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Program: Wednesday, August 27, 2003
08/27/03: Oklahoma Takes Aim At MCI
SUSIE GHARIB:Oklahoma state throws the book at MCI. The state's attorney general filed criminal charges against MCI today, the company formerly known as WorldCom. And also for the first time, former WorldCom CEO Bernie Ebbers is facing criminal charges for allegedly giving false information to investors. The 15-count complaint is the result of Oklahoma's own investigation of the biggest corporate fraud in history. Stephanie Woods reports. STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Oklahoma's attorney general, Drew Edmondson, says it's time WorldCom and its former top executives are punished. He's demanding justice for the $64 million the state's pension fund lost in the telecom giant's collapse. DREW EDMONDSON, OKLAHOMA ATTORNEY GENERAL: I don't think this company has been punished. I think it has been rewarded for its bad acts. And I intend to prosecute them criminally. WOODS: This is the first time criminal charges have been brought against the firm and former CEO Bernie Ebbers. Ebbers' attorney Reid Weingarten maintains his client's innocence, saying: "We expect that when this case goes to court we will be able to demonstrate that Bernard Ebbers was in fact involved in no wrongdoing and will be fully exonerated." Scott Sullivan, David Myers, Buford Yates, Betty Vinson, and Troy Normand were also named in the Oklahoma case and have all been charged separately by federal prosecutors. All except former CFO Sullivan have pleaded guilty and are awaiting sentencing. Legal experts say the state charges could make the federal cases more difficult. ELIZABETH, WALLACE FLEMING, ATTORNEY, TROUT & RICHARDS: This complicates the Justice Department's ability to obtain cooperation from witnesses because the Justice Department cannot promise immunity from prosecution by the states. They cannot promise that they will get a descent deal in the states. WOODS: Each of the 15 counts of securities fraud filed against the company and the executives carry a maximum penalty of 10 years in prison and a $10,000 fine. MCI says it doesn't expect today's charges to keep it from emerging from bankruptcy, but Hank Levine, who represents large telecom customers, says the criminal charges could cost MCI business. HANK LEVINE, ATTORNEY, LEVINE BLASZAK BLOCK BOOTHBY: It affects the perception of corporate telecom managers about whether MCI will be around and will be a strong player in three years or five years. WOODS: Attorney General Edmondson expects other states to file criminal charges, but states reached by NIGHTLY BUSINESS REPORT say their efforts are civil, not criminal. But the U.S. Attorney's Office and the Securities and Exchange Commission both expressed disappointment with Oklahoma's move, saying they hope it doesn't jeopardize their ongoing investigation. 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. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
08/27/03: One On One With Oklahoma's Attorney General, Drew Edmondson
SUSIE GHARIB: A short while ago, I talked with Oklahoma's attorney general, Drew Edmondson, and asked him why he filed the criminal charges. EDMONDSON: The main reason is that we feel that our statutes were violated, our securities statute which makes it a felony to provide false material information in the offering of a public stock or bond. And we have alleged 15 counts of the violation of those statutes. And believe that justice should be done in this case. GHARIB: Mr. Attorney General, there have been so many investigations of MCI WorldCom over the past year or so, what's the legal basis for demanding more? EDMONDSON: Well, the legal basis is there has been no ramifications sought for the violation of Oklahoma law, in addition to that it was my feeling that the sanctions brought by the Securities and Exchange Commission were woefully inadequate due to the enormity of the fraud that was committed. The fine that was leveled in that case, $750 million, includes $250 million of WorldCom stock and the $500 million cash is going to be paid in large part by a $300 million rebate from the Internal Revenue Service. In addition to that, WorldCom received $772 million in new federal contracts over the past year. It looked to me like WorldCom has, in fact, profited from its fraud rather than been punished for it. GHARIB: Well, you know, last night I talked to Richard Breeden, who is MCI's court-appointed monitor, and as you know, he issued a big report yesterday. And told me that he's confident that the current MCI has cleaned house. In fact, what he said was they've cleaned house as thoroughly as any company in America ever has. So where does all this end? EDMONDSON: That may be, and the new management of MCI WorldCom may be just as straight arrow as they can be. That does not, however, obviate $200 billion in national loss by stockholders or the $64 million loss by Oklahoma pension funds. The enormity of the damage that they have done in my estimation merits greater sanctions than they have received to date. GHARIB: Why have you gone after WorldCom, why not Enron or Tyco (TYC)? EDMONDSON: The major difference, we had investigations proceeding on Enron and WorldCom, the main distinctions aside from the difference in the magnitude of the crime, is the fact than Enron is essentially out of business. It's defunct. WorldCom, on the other hand, is attempting to wander into bankruptcy court and come out even stronger than it was before, without making full recompense to the victims of their fraud. I think that is a fundamental injustice. GHARIB: So what is your end goal here? Is it that you want to put MCI out of business? EDMONDSON: No. My end goal is to achieve justice in the case. For some, if not all of the defendants, that may require a period of incarceration. And these counts carry up to 10 years in the penitentiary per count. Fines, a total of up to $150,000, which I think for many of the defendants, would be insignificant. GHARIB: Mr. Attorney General, some of the people I talked to today in preparation of talking to you say that this whole WorldCom issue is a federal issue, it's not a state problem. What qualifies Oklahoma to go after MCI WorldCom? EDMONDSON: I don't think Oklahoma is any different from any other state of the union that has securities laws on the book. There was a violation of not only federal securities law but state securities law as well. It's true with a bank robbery, it violates both state and federal laws, and can be brought either state or federally or both. GHARIB: We talked to a number of states today, California, Alabama, Oregon and Indiana, who say they have no plans to join with you in following suit with WorldCom. Does it matter to you if you go this alone? EDMONDSON: No, it doesn't matter at all. We had no expectation of any kind in multi-state criminal action. Oklahoma law was violated and we intend to do something about it. It is my understanding that Alabama was proceeding civilly, I may be wrong on that. Other states will have to make their own judgments. GHARIB: Mr. Attorney General, thank you very much for joining NIGHTLY BUSINESS REPORT. EDMONDSON: Thank you very much.
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. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
08/27/03: Richard Trumka, Secretary-Treasurer of the AFL-CIO Offers An Outlook For The Workforce
SUSIE GHARIB Well, Labor Day is just a few days away, and jobs are at the top of the list of concerns for American workers. Joining us now to talk about this, Richard Trumka, secretary-treasurer of the AFL-CIO. Welcome, Mr. Trumka. RICHARD TRUMKA, SECRETARY-TREASURER, AFL-CIO: Thanks, Susie, thanks for having me on. GHARIB: Let me begin by asking you how has the weak economy affected your membership? TRUMKA: Well, it's good news and bad news, I guess, I'll give you the good news first. About two-thirds of the American public approve of the job that trade unions are doing in this country, and about 50 percent of all of the non-union workers in the country, or 42 million workers say that if given a chance they would join a union tomorrow. And last year we organized about 500,000 new workers. The bad news is we have 11 million workers out of work, that's a workforce about the size of Texas. Two-thirds of the states are in budget deficits, so we're losing much-needed police officers and firemen and other public services that we truly need. We have a record budget deficit. We have more job loss, a record job loss. You have a record trade deficit. And you have record gasoline prices. And on top of that, we have an administration who's only answer is to give tax cuts to the rich and to slash the overtime earnings of 8 million hard working Americans. GHARIB: Well, let me address some of the issues that you brought up, first of all, you know that next week we are going to have the August employment report coming out, and it's expected to show once again weakness in manufacturing. What do you think it is going to take to get those jobs back? TRUMKA: Well, first of all, it's going to take an administration that's determined to get those jobs back. They're going to have to start enforcing the trade laws that are already on the books. They're also going to have to a look at the tax code and start rewarding manufacturers who produce things here in this country rather than rewarding companies who take those jobs overseas. In addition to that they're going to have to start negotiating trade agreements that actually eliminate a lot of the non-tariff barriers and actually help American manufacturers, take a look at the dollar, prevent countries like China from manipulating their currency to get a 25 to 40 percent advantage over American manufacturers. If we make up our mind as a country that to bring back manufacturing jobs, good-paying, family-raising manufacturing jobs, we can do it. But this administration has shown no inclination to do that, no policy and not even a concern for the crisis that occurs right now in manufacturing. GHARIB: Some of the labor experts I've talked to say that even if the economy picks up that those manufacturing jobs aren't coming back, the ones that went to China that you refer to, that there has been a structural shift in labor, how are you going to adapt to that? TRUMKA: Well, first of all, we don't necessarily agree with that. We think a lot of those jobs can and should come back to the United States with the right policy. And what we're working for to elect somebody to the White House and the Congress in the United States that will help us bring those good-paying manufacturing jobs back to the United States. In addition to that, there are changes in the economy. And we've been organizing workers in a number of different fields, in high tech fields and professionals from teachers, engineers, doctors, graduate students, nurses, all of those people that are in the new economy, we're bringing them in. But we haven't given up on manufacturing because we think manufacturing and industrial unionism is the heart and the backbone of the country. GHARIB: All right. We just have few seconds left, let me just ask you on a completely different subject, the UAW contract talks with the big three are coming up pretty soon, given everything that we have discussed here and also the economy struggling, how much leverage does the union have this go-round? TRUMKA: Well, they're going to have the entire labor movement behind them. The UAW has done a good job of preparation. They have a good working relationship with the big three auto companies. They're looking at the subsidiaries and all of the downstream and upstream companies. I think they're going to do just fine. You have to look at - hope the economy would help both of us so that it isn't us against them or the autoworkers against the manufacturers, it's us against the rest of the world, that's what we're trying to achieve. GHARIB: OK. Well, I hope everything works out over there and all of these other jobs we've discussed. Thank you very much, Mr. Trumka. TRUMKA: Thanks, Susie, I appreciate it. GHARIB: We have been speaking with Richard Trumka, secretary-treasurer of the AFL-CIO.
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. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
08/27/03: "Square One: Building Your Investments"-Safe Returns
PAUL KANGAS: We've been taking viewer questions on the basics of investing as we lead up to our Labor Day special edition "Square One: Building Your Investments." B.A. Poleson from Lewiston, Idaho, wants to know: "Where can I get a better return on a money market that is reasonably safe?" ERIC TYSON, SYNDICATED COLUMNIST & AUTHOR: Well, it's important to recognize that if you're going to go into something that has the potential for a higher return than a money market fund, by definition you're going to have to take on more risk. The next step up in potential return and, therefore, risk from a money market fund, would be a shorter, immediate-term bond fund. Stick with funds that are investing in so-called high quality corporate bonds. And you can certainly pick-up at least another 2 or 3 percent of yield, but you have got to be prepared for the fact that if interest rates go up, the principal value of your bond fund could go down a little bit. KANGAS: You can learn more about the basics of investing this Labor Day with our NIGHTLY BUSINESS REPORT special edition: "Square One: Building Your Investments."
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. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
08/27/03: Money File-The Positive Return On A College Education Investment
SUSIE GHARIB: In tonight's "Money File": It's one of the best bargains for your investing dollar, and it might surprise you. Here's Julie Stav, public television host and author of "Get Your Share." JULIE STAV, AUTHOR, "GET YOUR SHARE": If you have taken a look at the cost of a college education lately, you are probably still recovering from the shock. For those of you that haven't had the courage to face the facts, let me share with you that the average tuition costs for the 2001-2002 school year were close to $4000 for a public and over $17,000 for a private four-year college. Now for the good news. If you are looking for the best investment you could possibly make, look no further. If there is one place where you really get your money's worth, it's in education. Salaries of high school graduates have averaged over $30,000 a year, compared to over $53,000 for an employee with a college degree. That's a pay increase of almost 75 percent for having earned that diploma. Take the time to educate yourself about the many plans available to assist you in this important goal such as state-sponsored 529 plans. Remember, even if you live in one state, you may participate in a 529 plan sponsored by another. In addition to offering some of the most popular savings vehicles for college funding, 529 plans have additional tax benefits that help you maximize those investments. So, as you write your net check for little Einstein's college fund, be assured that you are making the best investment you could possibly make. I'm Julie Stav.
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. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use. 8/27/03: "Paul Kangas' Stocks In The News"
PAUL KANGAS: Wall Street opened slightly lower, unable to follow through on yesterday's late rally in the absence of any new economic reports or influential earnings releases. After an hour of very dull trading, the Dow fell 23 points while the NASDAQ Index was off 2 points. That shallow downturn inspired some buying in the semiconductor, defense and oil services sectors, but the gold stocks were the main standouts as bullion rose to its highest level in six months. By early afternoon, the Dow was down only 13 points and the NASDAQ Index was up 5 points. Light but persistent buying in the tech sector gave the market an improved tone as did a number of brokerage upgrades mostly in cyclical stocks. At the close then, the Dow Industrial Average trimmed its loss to just 6 2/3 points, putting it at 9333.79. The NASDAQ Composite ended with an 11 ½-point gain at 1782.13. The Standard & Poor's 500 Index edged up 0.06 at 996.79. In the debt market, Treasuries lost ground due to today's disappointing 2-year note auction. The 10-year note fell 15/32 to 97 23/32, putting the yield at 4.54 percent. The most active big board issue on $16 million shares, Nokia (NOK), moving up $0.52. The company introduced two new handsets and a network product aimed at new growth markets in Russia, China and Latin America. Pfizer (PFE) down a dime a share. Motorola (MOT) showed no change although it traded as low as $10.32 in the morning after Morgan Stanley downgraded it from overweight to equal weight because the stock has achieved Morgan Stanley's target price which I believe was $10 a share. Texas Instruments (TXN) moving up $0.81 in the strong semiconductor group. Liberty Media (L), a $0.36 rise, number five in big board volume. Disney (DIS) down $0.13. ExxonMobil (XOM) gained $0.42. Banc of America upgraded it from neutral to buy with a $41 a share target. Banc of America also sees cost-cutting at ExxonMobil boosting this year's and next year's earnings and thinks the company will pay a special dividend of $1 or $2 for each of the next two years. General Electric (GE) down $0.13. NorTel Networks (NT) moved up $0.03. AOL Time Warner (AOL), a $0.02 gain, tenth in volume. Altria Group (MO), there you see it, up $0.33. The company is increasing its quarterly dividend by $0.04 to $0.68 a share. That will lift the yield to 6.75 percent and edge out Eastman Kodak (EK) as the biggest dividend-paying stock on the Dow 30. Kodak yields about a 6.45 percent. Elsewhere we see a nice gain in Fresh Del Monte Produce (FDP). Now this is another dividend boost. The company is doubling its quarterly dividend from $0.10 to $0.20 a share. And Newmont Mining (NEM), one of the largest of the gold stocks, up $1.42. As you saw earlier, New York December gold up $7.30 an ounce, to a six-month high. The whole group was very firm today. Culp Incorporated (CFI), one of the best percentage gainers, up $1.28. The company did report a first-quarter loss of $0.04 versus $0.08 in earnings last year. But that loss was a lot narrower than the $0.08 loss the Street was expecting. And the company sees second-quarter earnings of $0.12 to $0.19. BB&T Capital repeated a strong buy on the stock of Culp. Fairchild Semiconductor (FCS) up $2.01. Bear Stearns upgraded it from peer perform to outperform. And National Semiconductor (NSM) up $1.57. Lehman Brothers upgraded it from underweight. First-quarter earnings are due out September 4, incidentally. And then Wendy's International (WEN) up $1.84. Prudential Securities began covering it with a buy, put the whole restaurant group in an outperform rating. Marvel Enterprises (MVL) down $1.33. The news, vice chairman sold 5 million shares and cut his stake by 20 percent. And Hughes Supply (HUG) was down $1.97. Second-quarter earnings $0.80, up from last year's $0.78, but $0.02 below the Street estimate. The company sees third-quarter earnings falling to $0.70-$0.78 because of the weak commercial construction market. And then H&R Block (HRB) moved up $1.41 after the close yesterday. The company reported first-quarter earnings of $0.06. That was the first profit this company has had in the first quarter in eight years. Also its chief exec is upbeat on the outlook. Most active NASDAQ issue, Intel (INTC) moving up $0.31. Qualcomm (QCOM) gained $1.47. Microsoft (MSFT) down $0.15. A $0.09 drop in Cisco Systems (CSCO). Amgen (AMGN) gained $0.20, fifth in dollar volume on NASDAQ. Applied Materials (AMAT) was up $0.70. Apollo Group (APOL) down $1.31. That was hurt by the less-than-robust outlook from its rival, Corinthian Colleges (COCO). Dell Incorporated (DELL) down $0.25. A penny gain in Oracle (ORCL). And eBay (EBAY) down $0.66 a share. Flamel Technologies (FLML), this is a French health care firm. It's in a pact with Bristol-Myers (BMY) to develop and market a new diabetes treatment. And then Semtech (SMTC), another semiconductor, up $3.21 here. After the close yesterday, second-quarter earnings came in much lower, $0.03 versus the prior year's $0.14. But the company predicting third-quarter earnings will jump up to $0.11. And sales will rise 4 to 6 percent. And those are the "Stocks in the News."
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. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 9333.79 -6.66 - .1
HIGH 9346.98
LOW 9306.49
NASDAQ COMP. 1782.13 +11.48 +.7
HIGH 1783.12
LOW 1764.63
VOLUME 1,056.7
PREVIOUS 1,186.7
UP VOLUME 646.1
DOWN VOLUME 375.5
DOW TRANSPORTS 2632.63 -4.07 - .2
DOW UTILITIES 238.74 -.06 - .0
CLOSING TICK -293
S&P 500 996.79 +.06 + .0
S&P 100 498.73 -.55 - .1
MIDCAP 400 509.16 +2.70 + .5
REUTERS/CRB 240.90 -.18 - .1
NYSE COMPOSITE 5605.73 +8.24 + .2
VALUE LINE 319.69 +1.46 0.46
RUSSELL 2000 490.92 +4.41 0.91
WILSHIRE 5000 9651.67 +14.66 0.15
U.S. TREASURIES
5-YEAR NOTE 3.25%
Aug. 15,2008 98 23/32 -11/32 3.54
10-YEAR NOTE 4.25%
Aug. 15,2013 97 23/32 -15/32 4.54
30-YEAR NOTE 5.375%
Feb. 15, 2031 100 27/32 -20/32 5.32
LEHMAN BROS.
LONG BOND INDEX 1680.39 -5.63
DOW CLOSE 9333.79 -6.66 - .1
ADVANCES 1964
DECLINES 1243
NEW HIGHS 118
NEW LOWS 17
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
NOK Nokia Corp 16.31 +.52 +3.3
PFE Pfizer 29.91 -.10 -.3
MOT Motorola 10.73 unch. unch.
TXN Texas Instrument 23.49 +.81 +3.6
L Liberty Media 12.01 +.36 +3.1
DIS Disney 20.72 -.13 -.6
XOM Exxon Mobil 37.25 +.42 +1.1
GE GE 29.75 -.13 -.4
NT Nortel Network 3.26 +.03 +.9
AOL AOL Time Warner 15.85 +.02 +.1
NASDAQ CLOSE 1782.13 + 11.48 + .7
VOLUME 1,355.3
PREVIOUS 1,384.4
ADVANCES 1926
DECLINES 1161
NASDAQ ACTIVES
INTC Intel 28.02 +.31 +1.1
QCOM Qualcomm 41.00 +1.47 +3.7
MSFT Microsoft 26.42 -.15 -.6
CSCO Cisco Systems 19.01 -.09 -.5
AMGN Amgen 65.73 +.20 +.3
AMAT Applied Matl 21.65 +.70 +3.3
APOL Apollo Group 60.52 -1.31 -2.1
DELL Dell Inc 31.68 -.25 -.8
ORCL Oracle 12.45 +.01 +.1
EBAY eBay 111.50 -.66 -.6
AMEX CLOSE 971.28 + 5.54 + .6
INDEX SHARES
DIA DIAMONDS TRUST 93.53 -.07 -.1
QQQ NASDAQ 100 32.80 +.26 +.8
SPY S&P DEP.RECEIPTS 100.14 +.03 +.0
STOCKS IN THE NEWS
MO Altria Group 40.28 +.33 +.8
FDP Fresh Del Monte 27.00 +1.42 +5.6
NEM Newmont Mining 39.16 +1.42 +3.8
CFI Culp 8.28 +1.28 +18.3
FCS Fairchild Semi 16.97 +2.01 +13.4
NSM Natl Semiconduct 28.74 +1.57 +5.8
WEN Wendys Intl 31.33 +1.84 +6.2
MVL Marvel Enterprise 21.07 -1.33 -5.9
HUG Hughes Supply 36.81 -1.97 -5.1
HRB H&R Block 43.15 +1.41 +3.4
FLML Flamel Technology 26.95 +5.65 +26.5
SMTC Semtech 21.65 +3.21 +17.4
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