Program: Thursday, August 28, 2003

The American Economy Is Revving Up
CEO Outlook From Home Depot Chairman and CEO Robert Nardelli
Cracking Down On Video Pirates Could Wind Up Robbing Legitimate Businesses
"Square One: Building Your Investments"-Selling A Stock Short
Commentary: The Free Lunch Syndrome
Paul Kangas' Stocks In The News
Market Stats

08/28/03: The American Economy Is revving Up

SUSIE GHARIB: New evidence tonight that the economic recovery is picking up steam. The government said today that the nation's gross domestic product, the broadest measure of economic performance, grew by more than three percent in the second quarter. That was much stronger than the initial estimate of about 2 1/2 percent, boosting hopes of even more robust growth in the second half of the year. Scott Gurvey reports.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: The economy is now growing at a rate not seen for a year. In revising its estimate of economic output in the second quarter today, the Commerce Department set the annualized growth rate at 3.1 percent. That was more than the consensus forecast and well above the sluggish first quarter rate. Higher spending by consumers and by state and local governments, as well as a smaller trade deficit, accounted for most of the revision. Inventories were revised down, offsetting some of the gains. Consumer spending on big ticket durables and increases in defense spending accounted for much of the growth in the quarter.

JOHN RYDING, CHIEF MARKET ECONOMIST, BEAR STEARNS: I think we are out of the woods. It looks like following a quarter in which GDP exceeded three percent, in the current quarter GDP might run up close to five percent and firing on a lot more cylinders. The only missing element is robust job creation. And that's difficult right now given how strong productivity growth has been.

GURVEY: To get that robust job creation, the Fed has stated that it is willing to let growth rise above four percent for several quarters. It has that luxury because inflation, according to today's report, is still not a problem. The rate, as indicated by the Fed's favorite indicator, the GDP Personal Consumption Deflator, was at 0.7 percent. Today's report also had good news about corporate profits.

JAMES GLASSMAN, SR. U.S. ECONOMIST, J.P. MORGAN CHASE: Profits as a share of GDP, which is sort of the way most economists look to see how things compare, have recovered to levels that we, the last time we were here was 1999 and 2000. So you could say that companies have returned their -- have restored their profitability back to pre-recession levels, given where the economy is. Now, what that tells you is as the economy accelerates, companies are going to see very good profits growth.

GURVEY: There will be one more revision to the second quarter GDP report. That is due on September 26. 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. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.

08/28/03: CEO Outlook From Home Depot Chairman and CEO Robert Nardelli

SUSIE GHARIB: Today's news about the economy's strong growth is the result of sturdy business from companies like Home Depot. The giant home improvement retailer says it opens a new store every 43 hours. It's been riding the incredible housing boom and reporting solid earnings. As we continue our series CEO Outlook, we get the outlook tonight from Home Depot Chairman and CEO Robert Nardelli. Mr. Nardelli, welcome to NIGHTLY BUSINESS REPORT.

ROBERT NARDELLI, CHAIRMAN & CEO, HOME DEPOT: Thank you, Susie. It's good to be with you.

GHARIB: As you know, this housing boom has been red hot and the home improvement business has been strong, as well. Do you see any signs of this cooling off and, you know, what might it mean now that mortgage rates are going up?

NARDELLI: Susie, we're not seeing any cooling off at all. As a matter of fact, we're very pleased to be in such a sweet spot. We have seen sequential improvement in May, June, July and now in August in our overall sales.

GHARIB: Are you seeing any changes in the direction of your business as a result of what's going on in the housing market?

NARDELLI: No. Again, we're very pleased with the segment we're in. Certainly the housing starts, the turnover all bode well for our business. And we feel very good about the economy and the progress that it's making.

GHARIB: I understand that Home Deep owe is now targeting professionals like contractors and home builders. What kind of demand are you seeing from that sector and what is that telling you about the economy?

NARDELLI: Well, we see that as, again, a great opportunity. We only have about 10 percent market share, so we feel we have tremendous growth opportunities in the pro segment. We are really trying to more mirror image their needs in providing new service, new merchandise and credit programs to serve that growing market.

GHARIB: Mr. Nardelli, you see consumers coming in and out of your store every single day. What's your sense of the consumer mood and consumer confidence?

NARDELLI: Well, we see it getting much stronger, Susie. We do about 1.2 billion transactions a year. So you're right, we get a lot of customer footsteps. We see morale up. We see couples shopping more. We see an increase in big ticket items, certainly like appliances, kitchen, some major remodeling. So, again, we're very pleased with the state of the economy and the progress that it's making. We think the presidential tax cut, the dividend improvement have all bode well for us.

GHARIB: I understand, actually, that Home Depot is cashing those child income tax credit checks. To what extent are you seeing people cashing those checks in your stores and then spending the money?

NARDELLI: Well, we are very pleased with the conversion. As a matter of fact, we have shifted our marketing and advertising, certainly shouting out that we will provide that service, encouraging families to invest in projects, to really invest in the home, the biggest asset they have for family projects. So we're very pleased with the conversion that we're seeing as a result of those tax debate checks.

GHARIB: And yet we know, you heard our other story that we did at the top of the program that the job market is not very good. To what extent are you finding, though, that American consumers are concerned about their jobs and maybe are saving more than spending?

NARDELLI: You know, Susie, I think this is going to be maybe a different kind of recovery than we've seen in the past. As you mentioned in your opening comments, we open a new store every 43 hours. We're on strategy to hire 40,000 new associates every year. We did it last year. We'll do it this year. So I think this may not be a jobs led recovery. So we may have to get used to a retail, a consumer led recovery and jobs may lag a little bit longer than normal because of the tremendous productivity we've seen in this country.

GHARIB: And it may also be a business spending type of recovery. From all the CEOs who I've been talking to are saying it's going to really count on businesses spending money to get the economy energized. Now, I was surprised to find out that Home Depot has quadrupled its spending, tech spending in the past year. Do you see -- that's obviously helped the economy. Are you going to continue that trend at Home Depot?

NARDELLI: We sure are. Look, we have been undeterred relative to the economy and in regards to our investment. We carved out a strategy. We're on strategy. We increased our capital spending significantly year over year, specifically, and to your point, in the area of technology. We think systems and digitization of our business will provide our customers with better service and will increase our overall productivity and efficiency.

GHARIB: Well, very good to get such an upbeat report from you. Thank you very much, Mr. Nardelli.

NARDELLI: Thank you, Susie.

GHARIB: And we've been speaking with Robert Nardelli, Chairman and CEO of Home Depot.

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.

08/28/03: Cracking Down On Video Pirates Could Wind Up Robbing Legitimate Businesses

SUSIE GHARIB KANGAS: There's a huge government crackdown underway these days on pirated music, film and software. And it's in a place you might not expect. Malaysia is leading the charge to clean up piracy, but it's having some unexpected fallout. As Rian Maelzer reports, legitimate industries are worried that they're also about to become casualties of the government's anti-piracy campaign.

RIAN MAELZER, NIGHTLY BUSINESS REPORT CORRESPONDENT: The latest music CDs and films for just a $1.50 each, copies of software for a hundredth of the price of the original. It's too tempting for most Malaysians to resist. And Malaysia's government feels some empathy with them. It has, in effect, accused the film, music and software industries of helping drive consumers into the arms of pirates by profiteering. The industries reject any link between their prices and piracy.

LAM TUCK SENG, RECORDING INDUSTRY ASSOCIATION OF MALAYSIA: Pirated products are actually stolen products. What is stolen is always cheap.

MAELZER: And there's a lot of theft going on here. Aside from meeting local demand, Malaysia based counterfeiters have exported hundreds of millions of discs around the world. American companies hold the copyrights to around 70 percent of those products and were initially encouraged by the government's latest anti-piracy drive. Relentless raids have targeted the pirates' factories and retail outlets and driven them off the streets here, for now at least. But the government feels that enforcement alone is not enough. So it's demanding that the music, film and software industries slash the prices of the original products. The government then intends to impose price controls on them, just as it does for essentials, such as chickens. Pikom represents hundreds of international software developers.

SIMON SEOW, PIKOM: It doesn't seem to make sense because, you know, the line of reasoning says that why is the victim being punished?

MAELZER: Many have also questioned how it's possible to control the prices of vastly different products developed by thousands of companies. And critics of the plan, including the U.S. Department of Commerce and the Malaysian government's own agency for developing the I.T. sector, warn that price controls could prompt producers to shun the country. The big music labels also vehemently oppose price controls.

SENG: I'm afraid as an industry we have been bleeding for the last 10 years. I don't know to what extent the industry can sacrifice any more.

MAELZER: The government told industries and companies to provide a breakdown of how they determine their prices and to suggest price ceilings. Few responded. Some music companies do appear to have agreed to very modest price cuts. Software industry reps, meanwhile, have insisted they cannot comply and are praying software will be granted an exemption. And behind the scenes, companies hint that if the Malaysian government decides to impose drastic price cuts, they'll be forced to quit Malaysia, something not even years of piracy pushed them to do. Rian Maelzer, NIGHTLY BUSINESS REPORT, Kuala Lumpur.

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.

08/28/03: "Square One: Building Your Investments"-Selling A Stock Short

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 Investment. T. Gabriel of Stillwater, Minnesota, asks, "Can you please explain selling a stock short?"

ERIC TYSON, SYNDICATED COLUMNIST & AUTHOR: Well, selling a stock short is a reverse of what most investors do when they buy a stock and hope that it goes up in value. When you sell a stock short, you actually sell stock that you don't own, so you're actually borrowing shares from a broker. And you hope that the stock actually goes down in value. And the reason that you hope it goes down in value is that you hope in the future you can buy the stock back at a lower price than what you sold it for, and therefore profit or pocket the difference. Selling short is a risky strategy because if a stock goes up, you could lose, theoretically, an unlimited amount of money.

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.

08/28/03: Commentary: The Free Lunch Syndrome

SUSIE GHARIB: In tonight's commentary, the free lunch syndrome. Here's Allan Sloan, Wall Street Editor for "Newsweek" magazine.

ALLAN SLOAN, COMMENTARY: One of America's current fantasies is we can get something for nothing. We can get quality goods on the cheap and we can have first rate services, such as good schools, without having to pay up for them. It's the free lunch syndrome. Take last Tuesday's news about federal budget deficits. If you count Social Security, as you should, we'll add around a trillion dollars to the national debt in two years, debt our children and grandchildren are going to have to pay or weasel out of. But we're happily scarfing down big tax cuts, originally designed to reduce surpluses, now supposedly to stimulate the economy, even though the recession ended about two years ago. The cost of these tax cuts? What cost? They're magic tax cuts. They don't cost anything. Two weeks ago, we had blackouts because our electric transmission network is crummy. It's crummy because no one wants to pay for it. The way electricity deregulation works, no one can be sure of making a decent profit for building big transmission lines. So no one builds them. That keeps power costs lower than the old regulated monopoly rules, but we pay for it with blackouts. Then there's the nonsense of trying to rebuild Iraq and Afghanistan on the cheap. It's the same don't pay for anything thinking. Sure, throwing money at problems doesn't necessarily solve them. But I can guarantee you one thing. In life, as in economics, there's no such thing as a free lunch. I'm Allan Sloan.

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.

8/28/03: "Paul Kangas' Stocks In The News"

PAUL KANGAS: Stocks on Wall Street opened lower as investors were apparently not impressed by the stronger than expected second quarter GDP figure, not only because it reflected what has already happened, but also be use the market's recent rally had discounted most of it. After an hour of trading, then, the Dow fell to a 55 point loss. And the and the NASDAQ Index was down 4 points. The mildness of the early sell-off, along with its light volume, gave the bears cause to pause, while the bulls saw this as an indication the path of least resistance was higher. So they did enough buying to turn the market slightly positive by early afternoon. With the cyclicals and tech stocks leading the way higher, a late, light volume rally ended the session. The Dow Industrial average closed up 40.42 points, at 9,374.21. The NASDAQ Composite gained 18 points, or one percent, to 1,800.18. That's just about a 17 month high. The Standard & Poor's 500 Index rose 6 points, to close at 1,002.84. Treasury prices gapped higher thanks to end of month portfolio shuffling by fund managers. The 10-year note jumped 30/32, to 98 21/32, pushing the yield down to 4.42 percent.

Topping the active list on the New York Exchange on 15.8 million shares, Agere Systems (AGR.A) moving up $0.22.

Followed by Pfizer (PFE), which dropped a $0.10 a share.

And Disney (DIS) losing $0.42.

But Western Digital (WDC) a big move up, gaining $1.98. That's a 21 percent rise and the best percentage gain on the New York Exchange today. The company forecast a break even first quarter, with revenues at the high end of the $690 million to $700 million it estimated last month. It also expects its Read-Rite acquisition to be accretive to earnings in this year's fourth quarter.

AOL Time Warner (AOL) was up $0.33, number five in big board volume.

Then Nokia (NOK) edging up $0.08.

Followed by NorTel Networks (NT), a $0.03 gain there.

Liberty Media (L) was up $0.12.

ExxonMobil (XOM) gained $0.30. Yesterday, the Bank of America (BAC) upgraded it from "neutral" to "buy." It looks like a little follow through buying today.

General Electric (GE), number 10 in big board volume, was down $0.07 a share.

General Motors (GM) moved up a $1.01, now over $40 a share. Today, Goldman Sachs upgraded it from "under perform" to "in line."

And in the meantime Goldman Sachs downgraded Ford Motor (F) just the opposite, from "in line" to "under perform," although this afternoon Ford said it expects August to be the best month of the year.

Elsewhere, on the down side, Superior Industrial International (SUP) losing $2.07. The automotive wheel maker says third quarter earnings will come in only around $0.40, far below the $0.62 Wall Street estimate. The company blamed some unusual expenses and a three percent drop in the shipment of wheels.

A good gainer, the retailer Michaels Stores (MIK), up $5.33. That was second quarter earnings $0.35 versus $0.30 last year, $0.02 above the Street estimate, and the company's chief executive officer is forecasting a strong autumn and holiday retailing season.

Another retailer that did well, Dollar General Store (DG) rising $1.60. Second quarter earnings up 40 percent, $0.18, way up from last year's $0.13 a share. And the company increased 2003 earnings growth estimates from 11 to 15 percent, to 15 to 20 percent growth.

And yet another retailer doing well, Chico's FAS (CHS), up $2.75. After the close yesterday, the company reported second quarter earnings rose 49 percent, to $0.28 a share, up from the previous year's $0.19. And same store sales were up a very respectable 14.6 percent.

Murphy Oil (MUR) had a good day, rising $4.53. The company announced a significant oil discovery offshore Malaysia. And the Bank of America increased its price target for the stock from $55 to $60 a share.

On the down side, the biggest percentage loser on the New York Exchange was Oneida (OCQ). This is the silverware manufacturer. The company reported a second quarter loss of $0.23 a share, bigger than last year's $0.17 per share loss, and sales during the period fell seven percent from the previous year.

Back on the up side, Zimmer Holdings (ZMH) up $2.83. The orthopedic device maker won the battle to control Center Pulse over Britain's Smith & Nephew (SNN). In the meantime, Merrill Lynch upgraded Zimmer from "neutral" to "buy" and has a $58 a share target.

The most active NASDAQ issue today was Intel (INTC), moving up $0.28. For the month so far, Intel is the best gainer in the Dow Jones industrial average, having risen 14.3 percent as of today.

Microsoft (MSFT), a $0.09 gain.

eBay (EBAY), a little profit taking there, down nearly $2.

Cisco Systems (CSCO) up $0.18.

Applied Materials (AMAT) an $0.08 loss, number five in dollar volume on NASDAQ.

Amgen (AMGN) was up $0.55.

Qualcomm (QCOM) a $0.03 loss.

Broadcom (BRCM) gaining a $1.50.

Dell (DELL) a $0.57 rise there.

And tenth in volume Oracle (ORCL) up $0.32 a share.

Big gainer, Progress Financial (PFNC) jumping almost $10 a share, or 59 percent. FleetBoston (FBF) will acquire the company for stock worth $27.63 as of today.

Fleet Financial was down $0.11. Not much movement in that one.

And then LTX Corporation (LTXX), the company makes semiconductor test equipment. The company did report a fourth quarter loss of $1.61. That's smaller than last year's loss of $1.84 and it sees a first quarter loss of only $0.24 to $0.27. Soundview Financial upgraded the stock from "neutral" to "outperform."

And then PETsMART (PETM) up $2.39. Second quarter earnings came in higher, $0.19 versus last year's $0.15, $0.02 better than the Wall Street estimate. Same store sales in the period up 7.9 percent.

And those are the stocks in the news tonight.

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.

08/28/03: Market Stats

									   NET    PERCENT
                          CLOSE     CHANGE     CHANGE

DOW CLOSE              9374.21     +40.42       + .4
HIGH                                         9392.59
LOW                                          9261.57

NASDAQ COMP.           1800.18     +18.05       +1.0
HIGH                                         1800.65
LOW                                          1772.98

VOLUME                                       1,160.2
PREVIOUS                                     1,056.7
UP VOLUME                                      839.6
DOWN VOLUME                                    294.6

DOW TRANSPORTS         2668.45     +35.82      + 1.4
DOW UTILITIES           238.69       -.05       - .0
CLOSING TICK                                    +491

S&P 500                1002.84      +6.05       + .6
S&P 100                 501.24      +2.51       + .5
MIDCAP 400              514.94      +5.78      + 1.1
REUTERS/CRB             241.78       +.88       + .4

NYSE COMPOSITE         5639.15     +33.42       + .6
VALUE LINE              323.07      +3.38       1.06
RUSSELL 2000            495.81      +4.89          1
WILSHIRE 5000          9719.88     +68.21       0.71

U.S. TREASURIES
5-YEAR NOTE 3.25%
Aug. 15,2008          99 10/32     +19/32       3.41

10-YEAR NOTE 4.25%
Aug. 15,2013          98 21/32     +30/32       4.42

30-YEAR NOTE 5.375%
Feb. 15, 2031        102 12/32   +1 17/32       5.21

LEHMAN BROS.
LONG BOND INDEX        1697.13     +16.74


DOW CLOSE              9374.21     +40.42       + .4
ADVANCES                                        2245
DECLINES                                         967
NEW HIGHS                                        192
NEW LOWS                                           4

                                      NET    PERCENT
NYSE MOST ACTIVES    4PM CLOSE     CHANGE     CHANGE
AGRa   Agere Systems      2.95       +.22       +8.1
PFE    Pfizer            29.81       -.10        -.3
DIS    Disney            20.30       -.42       -2.0
WDC    Western Digital   11.48      +1.98      +20.8
AOL    AOL Time Warner   16.18       +.33       +2.1
NOK    Nokia             16.39       +.08        +.5
NT     Nortel Networks    3.29       +.03        +.9
L      Liberty Media     12.13       +.12       +1.0
XOM    Exxon Mobil       37.55       +.30        +.8
GE     GE                29.68       -.07        -.2

NASDAQ CLOSE           1800.18    + 18.05      + 1.0
VOLUME                                       1,468.9
PREVIOUS                                     1,355.3
ADVANCES                                        1905
DECLINES                                        1234

NASDAQ ACTIVES
INTC   Intel             28.30       +.28       +1.0
MSFT   Microsoft         26.51       +.09        +.3
EBAY   eBay             109.52      -1.98       -1.8
CSCO   Cisco Systems     19.19       +.18       +1.0
AMAT   Applied Matl      21.57       -.08        -.4
AMGN   Amgen             66.28       +.55        +.8
QCOM   Qualcomm          40.97       -.03        -.1
BRCM   Broadcom          27.45      +1.50       +5.8
DELL   Dell Inc          32.25       +.57       +1.8
ORCL   Oracle Corp       12.77       +.32       +2.6

AMEX CLOSE              974.40     + 3.12       + .3

INDEX SHARES
DIA    DIAMONDS TRUST    93.97       +.44        +.5
QQQ    NASDAQ 100        33.08       +.28        +.9
SPY    S&P DEP.RECEIPTS 100.76       +.62        +.6

STOCKS IN THE NEWS
GM     GM                40.41      +1.01       +2.6
F      Ford Motor Co     11.44       -.20       -1.7
SUP    Superior Inds     42.75      -2.07       -4.6
MIK    Michaels Stores   44.76      +5.33      +13.5
DG     Dollar General    22.52      +1.60       +7.7
CHS    Chico's Fas       31.65      +2.75       +9.5
MUR    Murphy Oil        58.15      +4.53       +8.5
OCQ    Oneida Ltd         5.55       -.59       -9.6
ZMH    Zimmer Hldgs      51.55      +2.83       +5.8
PFNC   Progress Finl     26.95      +9.99      +58.9
LTXX   LTX Corp          14.99      +2.56      +20.6
PETM   PETsMART          23.34      +2.39      +11.4