<BREAKFAST WITH THE FOOL>
Tuesday, March 23, 1999
"You are neither right nor wrong because the crowd disagrees with you." -- Benjamin Graham
OPEC to Cut Oil Supply
Members of the Organization of Petroleum Exporting Countries (OPEC) meeting in Vienna have agreed to cut oil production by 1.7 million barrels a day in an effort to boost world oil prices, which sank to 12-year lows in December. Including cutbacks by non-OPEC nations such as Mexico, Russia and Oman, the total reduction should reach about 2.1 million barrels a day, or about 3% of the global supply. Counting cuts pledged last June, oil producers will be slashing supply by more than 5 million barrels a day, or around 7%.
Provided that OPEC members follow through with the deal -- that's a big if since OPEC failed twice last year in efforts to curtail oil production as members reneged on their promised cuts -- the U.S. wholesale price of gasoline could be up 20% by July, according to an estimate by the Petroleum Industry Research Foundation in New York. Yesterday, the price of West Texas Intermediate crude for April delivery gained $0.26 to close at $15.50 a barrel on the New York Mercantile Exchange, the highest close since October 2. The active May contract increased $0.38 to $15.74 a barrel. The Saudi oil minister has said he would like to see the price rise to between $18 and $20 a barrel.
News to Go
Chemicals giant DuPont (NYSE: DD) plans to spin off its 70% remaining stake in oil company Conoco (NYSE: COC) to DuPont shareholders by the end of the third quarter. DuPont sold 30% of the shares back in October in an initial public offering that raised $4.4 billion, a new record. DuPont shareholders will be able to swap DuPont shares for shares in Conoco, though the exact exchange ratio has yet to be set.
Drug maker PathoGenesis Corp. (Nasdaq: PGNS) announced that due to fluctuations in the sales of its drug for managing pseudomonal lung infections in cystic fibrosis patients, it expects to post a loss of $0.30 a share for the first quarter, significantly short of analysts' mean estimate of a profit of $0.20. "We now think it will take longer to further penetrate the U.S. cystic fibrosis market and achieve the full sales potential," the company said.
Computer networking company Cabletron Systems (NYSE: CS) returned to profitability by reporting fiscal fourth quarter earnings of $0.01 a share (before charges), compared with a loss of $0.04 a year ago, with revenues up 11% year-over-year. Analysts had been projecting a loss of $0.01. The company also announced a restructuring effort, called "Project Ignition," designed to save $80 million a year and "re-energize revenue momentum."
Drug maker Eli Lilly & Co. (NYSE: LLY) will pay biotech firm Ribozyme Pharmaceuticals (Nasdaq: RZYM) $9.2 million this year plus as much as an additional $28.8 million as the two team up to develop treatments for hepatitis C. Lilly would pay Ribozyme royalties and manufacturing fees in exchange for exclusive worldwide marketing rights should they succeed in bringing a drug to market.
The world's largest electrical engineering company Asea Brown Boveri Ltd. (Nasdaq: ABBBY) and the world's second biggest maker of energy distribution equipment Alstom SA (NYSE: ALS) of France have agreed to merge their power generation units, which will put them ahead of General Electric (NYSE: GE) as the world's largest power generator. Alstom will pay ABB $1.5 billion as part of the deal.
Atlantic Coast Airlines Holdings (Nasdaq: ACAI), which operates United Express, warned that unusually inclement weather will reduce Q1 EPS by $0.03 to $0.05 to come in between $0.16 and $0.19, which would be below current consensus estimates of $0.20 and could be flat with the $0.16 it earned in the same period last year.
Computer virus detection software developer Symantec Corp. (Nasdaq: SYMC) announced plans to repurchase up to $75 million in its common stock, the second buyback in less than a year.
Mr. Tom Gardner goes to Washington to testify on securities fraud on the Internet. Read the transcript... Check out this Daily Double: Amgen Inc... Gear up for a week full of initial public offerings. Read The ABCs of IPOs.
-- Monday's Evening News
-- Fool Community
-- Post of the Day
-- Latest Fribble
Also, check out the Lunchtime News at 12:30 p.m. for updates on the top stories of the day, and remember to start each business day with Breakfast With the Fool at 9 a.m.
Let us know what you think of this feature. Send all comments and suggestions (including Foolish quotes) to the Breakfast Fools.