<BREAKFAST WITH THE FOOL>

Friday, June 18, 1999

"Money is the barometer of a society's virtue." -- Ayn Rand

Latest Market Numbers

Gillette Sales Get Shaved

Consumer products giant Gillette (NYSE: G) said last night that a rebound predicted after the end of the first quarter hasn't materialized yet.

While several new product lines -- including the MACH3 razor, Duracell Ultra batteries, and the Oral-B CrossAction toothbrush -- are being received well by the market, the company's Braun, stationery, and toiletries businesses disappointed in the second quarter.

That, compounded by "slower-than-anticipated recovery" in key overseas markets such as Brazil, Germany, Japan, and Russia, is expected to pull Q2 earnings some 20% below last year's levels with sales posting only a low single-digit increase. First Call's analysts were looking for a slight decrease as well -- $0.29 versus the year-ago $0.33 -- but Gillette's new numbers appear considerably worse.

After first-quarter earnings showed signs of progress despite some international weakness and the divisional problems mentioned above, Gillette Chairman and CEO Michael Hawley said, "we look for a return to our more traditional sales and earnings performance levels in the second half of the year."

And the company still feels that way, despite the projected second-quarter disappointment, based on sales growth, increasing market shares, and its second-half new products program.

Gillette also said it authorized an expansion of its stock buyback program to 75 million shares from 50 million shares. With the original 50-million-share repurchase expected to be completed by the end of the year, Gillette looks to buy the balance over the following 12 to 18 months on the open market or in private transactions.

News To Go

Desktop publishing software developer Adobe Systems (Nasdaq: ADBE) said fiscal Q2 EPS was $0.70, up from $0.41 last year and a nickel better than Wall Street's consensus. "There is positive momentum for the remainder of the year with a strong product release cycle ahead of us," said Chairman and CEO John Warnock. The company announced version 5.5 of its Photoshop image editing program last night.

Online travel bidding service company Priceline.com (Nasdaq: PCLN) named David Schulman, most recent president of AT&T's consumer markets division, its president and COO.

Specialty retailer Wet Seal (Nasdaq: WTSLA), a recent Foolish Double, said same-store sales for fiscal Q2 to date -- the period ends July 31 -- are down in the mid-single digit range. While the company has seen better sales trends in recent weeks in all of its markets except California and Florida, if current conditions prevail quarterly EPS could end up closer to last year's $0.35 than to First Call's $0.44 four-analyst estimate.

Rochester, New York-based local and long-distance phone company Frontier Corp. (NYSE: FRO) said after reviewing Qwest Communications' (Nasdaq: QWST) unsolicited bid for it and US WEST (NYSE: USW) that it will "take no action... at this time." Frontier already has a merger agreement with Global Crossing (Nasdaq: GBLX). "The current circumstances surrounding the Qwest proposal do not warrant any change at this time in our current initiatives that are designed to move Frontier's transaction with Global Crossing toward a prompt closing," said Frontier CEO Joseph Clayton.

Newspaper publisher New York Times Co. (NYSE: NYT) said it authorized the buyback of up to $500 million worth of its common shares. So far this year, the company has already spent about $240 million buying approximately 7.4 million shares. About $107 million remains from previous authorizations.

More Foolishness

Find out which stocks Fools are giving their Dads... Check out our latest StockTalk interview... See what Fools are talking about on our message boards... Wanna jazz up your Web page? You can add Motley Fool headlines to your page for free. Click here for more info... Step this way for the Fool's latest Double take.

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.

Dave Marino-Nachison (TMF Braden), Writer
Jennifer Silber (TMF Amused), Editor