10/24/01: Sears CEO Alan Lacy Outlines The Store's New Sales Strategies

SUSIE GHARIB: A sweeping reorganization at one of America's oldest retailers: Sears announced today that it will move away from the traditional department store model. The 115-year-old retailer also said it's cutting almost 5,000 jobs. Diane Eastabook reports on what the new Sears will look like.

DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Sears says it no longer wants to be a department store, but it doesn't want to be a discount store either. Chairman and CEO Alan Lacy says Sears is carving out a new niche.

ALAN LACY, CHAIRMAN & CEO, SEARS, ROEBUCK & CO.: No one has what Sears has to help you live your life. We've got an incredibly unique assortment and incredibly unique support from services and a credit standpoint versus any other retailer. It's a different business than really any other retail company.

EASTABROOK: The restructuring plan Lacy rolled out is supposed to improve Sears' merchandise mix and lower its cost structure. The company will cut the number of brands in its soft line business by half, and improve its apparel business. Poor-selling product lines will be dumped, but popular lines like jewelry will be expanded. Sears will continue to have salespeople in some areas of its stores, but will use a self- serve format in others. It will also add centralized checkout areas. The changes will eliminate nearly 5,000 salaried positions. Most of those are in stores and regional offices.

LACY: We're really going to ask our managers to cover more categories than they have-fewer managers to cover more categories, and they'll be able to do that because we're going to simplify our business processes.

EASTABROOK: Sears has been struggling to refresh its image and cut costs for the last few years. Today it reported third quarter earnings down slightly from the same period a year ago, and a penny ahead of Wall Street expectations. The company says its restructuring should help it improve profits by $1 billion in two years. Analysts agree the new plan could improve margins, but aren't sure it will increase sales.

DANIEL BARRY, RETAIL ANALYST, MERRILL LYNCH: Just simplifying the situation will certainly cut costs, so I like the idea that cost cutting will be significant. But does all that drive the top line, is really the question. And if it does drive it, it won't happen near term. It will be later in that three-year period.

EASTABROOK: Lacy says by late next year, most of the merchandising initiatives should be in place and renovations should be finished on about 50 Sears stores. Renovations on the remaining stores should be finished in three to four years. 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.

10/24/01: The Economic Stimulus Plan Is Stimulating Big Debate On The Hill

SUSIE GHARIB: An economic stimulus package is one step closer to reality. Late this afternoon, the House of Representatives passed a Republican plan to cut taxes by $159 billion over 10 years. But Democrats say the plan is too big. Darren Gersh reports.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: You could call it a return to normalcy. The House of Representatives took up a Republican plan to stimulate the economy, and the debate turned into a good old-fashioned political dogfight. The plan provides $100 billion in tax relief next year.

REP. RICHARD ARMEY, MAJORITY LEADER: It says, "Mr. And Mrs. America, it's your money. You worked hard for it, you earned it, you know what you can accomplish with it if it's left in your hands."

GERSH: Again and again, Democrats quoted Treasury Secretary Paul O'Neill, who called the House Republican plan "show business." Democrats called that an accurate political description of a plan that provides $70 billion in tax cuts for corporations.

REP. CHARLES RANGEL, (D) NEW YORK: You're looting the Social Security trust fund in order to pay these faceless corporations and the American people understand this.

GERSH: The House Republican stimulus plan cuts the long-term capital gains rate, eliminates the corporate alternative minimum tax, increases expensing for equipment purchases, and sends tax rebate checks to low-income workers who did not get them this fall. Speaking at a small business near Baltimore, the president urged Congress to cut taxes quickly to restore consumer confidence in time for the holiday shopping season.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: One way to feel confident is for people to know that there is strong homeland security initiative and strategy, that our country is doing everything we can to succeed, and there is nothing like boosting confidence than a little extra money in the pocket too.

GERSH: But Senate Democrats are taking a different approach. Their plan includes $33 billion for expanded unemployment benefits and health insurance benefits, and $34 billion in business tax cuts and rebates for low income workers. Senate Majority Leader Tom Daschle said the House Republican plan failed the test of a successful stimulus plan.

SEN. TOM DASCHLE, MAJORITY LEADER: It's not that stimulative, it's not that immediate, and it certainly isn't cost contained.

GERSH: This may be a big political battle, but economists expect the stimulus package that finally emerges will provide only a small boost to the economy next year. 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.

10/24/01: The Airline Industry Is Flying On Financial Fumes

SUSIE GHARIB: Another industry in deeper trouble since September 11th: airlines. And there was more evidence of that today. American Airlines (AMR) reported a huge loss of $414 million. That's $2.68 a share, way above expectations. But American is in the same situation as a lot of other carriers. And as Stephanie Woods explains, experts say some of those carriers will eventually fold their wings.

STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: More than half a billion dollars from the government's bailout didn't keep American Airlines from reporting its worst quarter in history. The next quarter won't be much better. American expects to lose $10 million to $15 million a day. Analysts say it's a similar outlook for most of the industry.

RAYMOND NEIDL, AIRLINE ANALYST, ABN-AMRO: The industry right now is in a survival mode. They're not even trying to make profits. What the industry is trying to do now is stabilize itself, bring customers back and once they do that they can plan for the future.

WOODS: Even with discounted fares, air passengers have been slow to return to flying. Passenger traffic dropped by more than a third in September. Revenues were nearly cut in half. To stay afloat, airlines have been cutting flight schedules, laying off employees and mothballing planes. Analysts say America West (AWA) U.S. Airways (U) are at the greatest risk of failing, with virtually no hope of being bought out by another airline.

DARRYL JENKINS, AIRLINE ANALYST, THE GEORGE WASHINGTON UNIVERSITY: If America West were to shut down, other airlines would fill up those routes and they would do it reasonably quickly, you know, as that vacuum occurred. So there's really no need-if America West fails, I doubt there is anybody who would want to go in and buy those assets, because they have them.

WOODS: Southwest (LUV) and Alaska Air (ALK) are the only carriers not on S&P's credit watch. The rest of the industry may be kept flying with the help of government guaranteed loans. But deciding who gets those loans is dicey. Both Treasury Secretary Paul O'Neill and Federal Reserve Board Chairman Alan Greenspan say they don't want to prop up airlines that would have failed even before the September 11 attacks. Still, denying loans may be politically difficult.

PHILIP BAGGALEY, TRANSPORTATION ANALYST, STANDARD & POOR'S: If they do come back with a rejection, though, I think that some of the politicians from the home state of that weak airline might put some strong pressure on them. So it will be interesting. It could well become a political issue as much as an economic one.

WOODS: Until travelers start flying more, airlines will have little choice but to continue to cut costs and borrow money. But as American Airlines' CFO said today, it's like throwing your furniture into the fire to heat your house-it's not a long-term strategy. Stephanie Woods, 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.

10/24/01: Microsoft Cracks The Windows XP

SUSIE GHARIB: Microsoft (MSFT) is rolling out its new PC operating system this week. It's called Windows XP. And the software giant is spending more than a quarter of a billion dollars to market it. The official launch is not scheduled until tomorrow. But as Scott Gurvey reports, the marketing effort is already under way here in New York.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: This was a media event of the kind only Microsoft and a few Hollywood studios seem to do these days, company founder bill Gates opening the Windows XP pavilion and kicking off what the company plans as a two day extravaganza to launch its new operating system. There are demonstrations by hardware and software partners and a new TV commercial featuring singer/superstar Madonna. Windows XP introduces a new and easier to use desktop and many new features. But its biggest claim to fame is hidden. By using the same core programming as the company's business system, Windows XP brings what most reviewers have called greatly increased reliability and dependability to all users. Microsoft's Jim Allchin has been pushing for this convergence of consumer business systems for nearly a decade.

JIM ALLCHIN, GROUP VICE PRESIDENT, MICROSOFT: I'm a hardcore believer. I've never had a product where I get fan mail on it. I get fan mail on an operating system. So this product is really loved by people.

GURVEY: But XP is not without controversy. There are privacy concerns over a new authorization system Microsoft is using to make sure each single computer copy is used on only one machine. And there are complaints that XP steers users to Microsoft products and the products of its partners. But overall, the reviews for the product have been good and industry analysts see XP adding to profits once the economy begins to recover.

MELISSA EISENSTAT, SOFTWARE ANALYST, CIBC WORLD MARKETS: I think by the time that happens, actually some of the strategies that Microsoft has put into place could be bearing fruit, like dot-net, like the enterprise could be up and running, XP could be finally taking off. So I don't want-you never want to say "buy" and "hold" for anything, you trade around positions, but I would not be afraid to sort of wait and to hold this stock in this environment.

GURVEY: Windows XP may not show up on Microsoft's bottom line immediately, but analysts say it will over time and buyers of new personal computers for both home and business can expect to see it immediately. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.

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.

10/24/01: Money File-When Refinancing Really Makes Cents

SUSIE GHARIB: In the money file tonight, your money and your mortgage. Now may be the time to refinance and reap some of the benefits. Here's Chris Farrell, host of "Right On The Money" on Twin Cities public television.

CHRIS FARRELL, HOST, "RIGHT ON THE MONEY": With the economy in a recession, mortgage rates are coming down. Is now a good time to refinance your mortgage? For many homeowners, the answer is yes. Conventional wisdom was that mortgage yields had to fall by two full percentage points before refinancing made economic sense. No more. For one thing, homeowners refinance for reasons other than reducing their monthly outlay. You might want to swap an adjustable rate mortgage for a fixed rate mortgage and lock in a low rate for the life of the loan. Some people see a drop in rates as a smart time to refinance from a 30 year to a 15 year mortgage. True, your monthly payment will increase, but you'll build up the equity in your home twice as fast. In today's competitive mortgage market, it may pay to refinance even if you gain a mere half point on your mortgage rate, say from seven percent to 6.5 percent. Here are the two critical questions to consider. First, what is your time frame? The longer you're going to stay in your home, the more the numbers come out in your favor. Then there are the closing costs to consider, your out of pocket expenses. The lower your closing costs, the smaller the interest rate cut you'll need to justify a refinancing. Closing costs typically range from $1,000 to $5,000. But there are very low cost plans available in exchange for a slightly higher interest rate. Want to run the numbers? You can get mortgage rates and closing costs off the Internet or from a mortgage lender. Then plug your details into a mortgage calculators and see if you come out ahead. I'm Chris Farrell.

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.

10/24/01: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: The stock market opened on a mixed note today, with the blue chips faltering after both DuPont (DD) and Eastman Kodak (EK) released disappointing quarterly results and rather gloomy outlooks. At 10:00 a.m., The Dow Industrial Average posted a 34-point deficit, most of which was due to a $5 per share tumble in Kodak stock. The NASDAQ Index managed to gain about four points as tech stocks firmed up a bit. For the rest of the morning, stocks churned about in a relatively narrow price range, but steady improvement in the tech sector in the hope it had pretty well bottomed out, gradually helped the blue chips firm up as well. At 1:30 p.m., the Dow moved up to a 28-point gain, just as the NASDAQ Index did. For the rest of the session, the NASDAQ market held its gains for the most part, but sellers kept pounding away at the blue chips and by the final bell, the Dow Industrial Average was up only 5.54 points, putting it at 9345.62. The NASDAQ Index ended with a gain of 27.10 points at 1731.54.

Big board volume up just a touch from yesterday at 1.34 billion shares. About a 7 to 6 ratio of down volume over up volume.

The Dow Transports Index down nearly 41 points.

The Utility Index fell 7.11.

And the Closing Tick neutral at +33.

Standard & Poor's 500 up .42.

A loss of .36 in the 100.

MidCap 400 up .89, very narrow movement here.

The Bridge Futures Price Index was up about 2/3 of a point.

A loss of just over 1 1/2 in the New York Composite.

The Value Line edging up 1/3 of a point.

The Russell2000 a similar gain of .28.

And the broadly based Wilshire 5000 gaining 5.83.

After weakening slightly earlier this week on heavy new debt offerings, the bond market rallied today mostly in reaction to the Fed Reserve's latest beige book survey on the economy. It showed no area of the country has been spared from the economic jolt caused by the attack on America. Business activity has now slowed to a level which makes two more 1/4 point cuts in interest rates in the next two months very likely. That helped tax-free and corporate issues rise 1/4s and up to 3/8 of a point on average and the Treasury market was firm.

7/32 rise in the 5-year note.

The 10-year note up 13/32.

The 30-year bond rose 25/32.

And the Lehman Brothers Long-Term Treasury Bond Index up just about 9 points.

Some fairly good signs of life in the high tech sector today, as reflected by a good gain in the NASDAQ Index. But the Dow just kind of lumped around here. About a 5 1/2 point gain. It had been up well over 20, as you remember. But at the close it faded a bit. The broader market lower by a 17 to 13 margin. 42 new yearly highs; 64 new lows.

Enron (ENE) topped the active list on a hefty 61.8 million shares. The stock tumbling $3.38. Of course, the SEC is already investigating the company's limited partnerships and today's "Wall Street Journal" says the company may have to come up with several million dollars in the next 20 months to cover shortfalls in some of those investment vehicles. Prudential Securities issued a "sell" on Enron today.

AT&T (T) down $1.36. After the close yesterday, of course, sharply lower earnings out for the third quarter, $0.04 versus $0.35 a year ago.

Lucent Technologies (LCN) a $0.06 loss today.

AT&T Wireless (AWE), which yesterday had better than expected earnings, up $0.60.

HCA (HCA) down $2.36. Today the company had third quarter earnings higher, $0.40 versus $0.33 last year. But Standard & Poor's says there's growing concern about the company's profit margins.

Pharmacia (PHA) gained $1.22.

And then General Electric (GE), a $0.19 loss.

AOL Time Warner (AOL), a $0.79 drop.

EMC (EMC) edged up $0.33.

And finally, ExxonMobil (XOM) dropping $1.01 after reporting lower than expected earnings yesterday.

Avaya (AV ) was down $1.30. The maker of communications equipment had fourth quarter earnings sharply lower, only $0.04, down from $0.07 last year. And revenues tumbled 29 percent.

DuPont (DD) down $0.81. I mentioned it earlier. Third quarter earnings down 75 percent at only $0.12 a share versus $0.53 the year before. The company sees fourth quarter earnings no better than the third quarter.

Dynegy (DYN) tumbled $5.45. The A.G. Edwards Brokerage downgraded it from "buy" to just a "hold." Meanwhile, Standard & Poor's repeated a "buy." So I guess that's what makes a horse race.

Eastman Kodak (EK) down $3.46. The company's third quarter earnings $0.52, way down from $1.40 in the previous year. Sales fell eight percent and the company sees only $0.15 in fourth quarter earnings versus the Wall Street estimate of $0.46. The stock traded as low as $28.57 today.

KingPharmaceuticals (KG) down $3.80. This firm plans a 16 million share common stock offering. That represents about a seven percent dilution factor. Today, the stock dropped nine percent.

LSI Logic (LSI) moved up $1.07. A third quarter loss reported of $0.29, but not as bad as the $0.31 loss the Street was expecting. Revenues did tumble 45 percent.

Transcontinental Realty (TCI) one of the best percentage gainers, rising $4.04. American Realty Investors is offering $17.50 cash for the 35 1/2 percent of the stock not owned.

And Titan (TTN) up $4 a share on optimism the company will get a contract from the United States Postal Service for the use of its sanitizing system on the U.S. mail.

Sybase (SYBS) gained $1.99. Third quarter earnings, $0.20, $0.02 above the Street estimate. Standard & Poor's upgraded the stock from "sell" to "hold."

And Caremark (CMX) up $1.45. Third quarter earnings nicely higher, $0.19 versus $0.11 the previous year. Revenues up a whopping 27 percent. The company increased its 2001 earnings estimates.

Specialty Labs (SP) tumbling $6.89. Third quarter earnings lower, $0.13, down from $0.14 a year ago. But revenues were higher by 8.3 percent. The only other news I saw, the president recently filed to sell 5,000 shares.

Unit Auto Group (UAG) tumbling $2.08. Third quarter earnings lower, $0.38 versus $0.40 the year before. Revenues, however, were up 19 percent.

NASDAQ trading, a gain of 27 1/10 points or 1.6 percent. Volume up just a touch from yesterday. About 20 stocks up for every 16 lower.

Microsoft (MSFT) topped the active list, moving up $0.89.

A similar gain in Cisco Systems (CSCO).

QUALCOMM (QCOM) gained $3.89. The company is in an alliance with a leading Korean wireless telecom company.

Intel (INTC) up $0.48.

QLogic (QLGC) gained $5.67. After the close yesterday, it had earnings in l