<BREAKFAST WITH THE FOOL>

Wednesday, July 7, 1999

"Some people work just hard enough not to get fired, and some companies pay people just enough that they won't quit." -- Louis Boone

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Music E-tailing Heats Up

As the East Coast gets a slight reprieve from the blistering summer heat today, the online book and music selling business is heating up as barnesandnoble.com (Nasdaq: BNBN) launches a music store along with a redesigned main site for books. The music store will take on rivals Amazon.com (Nasdaq: AMZN) and CDnow (Nasdaq: CDNW) by featuring all types of CDs at up to 30% off the retail price.

One feature that might set barnesandnoble.com's music store apart is its emphasis on classical music, with an area dedicated to classical music, videos, DVD, books and scores. Also, joining the trend to offer downloadable music, barnesandnoble.com is offering 30-second audio samples plus an exclusive, free live version of "Deep Water" from Jewel's multiplatinum album Spirit. barnesandnoble.com has also hired music critics, such as jazz expert Gary Giddens, to provide reviews and an "editor's picks" area.

On the books front, barnesandnoble.com has revamped its site and now allows users to check the status of orders online -- a feature that Amazon has long offered -- instead of having to call a toll-free number and talk to a customer-service rep. In addition, barnesandnoble.com has also opened a software store as well as a magazine store that guarantees "the lowest publisher-authorized price available to the general consumer anywhere on the Internet."

Separately, Barnes & Noble (NYSE: BKS) announced late yesterday that its chairman, senior executives, and board members bought a substantial stake in the initial public offering (IPO) of barnesandnoble.com by selling a small portion (less than 10% of their current holdings) of their Barnes & Noble stock options. Barnes & Noble employees and board members bought about 4.5 million shares, or 16% of the stock sold through the IPO, with Chairman and CEO Leonard Riggio taking roughly half of that position.

News To Go

Telecommunications company US WEST (NYSE: USW) is looking to structure a potential combination with Qwest Communications International (Nasdaq: QWST) as a merger of equals, not a takeover, The Wall Street Journal reported. Qwest has offered to buy US WEST for $69 a share, or about $35 billion. US WEST has already agreed to a merger of equals with Global Crossing (Nasdaq: GBLX), which is building a worldwide undersea cable network.

Cable systems operator Cox Communications (NYSE: COX) announced it will exchange its 50.3 million shares in AT&T (NYSE: T) stock for AT&T cable TV systems that serve roughly 495,000 customers and about $750 million in other consideration, including cash. The deal is valued at around $2.8 billion, based on yesterday's close.

Waste Management (NYSE: WMI) warned that it has lowered its second-quarter and full-year earnings outlook primarily due to lower-than-anticipated North America solid waste revenues. The company now expects earnings of $0.67 to $0.70 a share, before charges, for the quarter, and $2.65 to $2.70 for the year. Analysts had anticipated EPS of $0.78 for the quarter and $3.01 for the year.

The world's second-largest automaker Ford Motor Co. (NYSE: F) and its financing unit plan to sell up to $7.5 billion in bonds in the next several days. Ford postponed a much-anticipated bond sale two weeks ago amid nervousness in the bond market. Ford Credit will sell between $4.5 billion and $6 billion in three-year and five-year notes, while Ford itself will sell $1.5 billion in 30-year bonds. At $7.5 billion, the bond issue would be the second-largest corporate issue ever after AT&T's (NYSE: T) $8 billion deal earlier this year, according to Thomson Financial Securities Data.

Enterprise application integration software company New Era of Networks (Nasdaq: NEON) warned that it expects a second-quarter loss of $0.12 to $0.22 a share, before charges and assuming a normalized tax rate of 35%. Analysts had expected a profit of $0.12 a share. The company expects to announce results on July 20.

ValueVision International (Nasdaq: VVTV) announced that Hughes Electronic's (NYSE: GMH) DirecTV Inc. will begin carrying ValueVision's home shopping network starting July 31. ValueVision reached the multi-year agreement jointly with General Electric's (NYSE: GE) NBC unit, which provides ValueVision cable distribution and affiliate relation services. GE, through NBC and GE Equity, owns 19.9% of ValueVision.

Leadership training books and personal organizer seller Franklin Covey (NYSE: FC) said CEO Jon Rowberry has stepped down, and the company's chairman, Robert Whitman, will act as interim CEO until a successor is found. Rowberry said, "The Board of Directors feels it is now time to seek a leader to take the Company to the next level, in line with the accelerated growth strategy recently announced."

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