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	10/16/00: Chevron To Buy Texaco In $42.B Deal	Text-only
	10/16/00: Peter Bijur, CEO, Texaco & David O'Reilly, CEO, Chevron On The Deal	Text-only
	10/16/00: The Outlook For Oil	Text-only
	10/16/00: Considering Long Term Care	Text-only
	10/16/00: Paul Kangas' Wall Street Wrap Up	Text-only
	10/16/2000: NBR Market Stats	Text-only

10/16/00: Chevron To Buy Texaco In $42.B Deal SUSIE GHARIB: On Wall Street today, still lots of nervous tension. The Dow managed a gain of only 46 points, and the NASDAQ slipped 26. Also, some doubts about that $42 billion oil merger between Chevron and Texaco. Chevron stock fell by $2, but Texaco rose almost $4. Here's Scott Gurvey with details and analysis. SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: It is a stock swap worth about $35 billion, and Chevron will also assume Texaco's debt, bringing the total value of the deal to $42 billion. It will create the fourth-largest oil company in the world. Texaco shareholders will get 0.77 shares of Chevron for each for their Texaco shares. The combined company will be called: ChevronTexaco. Wall Street likes the deal. FRED LEUFFER, OIL ANALYST, BEAR STEARNS: The operations fit like a hand in glove. I think there are remarkable synergies. The company has identified $1.2 billion in cost reduction opportunities, which, I believe, is conservative. GURVEY: Those cost reductions will translate into lost jobs. At least 4,000, according to estimates; and that is not the only fallout. Without changes, ChevronTexaco would control 40 percent of the West Coast retail gas market. It would also control one-third of the region's refinery capacity. Regulators are expected to require the companies to sell assets before the deal is approved. And the impact of this merger on consumers is also expected to be carefully reviewed, coming as it does at a time of rising oil and gas prices. WILLIAM BAER, ANTITRUST ATTORNEY, ARNOLD & PORTER: They will say that the reasons prices are going up have nothing to do with the oil companies themselves; it has everything to do with supply/demand factors, limited refinery capacity, and that the mergers won't make it worse. But, they've got to be persuasive. GURVEY: Chevron and Texaco talked merger a year ago, but the deal was never completed. Analysts say differences about which West Coast assets to sell was one of the reasons. PAUL TING, OIL & GAS ANALYST, SALOMON SMITH BARNEY: You start to get the sense that the companies, both Chevron and Texaco, are more willing to look at realistic ways of disposing or mitigating the concern about the West Coast concentration on the marketing and refining side. GURVEY: Another reason there was no agreement last year, the analysts say, may have been the inability to reach a decision on who would be in charge. A new CEO at Chevron may have made the difference. Chevron's David O'Reilly will be chairman and CEO; Peter Bijur of Texaco will be vice chairman. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York. Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by FDCH. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc., Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. © 2001 Community Television Foundation of South Florida, Inc. 10/16/00: Peter Bijur, CEO, Texaco & David O'Reilly, CEO, Chevron On The Deal SUSIE GHARIB: Earlier today, I talked to the two CEOs and began by asking Texaco's Chairman, Peter Bijur, why he agreed to sell now when only a year ago he turned down Chevron's offer. PETER BIJUR, CHAIRMAN & CEO, TEXACO: Susie, a year ago there wasn't a deal. The timing was wrong, the circumstances were wrong, the situation was wrong. There just wasn't a deal a year ago. Today there's a deal. It's a great deal. We've got a great global company. We're going to do very well for hour shareholders and we're very excited about it. GHARIB: But Mr. Bijur, for Texaco's shareholders, why is this a great deal at $65 when it wasn't a good deal at $70? BIJUR: There never was a $70 deal a year ago. If we had had a $70 deal a year ago, we might have taken it. There might, if the circumstances and timing had been right, but nothing was right at the time, so there was no deal a year ago. Today we have a deal and it's a good deal. GHARIB: Mr. O'Reilly, there are a lot of antitrust concerns about this merger even though you've been playing them down today. Given that the Federal Trade Commission gave a really tough time to the Exxon Mobil (XOM) merger and then again an even tougher time for the B.P. Amoco (BP) acquisition of Arco, why should shareholders be confident that this deal is going to go through? DAVID O'REILLY, CHAIRMAN & CEO, CHEVRON: It's hard to predict what the FTC will want to do, but we're going to be very cooperative. We're going to go right in at the front end and tell them this is what we have, we need to work with you to find out what we need to do to retain competitiveness in the business. And I'm confident we can do that. GHARIB: Mr. Bijur, a number of analysts said that one way to solve this antitrust issue would be that if Texaco can get out at a good price in that joint venture with Shell. Is Shell going to cooperate or is it going to be a spoiler? BIJUR: Well, I think Shell is going to cooperate. They put out a release this morning that said they were interested in discussing this with us. We have had some preliminary discussions with them and we'll see what the FTC requires. We just don't know that at this time. GHARIB: Mr. O'Reilly, is this Texaco acquisition part of a larger consolidation strategy or is it a one time deal? O'REILLY: I'm not going to comment on where we're going to go next. The important thing is we've got to focus on getting this deal done right now, achieving the synergies we need to achieve, putting these two great companies together. We have a lot of employees we need to integrate. We have a great team spirit at the start of this and we intend to carry it through until full implementation. GHARIB: How is this merger going to impact consumers? Already oil prices are so high. With all the consolidation in the oil industry it just seems like there will be less choice and that there will be higher prices for consumers. O'REILLY: I don't agree with that. There's a critical need and we're very-we're experiencing this today, for gas and oil supplies for this nation and for the world. It's a very, very important issue. I think the consumers are acutely aware of how vulnerable we are and how important it is to have another large U.S. based company that can effectively compete and provide those supplies of fuel to the consumers for the long-term and that's what this company is going to do. GHARIB: Mr. Bijur, you're going to be in charge of all of the refining and marketing operations, which has been a weak part of the business. What are your plans to turn it around? BIJUR: We're going to continue to try to drive costs out of our system. We're going to continue to try to make it more efficient. We're going to continue to try to make our refineries operate safely and reliably and provide the customer with the best fuels that we can every place in the world at the lowest possible cost. GHARIB: Mr. O'Reilly, it sounded from your conference call today that one of the ways that you're going to create efficiencies is to reduce your joint expenditures on exploration. Wouldn't it make more sense to spend the same amount of money and grow faster? O'REILLY: The nominal dollars involved are not the issue. You could spend a lot of money in exploration. The key is do you have successful exploration and does it result in more supplies and growth in this company in the long-term? That's what we intend to do. It's a very modest efficiency, around 25 percent. That's easy to do in this big organization that we have. And I'm confident we can do it. GHARIB: Mr. O'Reilly, Chevron's stock hasn't done particularly well over the past year and that's in a time when oil prices have tripled in the past year. You've had great earnings. And today your stock was down on this merger news. How are you going to convince shareholders that you're creating value here? O'REILLY: Well, I think getting the story out, to begin with, is very, very important, ensuring that there's a commitment that we can get the synergies, that we are natural partners, that we can implement those synergies very quickly, which I truly believe we can, and by reminding them that when this is done, and we have confidence that this deal is doable because we think we will deal with the regulatory issues effectively, that we'll have a strong company, that we'll have greater market capitalization and we should see shareholder valuation increase as a result of that. So I'm confident that this is the right decision for our shareholders. GHARIB: Thank you very much. Mr. O'Reilly, Mr. Bijur, good luck to you both. O'REILLY: Thank you. BIJUR: Thank you. Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by FDCH. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc., Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. © 2001 Community Television Foundation of South Florida, Inc. 10/16/00: The Outlook For Oil SUSIE GHARIB: Texaco was on the most active list today on that merger news. But most other oil stocks were down and the price of oil dropped six percent to under $33. With me now to talk more about the outlook for oil is our colleague from BridgeNews, Peter Rosenthal, Senior Correspondent covering energy. Big day for oil. PETER ROSENTHAL, SENIOR ENERGY CORRESPONDENT, BRIDGENEWS: It was. GHARIB: Well, I know you were talking to a lot of analysts about this Chevron-Texaco deal. What analysis did you come away from after your conversations? ROSENTHAL: Well, one of the things was, as you mentioned, it's going to be difficult for them to get FTC approval until Texaco relinquishes part of its stake with the refining venture with Shell Oil, mainly in the west coast, where Chevron already has a significant presence. The two combined companies could have 35 percent or 40 percent of the market there. So certainly something there has to go. GHARIB: Yeah, that's a big concern. The other thing is a number of analysts who I was talking to today were saying that this deal had a lot to do with just sheer necessity in preparation for oil prices coming down, coming down a lot, I mean, maybe in the $20 a barrel category, which is hard to imagine where we are now. ROSENTHAL: Certainly there's few people out there on the oil market or the oil company side who expect these prices to stay above $30 much longer and it will probably be in the 20s next year. And at that point Texaco has to ask itself, which makes a lot of money just in the price of crude oil, how long it can survive on its own competing with the likes of Exxon Mobil (XOM) and B.P. and other large companies. GHARIB: If prices come down. ROSENTHAL: Right. GHARIB: Well, that's a big if, though. You know, there's an OPEC meeting coming up next month. What do you expect to come out of that in terms of pricing, production quotas? ROSENTHAL: Well, based on their price span mechanism, if prices stay this high, and for the next couple of weeks certainly they should be forced to raise output. Now, whether that's going to happen, Saudi Arabia and maybe one other country has room to increase oil supplies. So they'd have to convince the other OPEC members first that they should be allowed to handle the weight of it and second, the market needs more crude oil which more and more people are saying that there isn't a lack of crude oil. It's refining capacity and getting the right fuels in the right situation. GHARIB: And it's also exploration and one of the things that came up in the interview, too, is are these mergers really going to increase exploration or not? ROSENTHAL: That's a good question. Some people have said, you know, we've had a natural gas increase to record highs this year as well, and that's because oil companies when prices slid and they started to merge, is they didn't spend as much on exploration and therefore maybe we're not getting as much supply. GHARIB: Real quickly, Peter, we've got oil earnings coming out pretty soon. Who's going to be first? ROSENTHAL: Occidental (OXY) on Wednesday, and they're expected to show triple year ago earnings and up from the prior quarter. And, of course, it's the same story, high crude prices, high natural gas prices. GHARIB: And then when are the big names coming out? ROSENTHAL: Exxon Mobil, and some of its, Chevron and Texaco are all early next week, and again, at least 80 percent from a year ago. GHARIB: OK. High oil prices because of all of that. Thank you very much, Peter, for filling us in. ROSENTHAL: Thank you. Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by FDCH. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc., Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. © 2001 Community Television Foundation of South Florida, Inc. 10/16/00: Considering Long Term Care SUSIE GHARIB: Planning for your retirement involves more than just worrying about a roof over your head. One of the biggest concerns is medical care. Here's Stephen Aug with the latest installment of our occasional series on retirement, Making It Last. STEPHEN AUG, NIGHTLY BUSINESS REPORT CORRESPONDENT: John and Patsy Matthews are among the more fortunate retirees. For one thing, they take care of themselves physically. They exercise together. JOHN MATHEWS, RETIREE: One day we jog, usually about three miles, and another day we swim. She swim about a mile. I swim about a half mile. And we also both lift weights. And we think our diet is good. AUG: And because Patsy is retired from the federal government, in addition to Medicare they have the federal employees health care system to pay what Medicare doesn't. And it includes prescription drug coverage. In effect, their federal health care plan acts like a medigap policy that many retirees buy as a supplement to Medicare. A typical medigap policy costs around $110 to $120 a month or about $150 a month if you want prescription drug coverage. What the Matthews don't have is long-term care coverage, which is not include under either Medicare or medigap policies. They decided not to buy a long-term care plan, even though their financial adviser suggested they do. MATHEWS: We roll the dice and it's a gamble but we're gambling that neither of us will need it, or if we do need it, it won't bankrupt us. AUG: In fact, the average cost of long-term care in a nursing home is about $57,000 a year, somewhat less if you're in an assisted living facility. At the American Association of Retired Persons, they say there are two groups of people that do not need long-term care insurance. One is the very wealthy, who can pay for five years of long-term care out of their own resources. The other is people who don't have very much. ENID KASSNER, SENIOR POLICY ADVISER, AARP: If you would spend down your assets in, say, six or eight months of a nursing home stay, you really are not a great candidate for buying long-term care insurance. AUG: That's because the government's Medicaid program for the poor would begin paying your bills after you had spent all your assets. Somehow I found out about long-term care policies before I retired and my wife and I bought our policy seven years ago when we were both in our 50s, so we paid less than if we had bought them now when we're older. And there are a couple of things to look for if you're going to buy a long-term care policy. One is to go with a strong company that stands a good chance of being around when you need the insurance. The other is inflation coverage. KASSNER: If you're buying a policy when you're maybe 20, 30 or more years away from needing coverage, if you don't have inflation protection, the benefits are essentially meaningless. AUG: One problem with long-term care policies is that some insurance companies have imposed rate increases after people have owned the policies for many years. The only defenses against this are to find a company that has not raised rates and hope for the best or to find a policy that pays at least partial benefits if you can't afford to pay the premiums. Steven Aug, NIGHTLY BUSINESS REPORT, Washington. Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by FDCH. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc., Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. © 2001 Community Television Foundation of South Florida, Inc. 10/16/00: Paul Kangas' Wall Street Wrap Up JEEF YASTINE: A mixed bag for stocks today as the indices worked off Friday's bounce higher. The Dow Jones Industrial Average running up about 60 points right at the start of trading. Big board volume advancing outnumbered declining issues by a narrow 9-to-8 ratio, that was on lighter volume. The advance was paced by strength in IBM (IBM) and Hewlett-Packard (HWP) shares, which helped offset losses in Microsoft (MSFT) and Intel (INTC) today. By noontime, the Dow had notched a 29-point gain, despite a somewhat weaker bond market. And in afternoon trading, the NASDAQ Composite churned sideways after that huge 240-plus-point run on Friday. Traders continued buying networking favorites, like Juniper (JNPR) and Redback Networks (RBAK). The net effect was sideways in negative territory. Both indices mounted rallies up to the earlier highs of the day, before more selling kicked in, in the last hour of trading. And the Dow Jones Industrial Average finishing with a gain of 46.62 points, closing at 10,238. In today's narrow 94-point range, the Dow settled up 61 points from its low of the day. The NASDAQ Composite Index ending off 26.49 points lower at 3290.28. In its 77 1/2 -point range, the Index settled 49 1/2 points below its high of the day. Big board volume simmering down to about a billion shares, and just a little more up volume than down volume. The Dow Transports up nearly 8, thanks to that drop in oil prices. Utilities moved up 5.3 to 394. Its record set earlier this month stands at 401. The Closing Tick neutral, +22. The S&P 500 rising about 1/2 point. But the 100 falling 3 1/2. The MidCap gaining 1 3/4. And the Bridge CRB Futures Price Index down about 1 1/4 points. The Big Board Composite Index picking up just over 4 points. A 1/2-point rise in the Value Line. The Russell2000 gaining about 1.3 points. And the Broadly-Based Wilshire 5000 gaining nearly 28 points. Bonds edged lower as traders took note of Fed Chief Alan Greenspan's speech in Atlanta. He made no mention about the stock market, or recent economic reports. Bonds were also helped by a slide in oil prices brought on by the start of an emergency peace summit aimed at heading off more violence in the Middle East. But there was some selling as some of last week's flight-to-safety money began returning to the stock market. So, corporate and tax free issues were mostly unchanged. And Treasuries drifted lower. The 5-year note falling 4/32. The 10-year dropping 2/32. And the 30-year falling 3/32, the yield at 5.81 percent. And the Lehman Brothers Long Bond Index falling about 4 points. Well, the blue chips struggled but succeeded in building on Friday's bounce higher, a gain of 46 points today, and declining issues outweighing advancers by a narrow margin. Thirty-eight new highs today versus 114 new lows. Xerox (XRX) was the volume leader, trading 20 million shares, the stock down $2.69. The company said last week it's not having cash problems but published reports say it was having trouble borrowing in the commercial paper market, so it's tapping a bank credit line for the first time. AT & T Liberty Media (LMGA) slipping $0.88. Lucent Technologies (LU) ending off $1. Motorola (MOT) edged up $0.25. Motorola and Gemstar-TV Guide (GMST) agreed to dismiss litigation efforts against each other. Instead, Motorola will now license Gemstar's technology for TV interactive program guides used in set top boxes and the like. Home Depot (HD) picking up $1.19. AT & T (T) dropping $0.63. But Nortel Networks (NT) climbing $2 even. GE (GE) advanced $0.75. And Citigroup rising $1 ahead of tomorrow's release of third quarter results. Shares in Texaco (TX) were pumped, gaining $3.88. You heard the news earlier from Susie. Among the widely helds, Bank America (BAC) falling $1.38. The bank beat earnings expectations by $0.02 but analysts said they did that at the expense of their capital reserve levels, which continue to slide. Dynegy (DYN) shooting up $2.63 on excitement about the company's new trading site for energy and communications commodities. EMC (EMC) gaining $1.75, networking and storage companies continuing to be the buy of choice today. IBM (IBM) rising $2.06. Merrill Lynch revising Big Blue's third quarter earnings estimates upward by $0.03 to $1.10 a share. Final results due out tomorrow. Royal Caribbean (RCL) ending off $1.44, Goldman Sachs removing the cruise line from its "recommended" list and cutting 2001 earnings estimates. Seagram (VO) down $1.44. European regulators, though, clearing the way for Vivendi (V) to proceed with its $30 billion acquisition of Seagram. In the plus column, Specialty Equipment (SEC) climbing nearly $6. United Technologies (UTX) will acquire the company for $30.50 a share cash. Wilson Greatbatch Technologies (GB) rising nearly $6 as well. The stock went public back in September. A spokesperson could not account for the strength today. Three-Five Systems (TFS) ending up $6.63. Last week, TFS reported healthy third quarter profits and forecast good fourth quarter sales. That dampened fears about a downturn in the second half of the year for that company. CyroLife (CRY) ending, rising $4.31, the company receiving clearance to market its new heart valve product in the European Union. In the minus column, NS Group (NSS) tumbling $6.25 on heavy volume of 1.7 million shares. The company expects fourth quarter shipments to fall by up to 30 percent. Polaroid (PRD) falling $2.31 on lower than expected third quarter earnings of $0.40 a share. Results missed Street estimates by $0.14. Revenue projections also fell short. Salomon Smith Barney downgraded the stock today. In NASDAQ trading, the Composite Index falling 26 points to 3290, giving back some of what it gained, a little bit of what it gained last week on Friday. Trading volume tapering off to just under 1.8 billion shares and 126 more issues down than up. Juniper Networks (JNPR) bolting $14.50 higher. As I mentioned earlier, networking equipment makers enjoying nice runs. Sun Microsystems (SUNW) gaining $3.50. But Intel (INTC) falling $4.69. Salomon Smith Barney voicing concern about weakness in microprocessor markets and the earnings are due out tomorrow. Microsoft (MSFT) ending off $3.38. That's a two year low for the software giant and there's some concern that Microsoft may guide analysts lower for the year