JEFF YASTINE: Wall Street was on the plus side on this second to last trading day of the year. The Dow rose 65 points and the NASDAQ notched up 18. Despite today's gains, both Indexes will be down for the year, and the NASDAQ will probably post its worst year ever. But there is a bright spot. Erika Miller fills us in on a surprising performer.

ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Mid cap stocks have been anything but middle-of-the-road performers this year. The S&P 400 MidCap is up double digits, while the Russell 2000 Small Cap Index and the S&P 500 are underwater.

STEVEN DESANCTIS, SMALL CAP RESEARCH DIR., PRUDENTIAL SECURITIES: Mid caps actually have given you the best profit growth and have better profit growth outlook than that of large caps. And small cap managers are kind of rotating up into the mid cap space, just to look for liquidity.

MILLER: Analysts say part of the allure of mid caps is that they tend to be less volatile than small stocks. At the same time, they offer greater growth potential than large caps, and they're currently trading at lower valuations.

DESANCTIS: They're a little more seasoned management, a little more seasoned. Yet, some of the companies are still relatively undiscovered. So it kind of gives you the best of both worlds.

MILLER: Mid caps have also been benefiting as investors bail out of growth companies and buy more value. The S&P MidCap Index has a higher weighting in groups like energy and utilities, which have done well; and it has been hurt less by technology declines. There may also be seasonal forces at work. In what's known as, the "January effect," smaller companies tend to do better than larger ones this time of year. But experts say mid caps could do well, even beyond January. If the Fed cuts interest rates, experts say mid caps will likely benefit, since they tend to be more sensitive to economic changes.

LAWRENCE WEISSMAN, PORTFOLIO MGR., SMITH BARNEY MID CAP CORE FUND: I think one of the things that you are willing to do in a lower interest rate environment is pay for growth. And since mid cap companies have consistent, stable earnings growth, we should expect to see better multiples out of the mid cap sector.

MILLER: But investing in mid and small cap stocks is not without risk. The sectors tend to get hit harder than large caps during economic recession, something that is not beyond the realm of possibility, next year. Erika Miller, 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.



12/28/00: Adobe Acrobat Tumbles Toward Upward Earnings

SUSIE GHARIB: Littelfuse is just one of the latest companies issuing earnings warnings. But in the midst of those warnings, one long time tech leader is quietly telling analysts to revise their estimates upward. Adobe Systems (ADBE) is a company that many on Wall Street call the unknown name that's right in front of our eyes. Scott Gurvey reports.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: If you've downloaded an opinion from the Supreme Court, picked up a stock report from Standard & Poor's, visited the IRS Web site for a tax form, read GE's (GE) annual report online or printed out a metro subway map for Washington, D.C., you've used Adobe Acrobat files. Adobe's system has become the common language for documents on the Web. They look like the original on almost any display screen and print like the original on almost any printer. But what is commonplace today was a tough sell eight years ago.

JOHN WARNOCK, CHAIRMAN, ADOBE SYSTEMS: I thought the technology solved such a fundamental problem-and it had been a problem in the computer science world for 30 years-how do you take a document and move it around ubiquitously and without friction? And I thought we came up with a very innovative way to make that happen. And, but it's amazing that it's taken eight years for people to sort of figure out that all of this is possible.

GURVEY: Adobe Chairman John Warnock has always been an industry visionary. He has reinvented his company's product line many times. But the goal is always to assist humans in presenting information. Adobe is now working to make Acrobat files work on the increasingly popular handheld devices. Warnock says the dream of a paperless society is getting closer.

WARNOCK: When the device weighs less than the magazine, OK, and is more convenient than the magazine, it will never have the permanence of the magazine, but it will be able to carry a lot more information. The information will be easier to update and in the wireless world, it might even be transparent when it's updated. So it just may update itself and you're not even aware of that fact. So when it gets to that level, then sort of the value of paper starts to balance off against the value of the technology. And we're not too far from that.

GURVEY: Adobe gives its Acrobat Reader away for free. It makes money selling the tools authors use to create Acrobat documents, as well as a wide range of products designed to help create and publish content on paper and electronically. Wall Street likes its prospects.

SCOTT KESSLER, INTERNET ANALYST, STANDARD & POOR'S: I think any pullback in Adobe is a great opportunity to purchase one of the best and perhaps one of the least known bellwethers in the technology sector. Here you have a company that's increasing revenue growth, that is increasing gross and operating margins and that's really delivering to shareholders.

GURVEY: As a company, Adobe has been less hurt by the dot.com collapse than others. In fact, the company recently told analysts to revise their earnings forecast up slightly.

WARNOCK: The dot.coms are really a very small part of the Internet and the use of corporations to automate their business practices with the Internet is where the real action is and I believe that's where the majority of our customers are.

GURVEY: While analysts are somewhat concerned about Adobe at current valuations, they are generally positive about the company long-term. They say it has managed to carve out a unique part of the technology sector that it can call its own. Scott Gurvey, NIGHTLY BUSINESS REPORT, San Jose.

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.

12/28/00: Prime Mover: Thomas Siebel, Chairman & CEO, Siebel Systems

JEFF YASTINE: Well, when it comes to customer service software, Siebel Systems (SEBL) claims to be the leader of the pack. The Chairman and CEO is Thomas Siebel. He founded the company in 1993. Its flagship Siebel 2000 E-Business Applications Suite automates sales and customer service operations for large companies. Siebel now has offices in 30 countries and more than 6,000 employees and revenues for the third quarter of 2000 were more than $480 million, an increase of 131 percent over the same period in 1999. In tonight's prime movers segment, Suzanne Shaw of Myprimetime.com asks Siebel about the company's growth prospects.

THOMAS SIEBEL, CHMN. & CEO, SIEBEL SYSTEMS: I think that Siebel System's growth is going to tend to moderate going forward simply due to the law of large numbers. We're operating our business at about a $2 billion run rate and in recent quarters we've been growing at substantially greater than 100 percent compound annual growth rate. We employ 7,000 professionals today in 30 countries. Now the idea that we're going to grow a multibillion dollar business globally at greater than 100 percent annual growth rate is simply absurd. It's not possible to do this. And so our growth is going to slow down a little bit going forward.

SUZANNE SHAW, MYPRIMETIME.COM: Is this the time for you to look at acquiring other companies at a discount?

SIEBEL: In the last year I believe that we've acquired four or five information technology companies and you can expect to see this to continue to be part of our strategy going forward. Now that being said, we do not perceive ourselves as a consolidator. We're focused on growing the business organically. But where we see the opportunities to advance our technology foundation to identify strong engineering teams, strong product sets that we can fold into our product architecture, we will continue to employ the merger and acquisition process to accomplish that.

SHAW: Since 1939 when the company was founded, partly on lessons learned from his work at Oracle (ORCL), Tom Siebel has built an empire, an empire that has expanded from sales force automation to all segments of the e-business applications market. No hardware, just highly complex software for companies to manage customer relations. Tell me about your decision to split off Sales.com and now you're buying it back. Should investors look at that as a mistake?

SIEBEL: Sales.com was a tactical event and the theory was that we set it off as a separate organization with its own capital structure and its own offices and its own people that it would be able to operate on its own kind of individual culture and its own entrepreneurial feel, that it could operate perhaps faster and more aggressively in its market than Siebel could as a larger organization. And, but while in foresight that seemed like a very logical thing to do, the fact of the matter is that it was operating at a rate slower than that of our overall company. So we decided to fold it back into the business because we thought that was the best way to address the market opportunity.

SHAW: It seems like the greatest technology companies today survive because of their strategic partnerships. How important is that to you?

SIEBEL: I think that the e-business ecosystem that we've put in place, the business partnerships that we've put in place have been major, major influences on the growth of Siebel. Again, there's no way that we could have hired, trained and enculturated 30,000 people around the world today and yet through our partnerships we have accomplished that.

SHAW: Tom Siebel, thanks for your time.

SIEBEL: 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. © 2001 Community Television Foundation of South Florida, Inc.



12/28/00: Commentary: Presidential Economic Advice

SUSIE GHARIB: In tonight's commentary, some economic advice for the incoming Bush administration. Here's Alice Rivlin, Senior Fellow at the Brookings Institution and former Vice Chair of the Federal Reserve.

ALICE RIVLIN, COMMENTARY: In touting a big tax cut as a cure for a possible recession the incoming presidential economic team is making two mistakes at once. First, talking gloom and doom is the surest way to turn a welcome slowdown of an overheated economy into an unwelcome and unnecessarily costly recession that could destroy a lot of jobs. Second, tax cuts are bad instruments for combating recession because they are slow to take effect and cannot be reversed when no longer appropriate. Any proposed tax cut, particularly the huge one endorsed by President Elect Bush during the campaign, will lead to long and bitter wrangles in a closely divided Congress. No economic effects of a tax cut would be felt for at least a year, more likely two, by which time any recession would probably be over. Absent a recession, a tax cut reduces the government's ability to pay off the national debt and keeps interest rates higher. A quicker, more effective way to revive the economy is for the Federal Reserve to lower interest rates. The Fed has plenty of room to cut rates right now, doesn't need Congressional action to do it and can always raise rates again if the situation changes. A tax cut should be defended on its own merits, not as a cure for a temporary downturn. I'm Alice Rivlin.

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.

12/28/2000: Paul Kangas' Wall Street Wrap Up

SUSIE GHARIB: Worries about the economy still weighed on the markets, but Wall Street managed to post respectable gains today. At the opening, stocks sagged, but not by much. Investors had to deal with more negatives. Prudential Securities cut its forecasts for both IBM (IBM) and Dell (DELL), and that put pressure on the high-tech sector once again. But there was buying interest in retailing stocks, like Wal*Mart (WMT) and Home Depot (HD), which moved slightly higher. After the first hour, the Dow and NASDAQ turned positive. But throughout morning trading, investors were hesitant to take fresh positions, and content to wait out the end-of-the-year and fourth-quarter results. By noon, the markets turned mixed. The Dow added to its gains, but the NASDAQ slipped into the minus column. Throughout the lunch hour, buying interest increased in the blue chips. Investors shook off those negative comments on IBM. That stock moved higher, along with Boeing (BA), Merck (MRK), Home Depot and McDonald's (MCD). But the NASDAQ suffered from a sell-off in Microsoft (MSFT) and Intel (INTC), which hit a new yearly low. Things changed in afternoon trading, however. The NASDAQ reversed course and turned positive, thanks to a modest pickup in tech buying. And the Dow tried for a triple-digit gain. In the last hour of trading, the trend continued. By the closing bell, the Dow was up 65 points to 10,868. The NASDAQ rose 18 points to 2557.

On the Big Board, volume weighed in at more than a billion shares. Down from yesterday.

The Transports lost altitude, down eight points.

Utilities also weaker by a point.

And the Closing Tick, a bullish reading of +759.

In the broader markets, we see that all of the S&P Index were in positive territory, especially the MidCap Index which surged 2 percent which, as we reported at the top of the program, has been the unexpected star performer this year.

And the CRB Index was down 2 1/2 points.

The NYSE Composite rose one percent.

The Value Line up two percent.

And the Russell2000 surged more than three percent. In fact, the Russell has rallied up 11 percent in the past six sessions.

The Wilshire was also strong today. Up 110 points.

Then after the close, the Federal Reserve reported in the week ending December 18, the M-2 money supply rose $17.7 billion. In the bond market today, most Treasuries slipped for the third session in a row. It was a combination of profit-taking and reaction to mixed economic news today. The latest survey on consumer confidence from the Conference Board was at its lowest point in two years. But the National Association of Realtors said that sales of existing homes were up four percent. That was stronger than expected. Running down the numbers for you.

The 5-year lost 3/32.

The Benchmark 10-year was unchanged.

But the 30-year rose 7/32.

And the Lehman Brothers Long Bond Index lost about a point.

There was some growth in the stock market today. In fact, there was more green on the screens of Wall Street traders. The Dow closed solidly above the 10,800 level, up 65 points. Advancers had a lead of about 3 to 1 over decliners. And as for highs and lows, 385 broke out to new 52 week highs versus 53 new lows.

Lucent Technologies (LU) dipped $0.56 today, closing out the year 2000 year, three and a half year lows.

AT& T (T) lost $0.13.

Nortel (NT) was down $0.38.

Compaq (CPQ) slipped $0.37.

And America Online (AOL) fell $0.50 on doubts that government regulators will approve its merger with Time Warner (TWX) by the end of this year.

GE (GE) gained $0.25 today.

AT&T Liberty Media (LMGA) ended up $0.19.

Motorola (MOT) dropped $0.38.

Meanwhile, Citigroup rose by that much.

And Pfizer (PFE) edged up $0.50.

Among the widely held issues, American Standard (ASD) moved up $2.13. It announced plans to reduce its workforce by two percent and take an $82 million fourth quarter charge to cover costs.

Computer Science (CSC) fell $3.13. Wit SoundView expressed concern about the impact that the acquisition of Mynd Corp (YND) will have on near term results.

Goldman Sachs (GS) rose more than $5. Brokerage stocks have been moving up on speculation that a Fed interest rate cut would jump start underwriting.

IBM (IBM) moved up $0.56, and that's despite those negative comments from Prudential Securities that we told you about. It cut fourth quarter revenue projections on concern for a possible downturn in IBM's PC and hardware businesses.

Union Pacific (UNP) fell $2.13. Investors reacted negatively today to a warning from the railroad last night which said that fourth quarter earnings are expected to reach $0.90 a share, which is $0.03 below Wall Street projections. Also, 2,000 jobs will be eliminated.

And Verizon Communications (VZ) was down $1.63 in reaction to a report in the "Financial Times" noting that the company and its partner, Vodafone (VOD), will soon be facing more lawsuits claiming mobile phones cause brain tumors. Information Holdings (IHI) jumped about $4. After the close the company said it expects to earn as much as $0.12 a share in the fourth quarter. That's debate Street estimates.

Royal Caribbean (RCL) flowed to $3.50 higher on optimism that business will pick up now that its rival, Commodore Holdings (CCLN), filed Chapter 11 yesterday.

Jabil Circuit (JBL) surged nearly $3 on news that it'll replace Coastal Corp. (CGP) in the S&P 500 Index.

Entercom Communications (ETM) had a similar gain after being selected to join the S&P MidCap Index.

Barnes & Noble (BKS) climbed $3. We called the company, but there was no special news from the company.

And Abercrombie & Fitch (ANF) fell $1.05 on profit taking after its recent run-up.

In NASDAQ trading, the Composite rose 18 points to 2,557. Volume swelled to more than two billion shares and advancers led decliners by a margin of 5 to 3.

Cisco Systems (CSCO) lost $1.19 today.

Juniper Networks (JNPR) gained $10.50.

Microsoft (MSFT) fell $1.88.

Intel (INTC) was down $1.63 to $30.99, which, as we said earlier, that's a new 52 week low.

And Applied Micro Circuits (AMCC) gained $3.83.

JDS Uniphase (JDSU) fell $3.25.

Sun Micro (SUNW) dipped $1.44.

SDL (SDLI) fell $8.

CIENA (CIEN) rose $5.19.

And Brocade Commu