<BREAKFAST WITH THE FOOL>
Friday, May 14, 1999
"You can get more with a kind word and a gun than you can get with a kind word." -- Al Capone
Wins for Big Tobacco
Cigarette makers won another victory this week as a jury in Kansas City, Missouri, found that Brown & Williamson Tobacco Corp. wasn't liable for the death of Charles Steele, a former aluminum-foundry laborer who died of lung cancer. The jury foreman said Steele "knew what he was doing" and knew that cigarettes "were bad, but they gave him pleasure. The pleasure outweighed the dangers." This and other similar victories suggest that tobacco companies may be able to contain their exposure to lawsuits brought on behalf of smokers.
Earlier in the week, a jury in Memphis, Tennessee, ruled that the nation's three largest tobacco companies -- Philip Morris (NYSE: MO), RJR Nabisco's (NYSE: RN) R.J. Reynolds Tobacco, and British American Tobacco's (NYSE: BTI) Brown & Williamson unit -- didn't have to pay damages for the cancer deaths of three long-time smokers. And on Thursday, a state court judge in Portland, Oregon, cut a $79.5 million punitive-damage award by more than half to $32 million. That followed an earlier decision in San Francisco that had already cut a $50 million punitive award in half.
News to Go
Broadband Internet services company @Home (Nasdaq: ATHM) said that software giant Microsoft Corp. (Nasdaq: MSFT) will become a strategic technology partner to @Home Solutions. Microsoft will provide support and resources to help market @Home Solutions. In exchange, the companies will collaborate to incorporate the Microsoft Windows NT Server operating system into @Home's network.
Boeing (NYSE: BA) announced plans to cut 6,500 to 7,000 jobs out of some 20,000 in St. Louis between now and mid-2001 as it stops making the F-15 fighter jet early next year due to waning demand. The move comes in the wake of the decision by the Greek government to order 50 F-16s from Lockheed Martin (NYSE: LMT) instead of the more expensive Boeing F-15 jets. Boeing also intends to consolidate into fewer office and production buildings, streamline its internal organizations, and take other steps to cut overhead costs at the St. Louis site.
Department store retailer Nordstrom (Nasdaq: NOBE) posted fiscal first-quarter earnings of $0.22 a share, before one-time charges, up from $0.21 last year and short of analysts' mean estimate of $0.24. For the quarter, same-store sales dropped 2.6%, while total sales slipped 0.1% year-over-year.
Drug giant American Home Products (NYSE: AHP) is in early-stage talks to settle thousands of liability lawsuits on behalf of patients who took its diet drugs Pondimin and Redux, The Wall Street Journal reported. The two drugs -- Pondimin, or generically fenfluramine, was part of the popular diet-drug combination fen-phen -- were recalled in September 1997 after being linked to possible heart-valve damage. Since the drugs' withdrawal from the market, American Home Products has been hit with more than 2,500 lawsuits seeking damages.
Biotechnology firm Immunex Corp. (Nasdaq: IMNX), which is majority owned by American Home Products (NYSE: AHP) said it will soon begin testing its experimental drug CD-40 Ligand on patients suffering from advanced kidney cancer. The test is part of the second phase of three stages of human trials required by the Food and Drug Administration (FDA).
Networking equipment company 3Com Corp. (Nasdaq: COMS) may be a takeover target, according to Business Week's "Inside Wall Street" column. The magazine named as possible bidders Swedish wireless phone maker Ericsson AB (Nasdaq: ERICY) and telecommunications equipment maker Lucent Technologies (NYSE: LU).
New Holland NV (NYSE: NH) is reportedly in merger talks with Case Corp. (NYSE: CSE) on a possible combination of two agricultural and construction equipment makers that would set up a rivalry between the combined company and Deere & Co. (NYSE: DE), according to The Wall Street Journal.
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