SUSIE GHARIB: Stocks plummeted once again today on worries about the outlook for several tech giants. The Dow tumbled 192 points. The NASDAQ lost 53. Late today, Intel reiterated that its third-quarter revenues would be within the targeted range, but "slightly below the midpoint." We'll have more on that story shortly. But first, Microsoft. The Justice Department said today it will not break up the software giant into two companies. We have two reports this evening looking at today's developments and the reaction on Wall Street. First, Darren Gersh in Washington.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The Justice Department today took two big threats to Microsoft off the table. It will not seek to break up the company and, will no longer pursue charges the company unlawfully tied its Internet browser to Windows. The Justice Department and the state attorney generals who brought this antitrust case say they made a practical decision to avoid a prolonged courtroom battle.

RICHARD BLUMENTHAL, CONNECTICUT ATTORNEY GENERAL: Our decision today really is driven by the need for a remedy as quickly, promptly and effectively as possible in the interests of consumers.

GERSH: Legal experts say the government is simply giving up the weakest part of its case, since an Appeals Court set a high legal standard of proof on the tying issue, and was clearly skeptical of a breakup.

RANDY PICKER, UNIVERSITY OF CHICAGO LAW SCHOOL: I think the D.C. Circuit opinion made clear that a breakup in this situation would have been unusual and probably unwarranted and, so I think it's not surprising that the Department of Justice has chosen to drop that.

GERSH: A senior Justice Department official insists this is not a retreat. A federal judge considering penalties in the case has ordered both sides to submit a joint status report by September 14th and the government said it was making today's announcement to "facilitate consultations on that report." A Microsoft spokesman would only say the company is committed to resolving the remaining issues in the case. But legal experts say the door to a settlement has inched open.

ERNEST GELLHORN, ANTITRUST EXPERT, GEORGE MASON UNIV., LAW SCHOOL: As long as this breakup was on the table, I think Microsoft was going to be reluctant to begin a discussion.

GERSH: The Justice Department says it will not seek a court order delaying the release of Microsoft's new Windows XP operating system, but it will seek tough restrictions on Microsoft business practices. That worries company critics who say the software giant violated previous agreements.

KENNETH WASCH, SOFTWARE & INFORMATION INDUSTRY ASSOCIATION: But if the Justice Department is willing to step up to the plate to ensure that the conduct remedies are enforced, we have no problem with that.

GERSH: Government officials say they have also learned from experience.

GELLHORN: We know better now how to frame them, how to monitor them, and how to use them to enforce as well as effectuate relief.

GERSH: One thing is clear: the government wants to put the penalty phase of this case on a fast track. A senior official in the Justice Department's antitrust division joked he wants to resolve this case in all of our lifetimes. Darren Gersh, "NIGHTLY BUSINESS REPORT," Washington.

Copyright (c) 2001 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: This is Scott Gurvey on Wall Street, where the Microsoft antitrust news was greeted with a hand lap, but nothing in the way of sustained applause. Microsoft's shares opened down, spiked up sharply on the news, and then within minutes, fell back, giving up yesterday's gains. Analysts say the belief that a breakup of the software giant was highly unlikely, had already been factored into its stock price before today's Justice Department announcement. So the stock fell victim to the general market sell off that dominated the trading day.

ART RUSSELL, TECHNOLOGY ANALYST, EDWARD JONES: I just don't think there's a whole lot of incremental new information here. I mean, we knew they weren't going to seek a breakup. They're dropping the tying claim, but apparently they're trying to focus in and be very aggressive on the, you know, behavioral restrictions and it's unclear to me that they're going to get a whole of that pushed through.

GURVEY: The behavioral remedies may well prohibit Microsoft from employing differential pricing practices, and give more power to computer makers who want to modify the Windows desktop and install non- Microsoft products. But analysts say those restrictions will have little impact on Microsoft's bottom line. The next big bottom-line event will be revenue from the company's new Windows XP operating system, now almost certain to arrive in stores October 25. Computer makers can ship it on new computers at the end of this month. The analysts say the company's fundamentals look good in spite of the industry's weakness.

DON YOUNG, SOFTWARE ANALYST, UBS WARBURG: They are able to decouple from the underlying PC shipment trend for a number of reasons. One of them clearly is new products. They're going through an upgrade cycle with existing customer, so they don't need new PC to be shipped. It's an upgrade cycle.

GURVEY: With most of the legal news now out, analysts say Microsoft shares are more likely to be effected by general economic news than by courtroom developments. Scott Grvey, "NIGHTLY BUSINESS REPORT," New York.

Copyright (c) 2001 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.

SUSIE GHARIB: Another update today, also from the semiconductor industry, Fairchild Semiconductor raised its revenue estimates for the third quarter, saying order rates are increasing. But the company, based in Portland, Maine, reiterated that gross margins will come in at the low end of expectations, around 20 percent. Joining me now to talk more about the outlook, Fairchild Chairman and CEO Kirk Pond. And it's a pleasure to have you on the program.

KIRK POND, CHAIRMAN & CEO, FAIRCHILD SEMICONDUCTOR: Thank you. It's a pleasure to be here.

GHARIB: Thanks for coming all the way from Maine.

POND: All the way.

GHARIB: So, things are improving. Do you see that the orders, that you'll see sustained pick up in orders?

POND: Yes. We started seeing orders improving in the June/July time period. Our book to bills are now above 1 and that opposed to .7 that they ran a few quarters ago. So we're now beginning to build a little backlog, which has implications for the future.

GHARIB: Is this an actual pickup or do you think it's seasonal?

POND: Well, I think certainly part of it is seasonal. But I think also the inventories that existed in the industry have come down quite a bit. And in product demand is still moving along smartly so people are still buying computers and cell phones and automobiles and it's still moving along.

GHARIB: Now, Intel, we as just reported, reported today that things are stabilizing. National Semiconductor came out with its fiscal technique numbers and said things are improving. How much longer before we see revenues and real growth for semiconductors?

POND: Well, I think we'll look back on the September ending quarter as the bottom of the bookings and as the book to bills now are approaching 1, backlogs will begin building and I think we'll start to see some sequential revenue growth quarter to quarter.

GHARIB: Now, Fairchild Semiconductor, a lot of its business depends on how things are going on in personal computers, consumer electronics, telecommunications equipment, because you supply those industries. What kind of forecast, what kind of outlook is ahead for those sectors?

POND: Well, I think overall industry is expected to grow about 15 or 16 percent next year. We have very broad exposure to all of those segments, not only computer, but telecom and automotive and consumer. And I think we're probably supporting that estimate by SIE for about a 15 percent growth next year.

GHARIB: How about the telecommunications equipment area?

POND: Well, the large telcos, by all the discussions I've had with them, are pretty stagnant until mid-next year. They really won't start having business return to normal till probably mid-next year.

GHARIB: Let's talk a little bit about your stock. It's half of the level it was a year ago. You did have a loss in the second quarter. What can we expect for your stock?

POND: Well, I guess it is half of what it was a year ago but it's also 50 percent higher than it was at the beginning of this year. So it's made a nice run. We, our stock never did sink as low as a lot of them did. And so we expect, as our earnings come up, why, then our stock will respond.

GHARIB: When do you think we'll see a profitable quarter?

POND: Well, I think as we move into next year we should be able to see profitable quarters.

GHARIB: OK, well, thank you very much for coming on the program tonight.

POND: Thank you.

GHARIB: We appreciate it. We've been speaking with Kirk Pond, Chairman and CEO of Fairchild Semiconductor.

Copyright (c) 2001 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.

SUSIE GHARIB: As we reported earlier, many retail chains posted disappointing sales for August. Even back to school shopping and tax rebates couldn't tempt shoppers. But as Erika Miller reports, stores with lower prices did bigger business.

ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Retailers hoped back to school season would bring consumers back to their stores. But sales were generally weak last month, even at places where students shop, like The Gap (GPS).

DONALD TROTT, RETAIL ANALYST, JEFFERIES & COMPANY: The Gap division has gotten very stale. It tried to be all things to all people and today's environment requires a more focused approach to trying to bond with the consumer.

MILLER: The Gap reported a 17 percent drop in sales and warned it is not likely to make its third quarter sales projections. Abercrombie & Fitch (ANF) and The Limited (LTD) also posted declines. Experts say unappealing fashions are part of the problem. But they put most of the blame on weakness in the economy and stock market. Even the government's tax rebates did not seem to help.

LINDA KRISTIANSEN, RETAIL ANALYST, UBS WARBURG: The consumer certainly has a lot of debt and I think some of that money may just be going into paying down debt or into savings.

MILLER: Discount retailers were among the few bright spots in today's reports. Wal*Mart (WMT), J.C. Penney (JCP) and TJX (TJX), which is the parent of T.J. Maxx and Marshall's, all posted decent gains.

KRISTIANSEN: I think the discounters are doing well because they are focused on basics which people need regardless of the environment. They are also focused on opening or lower price point merchandise.

MILLER: Shares of most chain stores fell today, pushing the S&P Retail Index lower. It is now down about 10 percent since August 1. Some analysts see further markdowns.

TROTT: We still believe that there is more vulnerability to the group. Our best thinking at this point, and obviously it can be modified as we go out in time, our best thinking is that probably the point to become more aggressive again on the group is going to be in December.

MILLER: That's when he and others expect the stocks to hit their lows, especially if holiday sales are weak. But they predict a rebound in the shares next year, assuming the economy starts to recover. Erika Miller, NIGHTLY BUSINESS REPORT, New York.

Copyright (c) 2001 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.

SUSIE GHARIB: Economists know that there are pluses and minuses to be considered in every situation. Tonight's commentator says that even includes the world's climate. Here's Todd Buchholz, author of "Market Shock."

TODD BUCHHOLZ, COMMENTARY: The U.S. government takes a lot of heat for its hesitant position on global warming. Economists recognize that there are costs and benefits involved in global warming. Most newspaper reports portray it as a manmade disaster that will wipe out flood plains and swirl powerful storms across small islands. But at the same time it could stretch out growing seasons, bringing blooming crops to deserts and to frigid places. Milder winters would revive Georgia's peach crop and permit China to grow more wheat. Even Delaware's chickens would thrive, until they were slaughtered, of course. In fact, the world's climate has changed many times before. In 1948 when Cole Porter wrote his song, "It's Too Darned Hot," worldwide temperatures were cooling down. From the 1940s to the 1970s, despite tons of smoldering blacktop paving new highways, scientists worried that it was getting too darned cold. In 1776, American colonists suffered from awful weather, a mini ice age. Take a look at the famous portrait of George Washington crossing The Delaware. It looks downright Nordic. In the 1200s, the globe was much warmer. Greenland was, well, green. The truth is nobody really knows how much warmer the earth will get or whether Mother Nature is playing a temporary trick or casting a long lasting spell. It will take a very long time to figure her out. I'm Todd Buchholz.

Copyright (c) 2001 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.

PAUL KANGAS: The stock market opened in broad retreat today amid a flurry of lower August sales reports from retailers like The Gap (GPS) and several others all of which underscored how weak the economy was getting. By 10:00 AM the Dow was down 97 points and the NASDAQ Index posted a 24-point loss. Shortly thereafter came that announcement from the Justice Department saying it would not seek a breakup of Microsoft and, as the stock rallied almost $2.00 it helped to cut the Dow's loss to only 45 points and the NASDAQ Index's loss to only six points by 10:15 am. The positive impact was fleeting however, as wary investors sold aggressively into the strength, sending the market into a tailspin. Halfway through the noon hour, the Industrial average tumbled to a 175-point, or 1.75 percent, deficit, while NASDAQ was Down 44 points, or 2.5 percent. Afternoon trading brought several rally attempts, none of which succeeded because a lot of traders stayed on the sidelines to await Intel's post-market third- quarter update, which we'll have details on in a moment. The Dow Industrial Average finally ended with a loss of 192.43 points or 1.9 percent putting it at 9840.84. The NASDAQ Composite Index also weakened from its midday level to close with a loss of 53.37 or 3 percent. Now standing at 1705.64 getting near its April 4th low of the year. Volume today down 23 million shares from yesterday, but no contest between down and up volume, five times as much as the down variety as the up.

The Dow Transports Index down 30 1/3 points.

Utility Index down about 3/4 of a point.

And the Closing Tick slightly bullish at +236.

Standard & Poor's 500 down 25 1/3 points.

The S&P 100 off 13 1/3..

MidCap 400 fell 7.86.

CRB Bridge Futures Price Index down .81.

A loss of nearly 11 1/4 points on the New York Stock

Exchange Composite Index

Value Line off exactly 7 1/4 points.

Russell2000 Small Cap off 9.12.

And the Wilshire 5000 off 220.44.

The bond market got a lift earlier today from the Purchasing Manager report of a new low for its non-manufacturing activiy index for August meaning the sector is starting to feel the impact of a slowing economy. The other positive for bonds, of course, was plenty of safe haven buying by the big sell off in stocks.

Tax free and corporate rose 5/8 to 3/4 of a point on average as die most of the Treasury market.

The 5-year notes up 13/32.

The 10-year notes up 24/32.

And then the 30-year bond up nearly one full point.

Followed by the Lehman Brothers Long-Term Treasury Bond Index up just about 16 points.

The Dow Industrials down 192 1/2 points, or nearly so, and the advance/decline ratio a real shambles, more than twice as many issues losing ground as gaining, and the worst new yearly high/low ratio we've seen in a long time, 70 versus 166.

Compaq Computer (CPQ) topped the active list on 32.1 million shares, continuing to ease, down $0.06 today.

And then The Gap (GPS) tumbled $4. That's a 21 percent drop in the stock. As you heard, August same store sales down 17 percent and also the CIBC World Markets Brokerage downgraded Gap from a "strong buy" all the way down to just a "hold."

Motorola (MOT) down $2.46. That's a 15 percent drop. The company sees third quarter sales flat with the second quarter. Earlier, it was projecting a five percent rise in sales and also predicting a third quarter loss of $0.05 to $0.08 a share.

Lucent Technologies (LU) down $0.25.

Nokia (NOK) hitting a new 52 week low, down $0.90.

General Electric (GE) lost $1.20.

Hewlett-Packard (HP) off another $0.51.

NorTel Networks (NT) lost $0.31.

AOL Time Warner (AOL) dropping $1.66.

And tenth in volume, Qwest Communications (Q), down $0.99.

Abercrombie & Fitch (ANF) tumbled $4.94. August same store sales, as you saw, down 10 percent.

Best Buy (BBY), one of the few retailers on the plus side both on the stock and its sales. Best Buy reported second quarter same store sales up 2.8 percent. The company sees at least $0.38 in second quarter earnings. That's $0.08 more than the Street's been estimating.

Delta Air Lines (DAL) down $1.06. The company August domestic traffic was down 3.9 percent.

IBM (IBM) the biggest point loser in the Dow, off $2.69.

Medtronic (MDT) fell $2.09 on news the company is planning an offering of $1.5 billion in debenture bonds which will be convertible into the common stock. There's dilution potential there.

And Waters Company (WAT) up $1.01. Dane Rauscher Brokerage today upgraded it from "neutral" to "buy." Yesterday, J.P. Morgan issued a "buy."

LTC Properties (LTC), one of the few good percentage gainers, rising only $0.70, but a 15 percent gain. It's a health care real estate investment trust and it's going to make a $5.75 per share tender offer for up to three million of its own shares.

Hayes Lemmerz International (HAZ), the auto parts supplier, tumbling after it said it will restate 2000 results lower to correct accounting errors. It also postponed the release of second quarter results as it talks to its lenders regarding the fact that it is in non-compliance on some of its loan covenants.

General Cable (BGC) off $3.86. It's going to sell most all of its building wire assets to South Wire Company and take a $67 million charge in the process. The company sees 2001 earnings at $1.05 to $1.10. That's lower than what it earned in the year 2000, $1.39.

Pier 1 Imports (PIR) down $1.65. The company sees a drop in its second half sales and earnings. Raymond James Brokerage cut earnings estimates.

American Tower Corp.