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BREAKFAST WITH THE FOOL
Sotheby's Settles Civil Antitrust Charges

By Brian Graney (TMF Panic)
September 25, 2000

There was news from the auctionhouse world this weekend as Sotheby's Holdings (NYSE: BID) and privately held Christie's International agreed to settle a civil antitrust suit for price-fixing that had been brought on behalf of the firms' past customers. As first reported by The New York Times, the auctioneers have agreed to split a payment of $512 million to settle the charges.

Sotheby's $256 million share of the settlement bill is a rather large pill to swallow for a firm that has only generated about $203 million in operating income over the last three years. The company will not shoulder the burden alone, however, as former chairman A. Alfred Taubman will cover $156 million out of his own pocket. Taubman will also chip in $30 million in cash to settle fraud charges by the firm's shareholders, with the company also issuing some 40 million Class A shares to make amends with its investors.

Meanwhile, Sotheby's also reported that it is in "serious negotiations" to put to rest a three-year-old Justice Department criminal probe into the company. The firm said it is "optimistic that a mutually acceptable resolution will be reached in the near future." Christie's has been cooperating with the Feds in their investigation and is not expected to be prosecuted as a result, according to The Wall Street Journal.

News to Go

Liberty Media (NYSE: LMG.A) Chairman John Malone may be on the verge of increasing his stake in media conglomerate News Corp. (NYSE: NWS) to 20% from 7% through an asset swap, the Financial Times reported. Under the proposed transaction, News Corp. would get Liberty's stake in electronic program guide company Gemstar-TV Guide International (Nasdaq: GMST) while Malone would get the bigger News Corp. stake, a seat on the firm's board, and shares in Sky Global Networks, a new company that is being formed to hold the firm's satellite programming assets.

Development-stage pharmaceutical company Cell Pathways (Nasdaq: CLPA) announced that the Food and Drug Administration has rejected the firm's New Drug Application for its cancer drug Aptosyn for the indication of familial polyposis (FAP). Aptosyn is Cell Pathways' lead drug candidate and is part of a new class of compounds that works by selectively inducing programmed cell death in abnormally growing precancerous and cancerous cells.

Regional trucking firm USFreightways (Nasdaq: USFC) warned late Friday that its Q3 earnings will come in between $0.90 and $0.95 per share, down from the $1.07 per share earned a year ago and short of the First Call mean estimate of $1.11 per share. The company blamed the shortfall on the slowing U.S. economy and expansion expenses.

Specialty pulps, timber, and wood products supplier Rayonier (NYSE: RYN) preannounced that its Q3 earnings will fall $0.05 to $0.07 short of the First Call mean estimate of $0.49 per share. Like USFreightways, the company blamed the slowing U.S. economy as well as the strong U.S. dollar for the earnings miss.

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