<BREAKFAST WITH THE FOOL>

Thursday, April 22, 1999

"You can fool all of the people some of the time, and some of the people all of the time, and that's good enough." -- Laurence Peter

Latest Market Numbers

Mega Telecom Merger

Deutsche Telekom (NYSE: DT) and Telecom Italia (NYSE: TI) agreed to an $82 billion mega-merger of equals that will create the world's second-largest telecommunications company after Japan's Nippon Telephone & Telegraph Corp. (NYSE: NTT). The 3-for-1 stock swap -- three Telecom Italia shares for one Deutsche Telekom share -- will give the shareholders of Deutsche Telekom, the larger of the two entities, 57% of the combined company and make the German government, which holds a 72% stake in Deutsche Telekom, a 40% shareholder. The German government has agreed to sell down its stake and promised that it won't interfere with the merged company's operations.

The deal is aimed at creating a European powerhouse to compete against the rapidly expanding U.S. telecommunications giants. The merger still requires the blessing of European regulators as well as that of the companies' shareholders -- Telecom Italia shareholders can still choose to support a hostile bid from Olivetti SpA, which has offered 11.50 euros ($12.20) in cash, bonds, and shares for each Telecom Italia share. The Deutsche Telekom deal values Telecom Italia in the 12-euro range, but that could diminish if Deutsche Telekom's share price drops.

The new company will be legally based in Germany but will maintain co-CEOs and dual headquarters in Bonn and Rome, with its board made up of five Germans and five Italians and its chairman alternating between Deutsche Telekom and Telecom Italia. The press conference announcing the deal this morning was held in London, neutral ground for the two companies.

News to Go

Microsoft (Nasdaq: MSFT) CFO Greg Maffei is being recruited by RoadRunner, the high-speed Internet service owned by Time Warner (NYSE: TWX) and MediaOne Group (NYSE: UMG), to become its new CEO, The Wall Street Journal reported. Microsoft is a minority investor in RoadRunner and has veto rights over the appointment. Microsoft Chairman Bill Gates is reportedly resisting the appointment and may seek various business concessions from RoadRunner before consenting to Maffei's departure.

Lattice Semiconductor (Nasdaq: LSCC) agreed to buy Advanced Micro Devices' (NYSE: AMD) Vantis logic-chip division for $500 million in cash. The deal, expected to close before the end of Lattice's fiscal second quarter ending in September, will initially be dilutive to Lattice's earnings per share but will become accretive in calendar 2000.

The president and chief operating officer of Starwood Hotels & Resorts Worldwide (NYSE: HOT), Richard Nanula, resigned yesterday, a "mutual decision that our interests were best served by pursuing our careers separately," according to Chairman and CEO Barry Sternlicht. The company said there are no immediate plans to find a replacement for the posts.

Primedia Inc. (NYSE: PRM), which publishes magazines such as Seventeen and New York, plans to sell its supplemental education group for upward of $500 million in order to streamline its diverse operations, pay off debt, and boost its share price, The Wall Street Journal reported. The education group's products include Facts on File, Weekly Reader, World Almanac, and American Guidance Service, a company providing testing for special education.

Earnings to Go:
(Quarterly earnings per share versus that of the same year-earlier quarter and compared with analysts' mean estimate according to First Call. Where noted, earnings exclude one-time charges and gains.)

Bell Atlantic (NYSE: BEL) -- Q1 EPS: $0.73 (before charges) vs. $0.66 last year; estimate: $0.73
Beyond.com (Nasdaq: BYND) -- Q1 EPS: loss of $0.66 vs. loss of $0.11 last year; estimate: loss of $0.74
Black & Decker (NYSE: BDK) -- Q1 EPS: $0.44 vs. $0.29 last year; estimate: $0.35
CDW Computer Centers (Nasdaq: CDWC) -- Q1 EPS: $0.90 vs. $0.68 last year; estimate: $0.85
Cendant (NYSE: CD) -- Q1 EPS: $0.22 (from continuing operations) vs. $0.22 last year; estimate: $0.19
CNET (Nasdaq: CNET) -- Q1 EPS: profit of $0.09 (before charges) vs. loss of $0.19 last year; estimate: profit of $0.03
Conexant Systems (Nasdaq: CNXT) -- Q1 EPS: profit of $0.08 vs. loss of $0.16 last year; estimate: loss of $0.01
Diamond Multimedia Systems (Nasdaq: DIMD) -- Q1 EPS: $0.04 vs. $0.22 last year; estimate: $0.14
First Data Corp. (NYSE: FDC) -- Q1 EPS: $0.32 vs. $0.29 last year; estimate: $0.31
Go2Net (Nasdaq: GNET) -- fiscal Q2 EPS: profit of $0.07 (before charges) vs. loss of $0.02 last year; estimate: profit of $0.02
IBM (NYSE: IBM) -- Q1 EPS: $1.55 vs. $1.06 last year; estimate: $1.41
Lucent Technologies (NYSE: LU) -- fiscal Q2 EPS: $0.17 (before charges) vs. $0.07 last year; estimate: $0.15
Reebok International (NYSE: RBK) -- Q1 EPS: $0.32 vs. $0.36 last year; estimate: $0.31
Xerox (NYSE: XRX) -- Q1 EPS: $0.48 vs. $0.42 last year; estimate: $0.48

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