"The height of cleverness is to be able to conceal it."
--- Duc de la Rochefoucauld

BREAKFAST WITH THE FOOL
Credit Suisse First Boston Snaps Up DLJ

By LouAnn Lofton (TMF Lou2)
August 30, 2000

Credit Suisse First Boston is expected to announce this morning that it's buying U.S. investment bank Donaldson, Lufkin & Jenrette Inc. (NYSE: DLJ) for $90 share, or roughly $11.5 billion. The purchase would provide Credit Suisse First Boston with a strong foothold in the junk bond and merchant banking markets. It would also help the company compete more effectively against its investment bank rivals Goldman Sachs Group (NYSE: GS) and Morgan Stanley Dean Witter (NYSE: MWD).

Donaldson, Lufkin & Jenrette -- the seventh-largest investment bank in the States -- is 70% owned by the Paris, France-based insurance and financial firm AXA (NYSE: AXA). Credit Suisse First Boston is a division of Credit Suisse Group out of Switzerland. The deal is thought to be set up so that public shareholders will receive cash for their shares, and AXA will receive both cash and stock.

The combined company would have about 26,000 employees, with expected cutbacks of only 10% or so. Joe Roby, president and chief executive officer of DLJ, will become chairman of the combined company. Credit Suisse First Boston Chairman and CEO Allen Wheat will become president and chief executive officer of the new firm.

The move follows the recent acquisition of Paine Webber Group (NYSE: PWJ) by the Swiss banking company UBS. This leaves just a handful of independent investment banks in the United States, among them J.P. Morgan (NYSE: JPM), Bear Stearns (NYSE: BSC), and Lehman Brothers (NYSE: LEH).

News to Go

The appliance company Whirlpool (NYSE: WHR) warned this morning that its third- and fourth-quarter earnings will fall well below Wall Street's expectations. It attributed most of this shortfall to the loss of floor space for its products as a result of Circuit City (NYSE: CC) exiting the appliance-selling business. Third-quarter earnings should come in around $0.95 to $1.05 a share. The First Call/Thompson Financial consensus estimate for that quarter is $1.52 a share. For the fourth quarter, the company says it will earn $1.45 to $1.55 a share, compared to the expected $1.65.

Microsoft (Nasdaq: MSFT) can be subjected to class action lawsuits, according to one California judge. Superior Court Judge Stuart Pollack ruled yesterday that a class action case alleging that consumers were forced to pay too much for the company's software can move ahead. Similar suits against the company exist in other states. The judge said, "Most consumers have little incentive to litigate independently since the costs of litigation undoubtedly would overwhelm their potential recovery."

The French food company Danone refused to comment on a report that it's in the running to buy the U.S. cookie and cracker company Keebler Foods (NYSE: KBL). First-round bids for Keebler have been submitted so far by Kellogg (NYSE: K) and Campbell Soup (NYSE: CPB). Danone tried to buy Nabisco Holdings (NYSE: NA) by teaming up with Cadbury Schweppes last year, but was beaten out by Philip Morris (NYSE: MO).

Communications systems and software company Comverse Technology (Nasdaq: CMVT) announced its second-quarter earnings yesterday after the market's close. The company's net income was $62.5 million for the quarter. Earnings per share (not including charges related to an acquisition) came in at $0.36, which was ahead of the First Call/Thompson Financial consensus estimate by $0.02. In the year-ago quarter the company earned $41 million, or $0.26 a share. Revenues were up 35% to $292 million, from $217 million in the same quarter last year.

You can get yesterday's Foolish wrap-up of the market by just clicking here.

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