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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 16, 2000

benjamin.rogers@enron.com
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"If you don't read, you lose all perspective." -- David S.
Jackson


CHEVRON GUZZLES TEXACO
Two U.S. oil powers agreed this weekend to form the world's
fourth-largest oil and gas company.

By Tom Jacobs

The Texaco (NYSE: TX) board yesterday approved Chevron's (NYSE:
CHV) $35.1 billion stock purchase offer. The deal between the
No. 2 and No. 3 U.S. oil companies would create the
fourth-largest world oil and gas concern, Chevron Texaco, and
increase competition for world leader Exxon Mobil (NYSE: XOM).

Chevron will pay 0.77 of a share for each Texaco share and
assume $8 billion in debt, for a total of $45.4 billion. The
per-share price -- slightly higher than the 0.765 that Chevron
offered in 1999 talks that stalled -- values Texaco at $64.87,
an 18% premium to its Friday close of $55.13. Chevron
shareholders will have 61% control of Chevron Texaco and nine of
the 15 board seats.

Attention immediately focused on regulatory and political
obstacles to the marriage. The new company would have major
control of West Coast refining capacity and gas stations. Middle
East upheavals could bring political scrutiny as well. But the
new company's $85 billion market capitalization appears puny
compared to BP Amoco's (NYSE: BP) $207 billion, and the smaller
Chevron Texaco would arguably pose less of a threat to world gas
prices.

Texaco abruptly broke off prior merger talks in June 1999,
allegedly due to bad chemistry between former Chevron CEO
Kenneth Derr and Texaco Chairman Peter Bijur. Derr has since
retired. The new CEO, David O'Reilly, assumed command nine
months ago and reportedly has good relations with Bijur,
including several golf dates. Reilly would be CEO of the new
combined entity and Bijur would stay on as number two.

The deal came just days after Texaco purchased General Motors'
(NYSE: GM) interest in GM Ovonic, a joint venture between GM and
Ovonic Battery Company, a subsidiary of Energy Conversion
Devices (Nasdaq: ENER). Ovonic Battery was the originator of
nickel metal hydride (NiMH) batteries for electric and hybrid
vehicles. The joint venture develops production and
manufacturing processes to commercialize the NiMH battery
technology for use in 2003 model year cars. Texaco's share of
the joint venture is 50%, adding to its 20% ownership of Energy
Conversion Devices. There is no information whether the Chevron
purchase will affect this deal.

All told, the deal looks good for Texaco. Though both companies'
revenues are approximately $36 billion, Texaco's profits are 60%
of Chevron's. On Friday's huge up day, Texaco closed at $55.13,
off $1.88, while Chevron shed $3.06 to finish at $84.25.
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NEWS TO GO

European regulators switched course Friday and approved
Vivendi's (NYSE: V) $34 billion acquisition of Canada's Seagram
(NYSE: VO), after the European Commission indicated it might
subject the deal to a time-consuming further investigation. The
key shift occurred when Vivendi agreed not to discriminate
against competitors seeking access to Seagram's Universal unit's
film and music libraries. Observers are surprised that this deal
practically flew by in comparison with the five-month probe of
the Time Warner (NYSE: TWX)-America Online (NYSE: AOL) deal.

Qualcomm's (Nasdaq: QCOM) on-again, off-again affair with China
Unicom over increased Chinese penetration of Qualcomm's CDMA
(code division multiple access) wireless technology is back on.
The companies announced that they will join Shenzhen Zhongxing
Telecom, the leading Chinese CDMA phone equipment manufacturer,
to produce a CDMA handset for sale in China. A cool feature is
that it allows users to remove subscriber identification module
cards and switch phones, and retain their number and service.
Would be a good idea for the U.S., wouldn't it? Dream on.

Continental Airlines (NYSE: CAL) announced today third-quarter
earnings of $2.24 a share, a 54% jump over last year. This
exceeded First Call consensus estimates of $2.19 a share (click
here for a Foolish take on earnings estimates). The company
trumpeted its 22nd consecutive profitable quarter. Passenger
revenue increased in every geographic market, ranging from 12.2%
domestically and 27.9% for transatlantic traffic.
http://www.fool.com/m.asp?i=155936

Continental may be smiling, but Delta Airlines (NYSE: DAL)
isn't. Its pilots' contract proposal seeks huge pay increases
and parity with pilots for United Airlines (NYSE: UAL). The
pilots agreed in 1996 to a 2% pay cut and other work concessions
to assist Delta's turnaround. They now want 30-49% raises over
three years, which would bring basic pay for a 777 captain with
12 years experience to $267,600. (Would we feel safer?) Gregg
Holm, a spokesman for the Air Line Pilots Association, called
this "United [Airlines] plus."

Check out Friday's Foolish market wrap-up with one swift click!
http://www.fool.com/m.asp?i=155937
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EDITOR'S PICK

After Wall Street's crazy week, David Gardner reminds us why
stock investments should be made for the long term.
http://www.fool.com/m.asp?i=155938
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