10/19/01: The Prices & Penalties That Come With Cipro

SUSIE GHARIB: Tentative trading on Wall Street today-stocks rose modestly after investors shook off worries about more outbreaks of anthrax, and turned their attention to some better than expected earnings reports. The Dow rose 41 points and the NASDAQ added 18. Those anthrax concerns have spurred the Canadian government to override the patent for Cipro, the drug that's used to treat anthrax. As Darren Gersh reports, US officials are resisting calls to make a similar move.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Health and Human Services Secretary Tommy Thompson says the United States does not need to follow Canada's lead and override the patent on Cipro, since the strain of anthrax found in this country is sensitive to other antibiotics, including penicillin. Violating drug-maker Bayer's patent on Cipro would also create a huge legal liability for the government.

TOMMY THOMPSON, SECRETARY, HEALTH AND HUMAN SERVICES: If we would go against the patent, we would still have to pay damages and therefore, it may be more costly than going in and purchasing generics when you have other generic drugs that we can purchase such as dixycyclin , which are as effective as ciprofloxacin is in treating anthrax.

GERSH: The government is now negotiating with Bayer to increase stockpiles of Cipro and Thompson says the price will be in line with the cost for generics. But consumer groups say the government could get more supplies of Cipro faster and cheaper if generic drug makers were allowed to ramp up production.

RON POLLACK, EXECUTIVE DIRECTOR, FAMILIES USA: In terms of the national interest, I think it's a no-brainer. It is in the interest of the American public that we get this produced, and produced quickly, and it would make sense that we allow the generic companies to do so.

GERSH: But Bayer says it has more than tripled production of Cipro. The Pharmaceutical Research and Manufacturers of America which represents drug makers in Washington, issued a statement saying, "while we understand the concerns, the questionable Canadian move to compulsory licensing is not a long-term sustainable solution to terrorism." But analysts say the anthrax attacks have fueled concerns in Congress that drug makers are using patent rules to fend off competition from generics. Yesterday the Senate Judiciary Committee passed legislation requiring drug makers to disclose details of any payments they make to competitors who agree to keep generic substitutes off the market.

JOAN WOODWARD, WASHINGTON ANALYST, GOLDMAN SACHS: I think the disclosure is aimed at stopping the settlements to stay off the market by the generic industry.

GERSH: Analysts say Congress is likely to make changes in patent law favoring generic drug makers when it takes up legislation next year to fund drug approvals at the Food and Drug Administration. Darren Gersh, "NIGHTLY BUSINESS REPORT," Washington .

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. 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.

10/19/01: The Terrorist Attacks Doing Damage To The Dining Industry

SUSIE GHARIB: The tables have turned for the restaurant industry, and not for the good. Planet Hollywood (PHWD) filed today for Chapter 11 bankruptcy and blamed the move on those terrorist attacks. Since September 11th, once busy restaurant chains have seen their stock prices fall along with their reservations. Diane Eastabrook reports.

DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: At Ruth Chris steak house, diners are slowly coming back to savor filet mignon and other cuts of beef. Traffic at the restaurant chain fell nearly 20 percent in the first weeks following the September 11th attacks. They were yet another blow for Ruth Chris, Mortons, and Smith and Wollensky, upscale restaurants already suffering from a stagnant economy and a drop in tourist traffic.

DENNIS LOMBARDI, RESTAURANT CONSULTANT, TECHNOMIC: Fundamentally what we've seen since September 11 is a direct correlation between how expensive the restaurant is and how much business has fallen off. You can almost draw a straight line. As check average goes up, business declines as percentages.

EASTABROOK: Lombardi says mid-tier restaurant chains, which saw business explode in the late 1990s, are also having a hard time attracting diners and that trend should continue into next year. Since the terrorist attacks, some industry watchers have revised 2002 growth projections for full service restaurants from positive to negative. Growth for fast food chains has also been revised downward, but those restaurants should still experience some growth.

PATRICK SCHUMANN, RESTAURANT ANALYST, EDWARD JONES: We believe with consumers are seeing a slowdown in their economic conditions they likely will trade down and the fast food sector should probably weather this storm much better than the higher ticket restaurant chains.

UNIDENTIFIED CLERK: This is your change, thank you.

EASTABROOK: But analysts say the real bright spot in the restaurant industry is a somewhat new segment called fast casual. Chains in this segment include Panera Bread (PNRA), Cozi , Saperfina and Chipotle, a unit of McDonald's.

LOMBARDI: It provides the customer with a different type of food experience than they've historically been able to get at traditional fast food restaurants at price points that are not as high as casual dining.

EASTABROOK: But analysts say in this environment even restaurants with low price points are going to have to work hard to get diners in their doors and that's likely to mean new menu items and more promotional deals that could cut into profit margins. Diane Eastabrook, NIGHTLY BUSINESS REPORT, Chicago.

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. 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.

10/19/01: September 11th Is Putting The Squeeze On The Business Of Giving

PAUL KANGAS: Americans are reaching deep into their pockets to help the victims of the September 11 attacks, so far donating over $850 million for disaster relief efforts. But while some disaster related charities are seeing a surge in donations, Pat Anson reports others are struggling.

PAT ANSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: At the Los Angeles Society for the Protection of Cruelty To Animals, September 11th truly is a day of infamy. That's the day donations suddenly came to a stop.

MADELINE BERNSTEIN, PRESIDENT, LOS ANGELES SPCA: A complete halt. We got no mail, no checks, no phone calls.

ANSON: The falloff in donations was so severe the SPCA was forced to lay off eight employees and close two adoption centers. Aggravating the situation even more was the performance of the stock market.

BERNSTEIN: Portfolios have just plummeted, not just our own portfolio that would cover our operations, but foundation portfolios that would help us. And so those that would want to give to us have less to give. Those that might have given to us have given to the more primary need, which is the relief effort.

ANSON: For many charities it's a case of feast or famine. While the Red Cross and Salvation Army have been flooded by donations since September 11th, nonprofit organizations not involved in disaster relief have been forced to cancel or postpone fundraising drives. Heal The Bay is a conservation group that was on the verge of starting a direct mail campaign aimed at renewing old memberships. The campaign that been put on old and the organization is still debating when to have it.

MARK GOLD, EXECUTIVE DIRECTOR, HEAL THE BAY: Well, we're really struggling with that right now in that, you know, when is it OK to sort of start doing that part of the job?

ANSON: It's a difficult question faced by many nonprofits who raise about half of their funding during the fourth quarter.

GOLD: We're OK for the time being, but the end of the year, year end giving is absolutely critical not only to our organization, but most nonprofits. And so really that's what we're all nervous about right now.

ANSON: The news isn't all bad for organizations like the SPCA. Ironically with Americans traveling less and staying closer to home, more people are adopting pets for companionship and security. Pat Anson, NIGHTLY BUSINESS REPORT, Los Angeles.

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. 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.

10/19/01: Market Monitor-Jim Dines, Editor of "The Dines Letter"

PAUL KANGAS: My guest market monitor this week is Jim Dines, Editor of "The Dines Letter," based in Belvedere, California. And welcome back to NIGHTLY BUSINESS REPORT, Jim. Good to see you.

JAMES DINES, EDITOR, "THE DINES LETTER": Hey, thanks, Paul. How are you doing?

KANGAS: Just fine, thank you. You know, on your last visit with us in on your last visit with us in September of year 2000, you told our viewers that the high tech stocks were in the process of topping out, especially the semiconductors, and that we should be expecting before long the father of all bear markets. Is that what we're in the midst of now?

DINES: I believe so. After 18 years of calling it the mother of all bull markets, about a month after I was on your show I began calling it the father. We flashed a major "sell" signal and I led my subscribers entirely out of the market except for some Treasury bills and some gold stocks.

KANGAS: What led to this turnabout?

DINES: All market movements are transitions between mass greed and mass fear, as defined in my book, "Mass Psychology." Now last, in the spring of 2000 we saw mass greed on an unprecedented scale and the public got suckered into buying all these technology stocks for the long-term. We are now transfiguring toward mass fear. We're not there yet.

KANGAS: You know, at the same time you said get out of the high techs, which was a great call, you said let's get into the energy stocks. Your recommendations in September, a year ago were, Exxon (XOM), Enron, Phillips (P) and they're all sharply lower. But I think you got stopped out of all of them, did you not?

DINES: Yes, we sold them all. See, here's the point that people don't realize. The economy is in very deep trouble. I think this fourth quarter will be much worse than anybody realizes, or almost anybody realizes, because of the tremendous contraction of the money supply due to the reverse wealth effect, the crash going on in the commodity prices that is not in the headlines yet.

KANGAS: Is that why Stillwater (SWC) is down? That was one of your recommendations there with Palladium (PAL).

DINES: Yes, I think so. I think, you know, everything, all the commodity-I mean our real estate "sell" signal in the spring of 2000, I'm very bearish on real estate, I think we're in for real trouble here.

KANGAS: As much as you didn't like the high techs, you kept one dot-comer. You said you wouldn't sell that come hell or high water. That was CMGI (CMGI). It was $38 then, down from $150, and now it's $1.50. Do you still have it?

DINES: Well, we sold 100 percent of our telecoms, a 100 percent of our high techs.

KANGAS: But not that one?

DINES: And 98 percent of our Internet stocks and we kept just a few of them and that proves that god gave dogs fleas to remind them they're dogs.

KANGAS: All right. Well, that's still not a bad record. You made some good calls and I'll give you credit for that. How badly will this war impact the economy?

DINES: I think it's going to be very intense. The, in my "Mass Psychology" book I talked about the coming great religious wars and I think they're just starting and they're going to spread enormously. The whole world, the religions are at war not only between other religions, but within themselves, and I think that between the secular and the orthodox. And that's yet ahead of us and it's going to be a big extra expense on the economy.

KANGAS: So what's your investment strategy looking ahead rather pessimistically like this?

DINES: I'm not pessimistic. I've just, I've got to call the shots the way I see them and don't blame the messenger for the news.

KANGAS: I understand. But what do you invest in?

DINES: Well, I've led my people into the Treasury bills and some gold stocks and we're waiting for what could be the greatest buying opportunity of a lifetime. Short term, we flashed the "buy" signal at the end of September within a few days of the lows, which, perhaps, by luck, and we're looking for a good year end rally, maybe a dip in late October, a strong November and a flat December and that will bring us up to my big annual forecast this year.

KANGAS: We have less than a minute left. Which specific gold stocks do you like?

DINES: On the New York Stock-I'd go for the big ones. The New York Stock Exchange, I'd go for Anglo Gold, the world's biggest gold producer. I'd go at Niko Eagle on this pullback on the New York Stock Exchange and the third blue chip in the golds would be Franco Nevada (FN.TO).

KANGAS: A year ago you were correctly bullish by saying bonds were a good investment. How about now?

DINES: Still bullish on bonds, but, you know, of course they're getting close to their highs. But I'm still bullish. No sales signal as of today.

KANGAS: All right, we have time for just a quick final comment if you have anything.

DINES: I think it's really important to be very careful about getting sucked into this fear of anthrax.

KANGAS: OK.

DINES: This is just a bunch of lunatics with some envelopes. The real danger will be the weaponization of hemorrhagic diseases and-

KANGAS: All right. OK.

DINES: That's what I think.

KANGAS: OK, Jim, I understand. There's a lot more to talk about there, but we thank you for that comment.

DINES: My pleasure.

KANGAS: Thanks for being with us again.

DINES: Sure.

KANGAS: My guest, Jim Dines, Editor of "The Dines Letter."

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. 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.

10/19/01: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: Although stocks on Wall Street continued to retreat early today because of anthrax fears, aside from that, investors were concerned about how so many companies such as Microsoft (MSFT), despite reporting better than expected earnings, are very gloomy about the near-term outlook. Against this setting, the Dow Industrial Average fell 69 points by 10:30 a.m., matching its closing loss yesterday while the NASDAQ Index posted a 15 1/2 point deficit. Amid a steady flow of more mediocre corporate earnings reports, the market tried to make a mid-morning comeback, but it failed, especially after the news that a "New York Post" newspaper employee tested positive for anthrax. At noontime, then, the Dow sank to an 82 point loss, NASDAQ down 24 points. Stocks took a decided turn for the better in afternoon trading as bargain hunting, along with buying linked to expiring monthly options, lifted the Dow Industrial Average to a closing gain of 4089 points, at 9204.11. This week the Dow fell twice, rose three times, but it still lost 140 points or 1 1/2 percent overall. Today the NASDAQ Index was up 18.59, ending at 1671.31. The Composite fell twice and rose three times like the Dow this week but it had a net overall loss of 32 points or 1.9 percent. The volume on the big board just a touch ahead of yesterday's pace, 1.27 billion shares and not quite a up volume exceeded down volume by not quite a 6 to 5 margin.

The Dow Transport Index losing nearly 30 1/2 points, airlines weak again.

Utility Index however up just over 3 points.

The Closing Tick modestly bullish at +349.

Standard & Poor's 500 up 4.87.

Just over a 2 3/4 point rise in the 100.

The MidCap 400 up 5.61.

The Bridge Futures Price Index edged up .82.

A gain of almost 2 1/10 points in the New York Composite.

Value Line rose 1.80 exactly.

Russell2000 Small Cap Index up 4 2/3 points.

And the broadly based Wilshire 5000 gaining exactly 53 1/4 points or 1/2 of 1 percent.

Bond prices moved moderately lower today for several reasons, including the report of a bigger than expected 4/10 percent rise in September consumer prices. Another negative was a heavy supply of new debt forthcoming next week like some $7.5 billion in offerings from Ford Motor (F). A $0.52 per barrell jump in New York November oil futures also prompted some selling. A narrower

US August trade deficit appeared to have little impact.

Tax free and corporate issues lost 1/8s and 1/4s and the Treasury market fell across the board.

Minor losses, 5-year notes down 4/32.

10-year notes losing 11/32 however.

And the 30-year bond down 18/32.

The Lehman Brothers Long-Term Treasury Bond Index fell 5.38.

The market did a good job of defying the normal pre-weekend selling pressures and rallied late in the day, nearly a 41 point closing gain in the Dow. The broader market higher by a 16 to 13 ratio and nevertheless 7 more new yearly lows than new highs.

Providian Financial (PVN), the major casualty of the day, was also the volume leader on 55 1/2 million shares. The stock's traded as low as $4.75 and it closed down $7.25. That's a 58 ½ percent loss just today. The company reported third quarter earnings sharply lower, $0.20 versus $0.68 last year, and it sees fourth quarter coming in at only $0.10 to $0.15. Standard & Poor's repeated an "avoid" recommendation. Lehman Brothers, J.P. Morgan and a host of others downgraded Providian.

Nokia (NOK) moving up $1.32. The company came in with third quarter earnings of 16 euros per share, down from 19 a year ago.

Sales fell only 6.9 percent, though, and the earnings were at the high end of estimates.

AOL Time Warner (AOL) moved up $1.27.

EMC (EMC) gained $0.27.

No change at all for General Electric (GE) today, fifth in volume.

Citigroup down $0.65.

Enron ENE) down $2.95. That stock was in the high 80s about a year ago. Today it's reacting apparently to a negative article in the "Wall Street Journal" about questionable dealings between the company and its chief financial officer.

Sprint PCS Group (PCS) down $1.43.

AT&T (T), whose earnings are due out next Tuesday, down $0.15.

And then IBM (IBM), which had better than expected earnings last Tuesday, up $1.40 today. Computer Associates (CA) up $2.02. This company is defying the trend and had sharply higher second quarter earnings, $0.61 versus only $0.39 last year. Revenues were up 3.2 percent.

Coca-Cola (KO) rose $2.47.

And Hershey Foods (HSY) up $2.49. Both of these stocks were put on the "recommended" list of UBS Warburg, so they did well.

Gillette Company (G) up $1.58. The company reported third quarter earnings lower, $0.28 versus last year's $0.33. But Standard & Poor's repeated a "hold" recommendation. Those earnings were in line with estimates, incidentally.

Guidant GDT) up $3.22. Its third quarter earnings were $0.40 a share, same as last year. Sales were up 10 percent and the company sees fourth quarter earnings coming in higher than the third quarter at around $0.46 to $0.48 a share. A.G. Edwards upgraded the stock from "hold" to "buy."

Quest Diagnostics (DGX) gaining $5.25. Third quarter earnings sharply higher, $0.51 versus $0.30 a year ago. Revenues up 6.2 percent.

GP Strategies (EPX) had a good day. Look at that, 44 1/2 percent. The company's in the business of helping government and corporations tackle challenges caused by terrorism.

Scientific Atlanta (SFA) up $3.80. Fourth quarter earnings down, $0.23 versus $0.38, but a $0.05 better than expectations. Merrill Lynch upgraded it from "neutral" to "near term buy."

Steris Corp. (STE) up another $1.82 after a similar gain yesterday on a second quarter earnings report that showed a 37 percent increase. The company makes infection prevention products.

Trex Company (TWP) down $4.10. The company says preliminary indications will show third quarter earnings at $0.20, way down from $0.37 a year ago.

And then Tetra Technology (TTI) down $2.63 per share. The company, third quarter earnings were lower than expected at $0.46, a $0.01 below the Street estimate and the company is predicting fourth quarter weakness.

Tasty Baking (TBC) down $2.56. The company sees third quarter earnings of only $0.11 to $0.13 versus the $0.21 Street estimate.

NASDAQ trading, an 18 1/2 point gain in the Index today. Volume, however, dropped from yesterday. About 19 stocks higher for every 15 lower.

Microsoft (MSFT) topped the active list, up $1.15. It had slightly better than expected earnings, you'll recall.

eBay (EBAY) tumbling $7.11. After the close yesterday, third quarter earnings $0.12 versus $0.07, but the company gained a very mixed review of its outlook.

Cisco Systems (CSCO