<BREAKFAST WITH THE FOOL>
Thursday, September 24, 1998

"If you aren't willing to own a stock for 10 years, don't think about owning it for 10 minutes." -- Warren Buffett

Latest Market Numbers

Coke May Warn About Q3, Full-Year Earnings

What do you get when a company quickly gathers analysts for a meeting it calls an "earnings update?" Most likely it's an earnings warning. The world's largest soft-drink company Coca-Cola (NYSE: KO) has done just that, calling analysts on Tuesday for a briefing tomorrow morning in New York, The New York Times reported. The company downplayed the meeting as a "volume and earnings update for the third quarter and the full year." But it's the first time the Atlanta-based company has set up a meeting on such short notice, and the first briefing since the affliction of the "Asian contagion" and the spread of the malaise to Russia and Latin America.

Coke gets about two-thirds of its revenues from outside of North America and almost a quarter from what the company designates as "the Middle and Far East." What's more, 76% of its operating income comes from other continents with nearly 30% from Asia and the Middle East. Consumer-products giant Gillette (NYSE: G), often mentioned in the same breath with Coke as a global corporation, last week told analysts to reduce their third quarter sales expectations due to the drag of economic problems in Russia, Asia, and Latin America.

Coke's chairman and CEO Doug Ivester and CFO James Chestnut are expected to guide near-term estimates lower while reiterating the company's longtime outlook that economic downturns around the world can mean new investment opportunities. Many analysts already have cut estimates on volume and earnings recently based on the relative strength of the U.S. dollar, so an earnings warning from the company could mean further downgrades by Wall Street.

News to Go

Federal Reserve Chairman Alan Greenspan's comments yesterday suggesting that interest rate cuts may be on the horizon rallied U.S. markets, which in turn boosted trading overseas. The Nikkei jumped 415.97 points, or 3%, to 14205.78, while the Hang Seng Index surged 330.22 points, or 4.4%, to 7834.61.

Regional phone company Bell Atlantic (NYSE: BEL) said it remains "on target" to achieve double-digit earnings growth for the year and announced plans to buy back up to an additional $1.4 billion of the company's shares over the next two years. The company also reiterated plans to submit its application to the Federal Communications Commission (FCC) to offer long-distance service in New York in an effort to break into the long-distance market.

More bad news from oil-related companies trying to weather the prolonged decline in oil prices. Oil company Atlantic Richfield (NYSE: ARC) said it will cut jobs, expenses, and investments to ride out the storm and avoid being acquired by a larger competitor. The company aims to piece together a cost-reduction plan by mid to late October. Meanwhile, oilfield services company Baker Hughes (NYSE: BHI) warned that it expects operating earnings per share for the quarter ending September 30 before charges to be about half of the analysts' mean estimate of $0.36. The company said results are being hurt by a slowdown in activity as well as delays caused by storms in the Gulf of Mexico.

San Jose, Calif.-based Internet auction company eBay Inc. (Nasdaq: EBAY) makes its trading debut today with an initial public offering (IPO) of 3.5 million shares priced at $18 a share, at the top end of its estimated range of $16 to $18, which was already higher than the previous range of $14 to $16.

Real estate investment trust Regency Realty Corp. (NYSE: REG) announced it will acquire Dallas-based privately held Pacific Retail Trust for about $2 billion in stock and assumed debt, creating one of the nation's largest owners of strip shopping centers. Regency expects immediate and long-term accretion from the deal.

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

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