11/01/01: The Unsettling Elements Of The Tentative Microsoft/Justice Department Deal

SUSIE GHARIB: Microsoft powered up Wall Street today. Investors were encouraged by reports that the software giant and the Justice Department might be close to a settlement in their long-running antitrust dispute. The Dow gained almost 190 points, and the NASDAQ rose 56. As Stephanie Woods reports, the Microsoft settlement deal faces opposition from many sides.

STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Representatives of 18 state attorneys general met behind closed doors at the Justice Department to talk about a Microsoft settlement. Sources caution the deal is still a work in progress. The outlines of a settlement between the Justice Department and Microsoft include requirements that the software giant eliminate restrictive pricing and contract terms on PC makers, disclose some technical Windows information, and ban forced upgrades of Windows. The restrictions will last five years, with the possibility of a two-year extension if Microsoft violates the agreement. Sources say the state attorneys general will not sign the Justice Department settlement. Analysts say the administration and the states have different agendas.

ERNEST GELLHORN, ANTITRUST PROFESSOR, GEORGE MASON UNIVERSITY: The Justice Department is trying to limit the scope of the restrictions on the enterprise because Microsoft makes an enormous contribution to the economy. The states are, on the other hand, much more focused on fairness. What's the impact to individuals?

WOODS: Microsoft's rivals call this tentative agreement a sellout. They say the deal is weaker than what negotiators could have come up with before the court ruled Microsoft a monopoly.

EDWARD BLACK, PRESIDENT, COMPUTER & COMMUNICATIONS INDUSTRY ASSN: How do you end up with a weak remedy which does nothing to restrain going forward that behavior of somebody who's been shown to be a chronic lawbreaker.

WOODS: Even with a settlement, analysts caution, Microsoft is likely to face more legal challenges.

WILLIAM WHYMAN, PRECURSOR GROUP: Even if they close the chapter on this particular set, I wouldn't be surprised to see more lawsuits, and you have ongoing court supervision of Microsoft for at least five years, if not seven.

WOODS: All the parties will meet in court tomorrow morning to update the judge. Sources familiar with the settlement talks say the state attorneys general will ask for more time to review the proposed settlement. 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.

11/01/01: The Factory Sector Manufactures More Declines

SUSIE GHARIB: Investors were struggling with some bad economic news today. Manufacturing activity declined for the 15th month in a row and consumer spending dropped to its lowest level in 14 years. Here's Scott Gurvey with details.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Consumers gave up the ghost, and they didn't wait for Halloween. The Commerce Department is reporting the first drop in personal spending in 2 1/2 years. The huge 1.8 percent drop in spending in September is said to be directly linked to the terrorist attacks of September 11th. Personal income in the same period was flat, reflecting the already sluggish conditions, with consumer spending accounting for some two-thirds of the domestic economy. Many see the downturn, which began in the third quarter, continuing into the fourth and beyond.

MAURY HARRIS, CHIEF US ECONOMIST, UBS WARBURG: People are afraid to go out and shop the way they normally do, especially in large public spaces, like malls. And this is hurting a lot right now. I do think that, with the passage of time and the institution of more visible civil defense methods, I think that the public will start to feel comfortable and will start shopping again. But that happens next year.

GURVEY: A key measure of the manufacturing sector also plunged last month. The National Association of Purchasing Management said its index fell to 39.8 in October. That's a whopping 15 percent below the September mark and the lowest since 1991. And in a most unusual note, the NAPM reported that all 20 of the factory sectors it polls saw declines in the month.

CARY LEAHEY, SENIOR ECONOMIST, DEUTSCHE BANK ALEX BROWN: Oh, it's a dismal report everywhere you look. The overall headline reading dropped to virtually the lowest level since the last recession. And what's so discomforting about that is that the numbers have been improving in the last three months and you had a fairly upbeat assessment from the purchasing managers themselves last month about how things were improving. And then now it's just totally reversed.

GURVEY: In the wake of these reports, many economists reduced their expectations for the employment report, due out tomorrow. 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.

11/01/01: E-tailers Are Expecting A Greener X-mas Than Regular Retailers

SUSIE GHARIB: Well, the holiday shopping season won't be as cheery for retailers this year as in previous years. The sagging economy will make frugal gift givers out of most people. But even though they may spend less, as Diane Eastabrook reports, experts say they may shop online more.

DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: It's looking like a grim Christmas for retailers, but maybe not as grim for Internet retailers. The online consulting firm Jupiter Media Metrix (JXMI) says online sales should increase about 11 percent in the fourth quarter versus the same period last year. That's better than the relatively flat growth forecast for the retail industry overall. Jupiter says the September 11 attacks may be helping online retailers steal market share from brick and mortar competitors.

KEN CASSAR, SENIOR INTERNET RETAIL ANALYST, JUPITER MEDIA METRIX: Internet retailers and cataloguers alike will benefit as fewer people travel this holiday season, as those that do, those that do travel are less likely to carry gifts. It means they're more likely to ship products to consumers or have merchants ship products to consumers for them.

EASTABROOK: Analysts say e-tailers that offer value, choice and easy to navigate Web sites will do well this holiday season. Many sites have added e-gift certificates. Some, like Blue Nile, are doing more cross promotion. If you're buying diamond earrings, you're also encouraged to buy a matching diamond necklace. And other companies have improved their Web sites so checkout is much faster.

LAUREN FREEDMAN, PRESIDENT, THE E-TAILING GROUP: The confidence in the Internet, I think from a consumer perspective, you know, has been raised significantly. And I think we're going to continue to see that.

EASTABROOK: But most industry watchers agree the e-tailers that will be the most successful this holiday shopping season are those that straddle the World Wide Web and the more traditional world of retailing. Eddie Bauer, a unit of Spiegel Incorporated (SPGLA), has a Web site, a catalog and stores. Industry watchers say that is a huge advantage because it gives consumers a variety of shopping options. They can find an item in a catalog and order it online. Gift returns are also easier. A gift ordered online or through a catalog can be returned at a store or through the mail.

DEBORAH KOOPMAN, V.P. CORPORATE RELATIONS, SPIEGEL, INC.: We have a high percentage of people that shop both channels or shop all three channels, and obviously those are our best customers.

EASTABROOK: Analysts also believe e-tailers have the right inventories-enough to satisfy demand but not too much to prompt huge markdowns in the new year. Diane Eastabrook, NIGHTLY BUSINESS REPORT, Oakbrook, Illinois.

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.

11/01/01: Commentary: How The Feds Can Finance The Stimulus Plan

SUSIE GHARIB: Tonight's commentator says there are three ways the U.S. government can boost the nation's economy-spend, spend and spend. Here's Louis Uchitelle, Economics Writer for "The New York Times."

LOUIS UCHITELLE, COMMENTARY: The downturn in the national economy has already raked the private sector, drying up business investment, shrinking consumer spending and producing hundreds of thousands of layoffs. Now it is hitting the tax revenues that states and cities rely on to pay for their public spending, and there are cut backs. This is no minor matter. Without anyone ever quite noticing, states and cities have become a huge source of public spending. That spending, in turn, has generated jobs and stimulus for the national economy. The states and cities, in fact, are gradually overtaking the federal government in public outlays. Together, they spend an amount equal to 62 percent of federal spending, up from 54 percent in 1990, and 42 percent in 1960. The gathering recession, however, has shrunk the tax revenues, which come mainly from sales taxes that fund states and localities. The federal government could subsidize the states and cities, thus helping to restore the spending just when the economy needs it most. But Congress is considering instead a bill that relies mainly on tax cuts, not spending, for stimulus. Spending is what is needed and spending in a recession is the government's role, until the private sector gets its nerve back. I'm Louis Uchitelle. I'm Louis Uchitelle.

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.

11/01/01: Fast Retailing's Retail Revolution

SUSIE GHARIB: And finally, relentless deflation has battered Japanese department store sales, but a few low end retailers are thriving as consumers hunt for bargains. One of them is Fast Retailing, which runs a store called Uniqlo, Japanese for unique clothing apparel chain. And as Lucy Craft reports from Tokyo, Fast Retailing is now setting its sights on Europe and the United States.

LUCY CRAFT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Stylish outlets, a few basic clothing items and a lot of colors, high quality and, most of all, cheap prices. Uniqlo's brand of cut rate, unisex chic has amounted to nothing less than a retailing typhoon, sparking scores of imitators and single-handedly redefining fashion and the way apparel is sold here.

RICHARD KOO, SENIOR ECONOMIST, NOMURA SECURITIES: This is the kind of retail revolution we were waiting for for the last god knows how many decades. It's finally happening. For the first time in history, Japanese people are able to buy products from abroad at international prices. That's basically what Uniqlo has done, bringing the products made elsewhere at the prices that, for example, American consumers typically pay.

CRAFT: The secret behind Fast Retailing-the name comes from fast food-is deceptively simple.

TERUNOBU AONO, PUBLIC RELATIONS, FAST RETAILING COMPANY: Our business model is controlling the product from factory to store shelf by ourselves. Production is outsourced, but under close supervision of our own technicians. All product is purchased by us for sale exclusively in our own outlets.

CRAFT: By keeping in-house everything from design and manufacturing to distribution, warehousing and sales, fast retailing has been able to keep quality high while cutting costs to the bone and still reap huge profits. Pre-tax income for the year through August is expected to top $800 million. Saturation of Uniqlo's home market-there are 500 stores in Japan-has flattened the retailer's torrid growth, forcing it to expand oversees, this year to London, and eventually, the firm says, to the U.S. Analysts are bullish, saying Fast Retailing's low priced, high quality duds should transplant just about anywhere.

TAKAYUKI SUZUKI, RETAIL ANALYST, MERRILL LYNCH: What Fast Retailing is trying to do is to offer very basic casual wear for all over the country, for rich people, for poor. They don't care. It's just very basic. If their theory works, they'll be able to penetrate into many other new markets, including the European market and U.S. market.

CRAFT: Uniqlo is unusual in the world of specialty retailing here, one of the first Japanese chains designed to be competitive not just at home but overseas. For his part, the company's brash founder isn't modest about his goals. He's vowed that eventually Uniqlo will be number one in the world casual apparel market. 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.

11/01/01: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: The stock market got an early boost from that news of a possible settlement in the Microsoft antitrust case. At 10:00 a.m., The Dow Industrial Average was up 16 points. NASDAQ Index posted a 19-point gain. Stocks then backed down in reaction to the report that the purchasing managers business activity index dipped to a 14- year low last month, and we'll have the details on that shortly. The market bounced right back though, as many traders felt it was due for a rebound in the wake of the Dow's 470-point tumble in the first three days of this week. And bounce back it did as the Industrial Average climbed to a 110-point gain by 1:00 p.m. and the NASDAQ Index then was up 29 points. Continuing strength in stalwarts like Microsoft and General Electric (GE), along with impressive positive market breadth and plenty of short covering gave the rally big time momentum for the rest of the day. The Dow Industrial Average vaulted to a closing gain of 188.76 points and now stands at 9263.90. The NASDAQ Index surged 56 1/10 points to close at 1746.40.

Big board volume up only 4 million shares. That was a little disappointing, but the up volume over the down volume wasn't. Nearly a 3 to 1 ratio there.

The Dow Transport Index up 37.14.

Utilities edged up only .20.

And the Closing Tick about as strong as you'll see it on the bullish side, +1130.

Standard & Poor's 500 up 24 1/3 points.

A gain of 13.81 in the 100.

The MidCap 400 gained 7 2/3 points.

The Bridge Futures Price Index rose exactly 1 point.

New York Stock Exchange Composite up 9.62.

A gain of nearly 5 1/4 in the Value Line.

Russell2000 Small Cap Index up 6.71.

And the broadly based Wilshire 5000 up 203 3/4 points or percent, exactly the same percent that the Dow Industrials gained.

The bond market extended yesterday's massive rally into early trading today with the soon-to-be phased out 30-year Treasury bond soaring another three points with the added help of a big drop in the purchasing managers index and the report of a 4/10 percent decline in September construction spending.

But news of a 10,000 drop in the latest weekly jobless benefit claims and simple profit taking sent tax free and corporates back down to close mostly unchanged, while the Treasury market ended on a mixed note.

The 5-year notes actually losing 7/32.

But the 10-year note managed to gain another 2/32.

And the 30-year bond continues to go up. Although it didn't close at the high, it was still up 1 7/32.

And the Lehman Brothers Long-Term Treasury Bond Index up exactly 5 1/2 points.

The stock market got an early boost from that news of a possible settlement in the Microsoft antitrust case. At 10:00 a.m., The Dow Industrial Average was up 16 points. NASDAQ Index posted a 19-point gain. Stocks then backed down in reaction to the report that the purchasing managers business activity index dipped to a 14- year low last month, and we'll have the details on that shortly. The market bounced right back though, as many traders felt it was due for a rebound in the wake of the Dow's 470-point tumble in the first three days of this week. And bounce back it did as the Industrial Average climbed to a 110-point gain by 1:00 p.m. and the NASDAQ Index then was up 29 points. Continuing strength in stalwarts like Microsoft and General Electric (GE), along with impressive positive market breadth and plenty of short covering gave the rally big time momentum for the rest of the day. The Dow Industrial Average vaulted to a closing gain of 188.76 points and now stands at 9263.90. The NASDAQ Index surged 56 1/10 points to close at 1746.40.

Big board volume up only 4 million shares. That was a little disappointing, but the up volume over the down volume wasn't. Nearly a 3 to 1 ratio there.

The Dow Transport Index up 37.14.

Utilities edged up only .20.

And the Closing Tick about as strong as you'll see it on the bullish side, +1130.

Standard & Poor's 500 up 24 1/3 points.

A gain of 13.81 in the 100.

The MidCap 400 gained 7 2/3 points.

The Bridge Futures Price Index rose exactly 1 point.

New York Stock Exchange Composite up 9.62.

A gain of nearly 5 1/4 in the Value Line.

Russell2000 Small Cap Index up 6.71.

And the broadly based Wilshire 5000 up 203 3/4 points or percent, exactly the same percent that the Dow Industrials gained.

The bond market extended yesterday's massive rally into early trading today with the soon-to-be phased out 30-year Treasury bond soaring another three points with the added help of a big drop in the purchasing managers index and the report of a 4/10 percent decline in September construction spending.

But news of a 10,000 drop in the latest weekly jobless benefit claims and simple profit taking sent tax free and corporates back down to close mostly unchanged, while the Treasury market ended on a mixed note.

The 5-year notes actually losing 7/32.

But the 10-year note managed to gain another 2/32.

And the 30-year bond continues to go up. Although it didn't close at the high, it was still up 1 7/32.

And the Lehman Brothers Long-Term Treasury Bond Index up exactly 5 1/2 points.

Today's rally made it rather apparent the influence that Microsoft's (MSFT) stock has on the market as a whole. In any case, of course, it's a member of the Dow Jones Industrial average, so up 188.76. And we see the advance/decline ratio, very impressive, not even, not quite 3 to 1, but getting close to it. And the same number of new highs and lows for the year, 71.

Washington Mutual (WM) topped the active list on 20.7 million shares, down $1.63. A number of analysts say lower interest rates could trigger a huge refinancing boom and that could possibly weaken the company's more profitable existing mortgage loan business.

Qwest Communications (Q) down $0.95. ABN Amro downgraded it from "add" to just a "hold." Of course, yesterday Qwest reported a third quarter loss of $0.08 a share when earnings were expected.

Enron (ENE) down $1.91. As we reported late yesterday, the SEC now has elevated its informal probe into the company's financial dealings with partnerships into a formal investigation.

EMC (EMC) moved up $0.72.

AOL Time Warner (AOL) a gain of $1.43.

General Electric (GE) did well, up $1.50.

AT&T (T) down $0.21.

General Mills (GIS) gained $1.08. Of course, today the company completed its purchase of Pillsbury from Diageo .

Lucent Technologies (LU) edged up $0.13.

But Providian Financial (PVN) dropping $0.69. The Thomas Wiesel Brokerage downgraded it from "buy" to just "market perform." In the meantime, Providian has hired Goldman Sachs and Salomon Smith Barney to explore strategic alternatives, including the possible sale of the company.

Boeing (BA) edged up $0.59. Lockheed Martin (LMT) hinted today it might want Boeing to be involved in the big $200 billion jet fighter contract it got last week.

Chevron/Texaco (CVX) moving up $1.31. The company is boosting its quarterly dividend from $0.65 to $0.70 a share.

Clorox (CLX) up $1.78. First quarter earnings higher, $0.45 from operations versus $0.42 last year. Sales were up four percent.

Standard & Poor's upgraded the stock to "accumulate."

Then Delta Airlines (DAL) managed to gain $0.80 despite reporting a third quarter loss of $259 million or $2.43 a share, but not as bad as the Street estimate of a loss of $2.70.

Then United Air Lines or UAL (UAL), the parent company, had a third quarter loss of $1.16 billion. That works out to a loss of $21.43 a share, a record, obviously. But the stock moved up $0.38 because that bad news already in the stock, obviously.

Wal-Mart (WMT) edged up $0.84. The company's spokesman said he was mistaken yesterday when he said Wal-Mart would be the only place in the United States stocking Polaroid (PRD) 35 millimeter film. It will be the largest seller of that film, but not the only outlet.

Advanced Micro Devices (AMD) up $1.66. That's likely a technical breakout helped by the strength in Microsoft and the whole technical sector in general.

Imperial Chemical (ICI) up $2.47. Third quarter earnings were lower, $0.65, down from $0.69 the year before, but better than expected.

First American Corp. (FAF) up $1.74. Titled insurance companies like this apparently stand to benefit from the lower mortgage rates and the refinancing boom that might follow.

Montana Power (MTP), one of the bigger percentage losers, down $0.89. The company today delayed the release of its third quarter results. They were due out today. The company said it'll get back to us and tell us when they're coming out.

Massey Energy (MEE) down $1.29. Merrill Lynch downgraded this stock from "buy" to just "near term accumulate."

And Charles River Labs (CRL) dropping $1.69. Third quarter earnings were higher from operations, $0.26 this year versus $0.12 last. But the company predicting lower fourth quarter earnings, in the $0.23 to $0.24 range.

Nasdaq trading, a gain of 56 1/10 points, or 3.3 percent. But volume down from yesterday, a little disappointment there. 20 stocks up for about every 15 lower.

Microsoft (MSFT) topped the active list, moving up $3.69. That's a gain of 6.4 percent.

Intel (INTC) moved up $1.52 in the strong high tech sector.

Cisco (CSCO) rising $0.74.

A $0.27 loss in Juniper (JNPR), though.

Sun Microsystems (SUNW) edged up $0.69, fifth in volume.

QUALCOMM (QCOM) gained $2.51.

Applied Materials (AMAT) rising $2.88.

A $0.57 rise in Dell Computer (DEL