SUSIE GHARIB: Gateway is the "Scrooge" for Wall Street's holiday cheer. It said late today that it's expecting weaker sales of personal computers this holiday season. And as a result, it warned that its fourth quarter earnings and revenues will come in lower than expected. The news stunned investors, and the reaction in after-hours trading was brutal. Gateway's stock plunged more than $10 to below $20, losing a-third of its value. Standing by now to talk more about Gateway is technology analyst, Art Russell. He joins us live from the trading floor of Edward Jones in St. Louis. Hi, Art.

ART RUSSELL, TECHNOLOGY ANALYST, EDWARD JONES: How are you?

GHARIB: Well I'm - this was interesting news, to end the day. Tell me, what do you think went wrong at Gateway?

RUSSELL: Well, it sound like the consumer market just evaporated on them here. You know, Gateway has been immune to some of the effects that hit Compaq (CPQ) and Dell (DELL) earlier in the year. Now, it's the big consumer holiday, the Friday after Thanksgiving. Consumer didn't show up.

GHARIB: So is this a problem just for Gateway, or is the consumer not showing up for all the others in the industry?

RUSSELL: Well, I think with the slowing economic and a lot of other choices, including Internet appliances, Palm (PALM) Pilots, digital cameras, this may be the year to skip an upgrade on the PC and focus on some of these other areas.

GHARIB: So, who else is vulnerable?

RUSSELL: Well, I think Apple (AAPL) in terms of you know retail computer sales. Compaq and Dell are much less reliant on the consumer PC space, but certainly they'll be impacted as well. But Intel (INTC), Microsoft (MSFT) and the rest of the tech group are going to take it on the chin tomorrow.

GHARIB: All right. Going forward, for Gateway, back to that. Is this a one-quarter problem for Gateway, or is this something that's going to be a longer-term problem?

RUSSELL: Well, they're convinced that there's a lot of inventory in the channel and that we're going to have some price wars to work through some of that. They're talking about 12-18 months before things get back on track. But at 10 times their revised guidance for next year, the stock is still cheap here, and they are moving beyond the box, you know, beyond relying so heavily on the PC sales. So, it's a good story, still.

GHARIB: Given what you're saying in the outlook for the year ahead, what should investors do? People who already own Gateway, should they sell the stock now, should they hold onto it - what do you suggest?

RUSSELL: Well, I wouldn't rush out and panic and sell at the open tomorrow, because the stock's going to be down sharply. You know, I don't see any near-term catalysts really to drive this thing forward, and I think this is probably the first of a number of pre-announcements for the fourth-quarter earnings, but I'd probably sit tight unless I was overweighted. In that case, maybe back off a little bit.

GHARIB: All right, you gave some hints about what you think is going to happen tomorrow. What's trading going to be like, especially in these technology stocks?

RUSSELL: Well, I think this - you know, Gateway pointing to the fact that the slowing economy, weak consumer market, that kind of serves as an umbrella over the whole segment. And I think the chip companies, the Microsofts, Intels and the rest of the PC group, probably the whole NASDAQ will be down tomorrow. It'll be interesting to see you know how that plays out, but I think we'll see some weakness.

GHARIB: So the tech troubles aren't over?

RUSSELL: No, certainly not; and this is the first of a few pre-announcements to come.

GHARIB: All right. Thank you very much, Art. We appreciate your coming and talking to us tonight.

RUSSELL: No problem.

GHARIB: We've been speaking with Art Russell of Edward Jones, live from 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. © 2000 Community Television Foundation of South Florida, Inc.

PAUL KANGAS: Not only are those tech troubles bothering investors; so is the outlook for the economy. There's more evidence today that the economy is slowing down. The government revised downward its estimate for third quarter gross domestic product, and as Suzanne Pratt reports, the economy could slow even further in the months ahead.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: It's no secret to most investors that the U.S. economy is in the midst of a slowdown. The big question, however, is: how slow will it ultimately go? Today, the Commerce Department released data that shows the economy grew at its slowest pace in four years, during the summer. Gross Domestic Product advanced at an annual rate of 2.4 percent in the third quarter, down from 2.7 percent estimated last month; and it was less than half the second quarter growth rate. Economists blamed the third quarter revision on a bigger trade deficit, less business investment, and a smaller buildup in business inventories. And some say today's report suggests current GDP could also slip below 3 percent, and perhaps even lower next year.

PADDY GILEK, DIRECTOR OF U.S. ECONOMICS, CS FIRST BOSTON: It's very hard to know when the economy starts slowing, like it is now, when it will stop. And there are certain reasons for us to expect it to continue to remain relatively weak - that is, relative to recent years - over the coming months. And one of those is that credit conditions in the economy are tightening.

PRATT: Today's economic data seemed to have little impact on the market, with the Dow and NASDAQ moving in opposite directions. But experts say worries about slowing economic growth and what it will mean for corporate profits have been a big focus for investors in recent weeks. Still, many say those concerns may be overdone.

JOHN ZIMMERMAN, MARKET STRATEGIST, BANC OF AMERICA CAPITAL MGMT.: We're going to get a soft landing. I think everybody has a consensus opinion that's right. The question is: Does that soft landing turn into a hard landing? Our opinion is that it doesn't. We're looking at 3.5 percent GDP growth next year with 2.5 percent inflation, which is a relatively constructive or good environment for stocks.

PRATT: Sure, the slowing economy is making investors nervous, but experts say election uncertainty is also doing damage. Consider that in the three weeks that have passed since voters went to the polls, the NASDAQ is off 20 percent; and the Dow, 3 percent. 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. © 2000 Community Television Foundation of South Florida, Inc.



11/29/00: The Heating Oil Outlook

PAUL KANGAS: The price of warming your home this winter could put a chill in your pocketbook. Retail heating oil prices jumped to a seasonal high of $1.56 a gallon today. That's up 51 percent from the same period last year when heating oil averaged just over a dollar a gallon. Meanwhile, the Energy Department says heating oil inventories are at their lowest level ever heading into a winter season, with just under 49 million barrels on hand.

GHARIB: And joining me live now to talk more about this and the outlook for oil is our colleague from BridgeNews, Peter Rosenthal, who covers the energy markets. Hi, Peter.

PETER ROSENTHAL, SR. ENERGY CORRESPONDENT, BRIDGENEWS: Hi, Susie.

GHARIB: I know you were on the phone a lot cover this whole heating oil story. What did you find out?

ROSENTHAL: Well, what people are telling me, the people who track the data, this is the lowest stock levels we have seen going into the winter heating oil season in the northeast, which is the biggest market for such, that we've ever seen, and therefore any interruptions in supply, refinery problems or disruption in imports could mean another spike in prices, possibly, you know, nearing $2 a gallon.

GHARIB: I was going to ask you, how high? All right, $2 a gallon. Put that in perspective for us. Is that, you know, higher than we have seen before?

ROSENTHAL: For heating oil itself probably if that was the sustained price that would be the highest we have ever seen. Last January we saw a spike in new England to about $1.97 a gallon. So we got close, but it's precariously high.

GHARIB: It hurts.

ROSENTHAL: Sure.

GHARIB: Well, crude oil futures were also up today. They are now around $34 on concerns about Iraq and some threats from Iraq. What's that all about?

ROSENTHAL: Iraq is asking that its customers pay them directly a $0.50 per barrel premium for the oil it sells. That would go outside the sanctions controlled by the U.N. the U.N. has so far rejected this proposal and the U.N., and we found out that Iraq is already asking its customers in November to do so and some customers have backed off, saying we can't do it and go around sanctions.

GHARIB: Investors are already-I mean everybody is already worried about higher oil prices. Now with this new wrinkle, what does this all mean for the outlook for oil? As I said, it closed around $34 today.

ROSENTHAL: Well, once again people are talking about the $40 number and most people you talk to, even if we don't get to $40, are saying that it's unlikely that we're going to get any significant easing in prices probably until next spring.

GHARIB: So no sign of relief. When is this going to let up?

ROSENTHAL: Well, there's two key things. You've got Iraq. You've also got the weather. If it's a cold winter we're going to see higher prices. If not, then we should have a little bit of relief.

GHARIB: A lot of ifs. We'll see what happens. Thank you, Peter.

ROSENTHAL: Thank you.

GHARIB: And we've been speaking with Peter Rosenthal, Senior Energy Correspondent for BridgeNews.

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.



11/29/00: High Tech Industry Gets A Major Jolt In Japan

SUSIE GHARIB: Japan's financial system continues to stumble and its economy is still wobbly after more than a decade of recession and sluggish growth. But while many Japanese companies are struggling, the country's high tech industry is thriving. Lucy Craft reports from Tokyo.

LUCY CRAFT, NIGHTLY BUSINESS REPORT CORRESPONDENT: An egg shaped printer that spits out messages the size of a fortune cookie, a wearable computer that allows you to make speeches without notes or scan the news on the way to work. A wrist watch? No, a camera that snaps pictures James Bond style then zips the digital images over the Internet. Japan, Inc. may be in tatters, its economy still treading water after more than 10 years. But the country's prestigious high tech industries continue to dazzle, whether it's consumer elections or the components packed inside. American companies excel at software design and Internet applications. Lower cost countries like South Korea and Taiwan have taken away much of Japan's business in commodity semiconductors and hardware. When it comes to custom chips, new materials and complex precision parts, the guts of many electronics products, Japanese companies continue to dominate.

E. KEITH HENRY, PROFESSIONAL ASSOCIATE, MIT JAPAN PROGRAM: These are the companies that don't show up on the name plate of final product. But whether you open up a laptop, open up your mobile phone, whether that phone is made in Finland, Sweden, Illinois or in Kawasaki , nine times out of 10 the majority of those components could be made in Japan.

CRAFT: Products made in Japan, say experts, leverage two key Japanese strengths. One, Japan remains unbeatable when it comes to miniaturization such as cramming tiny ceramic condensers into the world's lights cell phone or making the little motors that power hard drives and DVD players. A second traditional Japanese skill, the ability it turn out masses of bug free products with hyper efficiency.

EDWIN MERNER, PRESIDENT, ATLANTIS INVESTMENT RESEARCH: Usually if you have a product which is mass produced where the same process is used over and over again, where you're doing the same thing millions and millions of times, the Japanese are very good at becoming more and more efficient. So if you produce 10 of something, then probably it can't be produced too efficiently in Japan. But it you produce a million, it could be a part, it could be a television set, it could be a car, then the Japanese factory becomes very, very efficient, especially over time.

CRAFT: Despite the declining market worldwide for desktop PCs, the outlook is still healthy for Japanese electronics makers, say analysts, because consumers are willing to shell out for the nifty gadgets that hook up to their computers. And designing and manufacturing consumer friendly accessories like personal digital assistants, game machines and mobile Internet devices, is still as Japanese as sushi. Lucy Craft, NIGHTLY BUSINESS REPORT, Tokyo.

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.



11/29/00: "Money File"- The Search For Returns In A Sinking Market

SUSIE GHARIB: The stock market's in the dumps, so what's an investor to do? Tonight's money file commentator has some suggestions. Here's Brooke Stephens, author of "Wealth Happens One Day At A Time."

BROOKE STEPHENS, AUTHOR, "WEALTH HAPPENS ONE DAY AT A TIME": Now that the Internet bubble has fizzled and the market is in the red for the year, the bears of Wall Street are howling a very self-righteous I told you so. Investors scrambling for safe havens for their money don't need to settle, though, for a 5.6 percent yield on treasuries. The stock market isn't dead, it's just finally shifted out of overdrive and slowed down to a normal cruising speed where a 10 percent return will begin to look good to us again. Investors looking at retirement within the next few years should adjust their expectations and focus on income with modest growth. This is where dividends become very important. Good quality blue chips with steadily rising dividends still have yields ranging up to 5 1/2 percent. Add in an annual growth rate of seven percent, which you can find in consumer staples, oil stocks and utilities, and that portfolio shift becomes a very easy call. Another income source is top quality preferred stocks with fixed pay outs. They are safer than common stocks and currently pay an average of eight percent and have about a five year investment life. Real estate investment trusts, which suffered sad neglect and flat returns over the last decade, are beginning to show modest profits as real estate prices rise again. They pay out 95 percent of their income to investors and yields are currently closing in on 7 1/4 percent. You won't find those returns in the safety net of a money market fund. I'm Brooke Stephens.

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.




11/29/2000: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: Because that third quarter GDP growth report was a bit stronger than generally expected on Wall Street, it suggested a soft landing in the economy is still possible; and that helped stocks open modestly higher with the Dow Industrial Average rising some 53 points at the outset of trading, although the NASDAQ Index recovered only 10 points from yesterday's hefty 145-point rout. That disappointing rebound in the tech-heavy NASDAQ market put it on the defensive again as morning trading continued, but the old economy blue chips then began to attract the attention of buyers who moved into stocks like Citigroup ©, Merck (MRK) and Wal*Mart (WMT), thereby helping the Dow post a 91-point gain by 12:30 p.m., when the NASDAQ Index fell to a 29-point loss. The downside pressure subsided somewhat on NASDAQ in afternoon trading while the Blue Chip sector continued to move steadily higher. At the closing bell, the Dow Jones Industrial Average was sporting a gain of 121.53 points, or 1.2 percent putting it at 10,629.11. In today's 165-point trading range, the Dow closed down only 17 points from its best level of the session, up 148 points from the low. The NASDAQ Composite came in with a loss of 28.05 at 2706.93. The Composite Index settled right in the middle of its 127-point trading range, down 63 from the high and up 64 points from the low of the session.

Big board volume moved up just a touch from yesterday to 1.1 billion shares, and about, looks like 37 million more shares of down volume than up volume.

The Dow Transport Index managed to gain 3.01.

But the Utility Index giving up nearly 3 ½ points.

The Closing Tick modestly bullish at +362.

Standard & Poor's 500 up nearly 6 points.

Exactly a 4-point gain in the S&P 100.

The MidCap 400 dropped just about 2 points.

Bridge Futures Price Index down .97.

New York Stock Exchange Composite gained just about 3 1/10 points.

Value Line down 1 1/3 points.

The Russell2000 Small Cap Index off nearly 4 1/2.

And the Wilshire 5000 gained just about 23 1/4 points.

The three-week rally in the bond market continued today, thanks to that report of slower third quarter GDP growth which raised hopes the Federal Reserve will soon ease interest rates. Bonds also got a lift from flight-to-quality buying triggered by another skid in the high-tech stock market.

Tax free and corporates ended with 1/8- to 3/8-point gains, and Treasuries did very well.

The 5-year notes up 12/32.

Bellwether 10-year note up 14/32, with the yield all the way down to 5.53 percent.

30-year bond up 16/32.

And the Lehman Brothers Long-Term Treasury Bond Index gained 4.19.

The real action on Wall Street was in the blue chips during the regular session but I'm afraid the down side action came in NASDAQ after the hour, after hours trading. 121 1/2 points to the good on the Dow Industrial Average, but the broader market just barely positive, not even 14 to 13. 101 new yearly highs, 143 new lows.

Lucent Technologies (LU) for the sixth consecutive session topped the active list, down $0.06 on 17.4 million shares.

EMC (EMC) no specific news there during the day, down $6.31, though.

America Online (AOL) rebounding $2.80.

Texas Instruments (TXN) fell $1.44.

And then Pfizer (PFE) edged up $0.63, fifth in volume.

Nortel Networks (NT) down $1.56.

AT & T (T) edged up $0.31.

Nokia (NOK) a $0.38 gainer.

General Electric (GE) dropped $0.13.

And Citigroup in that firm financial sector up $1.81, 10th in big board volume.

Compaq Computer (CPQ) closed down only $0.40 but in after hours trading it was as low as $20 in reaction to that post-market earnings warning from fellow box maker Gateway (GTW).

Continental Airlines (CAL) down $0.88 and most of the majors were off fractionally after Merrill Lynch cut earnings estimates because of the high cost of fuel these days.

ExxonMobil (XOM) dropped $4.13, the biggest point loser in the Dow. ABN AMRO Brokerage downgraded Exxon from "buy" to just "accumulate."

Merck (MRK) getting a new high for the year, up $2.25 after Goldman Sachs added it to the "recommended" list.

And then MetLife (MET) closed down $0.19. But in after hours trading, it was as high as $31. Standard & Poor's announced after the close that MetLife will replace Seagram's (VO) in the Standard & Poor's 500 Index on a date to be announced.

And Wal*Mart (WMT) up $2.88, the best point gainer in the Dow. As I mentioned earlier, the retail sector was strong.

Snap-On (SNA), the tool company, saw its stock ratchet up $2.13 after Lehman Brothers upgraded it from "neutral" to "outperform."

B.F. Goodrich (GR) doing well, up $2.94. The company is selling its chemicals unit for about $1.4 billion to AEA Investors, a private investment group.

Viasystems Group (VG) down $2.25, big percentage loser. Today, a spokesman couldn't account for the drop. It is in the electronics service businesses, not a particularly strong group today.

Intimate Brands (IBI) fell $2.31. A company, the company here today announced November same store sales were actually down two percent. Alex Brown Brokerage downgraded the stock from "buy" to just "market perform" just like Banc of America did yesterday, when Intimate Brands fell $1.50.

Energizer Holdings (ENR) down $2.50 a share. The company sees first quarter sales losing 12 to 16 percent from last year's levels and earnings will come in around $0.50 to $0.60 when the Street was expecting $0.84.

Quanta Services (PWR) down $3.56. Bank of America downgraded it from "strong buy" to just a "buy."

NASDAQ trading, a loss of just over 28 points in Composite Index. Volume moved just over two billion shares. Only 13 stocks higher for every 25 lower.

Microsoft (MSFT) topped the active list, losing $1.94, and keep in mind a lot of these stocks in after hours trading were a lot lower after the Gateway warning.

Cisco Systems (CSCO) was up $0.69.

CIENA (CIEN) plunged $11 on reports potential financial problems with one of its large European customers.

Juniper Networks (JNPR) up $9.69.

Intel (INTC) closed up $0.72, but weaker in after hours trading.

Sun Micro (SUNW) down $1.50.

Broadcom (BRCM) gained $9.94. Morgan Stanley upgraded the stock from "outperform" to "strong buy" and has a $225 a share target for it.

JDS Uniphase (JDSU) down $2.59