasizes its computer-server business rather than its graphics workstations, The Wall Street Journal reported. The company also will ditch its longtime cube logo with the lowercase letters "sgi."

Earnings to Go:

broadcast.com (Nasdaq: BCST) -- Q1 EPS: loss of $0.09 (before charges) vs. loss of $0.09 last year; estimate: loss of $0.12
DSP Communications (NYSE: DSP) -- Q1 EPS: $0.19 vs. $0.16 last year; estimate: $0.19
Enron Oil & Gas (NYSE: EOG) -- Q1 EPS: loss of $0.09 vs. profit of $0.06 last year; estimate: loss of $0.06
Paine Webber (NYSE: PWJ) -- Q1 EPS: $1.01 vs. $0.77 last year; estimate: $0.73
Merrill Lynch (NYSE: MER) -- Q1 EPS: $1.44 vs. $1.26 last year; estimate: $1.23
Southwest Bancorporation of Texas (Nasdaq: SWBT) -- Q1 EPS: $0.26 vs. $0.21 last year; estimate: $0.25
Synovus Financial (NYSE: SNV) -- Q1 EPS: $0.18 vs. $0.15 last year; estimate: $0.18
Tribune Co. (NYSE: TRB) -- Q1 EPS: $0.53 (before one-time items) vs. $0.46 last year; estimate: $0.51

More Foolishness

D.C.-area Fools, come out to a golf shoot-out this Saturday, April 17, to benefit Tim Aycock, a techie here at the Motley Fool who is undergoing cancer treatment. Come have fun and meet Tom and David Gardner. Donations welcomed. Click here for more info... Daily Double: RF Micro Devices.

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