<BREAKFAST WITH THE FOOL>

Wednesday, May 12, 1999

"If the only tool you have is a hammer, you tend to see every problem as a nail." -- Abraham Maslow

Latest Market Numbers

Cox to Buy TCA Cable

Cable TV operator Cox Communications (NYSE: COX) announced it will acquire TCA Cable TV (Nasdaq: TCAT) for $63.89 per share, or $4 billion, in cash and stock. That represents a 23% premium to TCA's closing price yesterday of $52 1/16. TCA shareholders have three payment choices: They can take $31.25 in cash and 0.3709 of a Cox Class A share for each TCA share, or $62.50 in cash per TCA share, or 0.7418 of a Cox Class A share per TCA share. TCA shareholders will hold approximately 6.3% economic interest and 4.4% of the voting power in Cox Communications.

TCA has roughly 883,000 cable TV customers in Texas, Arkansas, Louisiana and four other states. Following this deal -- which is expected to close late this year -- and the completion of Cox's recently announced acquisition of Media General's (NYSE: MEG.A) cable TV operations, which serve more than 264,000 customers in northern Virginia, Cox will serve about 5 million customers, making it the nation's fourth-largest cable company.

As part of the deal, Cox also will acquire TCA subsidiaries TCA Communications and VPI Communications, which operates under the name "CableTime." TCA Communications provides high-speed Internet access via cable modem and business-to-business data transmission services. VPI Communications offers advertising sales and production services to 82 multiple-system operators representing more than 3.5 million customers nationwide.

News to Go

Computer networking firm Cisco Systems (Nasdaq: CSCO) posted higher-than-expected fiscal third-quarter profits of $0.38, up from $0.30 a year ago and ahead of analysts' mean estimate of $0.37. Revenues for the quarter jumped 44% to $3.15 billion from $2.18 billion. The company also announced it will split its stock 2-for-1 effective June 21. It will be Cisco's eighth split since it went public in 1990.

Lycos Inc. (Nasdaq: LCOS), USA Networks (Nasdaq: USAI), and Ticketmaster Online-CitySearch (Nasdaq: TMCS) called off a proposed merger that had been vehemently opposed by Lycos shareholders -- in particular David Wetherell, chairman of Internet investment firm CMGI Inc. (Nasdaq: CMGI), Lycos' largest shareholder. Instead, Lycos, USA Networks, and Ticketmaster Online-CitySearch signed a deal whereby Ticketmaster Online and CitySearch will provide content for Lycos' national network, and ticket purchase links on Lycos will be directed to the Ticketmaster Online-CitySearch site.

Continuing its push in the cable TV realm, software giant Microsoft (Nasdaq: MSFT) is reportedly in talks to acquire up to 30% of Britain's Cable & Wireless' (NYSE: CWP) cable TV unit, according to The Wall Street Journal. Such a deal could involve more than $4 billion. If Microsoft can close the deal, it would have equity stakes in all three of the top cable operators in the U.K.

Microsoft and Sony's (NYSE: SNE) Sony Music Entertainment said they will collaborate and jointly promote software, music, and video products on the Web. As part of the deal, Sony Music will make protected downloadable music available this summer concurrent with the consumer launch of Microsoft Windows Media Technologies 4.0.

Casual apparel retailer Abercrombie & Fitch (NYSE: ANF) reported fiscal first-quarter earnings of $0.23 a share compared with $0.12 for the same year-earlier period. Analysts had predicted EPS of $0.17. Same-store sales rose 22% during the quarter, on the back of a tough-to-follow 48% increase last year. The company also announced a 2-for-1 stock split, which will be distributed on June 15.

In-flight catalog company SkyMall Inc. (Nasdaq: SKYM) turned in a first-quarter loss of $0.24 a share due to a "major investment in its e-commerce business." For the same quarter last year, SkyMall reported a profit of $0.01. Merchandise sales on its website, skymall.com, tripled to $825,000 from $266,000 year-over-year.

More Foolishness

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