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B R E A K F A S T W I T H T H E F O O L Thursday, December 7, 2000 benjamin.rogers@enron.com _________________________________________________________________ Sponsored By: Wells Fargo Do your business banking online, anytime, anywhere. See balances, move funds, track deposits, and get 24/7 customer service. Get more time for your life with business online banking: http://www.lnksrv.com/m.asp?i=232132 "You'd be surprised how much it costs to look this cheap." -- Dolly Parton BANK OF AMERICA TIGHTENS CREDIT The company also issued a fourth-quarter profit warning yesterday. By Chris Rugaber Bank of America (NYSE: BAC) lowered its earnings guidance for the fourth quarter yesterday, due to increased write-offs of bad loans. The company also announced that it would not renew $20 billion in corporate loans over the next two years. It is the second time in the past month that the company has reduced its fourth-quarter profit projections. The Charlotte, North Carolina-based bank now expects fourth-quarter profits of about $1.4 billion, or $0.85 to $0.90 per share, down from last year's $1.23 per share and below estimates of $1.17. As recently as September, estimates for the fourth quarter were $1.35 per share. Earnings projections were also reduced for next year, from $5.46 to $5.10 per share. The company plans to write off between $1.1 billion and $1.2 billion in bad debt this quarter, almost triple the third quarter's total of $435 million. Bank of America's shares fell about 10% yesterday, and other bank stocks declined as well, including Citigroup (NYSE: C), Chase Manhattan (NYSE: CMB), First Union (NYSE: FTU), and Bank One (NYSE: ONE). Last month, the company indicated that a loan of $500 million -- widely believed to be held by the Sunbeam Corporation (NYSE: SOC) -- is "nonperforming," meaning it is not paying interest. In addition, Bank of America holds loans to companies such as Owens Corning (NYSE: OWC), which filed for bankruptcy October 5 as a result of asbestos litigation, and ICG Communications (Nasdaq: ICGXQ), which filed for bankruptcy on November 14. The company also lent to Regal Cinemas, which defaulted on its bank debt last month and is considering filing for bankruptcy. Bank of America seems to have a negative outlook at this point. "We're pessimistic about the economy, we're pessimistic about the capital markets and the ability of companies to refinance, and it's very easy for companies to throw in the towel,'' said Chief Financial Officer James Hance at an investors' conference yesterday. "We're taking a very conservative outlook.'' Part of that conservative outlook was announced later yesterday when the company said it would not renew about $20 billion in loans over the next two years. CFO Hance noted that "We are not interested in renting out our balance sheet to clients who are not delivering us additional fee-based business." The move comes after Federal Reserve Chair Alan Greenspan urged banks on Tuesday not to overly tighten their credit standards. _________________________________________________________________ NEWS TO GO Motorola (NYSE: MOT) greeted investors this morning with an earnings warning, stating that it will not meet earlier revenue and earnings guidance. The company blamed delays in cost-cutting measures in its personal communications segment and "slowing market conditions" for its semiconductor products. Motorola now expects fourth-quarter sales of $10 billion and earnings per share of $0.15, down from earlier guidance of $10.5 billion and $0.27, respectively. In a press release the company stated that it "continues to expect robust growth in the global wireless telephone market, with unit sales in the range of 525-575 million in 2001, up from an estimated 420 million units this year, and expects to fully participate in that growth." The company announced additional manufacturing outsourcing yesterday. http://www.fool.com/m.asp?i=232133 Hasbro (NYSE: HAS) may soon be a has-been (sorry). The company warned last night that it will at best break even this year, and may post a loss of $0.10 to $0.20 per share, thanks to slowing sales, particularly in trading-card games. Hasbro also said it will sell its Hasbro Interactive and Games.com divisions to French company Infogrames Entertainment for $100 million in cash and stock. The company was expected to earn $0.43 per share this year, and pulled in $1.42 per share last year. Internet-commerce consultant Scient (Nasdaq: SCNT) announced last night that its fiscal third-quarter earnings would come in below expectations, and that it would cut 460 jobs. The company cited slowing spending among its clients -- which included AT&T (NYSE: T) and Chase Manhattan (NYSE: CMB) -- on Web services and growing competition from management consulting firms as the culprits. The world's fifth-largest media company, News Corp. (NYSE: NWS), said that it has initiated a hiring freeze in order to control costs as advertising revenue growth slows. President Peter Chernin said he expects the U.S. ad market to be "tough" over the next couple of quarters. Yesterday, other news organizations such as Dow Jones Inc. (NYSE: DJ) and Knight-Ridder (NYSE: KRI) also cited slowing ad sales as a reason behind their negative announcements. Dow Jones reduced earnings projections for its fourth quarter, while Knight Ridder said it would lay off as much as 2% of its workforce. _________________________________________________________________ EDITORS' PICK What do Warren Buffett and a wine critic have in common? It's more than good taste. http://www.fool.com/m.asp?i=232134 _______________________________________________________________ -News & Commentary http://www.fool.com/m.asp?i=232135 -Fool Community http://www.fool.com/m.asp?i=232136 -Post of the Day http://www.fool.com/m.asp?i=232137 -Latest Fribble http://www.fool.com/m.asp?i=232138 -Latest Market Numbers http://www.fool.com/m.asp?i=232139 ____________________________________________________________ My Portfolio: http://www.fool.com/m.asp?i=232140 My Discussion Boards: http://www.fool.com/m.asp?i=232141 My Fool: http://www.fool.com/m.asp?i=232142 Fool.com Home: http://www.fool.com/m.asp?i=232143 My E-Mail Settings: http://www.fool.com/m.asp?i=232144 Sponsored By: Wells Fargo Do your business banking online, anytime, anywhere. See balances, move funds, track deposits, and get 24/7 customer service. Get more time for your life with business online banking: http://www.lnksrv.com/m.asp?i=232145 17 STOCK IDEAS, ONE REPORT Don't miss our best-selling research product, Industry Focus 2001. Available in electronic download or hard copy. http://www.lnksrv.com/m.asp?i=232146 ATTENTION, BIOTECH INVESTORS: NEW INVESTING GUIDE Learn to analyze the potential of biotech companies with our new biotech investing guide. http://www.lnksrv.com/m.asp?i=232147 FOOL DIRECT E-MAIL SERVICES Need to change your address or unsubscribe? You can also temporarily suspend mail delivery. Click here: http://www.fool.com/community/freemail/freemaillogin.asp?email=benjamin.rogers @enron.com< Have ideas about how we can improve the Fool Direct or new e-mail products you'd like to see? Try our discussion board: http://www.fool.com/m.asp?i=232148 ____________________________________________________ © Copyright 2000, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool. . MsgId: msg-20105-2000-12-07_9-17-09-3342915_2_Plain_MessageAddress.msg-09:23:07(12-07 -2000) X-Version: mailer-sender-master,v 1.84 X-Version: mailer-sender-daemon,v 1.84 Message-Recipient: benjamin.rogers@enron.com
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