10/25/01: Wall Street Gets Back In The Black

SUSIE GHARIB: A sharp U-turn on Wall Street today. The Dow turned a triple-digit loss into a triple-digit gain thanks to a late afternoon rally. The Dow rose 117 points; the NASDAQ jumped 44. The early sell-off was caused by new reports showing just how badly the economy was hurt by the September 11 attacks. Orders for durable goods, items made to last three years, fell sharply, down 8 1/2 percent. It was dramatically lower than the 1 ½ percent drop expected, led by a decline in car buying and orders for new planes. Existing home sales also slumped last month, off 11.7 percent to a virtual standstill in the days after the attacks. But home sales picked up as the month ended. Economists say that despite uncertainty, Americans will begin to spend again.

GARY THAYER, CHIEF ECONOMIST, A.G. EDWARDS: Most people recognize that their own individual risk is not that great, and they're trying to get back to their regular activities. The economy is not going to be back to normal for some time, but I think that the initial shock that we saw last month may be the most dramatic, hopefully, that we'll have to deal with.

GHARIB: Thayer sees consumer spending turning around early next year, but he says that the corporate earnings picture could remain weak well into 2002. Paul?

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.

10/25/01: Can Windows XP Open New Profits For Microsoft?

SUSIE GHARIB: Microsoft's new XP operating system officially went on sale today after nearly a year of hype. In typical Microsoft style, it was a lavish launch in New York. But as Scott Gurvey reports, for the beleaguered computer industry, XP's business impact is iffy.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Windows XP came to the hot dog stands of Times Square and just about everywhere else today. New York's Mayor Rudy GiulianI took to the stage to thank the computer industry for helping the city cope with the terrorist attack. He received a standing ovation. Then TV's ubiquitous Regis Philbin joined Microsoft's Bill Gates on stage at the official launch event. But the big business question remains unanswered: will XP sell and will it sell new computers?

CRAIG BARRETT, PRES. & CEO, INTEL: It's going to introduce a lot of excitement in the marketplace, great technology, combine that with our latest processor family, the Pentium 4 processor, brings the end user a lot of great capability they didn't have before. But the unprecedented environmental conditions, slowdowns, the dot-com burst, terrorist attack, nobody really knows what business is going to look like going forward.

GURVEY: Even the leaders of some of the industry's biggest computer makers could not agree on the outlook.

TED WAITT, CHMN. & CEO, GATEWAY: We're not forecasting a significant uplift based on Windows XP. It clearly has the potential to. I mean, clearly we're in uncertain times right now in the economy. But I mean, it's a question of when.

MICHAEL DELL, CHMN. & CEO, DELL: We expect to increase our sales in the fourth quarter, and it's driven again, once again, by the consumer first. Its a very active quarter for the consumer, and we'll see a rapid conversion - we've already seen it.

GURVEY: But there was a general consensus when the industry leaders were asked about the longer range future. They are convinced that new technology, of which Windows XP is a part, will drive consumer buying when the economy recovers.

MICHAEL CAPELLAS, CHMN. & CEO, COMPAQ: What we're creating here to drive sales is actually a better experience in a market solution. You can do the same thing with home networking. I set up XP in my house in just virtually no time.

CARLY FIORINA, CHMN. & CEO, HEWLETT-PACKARD: It is not simply about more PC units, although it is about that. It's also about driving a whole set of exciting applications, most of which we've talked about today, and those drive a lot of neat things to get sold, too.

GURVEY: There was a time when industry leaders hoped Windows XP would spur sales just in time for the Christmas holiday buying season. Those times have passed. And now, if anything, the leaders can just be described as hopeful. 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.

10/25/01: Boeing And Lockheed Martin Are Engaged In A $200B Fighter Jet Fight

SUSIE GHARIB: Boeing (BA) and Lockheed Martin (LMT) are in a high-stakes battle for the contract to build the next generation of fighter jets. Tomorrow the Pentagon will name the winner. But as Stephanie Woods reports, the $200 billion project isn't necessarily a sure thing.

STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: At stake is the right to build as many as 3,000 fighter planes to replace the aging fleets of the US Navy, Air Force, and Marines, as well as the British Royal Navy and Air Force. Lockheed Martin is the odds-on favorite to win the $200 billion 25-year contract. But the deal has become more important to Boeing since September 11.

CHARLES GABRIEL, ANALYST, PRUDENTIAL SECURITIES: For Boeing, the stakes have risen substantially because their commercial business is under duress, and almost to the point where people have begun discounting heavily the value of their commercial business going forward.

WOODS: But analysts say a loss won't crush Boeing. The company still has two fighters and the C-17 cargo jet in its arsenal. While this joint strike fighter contract promises to reap huge spoils for the victor, it will take decades to materialize.

BRETT LAMBERT, DEFENSE ANALYST, DFI INTERNATIONAL: The decision really doesn't effect either company immediately. There would be about $20 billion spent over the next eight years, which would significantly help those companies, but the real bulk of the money wouldn't come until after 2010.

WOODS: Already, critics say the jet will cost more, take longer to produce, and have performance problems if it goes forward on schedule. And there are questions whether the joint strike fighter is the best choice for today's military missions.

STEVEN KOSIAK, ANALYST, CENTER FOR STRATEGIC & BUDGETARY ASSESSMENTS: One of the problems with relatively short range aircraft like these fighters is that they have to, we have to get into the region. We have to get into operating bases in the region to use them. And as the current campaign in Afghanistan shows, it's not always easy to get access to those bases.

WOODS: Still, analysts expect the project to march forward, but warn it's subject to change with the demands of the military and politics of the time. 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.

10/25/01: One On One With AutoNation, CEO, Michael Jackson

SUSIE GHARIB: The stock of AutoNation (AN) slipped today after reporting an eight percent drop in third quarter earnings. Sales at the nation's largest auto dealer have been sputtering just like the rest of the industry. But as Jeff Yastine reports, AutoNation's CEO sees some positives down the road.

JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: It was a challenging third quarter for Florida based AutoNation, owner of nearly 400 dealerships around the country. The company said revenues fell, but it still earned $0.24 a share for the third quarter, meeting analysts' estimates and matching last year's results. Investors are beginning to wake up to the company, as well. Its stock, below $6 in January, hit a recent high of about $12 before backtracking somewhat. Investors rewarded AutoNation for closing its money losing used car superstore division and spinning off its rental car unit in the past two years. All that's left are the dealerships, and CEO Michael Jackson says Detroit's zero percent financing promotions have brought buyers back to the showrooms.

MICHAEL JACKSON, CEO, AUTONATION: It really wasn't a factor in the third quarter because it only came at the very end. But I will tell you, you know, business was at a near standstill by the middle of September and I give great credit to General Motors (GM) and Ford (F) and Chrysler for the zero percent. It really got America moving again. And business is red hot here in October. So it gives us confidence that again in the fourth quarter we'll meet analysts' expectations and we'll have achieved that for the entire year. Basically the guidance we gave at the beginning of the year is exactly what we're going to come in with.

YASTINE: Since you've joined the company, the company has gone through a lot of changes. What do you tell investors who remember AutoNation when it still had a lot of other businesses versus what the business is now?

JACKSON: We've made the transition from a conglomerate to pure play. We've made the transition from a pure consolidation or roll up to an outstanding operating company with tremendous added value. So if you were here three or four years ago, it's a good time to look again. It's a different company. It's been transformed. Its ability to perform in a very difficult environment has been validated over the past 18 months in a difficult disrupted market with very strong positive cash flow in any kind of scenario. Take another look at Autonation. This is a company on the move.

YASTINE: Michael Jackson, CEO Of Autonation, thanks.

JACKSON: Jeff, thank you. I enjoyed the discussion.

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.

10/25/01: Commentary: Digging Up The Economic Cycle

SUSIE GHARIB: Tonight's commentator has some new thoughts on an old concept: the economic cycle. Here's Robert Thomson, U.S. Managing Editor of "The Financial Times."

ROBERT THOMSON, COMMENTARY: In the midst of e-euphoria, the dot-com days, intelligent people produced ever more convincing theories as to why the economic cycle had been condemned to the very large dustbin that is history. Most concepts focused on the idea that the technological revolution had changed the world for the better permanently. In other words, a virtuous circle had replaced the economic cycle. Productivity was elevated to unthinkable levels and prosperity was such that equity prices were gravity defying. Now that the good times have gone and the stock market has paused for breath, probably on the way further down, a profound pessimism is settling upon boardrooms, a pessimism deepened by the tragedies of September 11. Executives, chief and lesser, fear a downward spiral of recession that itself seems to have no bottom. Just as that famous economist Harry Callahan, Dirty Harry, would have told dot-com investors know your limits, he would also tell the merchants of misery that there are limits. This is certainly a time to be cautious, but not a moment to be melancholy. One reason is that the economic fundamentals are influenced by what you might call the emotional fundamentals. The more miserable we are, the more the economic cycle is, for a time, distorted. Even in Japan, the world's second largest and most miserable economy, the collective corporate response, painful and fitful, is making a difference. My one bold prediction is that in the second half of next year a partially recovered Japan will grow more quickly than the U.S. Most economists will say that I'm mad, but I have faith in the economic cycle. Call it an irrational confidence in the rational. I'm Robert Thomson.

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.

10/25/01: Supply & Demand Seems Out Of Whack In Japan

SUSIE GHARIB: It's a strange paradox in Japan these days. Unemployment is soaring, the economy is slumping, but demand for imported luxury goods is skyrocketing. From Tokyo, Lucy Craft looks at the reasons why.

LUCY CRAFT, NIGHTLY BUSINESS REPORT CORRESPONDENT: For luggage dealer Tumi, which recently opened its second store on prime Tokyo real estate, the theme song might have been recession? What recession? The New Jersey based retailer is merely the latest in what has become a parade of luxury boutiques into Japan. Defying conventional laws of consumption prestige brands are prospering in Japan as never before.

CHARLES CLIFFORD, CHAIRMAN & CEO, TUMI: There are still many, many people who are willing to spend an extra amount of money for products that they believe in and it's-for an American who's used to going into American shopping malls, I think the shopping propensity, the willingness to spend money, is still at a very, very high level.

CRAFT: And spend they do. Blocks away at the opulent new $140 million Maison Hermes in central Ginza. The store is so inundated at peak periods that managers are forced to limit access.

JASON BROWN, GINZA STORE MANAGER, HERMES JAPAN COMPANY LIMITED: We're thankful that a lot of people love Hermes. We appreciate it. But we don't anticipate the large turnout of people that came and still come.

CRAFT: While surveys show growing public disenchantment about social institutions in general, researchers say daily life for most Japanese remains comfortable, unchanged from before the economy turned sour in 1990.

HIDEHIKO SEKIZAWA, EXECUTIVE DIRECTOR, HAKUHODO INSTITUTE OF LIFE & LIVING: More and more people will have negative sentiment toward society, anxiety, hunger, sorrows. But at the same time they want to enjoy their daily lives and they have enough money to buy expensive products. So if they are interested in such kind of products, they will buy it.

CRAFT: In recent months foreign snob appeal brands have been rushing to build new boutiques and flagship stores. The move makes dollars and sense now because plunging property prices have slashed the costs of investment and start up. Analysts say foreign luxury retailers are far more skilled more than domestic rivals at the are of honing their brand appeal.

TAKAYUKI SUZUKI, Retail Analyst, MERRILL LYNCH JAPAN SECTION: They have very good advertising strategies and so Japanese consumers have dreams, yes, dreams about European branded products. In contrast, Japanese specialty stores or Japanese branded shops are not so good at brand duty. So that's a big difference.

CRAFT: Japan accounts up to one half of total sales for many top luxury brands. While the economic downturn continues to hammer profits at department stores and supermarkets, analysts say Japan's insatiable appetite for glamorous brands continues to remain unaffected by the recession, dictated more by the catwalks of Paris and Milan than economic fundamentals. Lucy Craft NIGHTLY BUSINESS REPORT, Tokyo.

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.

10/25/01: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: Stocks on Wall Street opened in a broad retreat in reaction to those dismal economic reports. Stocks were also undermined by declines averaging about 2 percent in most European stock markets after the European Central Bank prompted the selling by not lowering interest rates. At 10:30 a.m., the Dow Jones Industrial Average lost 148 points, or 1.6 percent, NASDAQ down 44 points, or 2.5 percent. The market soon stabilized as selling pressures eased throughout the rest of the morning, and slowly prices began to improve as bargain hunters stepped in. By 1:00 p.m., the Dow trimmed its deficit to 107 points, NASDAQ was down 22. A full-fledged rally developed during the rest of the session as buyers appeared to feel today's barrage of bad news just might mark the culmination of the bear market. In any case, the Dow Industrial Average snapped back to post a closing gain of 117.28 points, and now stands at 9462.90. The NASDAQ Index came in with a gain of 43.93, ending at 1775.47.

Big board volume picked up by about 45 million shares over yesterday's pace and about a 9 to 5 ratio of up volume over down volume.

The Dow Transport Index up nearly 19 points.

Utilities rose just over 6 points.

And the Closing Tick, decidedly bullish at +867.

Standard & Poor's 500 up nearly 15 points.

The 100 gained nearly 7 points.

MidCap 400 rising 7.86.

And the Bridge Futures Price Index fell 0.14.

A gain of 5.88 in the New York Composite Index.

Just about a 5 1/2 run-up in the Value Line.

Russell2000 Small Cap Index up nearly 8 1/3 points.

And the broadly based Wilshire 5000 gained 142, or 1.4 percent.

The bond market rose nicely not only in reaction to those durable goods and home sales reports, but also on news that the latest weekly jobless benefit claims rose by 8,000. A slight negative for bonds was the report that third-quarter employment cost index rose 1 full percent, that was about 0.1 percent more than expected.

Even so, tax free and corporate issues ended with gains of 1/4 to 3/8 of a point on average.

And the Treasury market was solidly higher across the board.

The 5-year notes up 6/32.

The 10-year notes up 12/32 with the yield down to 4.55.

The 30-year bond up 18/32.

And the Lehman Brothers Long-Term Treasury Bond Index up 12.82.

Another one of those come from behind rallies today. This was impressive, from a 150 point loss to nearly a 120 point gain. And even more impressively, no specific news to account for it. Just a lot of buyers around. The broader market higher by a 19 to 12 margin and one more new yearly low than new high.

Enron (ENE) topped the active list on 29.4 million shares, losing $0.06. The company is ousting its chief financial officer, whose dealings with company limited partnerships prompted an SEC probe.

EMC (EMC) moved up $0.74.

AT&T (T) down $0.34.

General Electric (GE) moved up $0.79.

And then fifth in volume, Providian Financial (PVN) down $0.35.

Lucent Technologies (LCN) gained $0.37.

While Motorola (MOT) lost that much.

And Nokia (NOK) down $0.38 after some recent gains.

Conseco (CNC) fell a $0.05 per share.

And then AOL Time Warner (AOL), tenth in volume, moved up $0.38.

ACE Limited (ACL) down $1.87 on news it plans a $1 billion offering of its common stock. Potential earnings dilution there.

Chevron Texaco (CHV) gained nearly a $1 today. Excluding one time items, its third quarter earnings came in at $1.86, way down from $2.35 last year, but that was well above the Street estimate of $1.45.

Genentech (DNA) rose $4.49. The company's kidney cancer drug called Avistan (ph) is showing some promise. Merrill Lynch today made an upgrade, from "accumulate" to "buy."

Goodyear Tire (GT) rose $0.48. The company's third quarter earnings, however, tumbled 45 percent from last year, only $0.06 versus $0.11 then.

SCI Systems (SCI) had a good day, rising $2.92. The company, of course, plans to merge with Sanmina (SANM) in a stock swap. For each share of SCI you get 1.36 shares of Sanmina and today that was a value of $23 per share for SCI holders. Sanmina's stock was up $2.21.

And Wellpoint Health (WLP) up $6.75. Yesterday, the company had third quarter earnings of $1.64, $0.07 better than the Street expected. Today, Goldman Sachs added the stock to its "recommended" list.

IKON Office Solutions (IKN) one of the better percentage gainers, up $1.18. Fourth quarter earnings came in at $0.12 a share, right in line with Street estimates. And Goldman Sachs is upbeat on the company's prospects since it restructured.

Core Labs (CLB) rising $2 a share. Third quarter earnings out today, $0.27, well up from last year's $0.17. That was about $0.01 or $0.02 above the Street estimate, on average.

Universal Compression Holdings (UCO) up $3.37. Yesterday, its second quarter fiscal year 2002 earnings were out, $0.42, way up from the previous year's $0.13.

Cabot Corporation (CBT), a chemical maker, down $7.48. Fourth quarter earnings were actually higher than last year, $0.38 versus $0.31. That was in line with expectations. But the company says pricing pressures lie ahead. The stock traded as low as $31 today.

ShopKo Stores (SKO) fell $1.42. The company sees a third quarter loss in the range of $0.15 to $0.20 a share. The Street was only expecting about an $0.11 per share loss. And Skechers (SKX) down $1.75. It's third quarter earnings lower, $0.30 versus $0.40 last year, $0.07 below the Street estimate.

NASDAQ trading, a gain of nearly 44 points or 2 ½ percent in the Composite Index and volume picked up considerably to 2.26 billion shares. Trading, or the advance/decline ratio about 21 to 14, and positive, of course.

Microsoft (MSFT) up $1.24. That's apparently a positive reaction to the introduction of its XP that you heard about earlier.

Cisco Systems (CSCO) gained $0.51.

Intel (INTC) up $0.62.

Oracle (ORCL) fell $0.71. Salomon Smith Barney downgraded Oracle from "outperform" to just "neutral."

Juniper Networks (JNPR) fell $0.63, fifth in NASDAQ dollar volume.

Brocade Communications (BRCD) down $0.72. J.P. Morgan downgraded it from "outperform" to "neutral."

Broadcom (BRCM) moved up $3.21.

And QUALCOMM (QCOM), a nice gain