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	10/17/00: Profit Warnings Shake Up The Street	Text-only
	10/17/00: What's Next For Wall Street?	Text-only
	10/17/00: Road To The White House: Economics & The Presidential Debate Round 3	Text-only
	10/17/00: Commentary: Is The Euro Compromising The European Central Bank's Credibility?	Text-only
	10/17/00: Paul Kangas' Wall Street Wrap Up	Text-only
	10/17/2000: NBR Market Stats	Text-only

10/17/00: Profit Warnings Shake Up The Street SUSIE GHARIB: Two tech titans deliver: IBM and Intel posted top earnings, just after the stock market closed today. IBM's numbers came right in-line with estimates, and Intel's were three cents better than expected. Then, in after-hours trading, IBM's stock plunged 11 points, and Intel rose a fraction. Not a good sign for tomorrow's trading. In today's trading, profit worries continue to slam the markets. The Dow tumbled almost 150 points; the NASDAQ lost 76. Here's Suzanne Pratt with a closer look at today's earnings. SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: All day long, Wall Street was bracing for earnings news from tech titans, Intel and IBM After the close, Intel reported profits of 41 cents a share, topping diminished estimates of 38 cents a share. But that 41-cent number was exactly what Wall Street was originally forecasting before the company warned on September 21. Revenues at Intel came in at $8.7 billion for the quarter, slightly above reduced expectations; but still well below earlier forecasts. IBM joined the profit parade after the bell with a 20 percent jump in third-quarter earnings per share. The company earned $1.08 a share, matching analysts' expectations. But revenue growth for Big Blue was at 3 percent, far shy of forecasts and disappointing to analysts. GEORGE ELLING, COMPUTER ANALYST, LEHMAN BROTHERS: Iwouldn't say I'm thrilled because in this kind of environment, you want to see everything come through. You want to see a company operating on all eight cylinders. And I think strategically, IBM is headed in the right direction. This is definitely an improvement from what we've seen in the last four quarters, but it's still not quite as much as the company had anticipated. PRATT: Earlier in the day, Dow components, Philip Morris (MO), Johnson & Johnson (JNJ), Caterpillar (CAT) and Citigroup also posted their third-quarter earnings. Profits for Citigroup, Johnson & Johnson and Caterpillar beat analysts' expectations, although estimates for Caterpillar were recently lowered when the company warned Wall Street. Despite adverse foreign exchange rates, Philip Morris met targets set by analysts. Among the Dow components, Citigroup's numbers were perhaps the most impressive. Profits at the nation's number one financial services company were driven in part by record investment banking fees and consumer banking operations in emerging markets. DIANE GLOSSMAN, BANKING ANALYST, UBS WARBURG: When you look at the company broadly, 15 percent revenue growth and mid-20 percent EPS growth, I mean, these are numbers that any of our companies would just froth at the mouth to be able to provide. PRATT: The earnings parade continues tomorrow. Look for scorecards from AOL (AOL), Microsoft (MSFT), Apple (AAPL) and Sun Microsystems (SUNW). All are scheduled to post their numbers after the closing bell. Suzanne Pratt, 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. 10/17/00: What's Next For Wall Street? SUSIE GHARIB: So, now what happens? Joining me live is Vince Farrell, Managing Director and Chief Investment Officer of the New York money management firm Spears, Benzak, Solomon & Farrell. Hi, Vincent. Nice to have you. VINCE FARRELL, CHIEF INVESTMENT OFFICER, SPEARS, ENZAK, SALOMON & FARRELL: Hi, Susie. Thanks. GHARIB: You know, I was talking to a market strategist today and he was saying that the market just isn't responding to good news and that's bad. What's your take on all of this? FARRELL: I mean that's dead on because Citigroup ©, for example, reported very good earnings today- GHARIB: Right. Caterpillar (CAT), too. FARRELL: -- with a return on equity of 24 percent and the stock went down. Citigroup is trading at 15 times with a 24 percent return on equity. I don't think it deserves to go down. When stocks have good reports and go down, it's bad news for the market. GHARIB: And another thought is that some people are saying that the stock market is telling us that the economy is heading into a recession, even though all of the economic reports that we're getting are not showing that, and they suggest that this means that we are close to a bottom. Do you agree with that? FARRELL: I don't agree that we're heading into a recession. I think we're struggling with to what extent do we have a slowdown? We priced stocks for perfection earlier in the year, especially in tech land, and maybe they deserved it, maybe they didn't, but now we do have some degree of a slowdown. We have to find out to what extent the slowdown is real, what are the earnings growth rates going to be and what's the appropriate multiple. But I don't think a recession is in the cards. I don't rule it out, but I don't think it's in the cards yet. I'd say there's a 10 percent probability of recession. We're just trying to figure out what the appropriate price is. GHARIB: All right, well, let's talk a little bit about some of the earnings that came out after the bell today, those Intel (INTC) numbers and IBM (IBM), IBM's stock down dramatically in after hours trading. FARRELL: You know, and I hate to say it, Susie, I think IBM deserves to be down dramatically. These guys have not grown that top line for quite some time. The earnings number was OK, but the top line was short again and it was short in areas that were supposed to be their strengths, software and services. IBM has done a magnificent job the past few years in delivering value to the shareholders by massively leveraging up the balance sheet and buying in stock. That's great, but that game's over. Now you've got to grow the top line and they can't seem to do it. GHARIB: So even though the stock is down to $103 in after hours trading, you wouldn't be a buyer of it? FARRELL: No. We very luckily sold most of the IBM we had earlier in the year and I'm very uncomfortable. I was thinking about buying some back but I'm very uncomfortable doing that until I see some top line growth. I would rather buy at a higher price when I see that top line come in. So right now I'm going to stay away from it. Intel, now- GHARIB: But you are, yeah, you are buying, you told me you sold Intel earlier in the year and now you are buying? FARRELL: Yeah, we owned Intel, Susie, for seven years and we sold it early in the year, luckily at a good price. But now there's controversy about what the earnings are going to be. But we think they're going to earn $1.75 next year. The guy at Salomon Smith Barney, by the way, came out with a report yesterday where he disagreed with that. He's a smart guy so I'm worried. So I'm not going to buy a full position back. But if $1.75 is correct, and I don't know that it is, that's our thought, we can buy Intel at 20 times earnings. Now, that's a good place to begin a position. They reported a good number today but, you know, they came out with a very, very shy warning. They said fourth quarter revenues will be up between four and eight percent. Fourth quarter revenues usually are up 10 or 11 percent sequentially from the third. So they're telling you that business is OK but not great. GHARIB: So it's sort of like a warning? FARRELL: It's a little bit of a warning, yeah. GHARIB: Vince, what are you doing with the portfolios at your firm? I mean with new money that's coming in, where is it going? FARRELL: What's worked for us this year have been energy stocks, selected financial stocks, pharmaceutical stocks, especially that's what worked. I would still buy the energy stocks. You know, the Chevron (CHV)-Texaco (TX) deal, for example. We bought the Texaco. I think it's still pretty good. Chevron is trading at about 12 times earning. It's going to be a major, it will be the fourth largest oil company in the world. Exxon (XOM), which is probably the best, is trading at 21 times earnings. I don't think that gap deserves to be so I think it'll close it. And so I'd still buy energy stocks. Selected financials, I think you're safe buying property casualty insurance companies because it looks like the pricing has turned and there's a wind at their back. There is a couple of odd names here. X.L. Capital (XL), Ace Insurance (ACL). These are Bermuda based insurance companies and they're born and raised in Bermuda so there's no tax issues. GHARIB: Let me give you a few initials that everybody knows, MSFT, Microsoft. Would you buy it at this level? FARRELL: You know, that's one I want to probably buy a little bit higher. I want to see what the earnings look like. The report comes tomorrow. Microsoft is getting close it a buy point, as are a lot of tech stocks, but start with very small positions. GHARIB: We're going to have to leave it there. Thank you very much, Vince. FARRELL: Thanks, Susie. Good to see you. GHARIB: A pleasure talking to you. And my guest tonight, Vince Farrell of Spears, Benzak, Solomon and Farrell. 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. 10/17/00: Road To The White House: Economics & The Presidential Debate Round 3 SUSIE GHARIB: Tonight's final presidential debate is in St. Louis partly because Missouri has been a bellwether in national elections. But the city has lagged behind when it comes to the new economy, until now. Community leaders are turning the St. Louis economy to the future and looking to the candidates for help in the new economy. Darren Gersh reports as we continue our coverage of the road to the White House. DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: At first glance, the Missouri botanical garden seems like the perfect place to escape from the worries of the real world. But this is also a place for practical research and it's helping transform St. Louis into a world class competitor in biotechnology. Dr. Peter Raven, Director of the garden, sees a new season for the St. Louis economy. PETER RAVEN, PH.D., DIRECTOR, MISSOURI BOTANICAL GARDEN: St. Louis can really achieve something great if it seizes on the opportunities in the new biotechnology and new life sciences and plant sciences technology. And if it fails to seize those opportunities, then it will just, then its economy will just gently subside. GERSH: St. Louis is building its new economy hopes on its world class universities and research institutions like the Missouri botanical garden, which is why Dr. Raven is so concerned about federal funding for science. RAVEN: For the St. Louis area, a combination of renewed investment in basic science and technology with real attention to tax incentives for small businesses, startup companies appropriating that technology, would be the best thing that could possibly happen. GERSH: Business leaders and venture capitalists say it's only in the last few years that St. Louis has gotten serious about competing in the new economy, which is why many people here hope the presidential candidates, in their final meeting, will address the new issues raised by new technologies. Investment banker Spencer Burke helps fund new economy startups in St. Louis. That's one reason why he'll be listening closely as the candidates visit his hometown. SPENCER BURKE, MANAGING DIR., A.G. EDWARDS & SONS: I've enjoyed the debates thoroughly and-but I have not heard anything about the new economy. GERSH: Until recently, St. Louis has suffered from a lack of home grown venture capital. Burke has been working to change that, helping build A.G. Edwards into a major source of local venture capital for plant and life science companies. A.G. Edwards is an underwriter of NIGHTLY BUSINESS REPORT. But Burke expects the candidates to tread lightly on the technology issues that are vital to his business. BURKE: I think these are subtle issues that go to leadership questions that are not all that popular to talk about. I'm thinking the controversy over, you know, genetically modified food. I can't imagine, you know, that coming up in the debate tonight. I would think everyone would run from it, because it's obviously a controversial issue. GERSH: St. Louis also has its share of telecommunications and Internet businesses, like Haystack Toys. Founder Dan Lauer wants to hear more tonight about Internet taxation. DAN LAUER, CO-FOUNDER, HAYSTACK TOYS: It's the complexity and the bureaucracy of that could just strangle us in terms of how do I collect $30 from someone in Providence, Rhode Island for purchases of something? So the unknown of what taxation on the Internet will do for a company like us is a scary thought. GERSH: The companies at this high tech business incubator have brought $140 million into the St. Louis economy. Incubator director Marcia Mellick wants to hear whether the candidates would provide the same incentives to the startups in her building that more establish companies now get. MARCIA MELLICK, PRESIDENT, CENTER FOR EMERGING TECHNOLOGIES: I personally would like to see an effort at redesigning some of those R&D tax credit programs so that they are specifically aimed at the very young startup companies that really need that kind of extra financial help. GERSH: Of course, both Bush and Gore vow to support research and the new economy. But tonight, Missouri voters are hoping the candidates will show them, in person and in more detail, where they stand on the high tech issues that are key to building this city's future. Darren Gersh, NIGHTLY BUSINESS REPORT, St. Louis. 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. 10/17/00: Commentary: Is The Euro Compromising The European Central Bank's Credibility? SUSIE GHARIB: In tonight's commentary, a stumbling Euro could undermine Europe's economic future. Here's Steven Levingston, Business Editor of the "International Herald Tribune" in Paris. STEVEN LEVINGSTON, COMMENTARY: Imagine you're standing on a street corner in any European capital. If you concentrate hard enough, you can probably feel the earth shifting beneath your feet. That's because there's a revolution underway here that's crumbling the walls of the old economic traditions. Consider two examples. The London stock exchange is a 200-year-old fraternity and it's in a mess. Electronic trading systems and the Internet have it running scared. It has tried to transform itself by merging with the stock exchange in Frankfurt, but the merger has fallen apart, and its future, its very existence, is a big question mark. Things aren't any easier for the new institutions that are remaking Europe. The European Central Bank isn't even two years old. It was born in January 1999 along with the Euro, Europe's single currency. But the Euro has plummeted ever since it was introduced and it has taken the credibility of the European Central Bank along with it. So the economic institutions of Europe, both old and new are struggling. It's a symptom of these revolutionary times. Vaclav Havel, the president of the Czech Republic, has said of this transition period, "It's as if something were crumbling, decaying and exhausting itself, while something else, still indistinct, were arising from the rubble." In Europe, the battle is on to arise from the rubble, not be a part of it. I'm Steven Levingston. 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. 10/17/00: Paul Kangas' Wall Street Wrap Up JEFF YASTINE: The blue chips wanted to retest their lows again, and that's pretty much what happened. The Dow Jones Industrial Average opening about 35 points higher, and that was an immediate cue for many traders to take profits on the bounce-rally of the past couple days. IBM was strong, but the financials like J.P. Morgan (JPM), and the retailers, were all taken back down again in that early trading. The selling continued all morning, and by noontime, the Dow was off about 110 points; the NASDAQ Composite Index suffering much the same fate as well. After opening higher, it was all sellers until shortly after 2:00 p.m., when Intel began picking up some buying interest off its lows of the day. But there wasn't much follow-through as many traders remained on the sidelines ahead of the chip makers' earnings release after the close. Same story for the Dow which bounced off that 10,030 level and moved sideways, going on the close with a loss of 149 points to 10,089.71. In today's 267 1/2-point range, the Dow closed down 204 points from the best level of the session. The NASDAQ Composite ending off 76 points at 3213.96. In its 175-point range, the Index settling 134 points below its high of the day. Big board volume weighing in at 1.1 billion shares, and just no contest between up and down volume. The Dow Transports sank nearly 47 points. Utilities moving - continuing to push higher, rather, rising about 1 1/3 points. And the Closing Tick mildly bearish at -45. In the broader market, weakness across the board with the S&P 500, 100 and MidCap 400s all posting nearly 2 percent losses.And a 1/3-point drop on the CRB Bridge Futures Price Index. The Big Board Composite Index falling 12 1/4 points. And 8 1/2-point drop in the Value Line. The Russell2000 Small Cap Index dropping nearly 11. And the Broadly-Based Wilshire 5000 dropping 242. A strong day for Treasury bonds, although the broader bond market was hurt by comments from bond guru, William Gross, who made some negative comments about corporate bonds not doing well in a cyclical U.S. economy. That hurt junk bond prices, especially. But oil prices remain stable, and Treasuries remained a safety-first favorite for anyone else worried about earnings on the equity side So, corporate and tax-free issues closed more or less unchanged, rising 1/4 and 1/8 respectively. The 5-year note rising 9/32. The 10-year note gaining 14/32. And the 30-year bond was up 18/32, with the yield at 5.77 percent. And the Lehman Brothers Long Bond Index also to the up side today, gaining 10 1/2 points. Well, Schwab stock fell $0.88 to $30.53. Merrill was off about $0.38 to $57.81. and the blue chips today struggling to hold above that 10,000 level floundered as low as 10,026 before finding a little bit of buying, cutting its loss to 149 points for the day. Declining issues easily outpacing advancers by a 2 to 1 margin, 36 issues hitting new highs, 238 new lows. And one of those new lows was America Online (AOL), nose diving $9 on concerns it might be the next Internet bellwether to, perhaps, warn from weak Internet ad revenues. That's just the sort of thought, the rumor on the Street. Merrill Lynch, though, giving AOL or expecting AOL to report with an upbeat earnings report tomorrow when quarterly results are released. Tyco (TYC) falling $3.38. Tyco closing its purchase of Mellancroft today, a $4.2 billion purchase. And the exodus out of chip stocks continuing, Micron Technology (MU) tumbling $4.69 on downgrades from Morgan Stanley Dean Witter and PaineWebber. This was a $90 stock back in late August. Time Warner (TWX) losing $12.29, down in sympathy with AOL. Xerox (XRX) slipping $0.19. Alcan Aluminum (AL) picking up $1.31 today. The aluminum stocks were fairly strong. AT & T (T) falling 1. GE (GE) ending off more than $2. And Lucent (LU) falling 1 1/4. Citigroup finished down $1.44 even though it was among some of the banks today reporting solid profits, Citigroup's third quarter net income rising 27 percent to $0.67 a share. That was $0.02 above Street estimates. Among the widely helds, Advanced Micro (AMD) falling $2. Besides being a chip stock, some are concerned about an emerging price war between AMD and Intel. Dover (DOV) falling $7. The company missed Street estimates by a penny. And IBM (IBM) gaining $1.88 during the trading session, but dropping and trading as low as $102 after the close. You heard the earnings news earlier. Lexmark (LXK) dropping $3.63. Standard & Poor's downgrading the stock from "buy" to "accumulate" because of the eroding value of the Euro. Pfizer (PFE) gaining $1.25. When blue chip and tech shares are falling, traders often buy drugs and that's what was happening here. Philip Morris (MO) ending up $0.94, another Dow component reporting quarterly results that matched estimates. And among the high fliers today, Sunrise Medical (SMD) up $2.69. An insiders group that includes the company's CEO wants to take the company private for $10 a share cash. Coca-Cola Enterprises (CCE) gaining $2.19, the bottling company posting stronger than expected third quarter results of $0.30 a share. That's up from $0.24 a year ago and beat Street estimates by $0.04. Trex Company (TWP) rising $3.88, the latest issue of "Forbes" ranking Trex as number one of its 200 best small companies in America. Shares in Teradyne (TER) tumbling $9.44. Third quarter earnings beat estimates by two pennies, but the company said profits will be off by 20 percent in the fourth quarter. So a fourth quarter warning there. On the down side, Invacare (IVC) plummeting $6.81. The company is contending with slow sales in Europe and worried about fourth quarter profits, as well. Ceridian (CEN) finishing down $4.31. Third quarter earnings were OK, but revenues were a bit light. They were off about 1.3 percent. In NASDAQ trading, the Composite Index falling 76 to close at 3213. Trading volume picking up to just under two billion shares and there were two more stocks down for every one that was up. Juniper Networks (JNPR) falling $13.81, some profit taking there. Sun Micro (SUNW) ending off $3.19. Cisco Systems (CSCO) rising a fraction. But Intel (INTC) edged up $0.50. Microsoft (MSFT) gained just a fraction as well today. CIENA (CIEN) ending off $5.17. JDS Uniphase (JDSU) slipping 2 1/2.