<BREAKFAST WITH THE FOOL>

Tuesday, July 20, 1999

"I don't know the key to success, but the key to failure is trying to please everybody." -- Bill Cosby

Latest Market Numbers

Microsoft Sees Slower Growth

Software giant Microsoft (Nasdaq: MSFT) posted a 39% gain in fiscal fourth-quarter revenues from the year before, but warned that it expects revenue growth rates to fall in fiscal 2000. The company anticipates the decline will result from slowing PC demand, uncertainty surrounding the Year 2000 problem, and volatile global economic conditions. Margins are not expected to improve further.

In a conference call with analysts, Microsoft CFO Greg Maffei said he expects fiscal 2000 revenue growth to be in the "high teens," with the first-quarter number growing 20% year-over-year. Microsoft has consistently given conservative forecasts. That's in part why the company has usually topped Wall Street estimates.

Late yesterday, Microsoft turned in fiscal Q4 revenues of $5.76 billion and total earnings of $2.2 billion. On a per-share basis, earnings came in at $0.40, a 60% gain from $0.25 in the same year-earlier quarter. Analysts had expected EPS of $0.36, according to First Call. The solid results were driven by "continuing strong demand for Microsoft Windows and Office." The company added that Office 2000 is "off to a very strong start" and has been "especially popular at retail."

News To Go

Internet portal and search engine company Lycos (Nasdaq: LCOS) is launching a $70 million Internet-investing fund whose partners include Microsoft co-founder Paul Allen's Vulcan Ventures, Bear Stearns, and Japanese trading house Sumitomo, The Wall Street Journal reported. Lycos will throw $10 million into the fund, which plans to invest in start-up Internet companies.

Cracker Barrel chain parent CBRL Group (Nasdaq: CBRL) announced that it expects earnings for fiscal Q4 ending July 30 to be in between $0.21 and $0.25 per share. That's significantly short of last year's EPS of $0.56 as well as analysts' mean estimate of $0.37. The company said same-store sales have not met expectations, and expenses have risen as it increased store management staffing levels.

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 One (NYSE: ONE) -- Q2 EPS: $0.93 (before charges) vs. $0.86 last year; estimate: $0.93

Corning (NYSE: GLW) -- Q2 EPS: $0.49 (before items) vs. $0.39 last year; estimate: $0.46

DoubleClick (Nasdaq: DCLK) -- Q2 EPS: $0.13 loss (before charges) vs. $0.14 loss last year; estimate: $0.13 loss

IBM (NYSE: IBM) -- Q2 EPS: $0.91 (before gain) vs. $0.75 last year; estimate: $0.88

General Dynamics (NYSE: GD) -- Q2 EPS: $0.81 vs. $0.72 last year; estimate: $0.80

Lucent Technologies (NYSE: LU) -- fiscal Q3 EPS: $0.26 (before charges) vs. $0.17 last year; estimate: $0.23

Osteotech (Nasdaq: OSTE) -- Q2 EPS: $0.23 vs. $0.17 last year; estimate: $0.23

Parametric Technology (Nasdaq: PMTC) -- fiscal Q3 EPS: $0.16 (before charges) vs. $0.16 last year; estimate: $0.15

Qualcomm (Nasdaq: QCOM) -- fiscal Q3 EPS: $0.75 (before charges) vs. $0.17 last year; estimate: $0.63

Rockwell International (NYSE: ROK) -- fiscal Q3 EPS: $$0.77 vs. $0.45 last year; estimate: $0.45

SBC Communications (NYSE: SBC) -- Q2 EPS: $0.59 vs. $0.51 last year; estimate: $0.58

Southwest Airlines (NYSE: LUV) -- Q2 EPS: $0.29 (split-adjusted) vs. $0.25 last year; estimate: $0.30

Texas Instruments (NYSE: TXN) -- Q2 EPS: $0.92 vs. $0.35 last year; estimate: $0.86

Xircom (NYSE: XIRC) -- fiscal Q3 EPS: $0.48 vs. $0.20 last year; estimate: $0.43

Zomax (Nasdaq: ZOMX) -- Q2 EPS: $0.60 vs. $0.15 last year; estimate: $0.55

More Foolishness

Yi-Hsin Chang critiques Fortune magazine's "UnFortunately Defined Diversity"... The Rule Breaker Portfolio contemplates the possibility of an AOL-Excite@Home merger... Louis Corrigan ponders after-hours trading.

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