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            B R E A K F A S T   W I T H   T H E   F O O L
                     Monday, October 23, 2000

benjamin.rogers@enron.com
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"To succeed in business, it is necessary to make others see
things as you see them." -- John H. Patterson


GENERAL ELECTRIC TO PURCHASE HONEYWELL
General Electric announced plans to buy Honeywell for nearly
$48.4 billion in stock and debt.

By Mike Trigg

Fairfield, Conn.-based General Electric (NYSE: GE) announced
plans to purchase aerospace systems company Honeywell (NYSE:
HON) for nearly $48.4 billion in stock and debt, GE's biggest
deal ever. In addition, General Electric Chairman and CEO Jack
Welch agreed to stay on through next year in order to see the
acquisition through.

Under terms of the agreement, General Electric will pay 1.005
shares for the automated controls maker, or about $55.12 per
share based on Honeywell's closing price Friday. The equity and
debt mix is about $45 billion and $3.4 billion, respectively.
According to General Electric, the deal will add at least $0.10
per share in its first full year and is being accounted for as a
pooling of interest.

After planning to step down as chairman in April, it's a bonus
Welch will be staying on to supervise the transition, calming
Street concerns. He's been on the job for over two decades,
overseeing tremendous company success, and is considered a
top-notch corporate executive. The company still plans on going
through with earlier plans to name a successor, expected
sometime before the year's end. In European trading, General
Electric was up, while Honeywell traded down.

The announcement comes only days after aerospace parts company
United Technologies (NYSE: UTX) and Honeywell were in similar
talks for a deal reportedly worth $40 billion. It would have
created an aerospace parts company with over $48 billion in
annual sales based on last fiscal year's figures. According to
reports, United Technologies stepped away from the table,
unwilling to engage in a bidding war after learning General
Electric had entered the picture.

Likewise, this deal comes less than a year after AlligedSignal
bought Honeywell and became Honeywell International. Of course,
integration is always a concern with any acquisition, and this
one will have its fair share of changes, with surely more to
come. According to a Honeywell spokesperson, its headquarters in
Morristown, N.J. will be closed and about 500 employees will
potentially lose their jobs. Three Honeywell officials will be
added to GE's board, including CEO Michael Bonsignore.

Overall, the acquisition creates an industrial Goliath that
specializes in aerospace, chemicals, and plastics products and
systems, among others. According to Welch, Honeywell's core
businesses -- avionics, automated controls, performance
materials, and microturbine technology -- are a perfect fit with
four of General Electric's major business lines.
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NEWS TO GO

Optical networking company Corning (NYSE: GLW) announced fiscal
third-quarter results this morning with profits more than
doubling. The company cited increased demand for optical fiber
and components used in communication networks. Corning reported
pro forma earnings of $317 million, or $0.35 per share, compared
to $148.1 million, or $0.17 per share, in the year-ago period.
The announcement was in line with the company's recently raised
forecast of $0.34 to $0.35 per share, with the Street consensus
calling for $0.34 per share. Revenues came in at $1.9 billion, a
54% increase from the year-ago figure of $1.25 billion.

Over the weekend, Lucent Technologies' (NYSE: LU) board of
directors named Henry Schacht the company's new chairman and
CEO. According to a press release, a need for a new set of
skills at this point in the company's life was the reason for
replacing existing Chairman and CEO Richard McGinn. Schacht is
returning to a position he held from 1995 to 1997. He will work
with senior management to run day-to-day operations and will
begin a search for his successor. The change could not come at a
better time, as Bill man recently commented. After yet another
earnings warning earlier this month, Lucent shareholders were
calling for the McGinn's removal. Hooray for them, I suppose.
http://www.fool.com/m.asp?i=164345

According to The Wall Street Journal, AT&T (NYSE: T) is
contemplating a plan, "Project Grand Slam", that would split the
company into four businesses: consumer long distance, wireless,
business, and broadband. The Business Services division, its
largest and most profitable, would become the new AT&T. It would
create brand and licensing arrangements with the three other
businesses. That division generated 39% of the company's total
1999 revenue, or $25 billion. The proposal will be discussed at
the telecommunication provider's board meeting Monday and, if
approved, could be announced as soon as Wednesday.

Check out yesterday's Foolish market wrap-up with just one
click.
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