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Wednesday, March 31, 1999
"Competence, like truth, beauty, and contact lenses, is in the eye of the beholder." -- Laurence Peter
Jury Slams Philip Morris
Cigarette maker Philip Morris (NYSE: MO) lost a case in Oregon, involving a Marlboro smoker who died of cancer, and was ordered to pay a record $80.3 million in damages. The verdict follows another suit last month in San Francisco, in which the company was hit with $51.5 million in damages. The two cases could open the floodgates for individual lawsuits despite the tobacco industry's $206 billion landmark settlement with 46 states regarding the public health costs related to smoking. Roughly 20 more suits on behalf of individual smokers are already slated for trial later this year.
The company said it will appeal the "emotional" decision, adding that the $79.5 million punitive damages award is "wholly unjustified" and "grossly disproportionate to the amount of compensatory damages awarded," which was about $800,000. The jury found both Philip Morris and the smoker, Jesse Williams, who smoked three packs of Marlboros a day, to be equally negligent, but it imposed the stiff punitive damages on the company for lying about the dangers of smoking.
Philip Morris argues that Williams was well aware of the risks associated with smoking. Plus, for much of his life, Williams smoked the unfiltered Pall Mall brand, made by British American Tobacco's (NYSE: BTI) Brown & Williamson Tobacco Co. unit. In the last decade, juries have ruled against tobacco companies in four other cases, three of which were overturned on appeal. Last month's verdict in San Francisco is still under appeal. Yesterday, Philip Morris shares sank more than 8% to $37 3/4. RJR Nabisco (NYSE: RN) fell 4% to $27 3/4.
News to Go
Oil giant BP Amoco's (NYSE: BPA) board approved an agreement to acquire Atlantic Richfield Co. (NYSE: ARC), or Arco, for about $26 billion to $27 billion -- a 25% to 30% premium over Arco's share price before talks became public, The Wall Street Journal reported. An announcement of the deal is expected tomorrow.
DaimlerChrysler (NYSE: DCX) said revenues are up 6% for the first two months of this year and that it expects "steady growth among all of its businesses, especially those operating within the company's two key markets of North America and Western Europe." The company is projecting 4% growth in revenues for the year. It added that integration of what was formerly Daimler-Benz and Chrysler is "right on track."
In an effort to stem privacy concerns on the Internet and to head off possible government regulation, IBM (NYSE: IBM) has decided to pull its online advertising from any North American website that doesn't post clear privacy policies, according to The Wall Street Journal. IBM, the second largest advertiser on the Internet after Microsoft (Nasdaq: MSFT), figures that about 30% of the 800 sites where it advertises worldwide currently meet this standard.
Consumer products maker Colgate-Palmolive (NYSE: CL) said the economic problems in Brazil and the devaluation of that country's currency will reduce the company's net earnings for the year by $20 million to $25 million, most of which will be felt in the first quarter. The company said the reduction is already reflected in analysts' estimates.
Tech Data (Nasdaq: TECD) reported fiscal fourth-quarter earnings of $0.64 a share, before a one-time gain, up from $0.53 a year ago and analysts' reduced expectations of $0.62. Prior to the technology products distributor's February 2 earnings warning, Wall Street had been forecasting Q4 EPS of $0.69. The company said it expects to meet estimates for the current quarter and for the year.
Home furnishings retailer Bed Bath & Beyond (Nasdaq: BBBY) posted fiscal Q4 EPS of $0.24, an improvement from $0.17 last year and ahead of analysts' mean estimate of $0.22. Revenues gained 37.4%, while same-store sales were up 10.8%.
Share Buybacks Roundup: Lawn, garden, and pet products company Central Garden & Pet Co. (Nasdaq: CENT) announced plans to buy back an additional $25 million in shares, boosting its repurchase program to $80 million... Anixter International (NYSE: AXE), which makes computer-network equipment, said it intends to buy back up to 1 million shares of its common stock.
Read about the poetry of investing in the latest Rule Breaker Portfolio report... Many Chicken Littles are now more optimistic the sky won't fall because of Y2K. Read all about it... Don't miss our StockTalk interview with Intuit President and CEO Bill Harris.
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