<BREAKFAST WITH THE FOOL>

Friday, April 30, 1999

"It is hard to believe that a man is telling the truth when you know that you would lie if you were in his place." -- H.L. Mencken

Latest Market Numbers

More Oil Consolidation

In further consolidation of the global oil and gas industry, Repsol SA (NYSE: REP), Spain's giant oil, natural gas, and chemicals group, made an unsolicited $13.5 billion bid to buy the remaining 85.01% of Argentina's YPF SA (NYSE: YPF) that it doesn't already own. If completed, the deal would propel Repsol to the number-eight spot among the world's largest oil companies, with some $26 billion in annual revenues. Repsol is offering to pay $44.78 a share in cash, a 25% premium over the closing price of YPF's American depositary receipts (ADRs) yesterday of $35 15/16 ($35.9375).

Repsol, YPF's largest single shareholder, acquired a 14.99% stake in the company from the Argentine government back in January for $2.01 billion, or $38 a pop. At the time, the Spanish oil concern said it would seek a change to YPF's bylaws and take full control of the company through a stock swap. Apparently the just-announced cash offer circumvents the need to amend YPF's bylaws. Still, the deal likely will face opposition from YPF's board and its chairman, who has expressed his desire to broker a merger of equals or remain independent.

Repsol said that the YPF acquisition would boost earnings per share, return on equity, and cash flow by 10% to 25% a year. Repsol's bigger refining capacity would complement YPF's deeper oil and gas reserves and greater production operations. The two companies combined would control more than half of Argentina's retail gas stations, which could raise antitrust concerns, though the government has agreed to vote its remaining 5.3% stake in YPF in favor of the deal under certain conditions.

News to Go

Highly sought-after cable TV operator MediaOne Group (NYSE: UMG) has entered into confidentiality agreements with both Microsoft (Nasdaq: MSFT) and America Online (NYSE: AOL), opening the door to merger talks in the wake of AT&T's (NYSE: T) counter-offer to Comcast's (Nasdaq: CMCSK) earlier bid to acquire MediaOne, The Wall Street Journal reported. Any new offers would have to come by May 5, and Microsoft and AOL likely would make a bid in conjunction with Comcast.

Troubled PC maker Compaq Computer (NYSE: CPQ) said Senior Vice President Michael Heil resigned as general manager of worldwide sales effective immediately. The news comes less than two weeks after the ouster of CEO Eckhard Pfeiffer. Heil will become CEO of newly formed data-network company CommcoTec Corp. in Stamford, Connecticut.

Aerospace and aircraft giant Boeing (NYSE: BA) is in serious talks to acquire a controlling stake in the $2.4 billion Ellipso satellite mobile-phone project, according to The Wall Street Journal. Privately held Ellipso holds a Federal Communications Commission (FCC) license to launch a 17-satellite system. When Boeing became the prime contractor and integrator for the project a year ago, it made a $50 million equity investment in Ellipso.

Cigarette maker RJR Nabisco Holdings (NYSE: RN) said it has developed a way to reduce the harmful compounds in cigarette smoke and that it plans to test the method to see if its laboratory results can be duplicated in barns where tobacco is cured. If so, the company may use the tobacco in all of its brands.

Information services company EDS (NYSE: EDS) reported first-quarter EPS of $0.36, before special charges and gains, down from $0.43 in the same year-earlier period and right in line with estimates. During the quarter, the company recorded restructuring and other pre-tax charges totaling $379.8 million, primarily to cover costs related to laying off 5,200 employees, asset writedowns, consolidation, and the discontinuation and exit of certain service offerings.

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.)

Axent Technologies (Nasdaq: AXNT) -- Q1 EPS: loss of $0.09 (before one-time items) vs. profit of $0.12 last year; estimate: loss of $0.07
Crescent Real Estate Equities (NYSE: CEI) -- Q1 EPS: $0.66 (funds from operations) vs. $0.62 last year; estimate: $0.63
EarthWeb (Nasdaq: EWBX) -- Q1 EPS: loss of $0.82 vs. loss of $0.27 last year; estimate: loss of $0.93
InfoSpace.com (Nasdaq: INSP) --Q1 EPS: loss of 0.03 vs. breakeven last year; estimate: loss of $0.14
Integrated Health Services (NYSE: IHS) -- Q1 EPS: loss of $0.13 vs. profit of $0.73 last year; estimate: profit of $0.06
Minnesota Mining & Manufacturing (NYSE: MMM) -- Q1 EPS: $0.95 vs. $0.98 last year; estimate: $0.91
National Steel (NYSE: NS) -- Q1 EPS: loss of $0.58 vs. profit of $0.14 last year; estimate: loss of $0.63
Patterson Energy (Nasdaq: PTEN) -- Q1 EPS: loss of $0.12 vs. profit of $0.14 last year; estimate: loss of $0.15
Penske Motorsports (Nasdaq: SPWY) -- Q1 EPS: loss of $0.21 vs. loss of $0.16 last year; estimate: loss of $0.21
Snyder Oil (NYSE: SNY) -- Q1 EPS: loss of $0.24 vs. profit of $0.06 last year; estimate: loss of $0.19
W.R. Grace & Co. (NYSE: GRA) -- Q1 EPS: $0.23 (before gain) vs. $0.15 last year; estimate: $0.21

More Foolishness

Warren's World: Get revved up for Berkshire Hathaway's annual shareholder meeting Monday by learning more about the company, Chairman Warren Buffett and Vice Chairman Charlie Munger in our special report. Yi-Hsin Chang will make the pilgrimage to Omaha this year, so come back Monday for updates... Stocks for Mom: The perfect gift idea for a mom who has everything.

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