10/30/01: Ford Tells Nasser To "Hit The Road Jac"

SUSIE GHARIB: A new driver is behind the wheel at the Ford Motor Company and he's a Ford. William Clay Ford, Jr., the great grandson of the company's founder, became chief executive officer today in addition to his title as chairman. He replaces Jacques Nasser who was ousted after less than three years at the helm. As Diane Eastabrook reports, some analysts think that Ford needs more than a change at the top.

DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Ford's new chief executive officer, William Clay Ford, Jr., got a standing ovation from employees this morning, then delivered his first order.

WILLIAM CLAY FORD, JR., CHAIRMAN & CEO, FORD MOTOR COMPANY: We need to focus on the basics of our business, which is building great products.

EASTABROOK: For the past year the world's second largest auto maker has had a difficult time focusing on those products. Ford has been distracted by a $3 billion recall of Firestone tires, a nearly $3 billion settlement over flawed ignition systems, quality problems with some vehicles, declining sales and a crumbling stock price. That combination of events led to Jacques Nasser's ouster early this morning by Ford's board of directors. He had been CEO less than three years. In announcing the management shake-up, Ford also said retired Wells Fargo Chairman Carl Reichardt will become vice chairman and North American group vice president Nick Scheele will become chief operating officer.

FORD: This company is in good hands. We have a strong, experienced management team in place and we have the greatest asset that any company could ask for, the extended family of Ford employees around the world.

EASTABROOK: While Ford's employees were upbeat about the management changes, Wall Street wasn't. The stock traded down most of the day. Analysts say a management change won't solve all of Ford's problems.

EFRAIM LEVY, SR. AUTO ANALYST, S&P EQUITY GROUP: There's a lot of competitive pressures there. That includes the competition from the foreign brands in the highly profitable light truck category that have been dominated by the big three, and that's not going to go away no matter who's in charge.

EASTABROOK: Ford says now that the company is focused on building cars and light trucks, other businesses may be cut and those cuts could come at the end of this year when the company announces a major restructuring. 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.

10/30/01: Ford COO, Nick Scheele Speaks Out About The Shakeup

SUSIE GHARIB: Back now to our top story, the management shakeup at Ford Motor. After the announcement this morning, I talked with Ford's new chief operating officer, Nick Scheele from a studio in midtown Manhattan. I began by asking what's his top priority.

NICK SCHEELE, COO, FORD MOTOR COMPANY: I think the top priority is to get ourselves focused back on the basics of our business and make sure that the whole company knows that we're focused on delivering great value, great quality, great looking, great driving cars and trucks.

GHARIB: Mr. Scheele, I know that, I understand that Ford is working on a restructuring plan for its North American operations. What's the plan?

SCHEELE: We haven't developed the plan yet. We're in the process of so doing. It will take us about another 40, 45, 60 days or so and then we'll have it. As soon as we've got it, we'll clearly communicate first internally with our employees because they're the people who need to understand and then deliver the plan and then obviously with the outside world including everybody who will be impacted by it.

GHARIB: Analysts are talking about capacity reductions, possibly layoffs, product changes. Are these things that are on the table for discussion?

SCHEELE: It's very interesting. Of course everything and anything is on the table, but we haven't reached that stage yet. I mean new products don't arrive overnight. This business is a business of long lead times. And we need time. We can't dream up a new product tomorrow and have it delivered the day after. It takes a couple three years sometimes so we are looking to the long term and we are looking to where we will be in the long term and where our competitors will be and how we are going to be the best amongst the best.

GHARIB: As you look, what is the vision for Ford?

SCHEELE: I think Ford, really, you've got to look backwards before you look forward. We are now 98 years old. Founded in June of 1903. We're close to our first century. We're looking forward to build Ford into the next century. And to do that, you can only do it with commitment from everybody who works with and for us, because we have a customer base, a dealer body, a supplier body across the world, and of course 350,000 employees across the world. We need to work for the next century with fantastic product.

GHARIB: You mention 350,000 employees. What are you going to do about morale? How are you going to get all of those employees to feel confident about working for Ford again? This has certainly been a difficult year.

SCHEELE: Morale has been impacted, no question about that. I think the first thing to say is that you listen and I will be doing a lot of listening. Since I came back to North America on August 1st of this year, I've spent an awful lot of time listening and I will do so with even more renewed passion and you listen and you talk with and you talk very, very importantly, deeply with employees and then you try to digest and analyze what needs to happen. And then you communicate to them the plan and keep on communicating.

GHARIB: As you try to strengthen the management team, are you going to be looking outside of Ford or are you going to be promoting from within?

SCHEELE: I think we've got great management in Ford and we've got an enormous abundance of just super people-committed, able, dedicated. And I don't believe that we will have to look anywhere but where we're right now. Will we look outside in the future? Well, of course. We've recruited in recent years some extremely talented people here in North America and in Europe and elsewhere, and obviously everybody is always open to that. But the root strength of Ford's management and Ford's commitment is right here in the company already.

GHARIB: Mr. Scheele, the expectation of Wall Street is that Bill Ford is going to be in the CEO's spot only temporarily. Is that a correct assumption?

SCHEELE: Bill, I think, answered that very well. He has set no time limit on it, but he's not here for the short-term.

GHARIB: OK, well, thank you very much and good luck to you.

SCHEELE: Thank you.

GHARIB: We appreciate you talking to NIGHTLY BUSINESS REPORT.

SCHEELE: Thank you.

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.

10/30/01: The Anthrax Scares Delivering New Dollar Dilemmas To The Post Office

PAUL KANGAS: Anthrax has been detected in three more postal facilities in Florida and Washington, D.C. All three are now closed for clean up. The growing number of anthrax cases is causing big problems for the Postal Service and the businesses that depend on it. Stephanie Woods reports.

STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Even before the anthrax worries and the September 11 attacks, the Postal Service expected to lose $1.3 billion this year. The Postmaster General told members of Congress that figure will be at least $300 million higher.

JOHN POTTER, POSTMASTER GENERAL: We do not have an estimate of what the impact of this anthrax situation will be. You know, we're working as hard as we can to restore confidence in the-mail. That's going to take, you know, take time and, you know-so it will have further-it could be several billion dollars worth of impact.

WOODS: The administration has already given $175 million to the Postal Service to cope with the anthrax situation. The Postmaster General says he will ask for more.

POTTER: We know that more money will be needed and it does put the Postal Service's long-term viability not in jeopardy, it just makes it, you know, a very difficult row to hoe.

WOODS: And some of the nation's biggest mailers agreed. They gathered in Chicago to discuss the situation. They say they're working closely with the post office to insure the safety of their mail.

MICHAEL SHERMAN, PRESIDENT, FINGERHUT: We're not going to let the threat, the terror undermine the post office and undermine the relationship marketing we do with our customers.

WOODS: Fingerhut is putting logos on its mailings so customers can identify it immediately. Land's End (LE) packages its catalogs as bulk mailings so they don't go through mail sorting equipment. The J. Jill Group (JILL) is taking the powder out of its printing process. Overall, the industry says the risks to the public are small.

ROBERT WIENTZEN, CEO, DIRECT MAIL ASSOCIATION: A lot of the fear that the American public has is predicated on the fact that there may be some broad scale attack and, in fact, that not only appears to be improbable, it appears to be highly improbable.

WOODS: Catalog executives say they're hopeful holiday sales will be strong and they say people traveling less and spending more time at home are habits that traditionally increase catalog sales. 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.

10/30/01: Commentary: Learning September 11th Leadership Lessons

SUSIE GHARIB: Tonight's commentator says that we should learn some lessons of leadership from the events of September 11, but she also says that what happened before that date is even more important. Here's Suzy Wetlaufer, editor of the "Harvard Business Review."

SUZY WETLAUFER, COMMENTARY: I got a call recently from a newspaper that wanted to know how leaders should react to the panic swirling around in these recent, horrible weeks. What, for instance, should leaders do if an employee receives a threatening letter? How do you manage that? The first answer here actually, is pretty straightforward. If a suspicious letter arrives, you call the authorities immediately. It's much harder, though, to answer what leaders should after the scare, when the tests come back negative, as most will. Because even when anthrax isn't present, the thought of it unsettles people. In fact, just the idea of bio-terrorism, its potential to arrive in our safe offices like a thief in the night, is making a lot of people nervous or irritable or depressed, or all three at once. Now, leadership experts will tell you there are a whole slew of things to do right now to combat these emotions. Get out there, get seen, talk to people, show control, demonstrate positive energy. Arrange for counseling for those who need it and, of course, issue clear headed policies for handling mail. But the truth is leaders right now, for better and for worse, are reaping what they have sown. A leader creates a company's culture. Before September 11, a culture was filled with trust and transparency or it wasn't. Those companies lucky enough to have a healthy culture where people talk honestly and act swiftly, will make it through this period of panic battered, but OK. Leaders who let their cultures become bureaucratic and opaque will finally understand why culture matters so much. That's a hard lesson to learn right now, but one that few leaders are now unlikely to forget. I'm Suzy Wetlaufer.

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.

10/30/01: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: Wall Street got another reminder today that the economy is facing a tough time and it didn't like what it heard. A new report shows consumer confidence in October at its lowest point in more than seven years. The Conference Board's figures show a huge slide from September, off more than 10 points. Analysts say that drop-off is troublesome.

MAUREEN ALLYN, CHIEF ECONOMIST, ZURICH SCUDDER INVESTMENTS: Consumer confidence just plunged and I think we all knew people were going to be feeling uncomfortable, but the suddenness and the steepness of the fall suggests that there's been a real change in the climate. It's really chilly out there.

KANGAS: The stock market was already down before that consumer confidence report was released and the bad news triggered another wave of selling, which sent the Dow Industrial Average tumbling to a 171 point loss by 11:00 a.m., while the NASDAQ Index fell 44 points. The steep sell-off finally attracted some bargain hunting as morning trading continued, but the buyers were very cautious after old stalwarts like Philip Morris (MO) and McDonald's (MCD) weakened after getting brokerage downgrades. Reports of additional anthrax victims was another negative. Nevertheless, the Dow managed to trim its deficit to 98 points by 2:00 this afternoon and the NASDAQ Index was off only 14 points. The rebound attempt had no staying power and sellers regained dominance for the rest of the session. The Dow Industrial Average fell to a closing loss of 147.52 points, putting it at 9,121.98. The NASDAQ Composite Index ended with a loss of 32.11 at 1667.41.

Big board volume moved up on the sell off, 1.3 billion shares and five times as much down volume as up volume. We haven't seen it that bad in a long time.

Transports Index down nearly 23 3/4 points.

Utility Index fell just over 4 points.

The Closing Tick just modestly bearish at -214.

Standard & Poor's 500 off 18 1/2 points.

A little over an 8 1/4 point drop in the 100.

The MidCap 400 fell just over 8 1/2 points.

Bridge Futures Price Index edged up the smallest of fractions.

New York Stock Exchange Composite off 9.11.

A 6 3/4 point drop in the Value Line.

Russell2000 off a little over 6 1/2 points.

And the broadly based Wilshire 5000 dropped 171 3/4 points or 1.7 percent.

Bond prices rallied for the fifth straight session today, driving short-term yields to 20 year lows. The market again benefited by safe haven buying prompted by that big drop in consumer confidence which fueled hopes for another rate cut by the Fed next week. Jitters over Argentina's debt problem also brought in buyers as did growing anthrax fears.

Tax free and corporate issues rose 1/4 to 1/2 point on average and the Treasuriy market closed nicely higher.

5-year notes up 12/32.

10-year notes rose 18/32.

And then the 30-year bond up 29/32.

While the Lehman Brothers Long-Term Treasury Bond Index gained just a little over 7 1/2 points.

The market was in a different kind of soup for the second day running, triple digit losses in the Dow Industrial Average, 147 ½ points. And for every 9 stocks up, 21 were lower. Only 28 new yearly highs as against 90 new lows.

Enron (ENE) topped the active list once again, today on 42.7 million shares. That's a 19 percent drop. Yesterday, of course, Moody's cut some of the company's debt ratings and the stock has been down every day since October 16, when it reported a third quarter loss.

CVS (CVS), the big drugstore chain, down $7.27. That's a 23 percent drop. Third quarter earnings lower, $0.30 versus $0.36 a year ago. The company sees fourth quarter earnings even lower, $0.23 to $0.28 versus the $0.39 Wall Street estimate.

Anthem (ATH) went public today and did very well in this kind of a market. This is a health insurance company. 48 million shares offered at a price of $36, opened at $40.50 and it closed right at the height of the day, $40.90.

EMC (EMC) down $0.95. IBM (IBM) appears to be making inroads in storage products to compete with EMC.

AOL Time Warner (AOL) down $0.58, fifth in volume.

Citigroup down $0.80.

And then General Electric (GE) lost $1.09.

McDonalds (MCD) dropping $1.29. Bank America cut McDonald's' 2002 earnings estimates from $1.50 down to $1.45. First Boston and Alex Brown Brokerages also cut earnings estimates for next year.

Motorola (MOT) fell $0.81.

AT&T (T), tenth in volume, lost $0.03 a share.

Fluor (FLR) down $4.19. And after the market closed, the company reported a third quarter loss of $0.68 a share versus a loss of only $0.17 in the fourth quarter a year ago. That's the best quarter to compare it with since they changed to a calendar accounting year.

Newell Rubbermaid (NWL) up $1.26. Third quarter earnings were down 32 percent, $0.34 versus $0.47 last year. But that was $0.01 above the Wall Street estimate.

Philip Morris (MO), a big Dow stock, losing $1.98. Goldman Sachs removed it from its "recommended" list, now just rates it a "market outperformer."

Procter & Gamble (PG) had a good day, the big gainer in the Dow, one of only two. IBM (IBM) was the other one, and it gained only $0.03. But Procter & Gamble had third quarter earnings of $0.96 a share, $0.02 above the Street estimate.

Serono SA (SRA), this is the Swiss biotech firm, down $1.41. Third quarter earnings lower than expected, $0.10 versus $0.13 last year.

And then SuperValue (SVU), the big drug-the big grocery store chain, down $1.96 on news the company plans to raise $185 million through the sale of zero coupon convertible notes, representing some earnings dilution.

Royal Caribbean (RCL), the cruise ship owner, up $1.28, one of the best percentage gainers. Third quarter earnings came in at $0.82, down from $1.04 last year. But that was $0.10 better than the Wall Street estimate.

Newmont Mining (NEM), the gold stock, up $1.36. Yesterday it had third quarter earnings out, $0.11, $0.07 above the Street estimate. Today Prudential upgraded it from "sell" to "hold" and of course the Argentine crisis, the instability is helping gold stocks these days.

The big loser, Rehabcare (RHB), tumbling $13.70. Third quarter earnings $0.44, up from $0.36. But the company sees fourth quarter lower than the third, down around $0.41 to $0.42. Merrill Lynch downgraded it from "buy" to "accumulate." The stock traded as low as $23.

IT Group (ITX) in the waste management services field, down $1.29. A third quarter loss reported today of $0.05 a share versus earnings of $0.21 and revenues fell 4.2 percent. Standard & Poor's says "avoid" this stock.

Hispanic Broadcasting (HSP) down $2.11. Third quarter earnings $0.08, down from last year's $0.12. Revenues dropped three to five percent.

And Dycom Industries (DY) off $1.29. It sees first quarter earnings of only $0.13 to $0.15, about $0.05 to $0.07 below Wall Street expectations.

NASDAQ trading, a 32 point loss in the Index. Volume moved higher on the sell-off. 12 stocks up for every almost 23 down.

Microsoft (MSFT) fell $0.76, topping the active list.

Cisco (CSCO) up $0.15.

Intel (INTC) dropped $0.64.

QUALCOMM (QCOM) losing $3.61. First Boston cut 2002 estimates by $0.12, down to $1.10 for QUALCOMM.

eBay (EBAY) managed to gain $0.89 after several days of losses.

A $1.01