<BREAKFAST WITH THE FOOL>

Monday, June 21, 1999

"Business is never so healthy as when, like a chicken, it must do a certain amount of scratching around for what it gets." -- Henry Ford

Latest Market Numbers

General Dynamics Wins Deal

Defense contractor General Dynamics (NYSE: GD) announced late Friday that it has won a $1.268 billion contract from the U.S. Army for HYDRA-70 2.75-inch rockets, warheads, motors, and incidental engineering services. The HYDRA-70 rocket is the world's most widely used helicopter weapon system. General Dynamics said the deal "secures our position as the world's largest producer of air-to-ground rocket systems and positions us for major international sales over and above the base contract."

General Dynamics' subsidiary General Dynamics Ordnance Systems has been the prime contractor for the rocket system since 1995. It is working with Primex Technologies (Nasdaq: PRMX) and Alliant Techsystems (NYSE: ATK). Work on the contract is expected to be completed by June 30, 2006.

Separately, The Wall Street Journal reported that the Pentagon is tightening its oversight over major defense contractors. Pentagon officials met with top executives from Lockheed Martin (NYSE: LMT) early this month, and have scheduled similar sessions with Boeing (NYSE: BA). Raytheon (NYSE: RTN.A) and Northrop Grumman (NYSE: NOC) are expected to be summoned this fall, according to the report.

News To Go

Federated Department Stores (NYSE: FD) is expected to announce today that it will provide fulfillment services -- handling orders and shipping merchandise -- for online sales for Wal-Mart Stores (NYSE: WMT) and eToys (Nasdaq: ETYS), The Wall Street Journal reported. The terms of the deals weren't yet available, but Federated's Fingerhut Business Services unit is expected to start handling orders by late this summer.

The Chairman and CEO of PC direct seller Dell Computer (Nasdaq: DELL), Michael Dell, is on the cover of this week's Barron's magazine, which quotes him as saying that the PC "remains the preferred way to get access to information, and it is going to be at the core of the computing world for years to come." He added that TVs with Web access won't replace PCs on a mass-market basis.

Belgium's chief food inspector, Albert d'Adesky, said he sees no reason to keep a ban on sales of Coca-Cola (NYSE: KO) products in that country, The Wall Street Journal reported. Late last week, Belgium's health minister extended the ban on Coke sales after a number of consumers said they became ill after drinking the company's soft drinks over the last 10 days. The recall of Coca-Cola products throughout Europe is the largest in the company's history.

Boston-based bank holding company UST Corp. (Nasdaq: USTB) announced it will be acquired by Citizens Financial Group, a New England-based financial services group owned by the Royal Bank of Scotland, for $1.4 billion, or $32 per share, in cash.

Chuck E. Cheese restaurant chain parent CEC Entertainment (NYSE: CEC) is offering $19 million for most of the assets of Discovery Zone Inc., an operator of children's entertainment centers that filed for bankruptcy protection in April, the second time in three years. A U.S. bankruptcy court will consider the bid at a hearing today.

General Instrument (NYSE: GIC), the nation's largest maker of cable-TV set-top boxes, acquired an 8% stake in Dynamic Digital Depth Inc. as part of a plan to deliver three-dimensional TV programs to homes. General Instrument paid $3 million Canadian for 1.5 million Dynamic Digital shares and received options for an additional 1 million shares at prices of CDN$3.50 to CDN$5.50. Under a 12-month development agreement, General Instrument will try to combine its digital set-top boxes with Dynamic Digital software for converting conventional programming into 3-D entertainment.

Computer networking, programming, applications development, and Internet services company IBS Interactive (Nasdaq: IBSX) said it will evaluate "financing and strategic alternatives available to it to maximize shareholder value" -- effectively putting up a "for sale" sign.

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