10/27/00:
Keying Into Keycorp & National City's Success Strategies
GHARIB: Paul, as you know, the financial sector has been
consolidating all across the country. But so far two super regional banks based
here in Cleveland, Ohio have resisted pressure to be absorbed by bigger players.
National City (NCBM) and Keycorp (KEY) are the 10th and 11th largest banks nationwide.
Erika Miller looks at what lies ahead for them.
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Come
to Cleveland and you can't miss Key Tower. It dominates the city skyline. In its
shadow lies the old Society Bank. Founded in 1849, it was bought by Keycorp in
1994. The combination of old and new reflects Key's efforts to expand and modernize
while still maintaining strong community ties. The bank has been active in Cleveland's
economic revitalization, investing more than a billion dollars in local projects
since 1992.
ROBERT GILLESPIE, CHAIRMAN & CEO, KEYCORP: We feel a
certain requirement to maybe go the extra mile because it is our headquarter city.
It is, in some respects, the flagship community for Keycorp.
MILLER: But Key is not the only hometown bank vying for
customer loyalty. Its biggest rival here is National City, which traces its roots
back to Cleveland's first bank, founded in 1845. In the past eight years, it,
too, has invested more than a billion dollars in community development.
DAVID DABERKO, CHAIRMAN & CEO, NATIONAL CITY CORPORATION:
I think our role is very much as a community leader involved in the initiatives
that are going on in the city and the region to try to raise the quality of life
for the citizens here.
MILLER: Keycorp and National City have worked to take advantage
of the recent economic boom in Cleveland, but analysts say both banks are going
through growing pains.
MICHAEL PLODWICK, REGIONAL BANKING ANALYST, UBS WARBURG:
Keycorp is restructuring again and this is the about the third restructuring in
the last five years and we're hopeful that they get it right this time.
MILLER: The company is struggling to boost revenues at a
time when it is also cutting jobs. Its shares have fluctuated over the past year,
partly reflecting investor uncertainty about the latest reorganization plan. But
analysts say one of Key's biggest strengths is that it has branched out beyond
traditional banking, like buying regional brokerage firm McDonald and Company
two years ago. Chairman Bob Gillespie remains optimistic.
GILLESPIE: We are very confident that this major restructuring
will present a company that is much streamlined, much simpler, much more efficient.
MILLER: National City shares have also been under pressure
as the company battles a shrinking net interest margin. That's the difference
between the rate the bank pays on customer deposits and the rate it charges borrowers.
As a result, the National City says it is now focusing on more profitable areas.
DABERKO: We are attempting to have a greater percentage
of our earnings come from the fee businesses, which have greater growth potential
than some of the more traditional deposit and loan businesses.
MILLER: Both National City and Keycorp have grown largely
through acquisitions, a trend that analysts expect will continue.
PLODWICK: Both Keycorp and Nat City have taken slightly
different paths of growing through consolidation. But, you know, one of the things
that could be in the future for either company is entering into a very large transaction
with someone either of equal size or of larger size.
MILLER: Keycorp and National City face a dilemma when it
comes to expansion. Both want to take advantage of growth opportunities wherever
they arise but they also want to stay true to their community roots. Erika Miller,
NIGHTLY BUSINESS REPORT, Cleveland.
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.
10/27/00: Keeping Cleveland's Healthcare Healthy &
Affordable
SUSIE GHARIB: Cleveland is a lot more than a manufacturing
hub. It's also one of the world's leading medical centers. But as Diane Eastabrook
reports, the sophisticated medical care available to Cleveland residents could
soon become a lot more expensive.
DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT:
The Cleveland Clinic and University Hospitals are within blocks of each other.
Both are known worldwide-the Clinic for cardiology, University Hospitals for pediatrics.
And both are intensely competitive.
M. ORRY JACOBS, EXEC. VICE PRESIDENT, UNIVERSITY HOSPITALS
OF CLEVELAND: Certainly part of competition keeps us on our toes, both in terms
of the quality of care and services that we render to our patients, as well as
being price competitive in the marketplace.
EASTABROOK: In the past decade the two hospital systems
have raced to either acquire or affiliate with all but a few hospitals in northeastern
Ohio. Together the Clinic and University Hospitals now control an estimated 90
percent of the healthcare market around Cleveland. The Hospitals say building
scale brings value to patients.
DR. FLOYD LOOP, CHMN. & CEO, THE CLEVELAND CLINIC FOUNDATION:
Value is access to the physician of your choice with experienced specialists when
you need them, consistently good outcomes, good communication with your doctor
and excellent service.
EASTABROOK: Industry watchers say so far heated competition
between the two hospital systems has kept medical costs from spiking like they
have in other cities. But that could soon change. Both hospital systems are facing
spiraling costs because of the rising cost of technology, staffing shortages and
more government regulations. And they say productivity improvements that used
to help them absorb additional costs in the past have basically been wrung out
of the system. That could be bad news to small companies like Phoenix Products.
The Council of Small Enterprises or COSE negotiates healthcare benefits for businesses
around Cleveland including Phoenix. COSE's executive director fears in order to
offset their own rising costs, the hospital systems will hike prices to benefit
providers, rather than curb spending.
SCOTT LYON, EXECUTIVE DIRECTOR, COSE: They are so competitive
that they compete with one another on every level anymore. So there is the fear
that we'll have duplicate services, more MRI machines, more CAT scans, more high
tech equipment that we can actually use in the town.
EASTABROOK: Industry watchers say in a tight labor market
employers are willing to foot the bill for more medical services in order to attract
and retain workers. But they might not if the economy sours.
J.B. SILVER, MANAGEMENT PROFESSOR, CASE WESTERN RESERVE
UNIVERSITY: Are you really getting a higher level of product? Are you better off
as a consumer because of this and therefore the higher price is reasonable? Or
are you getting gouged?
EASTABROOK: Both hospitals say they continue to work aggressively
to contain costs to benefit providers. But neither wants to cut costs so deeply
that it compromises the high quality of healthcare for which Cleveland is known.
Diane Eastabrook NIGHTLY BUSINESS REPORT, Cleveland.
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.
10/27/00: Market Monitor-Doug Preiser, Dir. Of Research,
McDonald Investments
PAUL KANGAS: My guest market monitor this week is Doug Preiser,
Director of Research for McDonald investments. And welcome to NIGHTLY BUSINESS
REPORT, Doug.
DOUG PREISER, DIR. OF RESEARCH, MCDONALD INVESTMENTS: Thank
you, Paul. Thank you for having me on the show this evening.
KANGAS: Your first visit with us.
PREISER: Welcome to Cleveland.
KANGAS: Yeah, well, being based here in Cleveland, does
this pose any advantages for you, being away from the bustling canyons of Wall
Street, as far as assessing the financial markets?
PREISER: I think it does, Paul. We have a very strong group
of analysts who are focused on seven broad industry sectors and those analysts,
because they're not located in New York, can really get away from the herd thinking
and get out and do some very proprietary and individual type of research.
KANGAS: What kind of market are we in here? It's very choppy.
It's volatile. What is your assessment?
PREISER: Well, it's obvious that the market is very schizophrenic
right here. It doesn't know which way to go. One day we're up big, one day we're
down big. I think October, as we all know, has been traditionally a tough period
for the market, but hopefully as we pull away from October and move into the latter
part of the year, we can see some improvement in the overall market environment.
However, I do think it's going to be quite tough due to the fact that we're likely
not to get good quarter over quarter comparisons from an earnings standpoint for
a few quarters yet.
KANGAS: Well, the market truly is schizophrenic. I mean
today we have the Dow up over 200 points and the NASDAQ up six points. What do
you make of this kind of action?
PREISER: Well, I think, Paul, that, you know, obviously
people just don't know where to go right now and one day they're moving into one
sector, one day they're moving into another sector. So I just don't think that
people really have their minds made up as to where they want to go. But they have
been looking to safety and we have seen them, you know, look to some value oriented
situations like the energy sector, which has done very well this year, as a protector
against just all the volatility we've seen in the technology sector.
KANGAS: You know, a lot of the stocks in this region have
just been absolutely mauled, some of the heavy industry companies that you probably
follow. Are they ever going to come back?
PREISER: Yeah, I think they are, Paul. We have a very close
relationship with many of the companies here in this region. They've been negatively
impacted by a couple of factors, which include just a slowdown into overall economy
as well as the Euro situation, but many of them have good technology oriented
types of businesses poised to deliver excellent earnings growth longer-term and,
you know, we would really look for those companies to do better at some point
here, especially given their depressed valuations.
KANGAS: Right. Let's get specific. Which companies are on
your shopping list?
PREISER: Well, I think companies right now that we follow
that, you know, that are actively, that are somewhat attractive here are TRW (TRW),
Parker Hannaford and Eaton, which are all very large Cleveland based companies.
KANGAS: And all very depressed stocks at the moment.
PREISER: That's right. In the industrial sectors.
KANGAS: This is a time to start nibbling on these?
PREISER: I think at some point here it will be a time to
start nibbling, especially if we see rates start to come down some.
KANGAS: Right. What are you avoiding like the plague, for
example?
PREISER: Well, I think right now obviously much of the technology
sector is very problematic. We also have started to take profits in the energy
sector, specifically integrated oils and also, too, the electric utility sector,
which is near and dear to my heart, as I was a former electric utility analyst.
It seems like it's lost a little steam in its growth path lately.
KANGAS: Are you looking at any of the fallen favorite angels
like Microsoft and Intel and stocks like that?
PREISER: Well, our coverage in the technology sector is
limited right now, but it's improving greatly. We continue to be a believer in
Cisco (CSCO) longer term and it has been one of our favorite stocks.
KANGAS: Are you doing anything in the bond markets here,
given the fact that the economy seems slowing?
PREISER: You know, we have been focusing investors more
on cash and bonds. But from an overall standpoint we still remain very, very bullish
on the overall market longer term.
KANGAS: OK, and no new highs for the Dow anymore this year,
I don't imagine?
PREISER: No, I don't think so, Paul. I think we're going
to be treading water for a while here, especially, as I said earlier, given the
fact that, you know, the quarter over quarter earnings comparisons are not going
to look good for a while.
KANGAS: But more or less constructive over the longer term
is your stance?
PREISER: Yes, we are.
KANGAS: OK. Great. Thanks very much for being with us, Doug.
PREISER: And thanks for having us here.
KANGAS: It's been a pleasure.
PREISER: I hope you had a good stay in Cleveland.
KANGAS: Wonderful. My guest market monitor, Doug Preiser,
Director of Research at McDonald Investments.
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.
10/27/00: Paul Kangas' Wall Street Wrap Up
PAUL KANGAS: I would not be betting on it, at all. Stocks
on Wall Street extended yesterday's upturn early today on that smaller-than-expected
rise in third-quarter GDP. It raised hopes that there would be no need for the
Federal Reserve to hike interest rates again. That bolstered the financial sector,
while JDS Uniphase's better-than-expected post-market earnings report yesterday
gave the beleaguered high-tech stocks a nice boost. At 10:30 this morning then,
the Dow Industrial Average posted a 48-point gain and the NASDAQ Index was up
37.5 points. The blue chips continued to forge into higher ground with the help
of end-of-month institutional buying and some short covering, while the NASDAQ
market turned quite choppy and lost a lot of its luster. At 2:30 this afternoon,
the Dow was sporting a 194-point gain but NASDAQ posted only a 48-point advance.
For the rest of the session, the blue chip and the NASDAQ markets went their separate
ways with the Dow Industrial Average soaring to a 210.5-point closing gain putting
it at 10,590.62. For the week, the Dow fell only once and rose four times for
a net overall gain of 364.03 points, that's 3.6 percent. The NASDAQ Index today
slumped to only a 6.18-point closing gain at 3278.36. For the week, the Composite
Index rose twice, fell three times and had a net overall loss of 204.78 points,
or 5.9 percent.
Big board volume today dwindled a bit from yesterday's hefty
pace, just over a billion shares. About a 7 to 3 margin of up volume over down
volume.
The Dow Transport Index had a decent day. Airlines were
firm, up 37 points there.
The Utilities snapped back nicely, with a gain of over 8
points.
The Closing Tick decidedly bullish at +792.
Standard & Poor's 500 up just over 15 points.
A 5.5-point rise in the 100.
The MidCap 400 up nearly 3.
Bridge Futures Price Index fell 1 1/3 points.
New York Stock Exchange Composite gained just over 7 1/2.
A gain of 2.61 on the Value Line.
The Russell2000 Small Cap Index edged up just .09.
And the Wilshire 5000 up 121 3/4 points.
The bond market rallied a bit on the weaker-than-expected
third-quarter GDP growth rate, but that was then offset by news that September
durable goods orders jumped 1.8 percent, and that was well above the 0.5 percent
rise estimated. There was little else to influence traders.
So tax free and corporate issues ended mostly unchanged,
while the Treasury market ended modestly lower.
The 5-year notes dropping 5/32.
The 10-year notes off 6/32.
30-year bond down 8/32.
And the Lehman Brothers Long-Term Treasury Bond Index fell
nearly 2 1/2 points.
It was the day of the blue chips on Wall Street, the Dow
Jones Industrial Average coming in with a huge gain of 210 ½ points. That's two
percent. And the broader market participated, 18 stocks higher for every 10 lower;
54 new highs for the year, 61 new lows. That's the best ratio we've seen in a
while.
Nortel Networks (NT) topped the active list on 34.6 million
shares, down $2.81. This morning it was trading as high as $48.75 and then it
kind of collapsed.
AT&T (T) edged up $0.13.
Corning (GLW) a 6 point gain. That's in reaction to JDS
Uniphase's (JDSU) better than expected earnings out late yesterday.
GE (GE) edged up $0.13.
Lucent Technologies (LU) a $0.27 gain.
Pfizer (PFE) down $1.25.
A $0.05 gain in Compaq Computer (CPQ).
Citigroup rose $1.25 in a strong financial sector.
Wal*Mart (WMT) down $0.19.
And Nokia (NOK) was up $0.81, 10th in big board volume.
AMR (AMR), the airlines represented here, they did well,
up $1.63.
And then Century Telephone (CTL) rising $2.75. Third quarter
earnings $0.47, up from $0.45 last year. Revenues up 16 percent.
Salomon Smith Barney increased its price target on Century
to $50 a share.
Electronic Data Systems (EDS) up $3.94. Third quarter earnings
higher, nicely, $0.59, up from last year's $0.51.
General Motors (GM), one of the better performing blue chips,
up $3.13, helping the Dow.
Harcourt General (H) rose $4.71. The publishing giant Reed
Elsevier is going to acquire this company for $59 a share.
Then J.P. Morgan (JPM) the biggest point gainer in the Dow,
up nearly $13. That run-up alone accounted for 76 points of the Dow's 210 point
gain.
Azurix (AZX) up $3. It's a water company and Enron (EXG)
is proposing to provide funding to take this company private at $7 a share.
Ingram Micro (IM) up $2.69. Third quarter earnings sharply
higher, $0.26 versus $0.11 last year. Sales up 13 percent. Morgan Stanley upgraded
it and so did Raymond James Financial from "buy" to a "strong buy."
CIT Group (CIT) rose $2.81. Third quarter earnings better
than expected at $0.67. That was $0.06 above the Wall Street estimate.
American Tower Company (AMT) up $5.38, a real third quarter
turnaround, earnings of $0.22 versus a loss of $0.08 a share last year.
Dril-Quip (DRQ) the big percentage loser, tumbling $5.31.
Third quarter earnings were flat, $0.17, same as last year, and that's despite
a 15 percent rise in revenues.
And Cooper Cameron (CAM) down $5.88. Goldman Sachs cut earnings
estimates for the year 2001 by $0.60, all the way down to $2.30 a share.
NASDAQ trading, a gain of 6.18. It was up over 50 early
in the morning, volume down over 200 million shares from yesterday. About 20 stocks
up for every 18 lower.
Intel (INTC) topped the active list, rising $1.69.
JDS Uniphase (JDSU) up $2.81 after those good earnings yesterday.
Microsoft (MSFT) up $3.25. Believe it or not, hackers broke
into the company's computer network and stole a source code. But Microsoft said
it is still intact.
SDL (SDLI), one of those fiber optics doing well, up $12.06.
Cisco Systems (CSCO) fell $2.88.
Juniper Networks (JNPR) was down $9.13.
A gain of $1.19 in Sun Microsystems (SUNW).
CIENA (CIEN) up $1.38.
Broadcom (BRCM) did well, rising nearly $13 a share.
And Applied Micro Circuits (AMCC) up $2.88.
Homestore.com (HOMS) on a rather good day, up $8.98. The
story here, the company will acquire Cendant's (CD) real estate Internet portal
for $761 million in stock.
Wild Oats (OATS), this is the natural food market chain,
third quarter earnings way down, $0.05 versus $0.19 a year ago. The Street was
looking for $0.22 a share. No wonder the big loss.
And Amgen (AMGN) down $9.19. Third quarter earnings were |
