SUSIE GHARIB: Two big stories tonight: the NASDAQ plunges almost 200 points; and a major shakeup at AT&T. First, AT&T. It's breaking up into four pieces - the biggest restructuring since the government split the old Ma bell in 1984. The stock plunged 13 percent today, and that's despite better-than-expected third-quarter earnings that also out today. Here's Scott Gurvey with details.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: First, in front of analysts, and then in front of reporters, AT&T chairman, Michael Armstrong explained the latest restructuring plan for the telecom giant. When it is completed in 2002, AT&T will be four separate stocks. AT&T business will include the world wide network, but will have a tracking stock to represent the beleaguered consumer long-distance service. Trading as separate asset-based companies will be the broadband cable assets, and the wireless service, which is now a tracking stock. Many analysts complain that the plan lacks specifics, and leaves unanswered questions about improving the business. They also wonder if restructuring will actually unlock shareholder value.

BRUCE ROBERTS, TELECOM ANALYST, DRESDNER KLEINWORTBENSON: I downgraded the stock because I never really believed there was a lot of synergies between the cable telephone industry - television industry - between that industry and the long-distance industry.

GURVEY: Armstrong disputes that, and points to the company's third-quarter earnings report.

C. MICHAEL ARMSTRONG, CHAIRMAN & CEO, AT&T: And so the best answer I have for that observation is: the strategy is working; the execution and operations of the businesses are delivering; and results that you see today, tell us that.

GURVEY: In fact, AT&T did beat expectations for its third quarter. But it had guided those expectations down; and today, it guided analysts to lower their forecasts for the fourth quarter and for all of 2001. And in a blow to many small investors in this widely-held stock, AT&T said it expects the combined dividends of all four restructured companies to be, quote, "substantially less" than AT&T's current dividend. Market reaction to today's events was swift and brutal - the stock falling 13 percent. It is now 62 percent below its 52-week high. At this level, a few analysts say there may be a buying opportunity.

MEL MARTEN, TELECOM ANALYST, EDWARD JONES: For a little bit more aggressive investors, with the patience into the second half of next year, we do think that AT&T does represent a pretty good opportunity right now.

GURVEY: Unanswered today were questions about Armstrong's future after the restructuring is complete. With executive heads rolling at Lucent (LU) and Xerox (XRX), some analysts say when AT&T is finished rearranging the chairs, Armstrong may not have a seat. 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. © 2000 Community Television Foundation of South Florida, Inc.

SUSIE GHARIB: From the road to the sky, TRW (TRW) covers it all. This Cleveland company makes airbags, antilock brake systems and equipment for the space and defense industries. It recently reported earnings slightly better than revised estimates after a warning and today announced a stock buyback and a dividend hike. When I talked to TRW's CEO Joseph Gorman today, I asked him about the outlook.

JOSEPH GORMAN, CHAIRMAN & CEO, TRW: Well, it's the automotive parts environment is pretty tough. The Euro hurt us quite a bit, the exchange rate, given the weakness of the Euro against the dollar. The shutdown of Ford (F) in certain of its production units hurt us. So a wide variety of events converged, some of which we had no control over whatsoever, to cause our earnings to be well under planned.

GHARIB: Looking to the future, how do things look?

GORMAN: Well, we don't predict earnings as to the future. But assuming the Euro stays reasonably balanced where it is against the dollar and assuming no other unforeseeable unforeseen events, then we ought to do pretty well.

GHARIB: Mr. Gorman, the stock of TRW is trading near its 52 week low and even though it was up a little bit today on news of that dividend boost and also your stock buy back, the Wall Street analysts I talked to say this is only symbolic.

GORMAN: Well, I think we're under valued severely. All of our peer companies have been battered as we have on the automotive side. In the aerospace side they've done a little better recently, but were battered previously as well. And so we're not happy with the stock price, but I've been around long enough to know it will come back.

GHARIB: Well, Wall Street analysts tell me that one way to unlock the value of TRW stock is to separate the automotive business from the aerospace and defense business. And yet you've been resisting doing this. Why is that?

GORMAN: Well, for a variety of reasons, really. One, we borrowed a good deal of money to buy Lucas Ferriday (ph), $7 billion, and two smaller companies each with heavy debt burdens is not a good idea. We might look at separation one day, but our task is to pay down the debt first to get it to a reasonable level.

GHARIB: But isn't the stock sending you a signal that it wants you to be more proactive?

GORMAN: No, it's sending us a signal that they're treating us as an auto parts supplier company and ignoring our space and information systems business and our technology bank. If we are able to bring the two businesses into balance better, then I think we'll see some real value created.

GHARIB: Mr. Gorman, TRW has been doing business in Cleveland since 1901 and yet recently you said that TRW would move its headquarters out of Cleveland unless voters approve a plan that would allow your company to build a mall on its corporate campus. Is this a threat?

GORMAN: No, and it wasn't intended as a threat and I said this is not a threat. And I said, when asked the question, I love Cleveland. I have no intention of moving the headquarters out of Cleveland. Of course, I can't speak for my successors and future boards. That's suddenly in Cleveland blown up to be a big story. But we have absolutely no intention of moving out of Cleveland.

GHARIB: Some people say that you do less of your, less of your customers are in Cleveland, you ought to move out anyway.

GORMAN: Well, that's, one could argue, because we don't have customers here. We don't have very many employees here anymore. Out of 120,000 employees in 40 countries worldwide, we've got about 1,500 here in Cleveland.

GHARIB: All right, we'll leave it there. Thank you very much for coming and talking to NIGHTLY BUSINESS REPORT.

GORMAN: You're very welcome, Susie.

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. © 2000 Community Television Foundation of South Florida, Inc.



10/25/00: Bonne Bell's Business Formula Bridges The Generation Gap

SUSIE GHARIB: Bonne Bell has been making cosmetics and skin care products since 1927 here in Ohio. Most of the company's customers are girls ages seven to 12. But as Erika Miller reports, you might be surprised by who is doing some of the behind the scenes packaging.

ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT:Evelyn CicerchI is proof that the benefits of makeup can be more than skin deep. At 90, she is the oldest worker in the seniors only production line at cosmetics giant Bonne Bell. They work up to 20 hours a week assembling, packing and shipping Bonne Bell products. The workers say they like the opportunity to be productive, not to mention the paycheck.

EVELYN CICERCHI, EMPLOYEE, BONNE BELL: I like the extra money because it enables me to do some of the things I wouldn't be able to do otherwise.

MILLER: The seniors work out of Bonne Bell's headquarters in Lakewood, Ohio, a suburb of Cleveland. They assemble about 20,000 blister packs of products a day including lip smackers, the largest selling lip gloss in the world. The program was started three years ago by this man, Jess Bell. At the time, Bonne Bell's main assembly plant in Westlake, Ohio, was desperate for part time help. So managers pitched in, including the boss.

JESS BELL, CHAIRMAN, BONNE BELL: My wife and I volunteered. We worked out there every weekend during September and October and learning through our own experience and working with a few other seniors that these people can do that, you know? You know, that seniors can do it.

MILLER: Bonne Bell's seniors program has become so popular, there's now a waiting list for openings. Part of the reason is that the company has made special accommodations to make older workers feel more comfortable. The seniors have their own workspace and are kept separate from other employees. They are supervised only by seniors.

BELL: I just think that works better, you know? And it's like, it's a little special treatment. They are grandparents, you know, so I want to treat them special. I'm a grandparent. I like to be treated special, too.

MILLER: Bonne Bell is a privately held, family run business.

BELL: They're every bit as skilled a worker as we have in the company. They're always on time. They always let you know well in advance if they're not going to be here, you know, and they just, you know, the morale is wonderful.

MILLER: Bonne Bell's seniors program is rooted in economics, not charity, which is why it's being imitated by other companies and non-profit groups. It shows that age can sometimes be a plus even in the beauty business. Erika Miller, NIGHTLY BUSINESS REPORT, Lakewood, Ohio.

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. © 2000 Community Television Foundation of South Florida, Inc.



10/25/00: Michael Armstrong, Chairman of AT&T On The Breakup

SUSIE GHARIB: Joining me live now from New York City is AT&T Chairman Michael Armstrong. Good evening, Mr. Armstrong.

C. MICHAEL ARMSTRONG, CHAIRMAN & CEO, AT&T: Good evening, Susie.

GHARIB: You've been telling us for quite a while about the benefits of having local, long distance and wireless under the same group along with broadband and the interest. Why are you back tracking now?

ARMSTRONG: Susie, I'm really not back tracking. I think our original strategy to transform AT&T from a point to point long distance business, which was really an application, not a durable sustainable business, into a facilities based communications company where we integrate the services over those facilities, it's really working. And if you looked at our third quarter results, those growth businesses grew 20 percent through the first three quarters of this year. That strategy is working.

GHARIB: So why are you doing this? So why are you breaking up into four pieces?

ARMSTRONG: Because now it's time to begin to realize the value of this strategy for our shareholders and we've got these tremendous growth businesses that we've invested in that are shrouded by the declining voice long distance business. And so this is an expression, a foundation and a path to realize the value of those investments. That's what we're doing.

GHARIB: Mr. Armstrong, I'm sure you've heard this criticism today a lot from Wall Street analysts, who are saying that even though you're breaking up the company, you're still not addressing the core problem. What are you doing to improve the long distance business?

ARMSTRONG: Suzy, the long distance business is a commodity priced business and what we're doing is taking cost outs of or company in order to be price competitive at the point of sale, whether it's on the consumer side or it's on the business side. The most important thing is to use that long distance business in which the package, and as you go to both consumers as well as to the business community, those services, we package them over cable with integrated voice video data. We package them over the mobile phone with roaming and local and long distance calls and that's what we're doing.

GHARIB: Well, somehow this isn't getting through to investors. The stock today was down 13 percent on this news and even once you break it up into four piece, why would an investor want to buy the old Ma Bell stock, given that the long distance business isn't growing, and not only that, it's shrinking faster than MCI WorldCom (WCOM) and Sprint (FON).

ARMSTRONG: All right, let me tell you why. First of all, our wireless business, which will be a standalone AT&T company and security, grew in the third quarter 37 percent, a tremendous growth and a very large average revenue per subscriber. One could invest in that. We will distribute that equity to our shareholders. Our broad band business grew 12 percent on a rapid rising rate and will grow in the mid-teens next year. We will have a tracker in the distribution of that stock. Now our consumer long distance business at first will be a dividend based stock, a high yield security and people who wish to have high yield dividend flow to them would invest in it and we will take cash flow and make that a growth business in the future.

GHARIB: OK, all right, let me jump in here because we're running out of time. Mr. Armstrong, I have to ask you a difficult question, but I wouldn't be a good business reporter if I didn't ask you this.Considering what's happened to the CEOs at Lucent Technologies (LU) and also at Xerox (XRX) recently, are you up against a deadline by your board to prove your vision to the board of AT&T?

ARMSTRONG: Not that I know of, Susie. I have, I believe, the support of this board going forward. They've been terrific in the transformation of this company. And as soon as I don't have the support of this board I'd be the first one to leave.

GHARIB: Well, have they given you any stock price objectives that you have to meet so that you can keep your job?

ARMSTRONG: No, they have not.

GHARIB: Do you have any stock price objectives? I mean AT&T's stock now is at $23. It's near its 52 week low.

ARMSTRONG: I do have an objective, to realize the value of these investments by enabling the securities to trade at multiples that they trade in terms of the markets they participate. And so just take those multiples of cable companies, take those multiples of wireless companies and apply them to those stocks and that's the value we're going to be delivering.

GHARIB: All right. And we're going to keep asking you to come back and deliver more to us and fill us in. Thank you very much, Mr. Armstrong. We appreciate your talking to NIGHTLY BUSINESS REPORT.

ARMSTRONG: Good night.

GHARIB: And we've been speaking with Michael Armstrong, Chairman of AT&T, live from 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. © 2000 Community Television Foundation of South Florida, Inc.




10/25/00: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: Well, the stock market certainly has had its bell rung earlier on today, and that started with an 18-point plunge in NorTel's stock in reaction to yesterday's after-the-close report of a smaller-than-expected rise in third-quarter revenues. And on top of that came a 3-point drop in AT&T early on, amid doubts that any restructuring moves would do much to help it recover in short order. With the telecom-related sector leading the way lower then, the Dow Industrial Average posted a 54-point loss at 10:00 a.m., while the NASDAQ Index tumbled to a 90.5-point deficit. The broad sell-off in tech stocks attracted buyers to the defensive blue chips, like the drugs; consumer product firms, like Procter & Gamble (PG); and amid calls for greater military spending, Boeing (BA) moved higher. And all of this helped the Industrial Average bounce back with a 36-point gain at 11:30 this morning. However, the NASDAQ market extended its decline as a host of recent high-flying fiber-optic stocks were undermined by the NorTel news. So at 1:30 this afternoon, the Composite Index was down a hefty 149 points. And then when several rally attempts failed, its continuing weakness finally dragged the Dow Jones Industrial Average down to a closing loss of 66.59 points at 10,326.48. Meanwhile, the NASDAQ Composite tumbled to a loss of 190.22 ending at 3229.57.

Big board volume almost 1.3 billion shares, almost 150 million more than yesterday. And down volume absolutely swamped up volume by an 8 to 3 margin.

The Dow Transport Index was down 32.28.

Utility Index losing 7 1/3 points.

But the Closing Tick indicating an improvement at the final bell, a +466.

Standard & Poor's 500 down 33 1/4 or nearly so.

The 100 off 19 1/4.

And then the MidCap 400 losing nearly 14 3/4 points.

The Commodity Research Bureau Price Index down 2.78.

The New York Stock Exchange Composite was off just over 10 points.

Almost a 7-point drop on the Value Line.

Russell2000 Small Cap off 12 2/3.

And the broadly-based Wilshire 5000 off just over 313 points, or 2.4 percent.

The bond market didn't get enough safe-haven buying support from the tech stock sell-off today to offset any selling that was prompted by caution ahead of tomorrow's release of the third-quarter employment cost report. Some weakness was also due to a $10 billion offering of 10-year Treasury notes which were priced to yield 5.85 percent.

Tax frees closed down 1/8 point.

Corporates down 1/2 on average.

And the Treasury market down across the board.

5-year notes losing 7/32.

10-year notes down 13/32.

And the 30-year bond losing 20/32, with the yield at 5 3/4.

Lehman Brothers Long-Term Treasury Bond Index off nearly 3 3/4 points.

Nortel Networks (NT) topped the active list on a massive 95 million shares, plunging $18.44 to close right at its lowest level of the day on those disappointing third quarter revenues.

AT&T (T) itself down $3.50 a share and you heard the news on that one, and more to come.

Corning (GLW), a fiber optic connected with Nortel (NT), down $16.63 on profit taking.

Compaq Computer (CPQ) bucked the trend, up $1.15.

Halliburton (HAL) lost $4.56. Third quarter earnings came in in line, $0.24 a share, but sales were flat. The company's also under a criminal investigation regarding a California military contract.

General Electric (GE) down $0.44 after over a 3 point gain yesterday.

Lucent Technologies (LU) fell $1.50. That's within $0.13 of a yearly low now.

Honeywell International (HON) going to be purchased by G.E., down $1.06.

Motorola (MOT) off $1.56.

And then Circuit City Stores (CC), which had problems last week, down $0.44, 10th in volume.

AFLAC (AFL) up $3.38. After the close yesterday, the company in with third quarter earnings, $0.62, up from $0.53 last year, and the company expects earnings to be up at least 15 percent next year.

Analog Devices (ADI) a major casualty, off 8 1/2. A.G. Edwards Brokerage downgraded it from "accumulate" to "hold" or just "maintain."

Bear Stearns (BSC) off $4.94, a little profit taking there, after a sharp recent gain on takeover speculation.

Boeing (BA) was up $1.56, as I mentioned earlier, increasing calls for more spending on the military.

Micron Technology (MU) down $3.31. The Chase Hambrecht & Quist Brokerage downgraded it from "strong buy" to just a "buy."

And UnitedHealth (UNH) down $2.13, although it was up over $107 this morning after the company said it's going to buy back up to 16 million of its shares and it also announced a 2 for 1 stock split.

Manor Care (HCR) a good percentage gainer. Merrill Lynch added this stock to its focus list.

And then Imation (IMN) was up $1.88. First quarter operating earnings higher, $0.40 versus $0.37 last year, in line with Street estimates.

Tremont (TRE) up $2.69. The company is a manufacturer of titanium products but no officer was available to comment on the stock's gain today.

Yankee Candle Company (YCC) singed for a loss of $3.88. Third quarter earnings $0.13, $0.03 below the Street estimate.

Bindley Western Industries (BDY), a pharmaceutical distributor, down $7.63. Third quarter earnings $0.33, in line with estimates, but direct distribution sales were up only 20 percent, not the 30 percent that was expected.

And C-Mac Industries (EMS), this is a Canadian electronics firm and the Toronto Stock Exchange Index, which is about one third of its value in Nortel, was dragged down 840 points or eight percent today and a lot of Canadian stocks went with it. That was a record one day drop, incidentally.

NASDAQ trading, a loss of over 190 points or 5.6 percent. Volume heavy, 2.15 billion shares. Only 12 stocks up for every 26 down.

JDS Uniphase (JDSU) down $24.06. You're not going to like these boards if you're in fiber optics stock.

Applied Micro Circuits (AMCC) off over $50.

An $81.80 loss in SDL (SDLI).

Microsoft (MSFT), that's a challenge there, up $0.20 or down $0.25. That is actually like a big gain today.

CIENA (CIEN) down $27 a share, fifth in volume on NASDAQ.

PMC-Sierra (PMCS) off $37.75.

Cisco Systems (CSCO) dropped $4.25.

Juniper Networks (JNPR) off $22.50.

Sun Microsystems (SUNW) off just over, or almost $9.25.

And Intel (INTC) was down just $0.69. That was a triumph right there.

Finally, PcOrder.com (PCOR) up $2.69. Trilogy Software is going to acquire this company for $6.37 per share cash.

Affymetrix (AFFX) had a good day, up just over $16. Better than expected third quarter, a break even versus a loss of $0.11 last year and revenues up a whopping 89 percent.