SUSIE GHARIB: While cash registers at traditional retailers may be jingling less this holiday season, some experts are predicting 2001 will be a banner year for many online retailers. Erika Miller reports.

ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: For Web merchants it could be a very merry Christmas. Forrester Research estimates online holiday sales will hit an all-time high of $11 billion, a 10 percent increase from last year. Other firms are even more bullish, predicting gains as high as 30 percent. By comparison, sales at most brick and mortar stores are expected to be flat at best. Analysts credit much of the growth in online retailing to greater comfort with the Internet.

JEFFREY FIELER, CONSUMER ANALYST, BEAR STEARNS: First you have more users coming on the Internet every year. Right now that number is approximately 18 percent per year. And then, in addition, within that subset, you have an increasing number of people who are willing to shop online.

MILLER: Easy price comparison is another advantage for online retailers. Consumers are worried about their jobs and the economy, and experts say that's made them more price conscious.

CHRIS KELLEY, E-COMMERCE ANALYST, FORRESTER RESEARCH: One reason they're more willing to go online to do their shopping is because the prices are low. Another reason is in conjunction with that the fact that a lot of these retailers - these online retailers are offering promotions, free shipping on $99 purchase, free shipping on a $50 purchase.

MILLER: Internet merchants may also benefit from a cocooning trend that appears to have become more pronounced after September 11. Many nervous consumers are opting to stay home to shop for gifts instead of battling crowds at the malls. But just because e-tailers are expected to do well, doesn't necessarily mean their stocks will head higher. Some analysts recommend buying companies like Yahoo! (YHOO) over pure plays like eBay (EBAY) or Amazon.com (AMZN).

FIELER: I think at this point, from the perspective of eBay, the question really is more one of valuation rather than the business itself. For Amazon, the issues are a little bit more company specific, also in terms of capital structure given the level of debt.

MILLER: While online sales are expected to be strong, experts point out they represent less than 5 percent of total holiday spending. So even a stellar performance would not likely be enough to rescue a dismal holiday season. Erika Miller, "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.

12/13/01:Congress Pushes Tax Cuts To The Back Burner

SUSIE GHARIB: There were more talks today on Capitol Hill about an economic stimulus package. Negotiators are reportedly close to agreement on expanded benefits for the unemployed. But as Darren Gersh explains, they appear to be leaving the toughest issue, tax cuts, for last.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The debate over stimulus is also a debate over beliefs. Republicans believe tax cuts will speed recovery.

REP. DENNIS HASTERT, HOUSE SPEAKER: We think it is very important not just to pay people who don't have jobs, but recreate those jobs, and the way you recreate those jobs in this country is to have capital and invest them in building buildings and buying new capital equipment so people have jobs.

GERSH: But Democrats believe the president's tax cuts busted the budget, and they insist any further cuts must come attached to a hefty benefits package for the unemployed.

SEN. TOM DASCHLE, MAJORITY LEADER: This is really a benefits versus tax question. We can continue to look at ways with which to deal with the tax reduction, but the full benefits package has to be part of it.

GERSH: Under the Bush administration's latest proposal, the 27 percent income tax rate would drop to 25 percent immediately, instead of in 2006 under current law. Deloitte & Touche estimates the greatest benefits will go to upper income Americans. For example, for single taxpayers earning $92,000 or more, the 25 percent rate means a tax cut of about $800. Married couples earning $158,000 or more would bring home an extra $1,300. Conservatives say accelerating income tax cuts sparks new investment and risk taking.

WILLIAM BEACH, BUDGET ECONOMIST, HERITAGE FOUNDATION: By bringing the rate reductions into the present, which are currently scheduled for three or four years from now, you can get the economy moving much more quickly.

GERSH: Essentially, it's the same debate the parties had over the Bush tax cut this past spring.

CLINT STRETCH, TAX POLICY DIR., DELOITTE & TOUCHE: This is a fight over stimulus, a fight over federal budget policy. It's a fight over whether we're going to have tax cuts or we're going to spend money on education and on prescription drug benefits for elderly people. And it's right at the center of the very things about which the two political parties disagree.

GERSH: Which is why negotiators are saving the issue of income tax cuts to the very end. Talks are likely to stretch into the weekend, with a final decision expected early next week. 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.

12/13/01:Prudential's CEO Arthur Ryan On The IPO

SUSIE GHARIB: As you said at the beginning of your report, Prudential Financial (PRU) had a good debut here at the big board. Earlier today I talked with Prudential's CEO Arthur Ryan and began by asking him why he decided to take the company public.

ARTHUR RYAN, CHAIRMAN & CEO, PRUDENTIAL FINANCIAL: The business mix is such that it, we didn't believe the mutual form was an appropriate form of ownership. Number two, it does give us a currency over and above cash in order to grow through acquisitions as that's appropriate going forward. And we believe that it is the proper form of ownership for the kind of company that we have.

GHARIB: Mr. Ryan, you've been telling Wall Street that your goal is for Prudential to deliver a return on equity of 12 percent. Right now it's around five percent and analysts are telling me they think that's a little bit of a stretch. How are you going to get to 12 percent?

RYAN: Well, as we told people on the road show, the key for us has been to respond to the slowdown in the economy. We've had to reduce expenses. Second, we've seen a tremendous shortfall in the securities markets. We certainly don't expect that to continue. But I think more importantly is that we've got each of our businesses, through the work we've done in the last four or five years, positioned for growth, whether it's our domestic insurance, whether it's our asset management business worldwide or international insurance. So we've seen some shortfall as a result of market conditions, but we've responded through expense saves there and we've got the other businesses ready to grow.

GHARIB: Let's talk about some of the operational challenges that might be facing Prudential. Prudential Securities has been losing more than $160 million so far this year. How are you going to fix that?

RYAN: Well, it's interesting, last year Prudential Securities we earned over $300 million and you're right, it is losing money this year. That is really driven by the retail securities volume. We've had to do a couple of things. First, we've had to further reduce expenses in order to get the break even level much lower. Number two, we've changed the business mix a lot. We focus on the investor. And so we've seen a tremendous change in terms of the business mix and with some modest market improvement we're going to be in good shape next year.

GHARIB: What about property and casualty? That's been borderline profitable.

RYAN: Well, property and casualty, as you know, is a business that is of modest with us, about $2 billion in revenue. It is profitable and it one that we need to get above the hurdle rate. It is not yet achieving the hurdle rate it should. Our game plan is to get it to the hurdle rate.

GHARIB: A number of analysts are telling me that if Prudential Securities and also property and casualty continue to be weak that you would sell them. Is there any time line for these units to improve before you consider selling them?

RYAN: No, I think it's fair that anyone in the public markets when a series of businesses either are having an off year as a result, say, Prudential Securities, or they're not meeting a hurdle rate, the question is what are you going to do about it? My objective is to make sure they do meet the hurdle rate. And the criteria that we use is the same there as we use for every other business. If you're not able to meet hurdle rates then obviously you have to look and consider other things. But that's not the game plan for Prudential Securities. The game plan is to make it work and I'm very confident we'll do it.

GHARIB: We've seen the stocks of Met Life (MET) and John Hancock do rather well since they went public. They're up 60 to 100 percent. Do you think that Prudential will do as well?

RYAN: Well, I certainly hope so. I applaud the work of the management and the people of those two companies. They've done a great job. I certainly anticipate that we're going to do well and I hope to live up to their standards.

GHARIB: Well, good luck to you and we thank you very much for speaking with NIGHTLY BUSINESS REPORT.

RYAN: My pleasure. Thanks an awful lot for having me.

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.

12/13/01: One On One With Raymond Kurzweil, CEO, KurzweilAI.net

SUSIE GHARIB: Raymond Kurzweil has a score of inventions to his credit, from electronic keyboards and synthesizers which bear his name to reading machines for the blind. At a recent "Business Week" forum on the digital economy, Kurzweil shared his sci-fi predictions of the not too distant future with New York Bureau Chief Scott Gurvey.

RAYMOND KURZWEIL, CEO, KURZWEILAI.NET: well, I've been thinking about technology trends for several decades. It stems from my interest in inventing because invention is to make sense when you finish the project and I realize the world would be a very different place if a project took three year. So I became an avid student of technology trends and that took on a life of its own. And I've developed mathematical models of how technologies in different areas evolve. If you put all these trends together, within 30 years we'll have the means to create machines, computers of that era that are as powerful as the human brain, both in terms of its basic computation ability, but also in terms of the sophistication of its software and there won't be a clear distinction between human and non-biological Intelligence. But the primary application will be to expand our own intelligence. We're already very intimate with our machines. We're starting to put them inside our brains for people with disabilities, like Cochlear (ph) implants for the deaf and implants for people with Parkinson's disease.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: And you think this will happen in a relatively short time frame? I mean we have devices, machines and things that we interact with now. But you wouldn't confuse them with a person.

KURZWEIL: Absolutely. The complexity of our computers today are still on the order of a million times simpler than the human brain but that gap is rapidly shrinking. We'll make, we'll shrink that gap of a million in complexity down to no gap within a few decades. So I would say 30 years from now, conservatively, machines will pass the turning test. They will be indistinguishable from humans and, in fact, it'll all be mixed up, because humans will have these machines inside their brains and there won't be a clear distinction between the two.

GURVEY: What are the business implications of all of this?

KURZWEIL: Most cutting edge software today is intelligent by the standards of, say, 10 years ago, incorporates what used to be disciplines of artificial Intelligence. That's the nature of the artificial Intelligence field. It spins off fields like robotics, machine vision, character recognition, speech recognition, other forms of pattern recognition. Then they become fields unto themselves. But most commercial software is Intelligent and in order to be competitive your software needs to be more Intelligent than your competitor's. And so there's an economic imperative to incorporate increasingly sophisticated forms of A.I. into our software.

GURVEY: How are the companies reacting to some of these predictions of yours?

KURZWEIL: There's an enormous amount of artificial Intelligence, for example, in Microsoft's software. Microsoft has a very substantial artificial intelligence effort. And it's true of other leading software companies and computer companies. All of these, and certainly all of the things I'm talking about, the exponential growth of computation, the exponential growth of communication, bandwidth, exponential knowledge of the human brain, I mean these are actually the forces that are animating business technology today.

GURVEY: Thank you. Ray Kurzweil, KurzweilAI.net.

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.

12/13/01: Paul Kangas' Wall Street Wrap Up

PAUL KANGAS: Largely as a result of that disappointing tumble in November retail sales, sellers quickly took the upper hand as trading on Wall Street opened today. To make matters worse was QWest's (Q) announcement it was cutting 7,000 jobs. The tech sector was undermined by worse than expected fourth quarter results from Ciena and Lucent's warning of a bigger than expected first quarter loss. By 10:30 a.m., the Dow Industrial Average was down 93 points, the NASDAQ posted a 42-point deficit. The market stabilized and then firmed up a bit in late morning, thanks in part to a successful initial public offering by Prudential along with better than expected earnings from Heinz (HNZ). But the trading pace slowed noticeably around 11:00 a.m., when the government released the Osama bin Laden videotape. At noontime, the Dow trimmed its loss to 58 points, while the NASDAQ Index was down 31 points. Renewed selling in the high tech arena spread across the market in general in afternoon trading and as buyers retreated to the sidelines the Dow Industrial Average fell to a closing loss of 128.36 points, putting it at 9766.45. The NASDAQ Index tumbled 64.87 points, ending at 1946.51.

Big board volume moved up about 34 million shares on the sell-off and down volume exceeded up volume by about a 9 to 5 ratio.

The Dow Transport Index down nearly 26 1/4 points.

Utilities managed to gain nearly 2 points.

The Closing Tick just modestly bearish at -144.

Standard & Poor's 500 down 17 2/3 points.

A 9 3/4-point drop on the 100.

MidCap 400 off about 7 2/3 points.

And the Bridge Futures Price Index edged up 0.17.

A loss of 6.12 in the New York Composite.

Value Line off 5 3/4.

And the Russell2000 Small Cap Index down 6 2/3 points.

The broadly based Wilshire 5000 tumbling 157.13 points, a little worse than the Dow as a percentage drop..

The bond market rose early today in reaction to the decline in November retail sales. But after three straight days of gains in this market, profit takers soon moved in, especially after the report of a much larger than expected decline of 86,000 in the latest weekly new jobless benefit claims. Even the stock market sell-off didn't prevent tax free and corporate issues from moving down a quarter to a half point on the close, and the Treasury market from falling across the board.

The 5-year notes down 9/32.

The 10-year notes off 16/32.

The 30-year bond dropped 20/32.

And the Lehman Brothers Long-Term Treasury Bond Index down 16.38.

Kind of a rugged day on Wall Street, good for the bears, bad for the bulls, down 128 1/3 points, or 1.3 percent. Almost twice as many issues down as up and two more new yearly highs than lows.

Lucent (LU) topped the active list on 49.7 million shares, down $1.21. The company sees a first quarter loss of $0.23 to $0.26 versus the Street estimate of a loss of $0.17. But the company did say it expects a second quarter upturn in its business.

Prudential Financial (PRU) went public today at a price of $27.50. A 110 million shares offered. The stock opened at $29.10 and the high was $30. Backed off just a little.

Qwest Communications (Q) down $0.30. As I mentioned, it's laying off 7,000 workers.

No change in G.E. (GE).

NorTel Networks (NT) down $0.95, dragged down by Lucent and some of the other high tech stocks.

Banco Santander (BSB), no change there.

Compaq (CPQ), there you see it, down $0.40.

And then, incidentally, Hewlett-Packard was off $0.74 at $21.07.

Calpine (CPN) moving up $0.14.

Pfizer (PFE) a loss of $0.74.

AOL Time Warner (AOL) moved up $0.79. Narrow movement on this board.

Advanced Micro Devices (AMD) down $2.13. Prudential Securities downgraded it from "hold" to "sell."

Boeing (BA) was up $0.20. The company's going to continue manufacturing its money losing Model 717 100 passenger jet but it will scale back production. It's also going to cut an additional 1,1500 jobs at a Philadelphia helicopter plant.

Bristol-Myers (BMY) down $1.45. After the close today, the company forecast next year's earnings will fall about 10 percent below Wall Street estimates and that's largely because the company expects to lose patent protection on its glucophage diabetes drug.

Corning (GLW) down $1.17 in reaction to Lucent's problems. And Credit Lyonnais (SOPAX) has downgraded the stock from "hold" to "reduce."

Delta Air Lines (DAL) off $1.10, representing some weakness in that group today.

H.J. Heinz (HNZ) moved up $1.16. As I touched on earlier, second quarter earnings better than expected, up 9.6 percent. The company's also forming a joint venture with Japan's Kagomi Corporation (ph).

Great Atlantic & Pacific (GAP) up $1.72. First Boston today said Kroger's (KR) earnings warning the other day is no reason not to buy Great Atlantic & Pacific.

Serono (SRA), this is a Swiss biotech firm, up $1.40. Expects to win FDA approval for its multiple sclerosis treatment called Rebiff. It expects that to happen by next summer.

Willamette Industries (WLL) up $3.25 after Weyerhaeuser (WY) sweetened its buyout bid from $50 to $55 a share. Weyerhaeuser's stock dropped $0.36.

The bigger lose of the day, MFS Special Value Fund (MFV). This is a closed end mutual fund and I talked to closed end fund expert Tom Herzfeld and he told me this fund's cash distribution is likely to be reduced. The company itself mentioned that and said it may liquidate. Incidentally, Tom will be our guest market monitor tomorrow night on the program.

Luby's (LUB), the cafeteria company, down $1. A first quarter loss of $0.24 versus only a $0.09 loss the year before and sales down 2.7 percent on the period.

And Boston Beer (SAM) down $1.77 after hitting a 52-week high yesterday. I think this is a little profit taking hangover.

Nasdaq trading, a loss of nearly 65 points, or 3.2 percent. Volume moved higher on the sell-off. And for every 13 stocks higher, about 22 lower.

Genzyme (GENZ) topped the active list, edging up $0.27. After the close today, this stock was added to the Standard & Poor's 500 Index, replacing Ralston Purina (RAL).

Cisco Systems (CSCO) down $1.49.

Microsoft (MSFT) fell $1.68.

Intel (INTC) off $1.51.

And Amgen (AMGN) fell $4.20. The company reportedly is in talks to acquire Immunex (IMNX), which moved up $2.51.

Then CIENA (CIEN