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<BREAKFAST WITH THE FOOL>

Tuesday, February 23, 1999

"It is easier to make money than to save it; one is exertion, the other, self-denial." -- Thomas Haliburton

Latest Market Numbers

Barnes & Noble to Miss Estimates

Online and offline bookseller Barnes & Noble (NYSE: BKS) said it expects to report 1998 year-end earnings of $0.76 a share, excluding a $0.53 gain from the investment of German media giant Bertelsmann in barnesandnoble.com. Analysts were expecting a full-year tally of $0.80 a share. The earnings shortfall comes despite a 7.2% gain in fourth quarter sales, with store sales up 11.8% (same-store sales increased 4.7%) and online sales up 280%.

For the year, sales at barnesandnoble.com totaled $70.2 million, a 381% gain year-over-year and higher than the company's earlier forecasts of $60 million to $65 million. Barnes & Noble said it anticipates earnings for the year ending January 29, 2000 will grow by 14% to 17% on a 4.5% to 5.5% same-store sales gain for its namesake stores. The company plans to open 50 Barnes & Noble stores and close 50 B. Dalton stores.

Meanwhile, casual apparel retailer The Limited (NYSE: LTD) this morning reported fourth quarter earnings of $1.07 (before one-time items), up 11% from $0.96 a year ago and in line with analysts' estimates. Same-store sales gained 6% during the quarter and the year ended January 30. Q4 sales totaled $3.26 billion, a 7% increase year-over-year. Elsewhere in retail, Nordstrom (Nasdaq: NOBE) turned in Q4 EPS of $0.47, also meeting estimates and an improvement over last year's $0.38. Total sales of $1.4 billion dipped 0.6% as comparable-store sales dropped 5.4%.

News to Go

Alan "The Man" Greenspan heads to the Hill this morning to give his semi-annual Humphrey-Hawkins testimony at 10 a.m. Investors will be trying to decipher where the Fed chairman thinks the market is headed and whether the Fed will tighten interest rates anytime soon. Separately, The Wall Street Journal reported that economic forecasters surveyed quarterly by the Federal Reserve Bank of Philadelphia now predict the economy will grow at an annual rate of 2.85% in the first half of the year, compared with their forecast of 1.7% just three months ago.

Phoenix-based airline America West Holdings (NYSE: AWA) late yesterday said it has ended consideration of expressions of interest to acquire the company, calling the offers "highly conditioned." The company said its "shareholders, employees and the communities [in which it operates] will be better served by a growing, profitable and independent company."

News Corp.'s (NYSE: NWS) 40%-owned British Sky Broadcasting (NYSE: BSY) is reportedly in preliminary talks with France's Canal Plus SA about a merger that could create the largest TV superpower in Europe, according to The Wall Street Journal. The deal would be accounted for as a merger of equals, not as an acquisition of Canal Plus, the largest pay-TV company in Europe with more than 11 million subscribers in 10 countries, by BSkyB, the biggest pay-TV provider in the U.K. with 7 million subscribers but a larger market cap.

Ubiquitous coffee retailer Starbucks (Nasdaq: SBUX) announced a 2-for-1 stock split, which will take effect March 19. The company's shares, which closed up $1 1/2 to $49 7/8 yesterday, have increased 32% in the last year and are trading at more than 41 times estimated earnings compared with a multiple of 25 times earnings for the S&P 500.

The New York Times Co. (NYSE: NYT) said it will invest $15 million in cash and services in TheStreet.com in exchange for a minority equity stake in the financial website. Details on the types of services have yet to be ironed out. In December TheStreet.com's CEO Kevin English told Bloomberg that a public offering of the company's shares this year is a "strong possibility." Interestingly, Martin Nisenholtz, president of the New York Times unit that operates the paper's website, went to high school and was close friends with TheStreet.com's co-founder and columnist James Cramer.

More Foolishness

A little history on the Dow Jones Industrial Average in last night's Fool on the Hill... Yi-Hsin (TMF Puck) talks to DoubleClick CEO and co-founder Kevin O'Connor in the latest StockTalk interview... Check out this Daily Double: TMP Worldwide.

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



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