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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
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"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.
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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.
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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.
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