<BREAKFAST WITH THE FOOL>

Monday, April 19, 1999

"I don't have any leadership qualities. In high school I was president of the German Club; nobody would listen to me. If you can't get Germans to follow orders, who will?" -- Tony Randall

Latest Market Numbers

Compaq Ousts CEO

The board of Compaq Computer (Nasdaq: CPQ) ousted CEO Eckhard Pfeiffer in the wake of the company's shocking warning that its first-quarter earnings would come in at less than half of analysts' estimates. Compaq shares have fallen $7 1/4, or 23%, since the pre-announcement April 9 and are down 54% from its 52-week high of $51 1/4. The world's largest PC maker is scheduled to release first-quarter results Wednesday morning and hold its annual shareholders' meeting on Thursday.

The board created an office of the chief executive to oversee the company's day-to-day operations while it searches for a new CEO. Board chairman and company co-founder Benjamin Rosen will serve as acting CEO with the assistance of directors and vice chairmen Frank Doyle and Robert Enloe. Meanwhile, CFO Earl Mason resigned his post, saying he will become CEO of a company in an unrelated industry. The company's treasurer, Ben Wells, has been named acting CFO.

In 1991, Chairman Rosen removed founder and then-CEO Rod Canion and installed Pfeiffer as the new CEO. Pfeiffer grew the company to a projected $40 billion in revenues this year from $3.3 billion when he first took over. According to The Wall Street Journal, Rosen said: "The company is so much more complex than it was a couple years ago. It takes a different skill set in managing the company as successfully as it should be."

News to Go

Regional phone company BellSouth Corp. (NYSE: BLS) said it will invest about $3.5 billion at $94.50 a share for a 10% stake in fiber-optic network and long-distance company Qwest Communications (Nasdaq: QWST). About $1.93 billion will go directly to Qwest in exchange for 20.35 million newly issued shares, while $1.57 billion will be paid to Qwest's largest shareholder Anschutz Co. for 16.65 million Qwest shares, cutting Anschutz's interest in the company to some 39%. BellSouth's investment represents a 13% premium over Qwest's closing price Friday of $82 but is 8% less than Qwest's 52-week high of $104.75.

Deutsche Telekom (NYSE: DT) and Telecom Italia (NYSE: TI) confirmed that they are in talks about a possible merger that would create one of the world's largest phone companies. Under the terms being discussed, the two companies would merge in a stock swap valuing Telecom Italia at roughly 100 billion euros ($107 billion), or 12.60 euros a share -- a 28% premium over its close Friday of 9.88 euros, The Wall Street Journal reported. The deal would give Deutsche Telekom shareholders 60% of the new company, while Telecom Italia shareholders would own 40%.

Telecommunications giant MCI WorldCom (Nasdaq: WCOM) will acquire wireless cable TV company CAI Wireless Corp. (OTC: CWSS) for $24 a share, or $408 million. The deal will allow MCI WorldCom to reach homes or businesses without going through the Baby Bell's local phone networks. CAI Wireless closed at $22 5/8 Friday.

Columbia Energy Group (NYSE: CG) yesterday announced a hostile bid to acquire Consolidated Natural Gas Co. (NYSE: CNG) for $70 a share -- $24.50 in Columbia Energy shares and $45.50 in cash. Based on Friday's close, that represents a 33.5% premium to CNG's market price and a 21% premium to a competing friendly bid from Dominion Resources (NYSE: D). Columbia said the deal could generate $250 million in pre-tax savings after the first year of the merger and $300 million thereafter.

Earnings to Go:

American Standard Cos. (NYSE: ASD) -- Q1 EPS: $0.65 vs. $0.49 last year; estimate: $0.54
Case Corp. (NYSE: CSE) -- Q1 EPS: loss of $0.68 vs. profit of $0.88 last year; estimate: loss of $0.85
Check Point Software Technologies (Nasdaq: CHKP) -- Q1 EPS: $0.49 vs. $0.39 last year; estimate: $0.44
Citigroup (NYSE: C) -- Q1 EPS: $1.01 vs. $0.90 last year; estimate: $0.87
Eli Lilly & Co. (NYSE: LLY) -- Q1 EPS: $0.53 (before one-time items) vs. $0.46 last year; estimate: $0.53
Gulfstream Aerospace (NYSE: GAC) -- Q1 EPS: $0.79 vs. $0.54 last year; estimate: $0.76
Lexmark International Group (NYSE: LXK) -- Q1 EPS: $0.96 vs. $0.69 last year; estimate: $0.88
Nextel Communications (Nasdaq: NXTL) -- Q1 EPS: loss of $1.37 (excludes tax-rate change and currency devaluation in Brazil) vs. loss of $1.53 last year; estimate: loss of $1.43
Rockwell International (NYSE: ROK) -- fiscal Q2 EPS: $0.74 vs. $0.60 last year; estimate: $0.70
STMicroelectronics (NYSE: STM) -- Q1 EPS: $0.72 vs. $0.65 last year; estimate: $0.69
Theragenics Corp. (NYSE: TGX) -- Q1 EPS: $0.10 vs. $0.11 last year; estimate: $0.10
Tower Automotive (NYSE: TWR) -- Q1 EPS: $0.51 vs. $0.37 last year; estimate: $0.44
Travelers Property Casualty (NYSE: TAP) -- Q1 EPS: $0.83 (from operations) vs. $0.77 last year; estimate: $0.83

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