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.


11/14/01: What's Ahead For Hewlett-Packard

JEFF YASTINE: Hewlett-Packard shares moved higher today after the company reported better than expected profits for its fiscal fourth quarter. The company posted operating earnings of $0.19 a share for the period off. That was sharply from the same quarter last year but far above the consensus Wall Street estimate of $0.08. Hewlett-Packard also reaffirmed its intention to merge with Compaq Computer (CPQ). Hewlett shares jumped $1.85 for 9 percent to 2208 on today's news. And joining me now to talk more about Hewlett's earnings and the merger prospects is Art Russell, technology analyst at Edward Jones. And Art, let's take the earnings report first. How was Hewlett-Packard able to beat the consensus estimate by such a wide margin?

ART RUSSELL, TECHNOLOGY ANALYST, EDWARD JONES: Well, I think what you saw is they did a little better than people thought in the printer segment. They lost a little less money than people thought in the home PC segment and overall we saw some stabilizing across all their business segments. So it was a nice surprise.

YASTINE How much of this was cost cutting on their part versus actual sales improvements or stabilization on the product side?

RUSSELL: Well, I think you can say that the costs cutting contributed about half of the upside surprise here. The rest of it was from increased revenue and keep in mind the printer piece of it is the most profitable part of Hewlett's business. So the extent that they had upside revenue in printers really contributed to the bottom line in terms of profitability.

YASTINE: Now is there enough here for you to call a bottom, the proverbial bottom to the technology product cycle here?

RUSSELL: No, I think it's way too early to call a bottom. Hewlett-Packard benefited from the fact they were early to market with the Windows XP computers. They tie-a lot of their printer sales go along with the actual sale of the PC. And the digital imaging piece of their business is really starting to gain some traction, and that helped out. I would not extrapolate this and call this a bottom to this entire technology cycle because Hewlett beat earnings here today.

YASTINE: All right, so things still remain tough on that side of it. All right, let's go to the idea of the merger with Compaq. Does this report help improve the prospects for that merger going through?

RUSSELL: Well, I think we're in a very fluid situation right now and people's opinions are changing on a daily basis. I think this report does improve the prospects this deal gets done. People are assuming now that there's more credibility from the H.P. management team. They delivered against their goals. They beat expectations here. And Carly came out on the conference call and was really, you know, forceful in her statement that H.P. intends to go through with this merger. And despite the fact that some of the Hewlett or Packard family members may choose to vote against this merger, the boards of both companies are committed to getting it done. She's going to see to it that she does whatever is in her power to get this deal to close.

YASTINE: So it really sounds, in 10 seconds, it sounds like there's, it's still really up in the air as far as whether this is really going to go
through or not?

RUSSELL: Yes, it's way too early to say whether this merger will close or not. I think people are interpreting today's results as a positive indication that there's more credibility coming from H.P.

YASTINE: All right, Art, we'll end it there. We appreciate your time.

RUSSELL: Thanks.

YASTINE: Art Russell, Technology Analyst at Edward Jones.

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.

11/14/01: The Economic Stimulus Package Is Still Stuck In Congress

LINDA O'BRYON: The political wrangling in Washington continues over an economic stimulus package. Late today, the Senate voted to block a $73 billion measure backed by Democrats. As Darren Gersh reports, it's another delay in an already stalled legislative process.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Speaking to business lobbyists, the Vice President stepped up pressure on Congress to move quickly to cut taxes to stimulate the economy.

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: If we're serious about wanting to restore confidence, to encourage risk taking and investment and create jobs, then clearly tax relief is the way to go.

GERSH: The White House has threatened to veto increases in spending but at the moment Cheney spoke, Senate Democrats were proposing to spend $15 billion more on homeland security. Half the money would go to fight bioterrorism and beef up food safety and law enforcement. The rest for everything from border patrols to transportation and postal security.

SEN. ROBERT BYRD (D-WV), CHAIRMAN, APPROPRIATION COMMITTEE: The American people want assurances that they can open letters free from worries about biological weapons. They're looking to their elected leaders for security.

GERSH: Late this afternoon, Democrats failed to muster the votes needed to overcome Republican objections to the added spending. The move effectively killed the Democrats' bill, but it was equally clear that Republicans don't have the votes to pass their plan either. With action stalled, senators from both parties talked about skipping a lengthy debate and moving straight to negotiations with the House and Bush administration to hammer out a final agreement.

TRENT LOTT (R-MI), MAJORITY LEADER: And we need to take a time out and say all right, let's skip all these hurdles and let's go right to the end game. Let's get the right people in the room and say get this job done.

GERSH: But angry Democrats say Republicans so far have rejected efforts to forge a bipartisan compromise.

SEN. THOMAS DASCHLE (D-SD), SENATE MINORITY LEADER: So don't talk to us about bipartisanship until you're ready to do it.

GERSH: In the end, analysts expect the solution will be to give both sides much of what they want.

BILL FRENZEL, BUDGET ANALYST, BROOKIINGS INSTITUTION: Nobody wants to look like they're underestimating the recession or the difficulties that it will cause and I think the inclination will be to overdo the stimulus rather than not to do it at all or to under do it.

GERSH: Which is why even though action is now stalled in the Senate, analysts are still counting on a stimulus package of close to $100 billion. 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.

11/14/01: The American Red Cross Has A New Financial Aid Plan For Its Liberty Fund

LINDA O'BRYON: Well, in Washington today, a stunning about face from the American Red Cross. The organization says it will use all of the money donated to its Liberty Fund for the victims of the September 11 attacks and their families. As Suzanne Pratt reports, today's news caps off a period of sharp criticism for many of the nation's charities.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: It's no secret that
the generosity of Americans since September 11 has been overwhelming. In two months, nearly 200 charities have collected more than a billion dollars. What's less clear, however, is where the money is going and why the distribution process seems to be taking so long. The American Red Cross and its Liberty Fund is the leader in collections, bringing in more than $500 million. At a press conference in Washington today, the organization said all of the money raised will now go to the victims of September 11 and their families. Today's announcement follows heavy criticism that the Red Cross has come under in the last month, for its decision to hold at least $200 million in reserve for future terrorist attacks.

HAROLD DECKER, CEO, AMERICAN RED CROSS:.DECKER: America wants our Liberty
relief efforts directed solely at the affected, people affected by the September 11 tragedies. We deeply regret that our activities over the past eight weeks have not been as sharply focused as America wants and the victims of this tragedy deserve.

PRATT: The Red Cross also said today it has already dispensed 25 percent of the Fund in direct aid to victims, but added it will stop accepting new donations.

DECKER: We have stopped the active solicitation of fundraising for the Liberty Fund because we believe that we have enough money to meet the immediate and long-term needs of people affected by the disasters.

PRATT: Another big rcpt of America's generosity is the September 11 Fund, created by the United Way and New York Community Trust. More than $300 million has been pledged and while the Fund provides grants to non-profit agencies that work on the front lines, all of its money ultimately goes toward helping victims of September 11.

JOSHUA GOTBAUM, CEO, SEPTEMBER 11TH FUND: The way the September 11 Fund works is precisely the way both the New York Community Trust and the United Fund have worked for generations, which is they know from their own experience which front line organizations can provide help most effectively and fairly.

PRATT: So far, the September 11 Fund has made 80 emergency grants totaling nearly $50 million, with the majority going to charities that give financial assistance to victims' families. A detailed list of the grants can be found on the Fund's Web site. Yet despite working long hours to dole out the cash, many charities are still being criticized for their slowness. Those involved say part of the problem is the decentralized nature of the distribution process. New York Attorney General Eliot Spitzer says his office is helping to improve that process by setting up a central database similar to one used after the 1995 Oklahoma City bombing.

ELIOT SPITZER, ATTORNEY GENERAL, NEW YORK: The purpose of the database is to permit information about who has received grants from the various charities to be aggregated so one charity will know who has received a grant from another charity. It will ensure equity. It will ensure that nobody slips through the cracks.

PRATT: Several of the charities are also urging patience to the victims' families. They say they're also planning for the long-term needs of those most affected by September 11, a process that in itself can take a long time.

GOTBAUM: We don't think that emergency needs alone ought to be our mandate and we don't think that that's the only reason that people-that literally millions of people contributed to the Fund. We think that the reason millions of people put their trust in us is that we will deal both with the emergency needs, the near term ones, and the longer-term needs.

PRATT: Experts say they've learned valuable lessons from other disasters that should help deflect some of the criticism aimed at the September 11 relief operation. In particular, it took the Oklahoma City Fund three months to dispense 20 percent of its total money and six years later, the Fund is still giving out aid. 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.

11/14/01: Money File- Some Funny Money Business

LINDA O'BRYON: In the money file tonight, laughing all the way to the bank with financial services funds. Here's John Waggoner, Mutual Fund Columnist for "USA Today."

JOHN WAGGONER, MUTUAL FUND COLUMNIST, "USA TODAY": If you see someone laughing all the way to the bank, it's probably your banker. You can laugh with your banker by investing in a financial services fund. Just remember that banking booms often go bust in the tail end of the slowdown. Why is your banker laughing? Well, short-term interest rates have dropped dramatically thanks to 10 consecutive cuts by the Federal Reserve. For a bank, money is a commodity, and the cost of money has plunged. In January, banks paid an average 5.3 percent interest on a one year certificate of deposit. Now they pay 2.3 percent. Loan rates have fallen, too, but not as much. Thirty year mortgages average 6.5 percent, down from 7.7 percent in January. And some banks simply originate the loans and sell them, collecting a fee on the way. In this refinancing rush, they're collecting a lot of fees. So that's why your banker is merry. You can share the mirth with a financial services fund which invests in stocks of banks, brokerages and insurance companies. The average financial services fund is down about seven percent this year. That's not great. But the average stock fund is down 16 percent and some funds that concentrate on banks only are up as much as 20 percent. What's the catch? Well, loans, like fish, take a while to go bad, and when loans go bad, they can really stink up bank stocks. Typically, borrowers default on loans at the end of a slowdown. That could be soon. So if you're tempted by a financial services fund, don't invest more than five or 10 percent of your portfolio. With luck, you'll be chuckling on the way to the bank, too.
I'm John Waggoner.

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.


11/14/01: Paul Kangas' Wall Street Wrap Up


JEFF YASTINE: Well, today's retail sales numbers gave stocks an early boost, but it did not last. The DowJones Industrial Average opened sharply higher. It jumped about 100 points in the early minutes of trading. But traders used that as a chance to start taking profits, and the Dow gave back all of those early gains before bottoming out. However, around 11:00 a.m., the Dow did  find some buyers and began tomove higher again. Big-board advancers still led decliners by about a 3 to 2 margin, and by noontime, the Dow remained about 40 points higher. In afternoon trading, the NASDAQ spent most of its time underwater as selling in Microsoft (MSFT) weighed on the Index. A lot of the other big favorites, like EMC (EMC) also came in for selling. But in late trading, buyers once again appeared on the horizon, and managed to boost the major indexes back toward the day's highs and the Dow went on to close up 72 points at 9823. The NASDAQ held up as well, rising more than 11.points to close at 1903.

Volume weighing in at 1.4 billion shares, up a touch above yesterday's level.

The Transports soared nearly 51 1/2.

Utilities off 6 1/2 points.

The Closing Tick very bullish at +855.

In the broader market, the S&P 500 and 100 each edging up about 2 points on the day.
The MidCap 400 ending fractionally higher.

The Bridge CRB falling about 2/3 of 1 point.

The New York Stock Exchange Composite Index rising about a point.

The Value Line climbing more than 3.

The Small Cap Russell2000 Index gaining about 4 1/2.

And the Wilshire Index rising more than 32 points.

Bonds closed lower for the fourth straight session, with those strong retail sales numbers being the reason du jour for the selling. The performance was enough to convince at least some traders that perhaps the Fed might be finished lowering interest rates. However, tomorrow, we'll have reports on initial weekly unemployment claims and business inventory levels and if either of those are worse than expected, bonds could get a lift. But for today, bonds headed lower.

The 5-year note losing 25/32.

The 10-year dropped 1 6/32.

And the 30-year Treasury losing 1 24/32. The yield up to 5.03 percent.

Finally, the Lehman Brothers Long Bond Index fell 21 points.

Well, those hefty retail sales numbers we saw today gave the Dow another boost, getting it up above 9,800, and we haven't seen that level since early September. Today rising 72 points. The advance/decline ratio 9 to 6 on the up side. 117 issues setting new highs, just 24 new lows.

Compaq (CPQ) up another $1.20, picking up a bit as a result of Hewlett-Packard's (HWP) stronger than expected fourth quarter results, which we mentioned a few minutes ago.

Lucent Technology (LU) advancing $0.62.

Enron (ENE) falling $0.08.

And here's the reaction in HP.'s (HWP) stock, the stock gaining $1.85, and that was more than double what Wall Street was expecting.

AOL Time Warner (AOL) rising a $0.25.

Corning (GLW) tacked on $0.67.

EMC (EMC) falling $0.40.

ExxonMobil (XOM) dropped $1.80. The oil sector under pressure given the outlook for lower crude prices.

Nokia (NOK) up $1.12. The prospects for the European launch of its third generation or 3G handsets in the third quarter of 2002 creating quite a stir there.

Citigroup advanced $0.50 on the day.

Among the widely helds, shares in Abercrombie & Fitch (ANF) coming to life, rising more than $2. The company reported flat third quarter results yesterday, but today's big report on retail sales drove that stock higher.

British Airways gaining $3.19. There is optimism British Air may recoup a large portion of losses resulting from the September attacks if debate in the U.K. parliament is successful.

Federated Department Stores (FD) climbing more than $2. Third quarter earnings coming in at $0.17 a share. That was $0.02 above First Call's mean estimate.

Freeport McMoRan Copper & Gold (FCX) climbing $0.82. Copper prices have been climbing the last couple of days and J.P. Morgan issued a positive report highlighting the drop in world copper supplies.

IBM (IBM) falling more than $2, but Big Blue's COO told analysts today that demand for I.T. spending is rebounding.

Newmont Mining (NEM) ended off $1.95. Today, the company announcing plans to acquire Canada-based Franco-Nevada Mining (FN.TO) for $16.36 a share in stock. It's also buying Normandy Mining Limited for stock worth about $0.79 a share.

Interpublic Group (IPG) rising $4.89. Salomon Brothers upgraded the stock on the belief the advertising firm's cost cutting measures will help it weather the economic slowdown and benefit from a recovery.

And Kansas City Southern up $1.33. C.S. First Boston upgraded the shares today.

Great Atlantic & Pacific (GAJ) up $1.75. The supermarket chain forecasting third quarter profits of $0.05 to $0.08 a share. It's also closing 39 stores in a restructuring move.

ACLN Limited (ASW) gaining more than $2. The marine logistics company posting stronger than expected third quarter earnings, $1.65 a share, up from $0.85 a year ago.

Global Marine (GLM) tumbling nearly $2. The outlook for lower oil prices amid OPEC's decision to postpone cuts weighing on that stock.

Vimpel (VIP) falling more than $2. A Russian bank downgrading the stock today. Shares are up more than 60 percent since September, though.

The NASDAQ Composite up 11 points on the day at 1,903. Volume managing to hold above 2.1 billion shares and seven stocks up for every five lower.

Microsoft (MSFT) falling nearly $2. The X Box launch is tomorrow, though.

Intel (INTC) rising $1.27.

Cisco Systems (CSCO) edged up $0.31.

Dell (DELL) rose $0.6