10/26/01: Lockheed Martin Lands The $200B Strike Fighter Contract

SUSIE GHARIB: A major military victory for Lockheed Martin: The Pentagon announced late this afternoon that Lockheed Martin is the winner of the joint strike fighter contract. It's the biggest defense contract in history, and the first big ticket military program in more than a decade. The new fleet of jets is estimated to be worth more than $200 billion. Stephanie Woods has been covering this competition and is standing by live in Washington with details - Stephanie.

STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Susie, the competition was fierce. For the last five years, Lockheed Martin and Boeing (BA) have been duking it out in this design contest. Lockheed Martin already makes the F-16 and the F-22. That experience made them the favorite going into the final decision. Defense Department officials said after reviewing the strengths and weaknesses of each company's proposal, they reached their conclusion.

JIM ROCHE, U.S. SECRETARY OF THE AIR FORCE: The Lockheed Martin team is the winner of the joint strike fighter program on the best value basis.

WOODS: But officials left open the possibility that Lockheed could give some of the fighter business to Boeing.

EDWARD ALDRIDGE, UNDERSECRETARY FOR DEFENSE: If Lockheed Martin wishes to use the unique talents of Boeing, they are free to do so.

WOODS: Lockheed Martin employees watching the announcement in Texas, cheered the victory.

VANCE COFFMAN, CHMN. & CEO, LOCKHEED MARTIN: It is, by far, the single most important win for the members of the Lockheed Martin team.

WOODS: Analysts say Boeing will be hurt by the Lockheed Martin victory, but will still play a role in the fighter business.

CHARLES GABRIEL, ANALYST, PRUDENTIAL SECURITIES: If Lockheed Martin and the winning team essentially don't cede some of the business to Boeing, then they'll have political headwinds that they face in the form of Boeing advocates offering Boeing F-18 - FA-18 EFs as alternatives.

WOOD: The contract won't give an immediate boost to Lockheed Martin's bottom line. The design of the fighter must be refined and tested. And the big money from actual production orders won't begin until 2010 - Susie.

GHARIB: Thank you very much, Stephanie. Stephanie Woods from Washington. We are hoping to bring you a live interview with the chairman of Boeing, Phil Condit, a little later in the program - 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.

10/26/01: One On One With Phil Condit, CEO Boeing

SUSIE GHARIB: Joining us live now from Arlington, Virginia, for his reaction is Boeing's (BA) Chairman and CEO, Phil Condit. Mr. Condit, nice to have you on the program. I'm sure this was disappointing news for you and for Boeing. But looking forward, a number of analysts I was talking to are saying that, are speculating that it's just a matter of time before Boeing will get out of the jet fighter business, I would like your reaction to that.

PHILIP CONDIT, CHAIRMAN & CEO, THE BOEING COMPANY: One, I think we're going to be in the jet fighter business for a long time. First, we've got great production programs going right now. Those are going to go for at least a decade. We've got a great design team. We want to use them and we're going to find ways to do that. So yes, this is disappointing, but we think we have a lot of ways forward.

GHARIB: Now, you've have indicated that you would be interesting in sharing work with Lockheed Martin on this joint strike fighter. What is going to be the argument you are going to make to Lockheed?

CONDIT: Well, I think the argument is really an argument at the governmental level. It is that there is a design team and a production capability inherent in Boeing and in Lockheed Martin and if the country wants the capability to have future competitions, it's important to keep those design teams together. One way to do that is to make sure that there is meaningful work for Boeing in this program and that's one possibility.

GHARIB: This has been a very intense competition over the last five years. Do you think that Lockheed Martin is interested in working with Boeing?

CONDIT: We work together on a regular basis. We're one third of the F-22 program to the Lockheed Martin two thirds. So we know how to do it. It's up to them.

GHARIB: Mr. Condit, you indicated today that you are adjusting your guidance for 2002 as a result of this decision on the contract, $1 billion in lower revenues for 2002. Do you think that this is going to lead to more layoffs at Boeing?

CONDIT: I think there may be a few, but it will be pretty small. The team that's currently employed on the program is a couple hundred people. So the real layoff and the real impact is over on the commercial side, not in the military side.

GHARIB: As you look at the military side, where do you see growth?

CONDIT: I think there's some great opportunities. The C-17, great program. It looks like it can go on another extension. The potential of tankers to replace the 40-year-old KC-135s. There are about 500 of those in the air force inventory. A 6-7 tanker is a great replacement. We're working on that. Beyond that, unmanned combat aerial vehicles. So there are a lot of opportunities.

GHARIB: There's been some speculation that maybe one way to build up your defense business now is to make an acquisition, and the name of Raytheon (RTN) comes up in conversations.

CONDIT: Well, I have an easy answer to that one and that is we never comment on those kind of things and we're not going to start now, Susie.

GHARIB: OK. Then let me ask you a little bit about your stock. See if you comment on that. The stock was down in after hours trading. Analysts expect it to be punished on Monday. A lot of investors are going to be thinking over it over the weekend. Anything you want to say to Jeffers? A couple of things, one of them is we were up 5 percent. 5 percent today, then back done in after hours. This is thin trading but it stabilized quickly. Two, this is a company that has great diversity. Great space business, great defense business, great commercial business. There is a lot of value in this company. We're going to deliver it.

GHARIB: OK. We're going to be watching you and hopefully you come back and tell us more. Thank you so much, Mr. Condit. Thank you. We've been speaking with Phillip Condit. Chairman and chief executive of Boeing.

CONDIT: You've got it.

GHARIB: Thank you so much, Mr. Condit.

CONDIT: Thank you.

GHARIB: We've been speaking with Phil Condit, Chairman and Chief Executive of Boeing.

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.

10/26/01: 3rd Quarter Earnings Are Standard & Poor

SUSIE GHARIB: There are only five Dow Components that have yet to report their quarterly earnings, but the results are out for 80 percent of S&P 500 companies, and the news is dismal. Here's Suzanne Pratt with the third quarter scorecard and a look ahead.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Corporate profits were pretty bad in the third quarter, and it looks like they won't get much better any time soon. With nearly 80 percent of the companies in the Standard & Poor's 500 reporting, profits for the third quarter declined on average about 22 percent from a year ago. That follows negative numbers for the first and second quarters of this year as well.

CHUCK HILL, DIRECTOR, FIRST CALL: That's one of the biggest numbers that we've seen, if we go back as far as the end of World War II. I mean, there have been a few times when quarters have been 20-some percent down, so this is unusual to see it this deep.

PRATT: According to Hill, the terrorist attacks of September 11 increased the third quarter earnings decline by an extra five percentage points. And the residual effects are pressuring profits in the fourth quarter as well. In fact, as of today, there have already been 283 warnings about fourth quarter earnings. That compares to only 213 at the same time in the previous quarter. And you have to look out to the second quarter of next year before Wall Street turns optimistic again. Fourth quarter earnings are expected to be down more than 15 percent, followed by a first quarter drop of more than 4 percent. But right now, analysts are forecasting a strong comeback for the second quarter. And stock market experts say that's exactly what investors are counting on.

JIM AWAD, CHIEF INVESTMENT OFFICER, AWAD ASSET MANAGEMENT: The market is assuming that the fourth quarter of 2001 will be the bottom in terms of economic activity and that we will start a recovery most probably in the second quarter of 2002 with the first quarter of 2002 being a transition quarter.

PRATT: Corporate America and Wall Street would love to see an earnings recovery by the second quarter of next year. But some experts say there is a risk that the stock market is being overly optimistic, especially when you consider the fact that we are at war. Suzanne Pratt, 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.

10/26/01: Market Monitor-Douglas Jimerson, President of National Investment Adviser

PAUL KANGAS: My guest market monitor this week is Douglas Jimerson, President of National Investment Advisers, a money management firm based in Potomac, Maryland. And it's nice to have you here in the studio again, Doug. Welcome.

DOUGLAS JIMERSON, PRESIDENT, NATIONAL INVESTMENT ADVISORS: Great to be back. Thank you very much, Paul.

KANGAS: How do you explain the stock market's surprising strength in recent weeks against such a terrible barrage of bad news on the economy?

JIMERSON: Remember the last time I was on here I said that sentiment was too complacent? Well, we got that scare over September 11 and that turned the sentiment and that's just what the market needed. Now, this is a trader's rally, but it is a big one.

KANGAS: So it's going to be worthwhile participating?

JIMERSON: For traders I think this is going to be lasting into Christmas so it's an exciting opportunity.

KANGAS: On your last visit with us this past April 20, the Dow was at 10,580 and you allowed that it might go above 11,000. Well, it got as high as 11,300. That was a tremendous call. But then you said it could get down to the 8,000 level and intraday it had gotten around, what, 8,040? Those were phenomenal calls and I congratulate you on the accuracy of them.

JIMERSON: Thank you very much.

KANGAS: So now let's go again with the new predictions as to the range of the Dow for this year, what remains of it.

JIMERSON: Well, you know, as I say, with this rally taking shape we have a very strong potential. I think the Dow can go back above 10,000, 10,200 in that area and beyond is resistance. The NASDAQ, I think, will have a bigger move, to go to 2,400 on the NASDAQ.

KANGAS: That's a long way from 1,768 today.

JIMERSON: That's right. So this could be very, very exciting. Now beyond it, I think we have problems six months out.

KANGAS: Now before we get to that, let's find out how you would participate in this worthwhile rally.

JIMERSON: All right. I would say you can go ahead, again, keeping in mind it's a trading opportunity in the technology stocks, and I think that they are going to continue to advance especially.

KANGAS: Your favorites.

JIMERSON: Well, I'd go with the big names, with the Intels (INTC) and the Ciscos (CSCO). Those are to be very exciting, short-term only.

KANGAS: OK.

JIMERSON: Now, longer term, I'm big on defense.

KANGAS: Well, of course, there was a big decision today. Are one of those stocks in your list or what do you like?

JIMERSON: Absolutely. You know, I think I like them all. Last time I said Raytheon.

KANGAS: At $30. It's now $34. It's done well, really. JIMERSON: I'd still buy it. I'd buy Lockheed Martin. I'd buy General Dynamics (GD). I think these will continue to perform well. I do still like the oils. So Chevron (CVX) is right in there as a buy.

KANGAS: You like Chevron-Texaco last time and Exxon. And both of them merged, Exxon with Mobil and Chevron with Texaco. And the stocks are about where they were then. They'd been higher. But you still leak them and would buy them here?

JIMERSON: I would.

KANGAS: Those two in particular?

JIMERSON: Yes.

KANGAS: Any new additions to your energy list?

JIMERSON: Oh, I'll stick with that, although I like energy funds, and I think those Fidelity Select Energy (FSESX), Invesco Energy are good choices.

KANGAS: So you're expecting a worthwhile rally but don't plan on taking any long-term gains out of it. Is that the way you see it?

JIMERSON: The problem is when we get into next year we're going to see new lows for the Dow and new lows for the Nasdaq. The trend is your friend and the trend is down. This is still a bear.

KANGAS: Well, you said that last time and it wasn't the most popular thing to do, but it was certainly one of the correct things.

JIMERSON: I'm sorry, but the money market is not a bad place to have a lot of your assets and keep them hedged.

KANGAS: And you still have those assets and then some.

JIMERSON: We actually have been in the money market with most of our accounts for over a year.

KANGAS: Well, it's the place to be. So caution is sometimes the best move.

JIMERSON: Yes, sir.

KANGAS: But right now you see the beginnings of a worthwhile rally.

JIMERSON: This is exciting.

KANGAS: But what about the downside? You say new lows on the Dow below 8,000?

JIMERSON: Yes, I think the next support level for the Dow logically would be-

KANGAS: What makes you so bearish after this rally?

JIMERSON: Well, the problem is the big picture is we're in a post bubble environment and the economy, and next year is likely to be another down year. This has been a very bearish year this year, the Nasdaq down 28 percent. We are going to see more declines next year.

KANGAS: Well, your timing has been superb. As a matter of fact, I believe that you have a nice rating by "Timers Digest," do you not?

JIMERSON: Yes, thank you. Long-term timer, I'm up near one or two on the list.

KANGAS: OK. All right, I'm glad that we had you on here this evening and I hope everyone listened closely.

JIMERSON: Thank you, Paul.

KANGAS: Thanks very much for being with us. Douglas Jimerson, President of National Investment Advisers.

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.

10/26/01: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: The stock market opened modestly higher today in an extension of yesterday's impressive late comeback. At 10:30 this morning., the Dow posted about a 38-point gain, but the NASDAQ Index gave up an early 10-point advance to fall to a seven-point loss. The blue chips remained moderately higher for the rest of the morning as cautious buyers appeared to be banking on a recovery in the economy by the middle of next year thanks to tax cuts and lower interest rates. The market's resilience in the face of recent bad economic news convinced a lot of bearish traders to cover some short positions. So by 1:30 this afternoon, the Dow was sporting an 82-point gain and that helped the NASDAQ Index post a 10-point advance. The blue chips continued to strengthen throughout the afternoon with the Dow up about 130 points early in the final hour. But when the NASDAQ market failed to follow, the Dow, well, the Industrial Average faltered a bit and it closed with a gain of 82.27 points at 9545.17. This week the Dow fell only once, it rose four times and had an overall gain of 341.06 points or 3.7 percent. The NASDAQ Index was down 6.51 at the close today, 1768.96. But for the week, this Index fell twice, rose three times and had a net overall gain of 97.65 points, that's 5.8 percent.

Big Board volume tapered off a bit on this rally, 1.21 billion shares and about, oh, a 7 to 5 ratio of up volume over down volume.

The Dow Transport Index up a little over 7 1/2 points.

While the Utility Index fell just over 1 1/2 points.

The Closing Tick, still fairly bullish at +603.

Standard & Poor's 500 up just over 4 1/2 points.

A 2 1/3-point rise in the 100.

The MidCap 400 up exactly 3 1/2 points.

The Bridge Futures Price Index edged up 0.37.

A gain of 3.62 in the New York Composite Index.

Value Line up 2.15.

The Russell2000 Small Cap Index up nearly 2 3/4 points.

While the Wilshire 5000 gained the better part of 42 1/2 points or 0.4 of a percent.

Bond prices moved higher for the third straight day after a $6 billion debt offering by General Motors (GM) Acceptance Corp. went quite well. A small, but surprising rise in the University of Michigan's Consumer Sentiment Index gave buyers cause to pause, but that was soon overshadowed by the report that September new home sales fell 1.4 percent. At the close, then tax-free and corporates were up eighths and quarters on average and the Treasury market ended moderately higher across the board.

The 5-year notes up only 3/32.

The 10-year note rose 7/32.

The 30-year bond up 11/32.

And the Lehman Brothers Long-Term Treasury Bond Index edged up 0.57.

Wall Street's blue chips had another good day and another good week, actually. The Dow today up 82 1/4 points and the broader market higher by an 18 to 13 margin. And 10 more new yearly highs than new lows.

Enron (ENE) topped the active list again, 21 1/2 million shares traded today, down another $0.85. Last Friday, that stock closed at $26.05. The SEC investigation about the company's CFO, who has been ousted, incidentally, in a limited partnership, certainly has taken their toll. EMC (EMC) up $0.19.

Motorola (MOT) fell $0.13.

AT&T (T) managed to rise $0.01.

And General Electric (GE) up $1.01, fifth in volume.

AOL Time Warner (AOL) gained $1.02.

Lucent Technologies (LCN) lost a $0.01.

Providian Financial (PVN) gaining $0.12.

Compaq Computer (CPQ) down $0.28.

And tenth in volume, NorTel Networks (NT) was up $0.26.

AES Corporation (AES), the power provider, up $1.53. Third quarter earnings lower, $0.27 versus $0.32, but the company sees earnings for the full year around $1.25 to $1.35.

Baker Hughes (BHI) up $1.74. The company had better than expected third quarter earnings out today, $0.41, up from $0.20 last year. Revenues up 6.1 percent.

Boeing (BA) was up $1.78. And then, of course, after the close the stock traded as low as $34.96 after losing out to Lockheed on that big contract.

Fairchild Semiconductor (FCS) down $2.42. The company is in the midst of a $200 million convertible note offering.

And then Lockheed Martin (LMT) up $1.02. And then after getting the big contract after the close I saw the stock as high as $53 a share. Lockheed today also had better than expected third quarter earnings of $0.49 a share, way up from a $1.74 loss last year.

And United Technologies (UTX) up $2.54, the biggest point gainer in the Dow. Experts say that the company's Pratt & Whitney division could get up to $4 billion in jet engine contracts from Lockheed.

Enesco Group (ENC), which retails collectibles and gifts and things like that, up $1.27. The company out with third quarter earnings, $0.31, well up from last year's $0.21 despite a drop in revenues. The company says that's because its cost cutting has been effective.

Penton Media (PME) up $1.09. The company provides business information to industries, publishes trade magazines and so forth and the stock is probably the subject of some bottom fishing. That stock was in the 30s about a year ago.

Annuity Life Holdings (ANR) down $8.84. A third quarter operating loss reported today of $1.55 a share versus earnings the previous year. J.P. Morgan cut its target on the stock from $36, the right word is $24. The company, however, says it'll buy back up to $25 million of its stock.

Stillwater Mining (SWC) the only palladium producer in the United States, down $4.06. Third quarter earnings lower, $0.26 versus $0.36, and the company said the drop in palladium prices is prompting a reexamination of the company's finances.

Group 1 Automotive (GPI) down $6.09. The company priced 3.3 million share offering of its stock today at $31, well below the market yesterday.

Kenneth Cole Productions (KCP) down $1.60. After the close yesterday, third quarter earnings sharply lower, $0.29 versus $0.59 the year before, and it sees fourth quarter earnings of only about a $0.05 to $0.10 a share.

Nasdaq trading, a loss of 6 1/2 points in the Index. Volume dropped on the sell-off there. 19 stocks higher for every 16 lower.

VeriSign (VRSN) tumbling $10.52. Now, after the close yesterday, the company reported higher earnings. But today Bear Stearns downgraded it from "attractive" to just "neutral."

Microsoft (MSFT) down $0.36.

Intel (INTC) fell $0.24.

QUALCOMM (QCOM) a loss of only $0.59.