Monday, July 19, 1999

"PR cannot overcome things that shouldn't have been done." -- Harold Burson

Latest Market Numbers

Qwest Wins Bid for US WEST

Telecommunications company Qwest Communications International (Nasdaq: QWST) won the battle to acquire US WEST (NYSE: USW) for $69 a share in stock, subject to a "collar" on Qwest's average share price. US WEST ended its merger agreement with Global Crossing (Nasdaq: GBLX), and Qwest withdrew its competing bid for Frontier Corp. (NYSE: FRO), allowing Global Crossing to proceed with its proposed acquisition of Frontier without having to raise its offering price.

The combined operations of Qwest and US WEST, which will take Qwest's name, are expected to realize revenue synergies of $12 billion over a 5 1/2-year period after closing and to be accretive to Qwest's earnings per share in the first year following completion of the merger. Joseph Nacchio, chairman and CEO of Qwest, will hold the top executive post in the new company. Meanwhile, Solomon Trujillo, now chairman, president, and CEO of US WEST, will become chairman of Qwest and president of the combined company's broadband local and wireless business.

US WEST paid a $140 million cash fee to break up its agreement with Global Crossing. In addition, Qwest agreed to buy $140 million in services from Global Crossing over four years at the best commercially available prices, and US WEST agreed to return $140 million in Global Crossing shares, purchased by US WEST in connection with its agreement with Global Crossing.

News To Go

Microsoft (Nasdaq: MSFT) is reportedly about to sell its Sidewalk network of city guides to Ticketmaster Online-CitySearch (Nasdaq: TMCS) in return for stock in the rival company. The Wall Street Journal said that Microsoft is slated to get a 9% stake in Ticketmaster Online-CitySearch, adding that Microsoft would retain Sidewalk's technical and advertising sales staff. The New York Times reported that Microsoft would have the option to increase its stake in the company to 13%. Microsoft is scheduled to report its fiscal fourth-quarter earnings after today's close.

Internet services provider America Online (NYSE: AOL) is launching a subscription-free Internet service in Britain to compete with Freeserve and other free services that have been launched in Britain and elsewhere in Europe over the past six months, according to The Financial Times. The new service will carry the brand Netscape Online and will be launched next month alongside AOL's existing subscription brands, CompuServe and AOL Europe, a joint venture with German media giant Bertelsmann.

Online airfare bidding service priceline.com (Nasdaq: PCLN) announced that Continental Airlines (NYSE: CAI.A) will join priceline.com, thus increasing priceline's domestic seat inventory by more than 20%. Priceline also reported a second-quarter loss of $0.10 a share versus a loss of $0.17 in the same quarter a year ago. Analysts had expected a loss of $0.11 a share. Revenues rose to $111.6 million from $7 million last year. Priceline also said it intends to sell $250 million in convertible subordinated notes and 6 million shares of common stock (4 million from shareholders) to "invest in further growth of priceline.com's multiple product offerings."

PC direct seller Dell Computer (Nasdaq: DELL) will launch its own online auction site that will allow consumers to list computer-related items, including non-Dell products, The Wall Street Journal reported. The site will sell refurbished Dell computers and used products made by other companies, such as printers, that previously were leased to customers.

Attention, Palm shoppers: 3Com Corp. (Nasdaq: COMS) today plans to introduce a cheaper, low-end Palm hand-held computer, priced at $229, The Wall Street Journal reported. The new Palm IIIe will feature an improved screen currently available only on Palm's pricier models, but will limit users from memory and system upgrades. The Palm III retails for $249, while the expandable Palm IIIx goes for $369. Both sell for less on websites such as buy.com.

Hewlett-Packard (NYSE: HWP), maker of PCs, printers, test and measurement instruments, and other electronic equipment, announced it has named Carly Fiorina as its new president and CEO, succeeding Lewis Platt, who previously announced his intention to retire. Fiorina was president of Lucent Technologies' (NYSE: LU) Global Service Provider Business, Lucent's largest and fastest-growing division, with more than $20 billion in annual revenue.

Earnings To Go

(Quarterly earnings per share versus that of the same year-earlier quarter and compared with analysts' mean estimate. Earnings exclude one-time charges and gains.)

Bank of America (NYSE: BAC) -- Q2 EPS: $1.15 vs. $1.13 last year; estimate: $1.14

Citigroup (NYSE: C) -- Q2 EPS: $0.71 (before charges) vs. $0.57 last year; estimate: $0.65

CNF Transportation (NYSE: CNF) -- Q2 EPS: $$0.86 vs. $0.73 last year; estimate: $0.72

Delphi Automotive Systems (NYSE: DPH) -- Q2 EPS: $0.69 vs. $0.18 last year; estimate: $0.67

Viacom (NYSE: VIA) -- Q2 EPS: $0.08 profit (from continuing operations) vs. $0.40 loss last year; estimate: $0.05 profit

More Foolishness

See what you might've missed last week in Fooldom by checking out the latest Notes From a Fool... Read a StockTalk interview with Infoseek CEO Harry Motro on the deal with Disney... Find out why Jeff Fischer thinks Excite@Home will retain a fat lead over its competitors even if AT&T opens up its cable lines... See what Fools are talking about on our message boards.

Also, check out the Lunchtime News at 12:30 p.m. for updates on the top stories of the day, and remember to start each business day with Breakfast With the Fool at 9 a.m.

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