Stocks to Watch: AOL, Bertelsmann Restructure Interests, Forge Alliance

America Online (AOL - Cramer's Take - Stockpickr) and Bertelsmann of Germany are restructuring their interests in AOL Europe and AOL Australia. Using put and call mechanisms, AOL would ultimately buy out Bertelsmann's share of the interests at a cost of $6.75 billion to $8.25 billion, if the options are exercised. Payment in either cash or stock at AOL's discretion would be made after Jan. 31, 2002. The companies also set a new global alliance to expand distribution of Bertelsmann's media content and e-commerce properties over AOL's brands worldwide. Under a four-year pact which is valued at $250 million, Bertelsmann will become a preferred provider of media content and e-commerce to the more than 23 million members of AOL's interactive services and over 135 million consumers of its Web-based brands.

Boeing (BA - Cramer's Take - Stockpickr) reached a settlement with its engineers' union, the Society of Professional Engineering Employees in Aerospace, that if ratified, could end the strike that is in its 38th day. SG Cowen upgraded Boeing to strong buy from buy.

Mergers, Acquisitions and Joint Ventures

Ford (F - Cramer's Take - Stockpickr) is buying the Land Rover sport utility unit from German luxury automaker BMW for almost $3 billion.

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Cruise line giant Carnival (CCL - Cramer's Take - Stockpickr) and Malaysia's Star Cruises decided to end their previously-announced joint venture to buy NCL Holding for $1 billion. Carnival said it and Star could not agree on the detailed terms of the venture.

Separately, Carnival reported first-quarter earnings of 28 cents a share, in line with the 18-analyst First Call/Thomson Financial estimate, and up from the year-ago 26 cents. The company warned, however, that weaker ticket pricing due to slower booking patterns, compounded by increased fuel costs, could cause second-quarter profits to be slightly lower than the year-ago second quarter. The company added, however, that it believes earnings for the second half of fiscal year 2000 will be stronger and estimates that for the entire fiscal year 2000, earnings will be up 8% to 10% from fiscal year 1999. The 17-analyst estimate calls for the company to earn 37 cents in the second quarter.

Complete Business Solutions (CBSI - Cramer's Take - Stockpickr), an information-technology services concern, unveiled a new e-business expansion strategy, which will be helped out by $200 million of growth capital from a fund managed by Clayton Dubilier & Rice.

lastminute.com (LMIN - Cramer's Take - Stockpickr), which went public this week, will provide NTL (NTLI - Cramer's Take - Stockpickr) with content for its interactive shopping and travel channels.

Earnings/Revenue Reports and Previews

(Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified.)

Nike (NKE - Cramer's Take - Stockpickr) posted third-quarter earnings above estimates despite a decline in sales, partly because of the dollar's strength against the euro. The company reported third-quarter earnings of 52 cents a share, 2 cents better than the 13-analyst estimate and up from the year-ago 44 cents. Total revenue fell 1% to $2.162 billion from $2.177 billion a year earlier. European revenues fell 7%, to $558.5 million, hurt by a rising dollar against the common European currency.

Offerings and Stock Actions

Goldman Sachs priced 11 million shares of Universal Access (UAXS - Cramer's Take - Stockpickr) at $14 each, above the estimated range of $11-$13. The company buys and sells unused network capacity.

Analyst Actions

Bear Stearns cut its earnings per share outlook for the first and second quarters on Gateway (GTW - Cramer's Take - Stockpickr). Bear Stearns maintained its buy rating on the stock.

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American Tower (AMT - Cramer's Take - Stockpickr): REITERATED buy at Lehman Brothers; price target up to 58 from 55.

Applied Materials (AMAT - Cramer's Take - Stockpickr): price target UP to 125 from 112 at Credit Suisse First Boston.

Applied Micro Circuits (AMCC - Cramer's Take - Stockpickr): UP to intermediate-term buy from intermediate term accumulate at Merrill Lynch. The firm also raised its risk rating to high from average.

Blackrock (BLK - Cramer's Take - Stockpickr): DOWN to intermediate-term accumulate from buy at Merrill Lynch due to "strong absolute and relative price performance."

British Telecommunications (BTY - Cramer's Take - Stockpickr): NEW buy at Donaldson Lufkin & Jenrette.

Career Education (CECO - Cramer's Take - Stockpickr): REITERATED strong buy at CSFB.

Fairchild Semiconductor (FCS - Cramer's Take - Stockpickr): price target UP to 52 from 48 at CSFB.

Hispanic Broadcasting (HBCCA - Cramer's Take - Stockpickr): DOWN to intermediate-term neutral from intermediate-term accumulate at Merrill Lynch based on valuation.

Jabil Circuit (JBL - Cramer's Take - Stockpickr): price target UP to 95 from 82 at CSFB.

KeySpan Energy (KSE - Cramer's Take - Stockpickr): UP to intermediate-term buy from intermediate-term neutral at Merrill Lynch.

On Assignment (ASGN - Cramer's Take - Stockpickr): DOWN to hold from buy at CSFB.

Sycamore Networks (SCMR - Cramer's Take - Stockpickr): REINSTATED at buy CSFB; price target SET at 175.

Miscellany

Qualcomm (QCOM - Cramer's Take - Stockpickr) reached an agreement to settle class-action litigation filed by former employees of the company stemming from its sale of its infrastructure division to Ericsson (ERICY - Cramer's Take - Stockpickr). Under terms of the settlement, $8.9 million, minus attorneys' fees and costs, will be distributed to more than 1,000 former employees covered by the lawsuit. Qualcomm said that while it agreed to resolve the suit, it paid nothing toward the settlement, with all payments to be made by third parties. Qualcomm said a final settlement approval hearing has been scheduled for April 28, 2000.

Viacom (VIA - Cramer's Take - Stockpickr) said the Supreme Court of the State of New York dismissed all claims of television station group Chris Craft Industries' (CCN - Cramer's Take - Stockpickr) unit BHC Communications in its litigation over its UPN partnership with Viacom. The ruling cleared the way for completion of Viacom's proposed $37 billion merger with CBS (CBS - Cramer's Take - Stockpickr).

Wendy's (WEN - Cramer's Take - Stockpickr), the fast food chain, said its board named John T. Schuessler as CEO and president effective immediately. Schuessler previously was president and COO, Wendy's U.S. Operations. Wendy's founder R. David Thomas continues as senior chairman of the board.

The Inside Wall Street column in Business Week this week, penned as usual by Gene Marcial, reports there's chatter that International Paper (IP - Cramer's Take - Stockpickr) may make a takeover offer for Champion International (CHA - Cramer's Take - Stockpickr), which has already agreed to be acquired by Finland's UPM-Kymmene. (TSC's James Cramer wrote a piece this morning on Marcial's picks.)

Elsewhere, the column offers up a bullish item on Snap-on (SNA - Cramer's Take - Stockpickr), whose stock some investors say is on the mend.

Also, Cornerstone Internet Solutions (CNRS - Cramer's Take - Stockpickr) gets positive mention in the column. The column, citing one unidentified big shareholder in Cornerstone, reports that two things will help juice up the company's stock: Cornerstone will soon have a national rollout of its FOODgalaxy.com service, and the company's forming a strategic tie-up with a giant financial-services company to provide credit facilities to subscribers of FOODgalaxy.com. The column says FOODgalaxy.com allows restaurants and other food-service establishments to post lists online of their supply requirements.

For analysis of the market's preopen tone and trends, see the Wake-Up Call, published separately.