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Program: Monday, September 8, 2003
09/08/03: WorldCom/MCI Bankruptcy Hearing Begins
SUSIE GHARIB: Will WorldCom get out of bankruptcy? That is the question before a federal judge in New York, who began today hearing arguments for and against the telecom giant's reorganization plan. There is considerable debate whether the company, now calling itself MCI, should be allowed to emerge from bankruptcy, given that it committed the largest corporate fraud in history. Erika Miller reports. ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: It was expected to be a grueling day of testimony on WorldCom's plan to emerge from bankruptcy protection. But Judge Arthur Gonzalez adjourned the hearing early, at midday, so WorldCom can continue negotiations with two creditor groups opposing its reorganization plan. LAURIE FIFE, ATTORNEY REPRESENTING WORLDCOM: Basically we have been in settlement discussions with the two principal objectors starting last night or several days ago. We asked the judge to adjourn the hearing so that we can continue the settlement discussions. MILLER: The parties will have until midnight to reach an agreement. At issue is whether WorldCom's plan pays these dissenting bond creditors enough money. Bankruptcy experts say there's a good chance an agreement will be reached. SHELDON HIRSHON, BANKRUPTCY ATTORNEY, PROSKAUER ROSE: I'm sure that they know each other's territory, and they know what it is that are the pressure points. So I'm sure that there is probably more common ground than one would perceive looking from the outside. MILLER: WorldCom, now operating under the MCI name, says its plan is backed by creditors holding 97 percent of its debt. The company proposes to emerge from Chapter 11 with about $4 billion in debt, compared to $41 billion now. The new company would also have a billion dollar cash cushion. Rivals are blasting the proposal, saying it would give MCI an unfair competitive advantage. But experts say those objections will not have much bearing on the hearing. RICHARD BREEDEN, MCI'S COURT-APPOINTED MONITOR: They have their own claims outside of the bankruptcy or that they hope to bring outside of the bankruptcy. But in terms of purely the bankruptcy proceeding itself, the competitor claims are not really an issue here. MILLER: If WorldCom does emerge from bankruptcy, experts warn the company will still face the daunting task of regaining the trust of customers and investors. PATRICK COMACK, TELECOM ANALYST, GUZMAN & CO.: I think that all the recent negative headlines concerning MCI has damaged their valuation, post-bankruptcy. It just seems like a lot of this negative stuff is hitting MCI a little late in the game. MILLER: If both sides can't reach an agreement, they'll be back here at the courthouse to resume their arguments tomorrow morning. 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. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
09/08/03: The President's $87B War Budget Is Under Siege
SUSIE GHARIB: The Bush administration came under fire today for the president's request for $87 billion for the war on terror. The money would be used for military operations and reconstruction in Iraq and Afghanistan. But as Darren Gersh reports, many in Congress are now questioning that effort. DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The $87 billion the president is asking for will cover operations in Iraq and Afghanistan, but it is really just an estimate. Mr. Bush cautioned the real cost could be higher. GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We will do what is necessary, we will spend what is necessary, to achieve this essential victory in the war on terror, to promote freedom and to make our own nation more secure. GERSH: Fifty-one billion of the total spending will go to support military operations in Iraq, another 20 billion for reconstruction. That's on top of the $62 billion in military funding for Iraq the administration got from Congress earlier this year. But even though all that money will come from additional government borrowing, financial markets shrugged off the news. STEVEN EAST, ECONOMIST, FRIEDMAN, BILLINGS & RAMSEY: We didn't know exactly what the number was going to be, but we knew it was going to be an adult number, and we got that number over the weekend. And the financial markets really haven't reacted to it. GERSH: But critics did react. They say, after downplaying the cost of the conflict, the administration is only now presenting the real bill to the American people. CHRISTOPHER PREBLE, FOREIGN POLICY ANALYST, CATO INST.: I have now doubt that they would support these costs if they thought they were making them safer, but I don't see how that is happening. I don't see how the war in Iraq makes us safer from terrorism. I think it is creating the conditions for even more Osama bin Ladens. GERSH: With troops in the field, Congress is expected to approve the president's latest request, but Democrats are demanding the administration answer some questions first. They want an estimate of the total cost of the war and a schedule for withdrawing troops. REP. JOHN SPRATT (D), SOUTH CAROLINA: What's your exit strategy? When do we get out, and when does this extraordinary burden on the budget cease or substantially diminish? GERSH: The cost of rebuilding Iraq has been estimated at 50 to $75 billion. Congress would like to see our allies pick up much of the tab, but the rest of the world did not seem in a hurry to contribute to a conflict that is already being funded by American taxpayers. 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. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
09/08/03: Seniors Fear The New Medicare Plan Will Leave Them Financially Ill
PAUL KANGAS: The Medicare bill takes center stage on Capitol Hill tomorrow as House and Senate lawmakers meet to hammer out their differences over the proposal's prescription benefit plan. But as Stephanie Woods reports, many seniors worry it's the wrong prescription for Medicare reform. STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: For Tony Fransetta, the Medicare debate is personal. Fransetta retired after a 34-year career at Ford (F). He enjoys generous prescription drug benefits from the company. As president of the Florida Alliance for Retired Americans, Fransetta is now lobbying Congress to make sure retirees aren't worse off under the new Medicare plan. TONY FRANSETTA, PRES., FLA. ALLIANCE FOR RETIRED AMERICANS: My message to Congress is, you got elected promising true prescription drug coverage the same as you have, deliver it. WOODS: Fransetta has good reason to worry. The Congressional Budget Office estimates as many as 37 percent of employers may drop retiree drug coverage if the government implements a plan of its own. The House and Senate Medicare plans leave gaps in coverage, and some seniors may end up with far less generous benefits. UNIDENTIFIED MALE: A bad bill is worse than having no bill at all. WOODS: In a meeting with Florida Senator Bill Nelson, seniors from the Florida Alliance wanted assurance that employers would be required to continue prescription drug coverage. SEN. BILL NELSON (D), FLORIDA: If it does not have the part that protects your private plans, I'm going to vote against it. WOODS: A coalition of employers is working to quell those fears. Companies with a large number of retirees with generous health care benefits stand to save an estimated $500 to $600 per retiree each year if the Medicare plan is passed. The coalition is running a half-million dollar ad campaign supporting the bill and telling lawmakers they won't drop coverage, but will tailor their plans around Medicare. RICH LAVIN, HUMAN SERVICES VP., CATERPILLAR: As we look at both versions of the legislation, we think that we can effectively wrap around provisions of the legislation - wrap around the benefit to enhance the overall coverage for employees and retirees. WOODS: Tax credits may be one way to insure employers don't drop coverage. But anything that increases the $400 billion price tag will be difficult for lawmakers. ANDY LAPIERRE, POLITICAL ANALYST, ISI: The whole point of passing a drug benefit for members of Congress is to win favor with senior citizens, and if a very large contingent of those senior citizens feels that this would in fact be against their interest, that poses a real serious political problem to the bill. WOODS: Medicare is a top priority for the president. Lawmakers will now have to balance that with the new costs in Iraq. Former House Speaker Newt Gingrich expects health care to outweigh defense demands. NEWT GINGRICH, CEO, CENTER FOR HEALTH TRANSFORMATION: Health is really much bigger, and health is growing much faster. And I think being able to transform the health system into one which is better for your life and better for your wallet, is the biggest domestic challenge of the next 10 years. WOODS: The key will be to deliver a bill seniors will support while still keeping costs under control. 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.
09/08/03: One On One With Cary Sherman, President of the Recording Industry Association of America
SUSIE GHARIB: The recording industry is taking the fight over online music piracy to the next level: filing suit today against hundreds of music lovers. The Recording Industry Association of America, this is the trade group representing the five major record companies, filed 261 copyright infringement suits against individual users today. Joining me now from Washington to talk more about this issue: Cary Sherman, president of the Recording Industry Association of America. Hello, Mr. Sherman. Welcome to NIGHTLY BUSINESS REPORT. CARY SHERMAN, PRES., RECORDING INDUSTRY ASSN. OF AMERICA: Thank you. GHARIB: Well, first of all, what are you hoping to gain from these lawsuits? SHERMAN: We're trying to send the message that illegal downloading and uploading on the Internet is illegal, that you're not anonymous when you do it and that there can be consequences. We have to get this piracy under control if the music industry is going to be able to continue to deliver music, new music, new artists to fans. GHARIB: Who are the 261 individuals that you've targeted? SHERMAN: We targeted the people who were distributing for other people to copy, millions of other people to copy large quantities of copyrighted music files. And we did it basically in the order of they egregiousness of the offense. So on average, of these 261 people, they averaged about 1000 music files. GHARIB: Given that there are allegedly millions of people who are downloading music files, do you think that by suing a few hundred will stop the practice? SHERMAN: You can't underestimate the deterrent impact of lawsuits. Nobody wants to get sued, and when in fact people understand that they are at risk, they will change their behavior. The reason that people don't shoplift is that there's a risk of getting caught. And we want to establish the same kind of risk equation with respect to Internet uploading and downloading. GHARIB: So what's going to be the - you mentioned earlier that there are consequences. What are going to be the consequences? SHERMAN: Well, the consequences here are financial damages in which people pay for their illegal act. But the long-term benefit here is that we're going to create, hopefully, a marketplace in which legitimate commerce can survive. The Internet is now offering lots of legitimate sites that music companies have licensed with their entire catalogs. So people now have legal alternatives in order to get the music that they want the way that they want it. They have to give those sites a chance and stop using the illegal services. GHARIB: Are you at all concerned that your strategy here is going to backfire, that you're going to damage the relationship you have with existing customers because many of these people who are downloading are also buying CDs from your record companies? SHERMAN: Unfortunately, most of the people who are downloading are buying fewer CDs by about a two to one margin, and that's why sales have fallen 31 percent in the last three years. GHARIB: But might you also alienate those very customers that you already have? SHERMAN: Well, you know, does the cable industry worry that they're going to alienate cable customers who really aren't paying but are stealing cable signals? The satellite companies basically go after people who are stealing satellite signals. Saks Fifth Avenue goes after shoplifters. We have to do the same thing if we're going to preserve a health music marketplace.. GHARIB: Mr. Sherman, just a little bit of time we have let. Let me ask you this about being proactive. Rather than fighting this trend, what about embracing the change and adapting to it? Is there anything the music industry can do that would be adapting to this trend? SHERMAN: The music industry has made enormous strides in adapting to the Internet. And they consider it an unbelievable opportunity for the future. Music is now being offered in completely new ways where you can get an a la carte download, you can get streaming subscription services. You can access music in more ways than ever before in history at very reasonable prices. GHARIB: All right, thank you very much, Mr. Sherman. We appreciate your time. SHERMAN: My pleasure. GHARIB: We've been speaking with Cary Sherman, president of the Recording Industry Association of America.
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. 09/08/03: Commentary: It's Not Easy Being "Green-span."
SUSIE GHARIB:In tonight's commentary: it's not easy being Alan Greenspan. Here's Alan Blinder, partner in the Promontory Financial Group and former vice chair of the Federal Reserve. ALAN BLINDER, COMMENTARY: Someday, a cultural anthropologist will study the lives of bond traders, a curious tribe with their own primitive rituals and icons. Right now, the tribe is mad at Alan Greenspan. That's quite a turn of events, really, for it wasn't very long ago that these same folks were worshipping Mr. Greenspan as if he were a god, imbuing him with magical powers to fix everything. But then the bond market bubble burst, and members of the tribe lost lots of money. With those losses, they apparently also lost faith in Mr. Greenspan. Well, I'll be the first to admit that Alan Greenspan is not a great communicator. He and his colleagues apparently allowed bond traders to believe that the Fed was more worried about deflation than it actually was. But the truth is that the Fed always viewed the risk of deflation as minor. It was the bond traders who got carried away, not the Fed. Just read what Fed officials actually said and wrote. And let's remember that the Fed's main job is to manage the economy. In that regard, it's worth recalling what Mr. Greenspan prophesied months ago: that the U.S. economy would snap back strongly after the war in Iraq. There were many doubters at the time, but his prophesy now seems to be coming true. So let's. (AUDIO GAP) . elocution is not the greatest, but he's one hell of a good central banker. I'm Alan Blinder.
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.
9/08/03: "Paul Kangas' Stocks In The News"
PAUL KANGAS: Wall Street opened moderately higher in the growing belief the U.S. economy is in the beginning of a solid recovery. The blue chips and the tech sector got a nice boost from C.S. First Boston's upgrade of IBM stock from neutral to outperform. After an hour of trading, the Dow was up 75 points and the NASDAQ Composite posted a 25-point gain. Buyers remained in control, with their enthusiasm further bolstered by a firm drug group which received positive comment in this week's "Barron's" financial magazine. Early this afternoon, the Dow was sporting a 93-point gain while the NASDAQ Index was up 27 points. A Smith Barney upgrade of the chip equipment group helped keep the rally on track, but just mediocre trading volume made further gains difficult. So the Dow Industrial Average closed up 82.95 points at 9586.29. The NASDAQ Composite rose 30.38 points, ending at 1888.62. The Standard & Poor's 500 gained 10 ¼ points, closing at 1031.64. In the debt market, the 10-year note fell 19/32 to 98 18/32, putting the yield at 4.43 percent. Bank of America shares actually rose $0.83 to close at $76.98 today. Now let's take a look at some other "Stocks in the News" tonight. The most active big board issue on a fairly active 50 million shares, Lucent Technologies (LU) moving up $0.16. Followed by NorTel Networks (NT), up $0.44, good percentage move. NorTel is teaming up with Bell Canada (BCICF) to build Canada's most advanced next generation network. Nokia (NOK) moving above 17 with that $0.51 gain. And Pfizer (PFE) up $0.96. It traded as high as $31.80. "Barron's" financial magazine this week has an article noting the drug stocks are trading at relatively low price-earnings multiples, and some of them have decent dividends. AOL Time Warner (AOL), a $0.16 loss there, number five in big board volume. Micron Technology (MU) in that strong high-tech group, up $0.83. A $0.90 gain in Texas Instruments (TXN). General Electric (GE), a $0.34 rise. Motorola (MOT) gained $0.53. And Schering-Plough (SGP), a $0.30 gain, number 10 in big board volume. Moving along, there is none other than Big Blue (IBM), up $2.15, a 2 ½ percent gain. And of course, as I mentioned, C.S. First Boston upgraded it from neutral to outperform, and also increased 2004 earnings estimates for IBM by $0.30 a share up to $5.10 per share for Big Blue next year. Wal-Mart (WMT), another Dow stock, but down $0.30. It traded as low as $58.05. The Sanford Bernstein brokerage downgraded it from outperform to market perform in the belief that the company's growth in same-store sales is starting to taper off a bit. Yet another Dow stock, Merck (MRK), rising $1.60, another major drug stock bolstered by that positive "Barron's" article. And of course, Merck yields about 2.9 percent as you see there. Sony Corp. ADR (SNE) is up $2.65. Sony is in a pact to license WMS Industries (WMS) the rights to make and market slot machines using Sony's Columbia Pictures film properties from the movie "Men In Black." Apparently they figure that will bring in a lot of revenues. Barr Laboratories (BRL) up $5.80. The FDA has approved the company's oral contraceptive called Seasonale. And the First Albany brokerage upgraded Barr stock from buy to a strong buy. EMC Corp. (EMC) up $0.58, good percentage move. Soundview Financial brokerage began covering the stock with an outperform rating. On the downside, CIBER Incorporated (CBR) fell $1.04, almost a 10 percent drop. The company now sees third-quarter earnings and revenues below its July guidance. And it also plans to cut 140 jobs. Back on the upside, Stifel Financial (SF) rising $0.93. It traded as high as $13.75. The news, Stifel is going to make a tender offer for up to 850,000 of its shares, or 12 percent of those outstanding. And the price will be $13.25 per share. Intel (INTC) topped the active list on NASDAQ, moving up $0.47. A similar gain in Microsoft (MSFT). Cisco Systems (CSCO), a $0.44 rise. But Dell (DELL) down $0.41 today. Oracle (ORCL), number five in dollar volume, was a $0.40 gainer. Applied Materials (AMAT) moved up $0.88. Smith Barney upgraded the semiconductor equipment sector from market weight to overweight. UTStarcom (UTSI) down $4.14. Prudential Securities sees tough competition for the company coming from China Telecom (CHL). Amgen (AMGN) up $0.92. eBay (EBAY) down $0.53. Nextel Communications (NXTL) dropped $0.13, number 10 in volume. Regeneron Pharmaceuticals (REGN) jumping $5.43. Aventis Corp. (AVE) will pay the company up to $510 million for the rights for its anti-cancer drug. Then Abgenix (ABGX), another nice gainer, up $2.16. The Adams Harkness brokerage believes this company could benefit from positive upcoming news from ImClone Corporation (IMCL) regarding ImClone's Erbitux colon cancer treatment. And then RF Micro Devices (RFMD) rising $1.45. The company sees at least break-even second quarter, up from its previous forecast of a loss of $0.04 to $0.05 a share. 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.
09/08/03:
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