SUSIE GHARIB: A shocker from Microsoft tonight: just after the closing bell, it came out with a revenue and earnings warning. It said that earnings for its current second quarter will come in around $0.46 or $0.47 a share. Analysts were expecting $0.49. Microsoft also said that revenues for its fiscal year ending in June will come in about 5 percent lower than expected. In after-hours trading, the stock fell four points, and that could set the tone on Wall Street tomorrow. Other high-profile earnings warnings today, including a joint announcement from merger partners, J.P. Morgan (JPM) and Chase Manhattan (CMB) dragged down Wall Street. The Dow lost 119 points, and the NASDAQ was down almost 100. Joining me now to talk more about Microsoft is Art Russell, senior technology analyst at Edward Jones. And he joins us live from St. Louis. Hi, Art.

ART RUSSELL, TECHNOLOGY ANALYST, EDWARD JONES: How're you doing?

GHARIB: I'm doing fine. You know, it's very unusual for Microsoft to pre-announce earnings or to give any kind of a warning. What is the problem here?

RUSSELL: Well, clearly we've seen pre-announcements from Gateway (GTW) and Compaq (CPQ) and Intel (INTC), and you connect the dots, and Microsoft is part of this PC market; they are not immune. And the hand writing is on the wall; they had to bring numbers down, which is very rare for them.

GHARIB: Is this a temporary issue for Microsoft or is it a longer-term problem?

RUSSELL: Well I think what we've got here is a slowdown in the overall PC market, specifically consumer PCs right now. And in the corporate market, that's being exacerbated by a slowing economy. And, you know, this could take a while to work through.

GHARIB: The fact that it's now going into the corporate sector - it's not just a consumer issue - is that something that worries you?

RUSSELL: Well, clearly, that has broader implications because the corporate market is larger than the consumer segment. They tend to buy higher powered machines, especially on the high-end server side. So you know, we're going to be watching the economy to see how growth is doing very closely to try to determine what the implications are. But, yes, it is troublesome.

GHARIB: As you mentioned, we have had warnings from Gateway, Apple (AAPL), Compaq, Intel; and now, Microsoft. What does this mean for the outlook for all these technology stocks?

RUSSELL: Well, I think there was this myth out there that somehow technology was immune from rising interest rates or a slowing economy. The fact is, half of all capital expenditures are related to technology. If the economy slows, these companies are going to feel it. And we're seeing evidence of that now.

GHARIB: All right. Now you've had a "buy" on Microsoft. Now with the new information tonight, what is your view on the stock?

RUSSELL: Well, we think the stock is cheap. It sold off in advance of this. We thought most of the news was in it. You know, you'll get some follow-through selling tomorrow morning. But you know, if you're investing long-term, it's a good time to step up to Microsoft. The PC is not going away. You have the economy slowing down; but we'll get through that as well. And I think to a certain extent, psychology is so negative right now, you can't give these stocks away. It's a good time to step up.

GHARIB: All right. Given what you've been saying and discussing about all these warnings in other stocks, are there any other technology stocks that investors should look at carefully that might be at risk in the coming weeks?

RUSSELL: Well certainly I think HP (HWP) and Dell (DELL) which are on a different earnings reporting cycle, probably are the most vulnerable. I mean, if you connect the dots in the PC business, these are the two that have not warned yet. And you know, they're not immune. Hewlett-Packard has good exposure. Dell is primarily corporate, so they're more at risk from that segment.

GHARIB: OK. Art, we just have a few seconds left, and I want to ask you. Now that we know that Governor Bush is going to be the next president of the United States, what does this mean for the legal case for Microsoft - real quickly?

RUSSELL: Well, I don't think it's going to really have a practical impact on how the case it handled. It may make the Justice Department less aggressive and more pro-business longer-term, but I don't see a major impact.

GHARIB: All right. Thank you so much for joining us tonight. Really appreciate it.

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.

SUSIE GHARIB: The stocks of AOL (AOL) and Time Warner (TWX) were both up almost $2 today on news that their historic merger is one step closer to reality. The Federal Trade Commission unanimously approved the blockbuster deal, a big breakthrough considering it's been almost a year since the merger was first announced. Stephanie Woods reports.

STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: America Online and Time Warner have waited nearly a year to hear the words "you've got approval" from regulators. But the approval came with conditions. The companies agreed to open their high speed networks to rivals.

ROBERT PITOFSKY, CHAIRMAN, FEDERAL TRADE COMMISSION: Our concern had to do primarily with access, access of competitors of Time Warner to this new Internet marketplace, access of competitors of AOL to the kind of content that's produced by Time Warner.

WOODS: AOL and Time Warner agreed to open the Time Warner high speed network to at least three rivals, keep AOL on local Bell companies' DSL service and report any complaints from rivals if they have trouble getting Time Warner's news and entertainment content. AOL and Time Warner hailed the agreement as a win for consumers. One of the deal's harshest critics, the Walt Disney Company (DIS), also praised the agreement. And consumer advocates say it will open up what they call AOL's walled garden of content.

GENE KIMMELMAN, CONSUMERS UNION: It won't be a walled garden that dominates their own cable systems. They have to let other providers on their cable systems. This is an enormous breakthrough in opening up cable.

WOODS: The Federal Communications Commission still must clear the deal. There were hints today that they may force AOL to open up its instant messaging service. Analysts say the conditions won't hurt the bottom line. Still, the new company will be under scrutiny from investors to show they can make it pay off.

ROBERT BURGOYNE, ANALYST, MONUMENT FUNDS GROUP: Big mergers don't create as much value as was originally thought. But in this case I think they have a good chance at generating a lot of additional revenue and realizing cost savings and we really need to give them about one to two years to see how that fares out.

WOODS: Government scrutiny of AOL/Time Warner won't end once the merger's complete. The FTC will monitor the company over the next five years to make sure it lives up to its agreement. Stephanie Woods, 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. © 2000 Community Television Foundation of South Florida, Inc.

12/14/00: Meet The New President Elect George W. Bush

PAUL KANGAS: Imagine taking charge of an enterprise with trillions of dollars in revenues and hundreds of thousands employees and you begin to get an idea of the challenges facing George W. Bush. What do we know about the nation's new chief executive officer and his leadership style? Darren Gersh reports.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Thirty-seven days and two Supreme Court decisions after election day, the Bush transition team finally got the keys to their official office. Now the real work of forming a government begins and the nation will begin to see just what kind of leader it has hired. Princeton Professor Fred Greenstein studies successful presidential leadership. He says Bush has one of the strengths needed to succeed in the white house, he's a natural organizer.

FRED GREENSTEIN, AUTHOR, "THE PRESIDENTIAL DIFFERENCE": He's had the same team for many, many years. It's a team that has worked smoothly. He's had a big state to administer.

GERSH: But President Elect Bush faces more than the organizational task of hiring 7,000 political appointees to run the government.

GREENSTEIN: This president is going to have to make his own honeymoon and I think there's several things that need to be done. One is to reach out to the other side.

GERSH: Observers say Mr. Bush's bipartisan style is one of his strengths. In part, he worked well with Democrats and Republicans because he had to. In Texas, the governor has limited powers. Management experts say the Texas experience taught Bush a useful lesson, effective leaders no longer simply command and control, now they must convince and persuade.

MICHAEL HAMMER, MGMT. CONSULTANT, HAMMER & COMPANY: The fact that the governor of Texas does not have a lot of executive power and requires that the governor persuade, cajole, influence people to follow his lead is probably good practice for being President of the U.S.

GERSH: Bush's management style is also famously hands off. Experts who followed Bush in Texas say he dislikes reading long memos and depends heavily on aides. They say the President Elect's work habits could cause him trouble in the White House.

BRUCE BUCHANAN, PROFESSOR OF GOVERNMENT, UNIVERSITY OF TEXAS: Well, it works, it has worked well for him here because the demands of the governorship are less rigorous. The degree of difficulty is not as high.

GERSH: As with any good CEO, the President Elect has shown the ability to set key goals and focus his efforts on achieving them. The question now is can he set set goals that will rally a divided nation. Darren Gersh, 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. © 2000 Community Television Foundation of South Florida, Inc.


12/14/00: "BusinessWeek" Digital Economy - Mark Hoffman, CEO,Commerce One

SUSIE GHARIB: Business to business is one area of Internet commerce that still shows signs of life in this tough year for the dot.coms. At a recent "Business Week" conference on the digital economy, Commerce One's (CMRC) CEO, Mark Hoffman told Scott Gurvey how his company's B to B marketplaces work.

MARK HOFFMAN, CHMN. & CEO, COMMERCE ONE: Well, I look at ourselves as an infrastructure builder for the electronic commerce world and so our goal is to build products that are essentially marketplaces and those marketplaces are communities where people come together to collaborate and transact. And it could be everything from buying to, you know, other engineering collaboration, marketing collaboration, any of the things that can go on in this area. So the full focus and goal of our company is building out this marketplace infrastructure.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: How do you characterize your competition? There are a lot of other companies doing things similar to yours and there are companies that are so large that they set up their own marketplaces.

HOFFMAN: Exactly. I mean they come from all different areas. I mean, you know, you take-certain companies game from, you know, being ERP companies, you know, that wanted to now move into the electronic commercial space. Other people were just building very isolated verticals out in the marketplace. And so it has been, those have been a mixed success. I think the thing that has given us an advantage is one is our total focus on marketplaces and the fact we are building an infrastructure.

GURVEY: What's going on in terms of the learning curve? Are the people running companies beginning to under business to business Web sites?

HOFFMAN: Well, I think there are two plays in the marketplace and one is a sell side play and I think everybody company should build, you know, their own Web site and get that up and available for selling for people that want to go deal directly with them. But that's not going to be the only channel into the market. Early on in this market people thought that is all I need and people will just come to me. And, you know, the fact is is that doesn't work as the only channel. And so you also then have buying marketplaces that are going to plug into that infrastructure and become another channel for that supplier out into the marketplace. So my view is always, you know, you should build a Web site. That is a good thing. And you should start to come in and participate in the marketplaces because I think you will learn so much over a very short period of time. If you are just going to sit back and wait for the market to develop then you are going to lose this early market advantage where, you know, I think if you're in there now learning then you are going to be at the forefront of this technology.

GURVEY: Where does Commerce One make its profit?

HOFFMAN: We get license fees and we sell, you know, the infrastructure out into the marketplace. And then we get, we share transaction fees with all of these marketplaces. So our goal is to take a small slice along with the runners of the marketplaces. And so, and we call that transaction rhythm.

GURVEY: Thank you. Mark Hoffman, Commerce One.

HOFFMAN: Great, 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. © 2000 Community Television Foundation of South Florida, Inc.


12/14/00: Commentary: Viva La French Cuisine

SUSIE GHARIB: Tonight's commentator says that French cuisine is going through fundamental changes and this is affecting French businesses. From Paris, here's Steve Levingston, Business Editor of the "International Herald Tribune."

STEVE LEVINGSTON, COMMENTARY: France is in a mad cow panic and only partly for health reasons. Already a few traditional beef dishes have been banned from the menu and anything that strikes a blow to French gastronomy strikes a blow to the heart of France. But French cuisine faces far scarier threats than a temporary problem with infected cattle. The global economy is producing fundamental and lasting changes to the spreads on French dining tables. Most of the world's goose foie gras is no longer French. It's Hungarian, with the Chinese planning their own huge processing plant. And French wine? The American, Robert Mondavi (MOND) hopes to bottle his own right on French soil. And what about the Michelin guide, that French arbiter of top chefs? Its editor is now British. French cuisine is burdened by tradition far more than media, banking or the auto industry. But it's a business and like any other, it must embrace global trends or fall behind. One person who recognizes this is Marc Veyrat. He's an iconoclast three-star chef. He wants to create a new French cuisine that absorbs global influences. He welcomes Chinese foie gras, he praises McDonald's (MCD) and he says if fast-food outlets are putting traditional cafes out of business, it's the cafes' own fault. Marc Veyrat is not just a chef, he's a businessman and it's progressive voices like his that are pointing the way not only for French cuisine, but for all of French industry. 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. © 2000 Community Television Foundation of South Florida, Inc.



12/14/2000: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: Wall Street's blue chip sector opened broadly lower today after merger partners, Chase Manhattan and J.P. Morgan jolted investors by warning fourth-quarter earnings there would be substantially below third-quarter levels, due to higher expenses and difficult capital markets. By 10:30 a.m., the Dow Industrial Average fell almost 140 points, with an 1/8-point drop in J.P. Morgan stock accounting for nearly 50 points of that loss. The NASDAQ Index, which had risen some 25 points at the outset of trading, was then dragged down by the weakness in the Dow and posted a 30-point loss an hour into the session. Profit warnings from FedEx (FDX) and United Parcel Service (UPS) seemed to underscore the slowdown in the economy, and kept the market on the defensive for the rest of the morning. At noontime, the Dow was still down 105 points, and the NASDAQ off 22. The market continued to move lower on diminished volume in afternoon trading. The Dow Jones Industrial Average closed with a loss of 119.45 points, or 1.1 percent putting it at 10,674.99. In today's 183-point trading range, the Industrial Average closed down 124 points from its best level of the session. The NASDAQ Composite fell 94.26 points putting it at 2728.51. In its 120-point trading range, the Composite Index settled 119 points below its best level of the day; in other words, just about at the bottom.

Big board volume tapered off about 137 million shares from yesterday, but still over a billion traded. And we see about 302 million more shares of down volume than up volume.

The Dow Transport Index really got hit, down 109.26. Airlines very weak because of signs of this slowing economy. Could hurt traffic.

Utilities down 4 1/4 points.

And the Closing Tick just barely bullish at 162+.

Standard & Poor's 500 down just over 19.

Almost a 10-point drop in the 100.

The MidCap 400 off just about nine points.

And the Bridge Futures Price Index fell 1.30.

New York Stock Exchange Composite off nearly 7 3/4.

Just about a 6 1/4-point drop in the Value Line

The Russell2000 Small Cap Index off 8 1/10 points.

And the Broadly-Based Wilshire 5000 dropping almost 217 points, or 1.7 percent.

After the market closed, the Federal Reserve reported in the week ending December 4, the M-2 money supply rose $7.8 billion.

Bond yields in the Treasury market today fell to their lowest levels in nearly two years, thanks in part to the report that November U.S. wholesale prices rose a mere 0.1percent, and excluding the volatile food and energy components, there was no change at all.

A drop of $0.84 per barrel in January New York oil futures was another positive factor which helped tax-free and corporate issues rise 1/8 to 3/8 of a point, while the Treasury market ended higher across the board.

5-year notes up 6/32.

10-year Bellwether was up 9/32, the yield all the way down to 5.22 percent.

30-year bond up 16/32.

And finally, the Lehman Brothers Long-Term Treasury Bond Index was up 7.80.

The Dow Jones Industrial Average didn't do much firming today, down 119 1/2 points or 1.1 percent. The broader market definitely lower. For every 12 stocks on the up side, 17 lower. Yet, 105 new yearly highs and only 77 new lows.

Topping the active list, Nortel Networks (NT) on nearly 23 million shares, up $2.31 after the company says it expects to meet its previous fourth quarter earnings estimate and sees year 2000 earnings and revenues up 40 percent.

Lucent Technologies (LU) down $1.25, a little profit taking after a run-up recently on takeover rumors. Some say Nokia (NOK) might be interested. Others say Alcatel (ALA). Most analysts I've talked to say they don't believe that.

EMC (EMC) down $3.25, a little more profit taking there.

Chase Manhattan (CMB) on that earnings warning traded as low as $41.38 and then trimmed that a little.

America Online (AOL) up $1.55. Looks like the big merger with Time Warner is going to happen.

General Electric (GE) down $1.56.

AT & T (T) fell $0.31.

Compaq Computer (CPQ) bucking the overall trend, up $0.60.

Citigroup in the weak bankers down $2.25 on that Chase Manhattan warning.

And then Corning (GLW) in the morning was trading as high as $76.44 after the company released an upbeat outlook and then it got caught in the afternoon downdraft.

Du Pont (DD), believe it or not, was the best point gainer in the Dow, up only $1.25, but the company's board has approved a plan to separate the pharmaceutical unit from the rest of the company and that could eventually lead to an initial public offering.

FedEx (FDX) down $4.31. As I touched on earlier, the company notes that business is slowing in its third quarter, although it did say in the second quarter earnings should come in at $0.67, $0.03 above the Street estimate.

Maytag (MYG) lost $2.50. The company sees fourth quarter earnings down 50 percent from last year's level.

Standard & Poor's downgraded Maytag from "hold" to "avoid."

J.P. Morgan (JPM) tumbling $6.31 on the close. That was the Dow's big loser, of course, and it hurt the Industrial Average by 38 points.

Torchmark (TMK) down $1.38. Prudential Securities downgraded it from "accumulate" to just a "hold."

And United Parcel Service (UPS) down $3.94, reflecting the problems that FedEx apparently is having. United Parcel said fourth quarter earnings would come in at $0.60 to $0.62, about $0.02 below the Street estimate. Bear Stearns downgraded the stock from "attractive" just to "neutral."

ICN Pharmaceuticals (ICN), the star of the day, up $3.31. Now, Schering-Plough (SGP), which bought ICN's licensing rights for the Hepatitis drug, Rebetol, is seeking FDA marketing approval for that drug.

Tektronix (TEK) up $2.94. Second quarter earnings sharply higher, $0.38, up from only $0.09 last years, revenues up a respectable 24 percent. And those earnings were $0.09 above the Street estimate.

United Dominion Industries (UDI) down $5.31. The company sees fourth quarter earnings 20 percent below last year's $0.74 a share and it also ended talks to sell the company to a suitor that it didn't name.

Pinnacle Entertainment (PNK) plunging $6.06. The proposed merger with Harveys Casino Resorts has been postponed.

Clorox (CLX) down $3.50. Speculation the company will issue a profit warning. It's going to have a conference call tomorrow.

Abercrombie & Fitch (ANF) losing $1.31. The Alex Brown Brokerage cut earnings estimates, downgraded the stock from "buy" to "market perform." Standard & Poor's also downgraded.

NASDAQ trading, a loss of 94 ¼ points or 3.3 percent on the Index. Volume well below yesterday's pace. But only 12 stocks up for every 26 lower.

Sun Microsystems (SUNW) topped the active list, losing only $0.06. Cisco (CSCO) down only $0.19.

But then Juniper Networks (JNPR) plunging $18.75.

JDS Uniphase (JDSU) off $3.19.

Microsoft (MSFT) off $1.75 and then fell some more after the close, of course.

CIENA (CIEN) down $7.69.

Veritas Software (VRTS) off just over $11.

SDL (SDLI) down $16.31.