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Program: Tuesday, September 23, 2003
09/23/03: Wall Street Braces For The Third Quarter Comeback
SUSIE GHARIB: Stocks moved higher today, breaking a two-day slide. The Dow rose 40 points and the NASDAQ jumped 27. Analysts said stocks got a boost from strong earnings news from Wall Street's big brokerage firms. Lehman Brothers (LEH) third-quarter earnings soared nearly 150 percent to $1.81 a share as demand for its investment banking and bond services picked up. Lehman beat analysts' estimates by $0.46 a share. Morgan Stanley (MWD) also had a terrific third quarter: profits more than doubled, partly because of a change in how it accounts for stock option awards. It made $1.15 a share, solidly beating analysts' estimates of $0.69 and way above year-ago earnings of $0.50. For Goldman Sachs (GS), the results were strong but less dramatic, $1.32 in the third quarter. That's a dime better than estimates and $0.32 more than the same quarter a year ago. Well, in the next few weeks investors will be dealing with a barrage of earnings reports, and as Suzanne Pratt reports, analysts expect good earnings news to spread across many sectors. SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: In just a few days most of corporate America will close the books on the third quarter. And, as quarters go, this year's third is likely to be the best Wall Street has seen for some time. CHUCK HILL, DIRECTOR OF RESEARCH, FIRST CALL: It's shaping up to be a very good quarter, as is the fourth. We're really going to see a jump here in earnings on a seasonally-adjusted sequential quarter basis. This will be the biggest jump of the recovery. PRATT: According to First Call, analysts are expecting a more than 15 percent increase in profits for companies in the Standard & Poor's 500. That compares with a 9.5 percent rise in earnings in the second quarter. Reinforcing predictions for strong third-quarter earnings is the fact that pre-announcements so far have been less negative than usual. The ratio of negative pre-announcements to positive ones currently stands at 1.6. That's much better than at this time in the second quarter and at the same time a year ago. EDWARD KEON, CHIEF QUANTITATIVE STRATEGIST, PRUDENTIAL FIN.: In this case, pre-announcements have been very quiet. We had Verizon (VZ) today. But, generally a very quiet pre-announcement season and that usually means that companies have good news to report when it finally comes out. PRATT: Experts say the weaker dollar, solid productivity growth and an improving economy are all providing a strong tailwind for profits in the third quarter. But the big question for Wall Street is whether the pace of earnings growth is sustainable. While most experts are forecasting a solid fourth quarter, next year is still up in the air. KEON: We're optimists. We think that the cycle is going to last for some time, some years into the future. But, it's a little too early to say that for sure. We'll have to see what happens in the middle of next year as you kind of anniversary (sic) the great stimulus we've had and see whether the economy catches fire on all cylinders. PRATT: Right now analysts are calling for a 12 percent increase in profits for the S&P 500 in the first half of next year. Experts say as long as analysts don't get carried away, those numbers are probably doable. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
PAUL KANGAS: President Bush went to the United Nations today trying to drum up support for a transition to democracy in Iraq. And to encourage that, Mr. Bush offered the U.N. a larger role in the rebuilding of Iraq, there are behind the scenes talks going on for a new U.N. resolution settling terms for the hand-over of power in Iraq. So far American efforts along that line have been frustrated by France, Germany, and other critics of U.S. policy. Critics closer to home today called on the president to account for the $87 billion he wants to rebuild Iraq. South Carolina's Democratic Congressman John Spratt told reporters he'll insist on an accurate record of all the money going to Iraq. And before any more money is approved, Spratt says there should be public debate on what has been spent already and what is likely to be spent. REP. JOHN M. SPRATT, JR. (D), SOUTH CAROLINA: We don't know the cause for sure, but we do know this, it's not zero. And that was the cost that the president put in his budget for 2004. That's the cost in effect in the basic appropriations bill for defense this year. And we know it's not zero. We also believe it's a significant number. KANGAS: Spratt says that $87 billion figure President Bush is asking for could be just a starting point. He says it could eventually run as high as $418 billion.
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.
09/23/03: "Defending the Franchise" Part 1-Are You Ready For Some Football?
SUSIE GHARIB: Well, it's September, and in the U.S., that can only mean one thing to sports fans: football season is in full gear once again. The NFL is regaining its place as the center of attention for many Americans. But the League and its teams aren't taking fan loyalty for granted. Tonight, Jeff Yastine begins a three-part series, called "Defending the Franchise," looking at how teams market themselves to be winners off the field. JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: For Georgia Bazos and her dad, pro football is the focus of their lives. In this case, it's a passion for the Miami Dolphins. From her Dolphins Beanie Babies collection to Dolphins aqua and orange bedspreads, the team has a place of honor in their home and in their pocketbook. In all, the family spends more than $2000 a year for season tickets and merchandise, pinching pennies in the off-season so they can have their tailgate parties and watch the games in person. GEORGIA BAZOS, SEASON-TICKET HOLDER: It's incredible, it's like a rush, you cannot wait for the National Anthem to be played and then kickoff and it's game time. YASTINE: Georgia is the kind of fan NFL teams want to keep. With the NFL's long-time revenue sharing arrangement, the League's teams all share equally in the money generated by network television broadcasts. But revenues from ticket sales flows directly to each team's bottom line, so more franchises are focusing their marketing efforts in an effort to keep current fans happy, or to attract a lot more new ones. Miami Dolphins executives learned that lesson in 2001, when the team failed to sellout a playoff game, a shocker for a franchise that's been well-supported by fans for decades. It has since spent a lot of money developing a sophisticated customer-research operation. JIM ROSS, SR. V.P. OF MARKETING, MIAMI DOLPHINS: Marketing is important because there is a tremendous amount of competition out there for people's time and for people's discretionary income and we're competing, we're competing for that time, for people's time and income. And we needed to do a better job understanding our fans, and developing new fans, and keeping our current fans. And we've committed a lot of resources over the last few years to do that. YASTINE: Dolphins management did a wide series of market research tests, using focus groups and quantitative studies of both ticket buyers, and non- ticket buyers. They were asked how they felt about the Dolphins brand, the franchise management, what they liked, and did not like about going to the games. UNIDENTIFIED VOICE ACTOR: Ricky's back, Jason's back. YASTINE: It also meant doing a lot more media advertising and more personal appearances by the team as a way to keep the Dolphins brand name in front of the public before and after the season. Sports marketing researcher Kathleen Davis says the number of NFL teams she consults with have doubled in the past year, as franchises increase their focus on keeping fans satisfied. KATHLEEN DAVIS, EXECUTIVE DIRECTOR, SMRI: Everybody wants to be respected. They all want to be respected as an individual, that I'm important, that my service is important. I work hard for my dollar bill and whatever I put into getting that dollar bill, earning that dollar bill, I want to make sure that when I slap it down they're giving it back to me. ROSS: We've been fortunate in that we've put a successful product on the field. And we have an owner that's committed to winning, but we needed to do things to be sure that if and when that changes, that our fans feel a loyalty to our brand, and that they'll continue being customers of ours. YASTINE: Dolphins executives say their research has paid off. Season ticket sales have grown and the team sells out its home games much earlier than in the past. The other thing that would make these fans happier, a trip to the Super Bowl. Jeff Yastine, NIGHTLY BUSINESS REPORT, Miami.
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.
09/23/03: Commentary-GDP's Gain Is Labor's Loss
SUSIE GHARIB: Tonight's commentator takes a look at productivity and how it has affected the American economy. Here's Charles Schultze, senior fellow at the Brookings Institution. CHARLES SCHULTZE, COMMENTARY: Lately the growth in productivity, that is, GDP per hour worked, has speeded up sharply, from a little over 2 percent a year in the late 1990s to almost 4 percent in the last two years. With such rapidly growing output per worker, and a continuing rise in the working-age population, GDP has to grow at a fast clip simply to keep employment from falling. But during most of the past two years GDP has actually grown rather slowly, hence our jobless recovery. No one can fully explain the latest speed-up in productivity growth, but some of it appears to be a one-shot phenomenon, stemming from the burst of restructuring and workforce downsizing that so many business firms have been engaging in. The investment boom of the late 1990s left behind a large overhang of excess capacity. The competitive pressures created by that excess capacity, together with strong overseas competition, have forced business firms to find ways of getting higher productivity from their workers. But these restructurings are one-time efficiency gains, and productivity won't keep growing at today's rates. On the other hand, all the restructurings aren't likely to stop immediately. Their contributions to productivity gains will only gradually tail off. And so, the speedup in GDP growth that's now under way may stop employment from falling further, but it could be some time before we see significant employment gains. I'm Charles Schultze.
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. 09/23/03: Last Word: Let There Be Light
SUSIE GHARIB: And finally tonight, sometimes new technology can have some unexpected uses. Take, for example, the technology "smart surface." It produces light but not heat to an applied surface. Then take, for example, this use for it: lighting up the inside of a hand bag. Although the technology was originally developed for the auto industry, a German leather company named Bri (ph) is now using it in pocketbooks. A small glowing card provides the illumination and it can be easily turned on or off. The new hand bag should be on the market in a few months, Paul, and its makers hope it will be as ubiquitous as cell phones in a few years. PAUL KANGAS: Yes, maybe they can put some of that on the restaurant menus, you know, for those the dark corner tables so you can see what you are ordering. GHARIB: Aren't you a romantic? KANGAS: Well, yes, but you don't look at the menu all through the dinner. GHARIB: Well, that may be another use for it. Good idea.
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. 9/23/03: "Paul Kangas' Stocks In The News"
PAUL KANGAS: Wall Street opened with a modest rebound from yesterday's broad sell-off and those big earnings gains from Goldman Sachs, Lehman and Morgan Stanley offered a temporary boost. After an hour of trading, the Dow was up 34 points and the NASDAQ Index rose about 18. Then the blue chips began to fade after Verizon issued an earnings warning and Smith Barney downgraded a number of the major defense stocks including Lockheed Martin (LMT). At mid-day the Dow fell to a 5-point deficit, although the NASDAQ Index was still up 9 points. That firmness in the tech-laden NASDAQ market spilled back into the blue chips, especially after the bond market improved nicely in the afternoon. So the Dow Jones Industrial Average came back with a closing gain of 40.63 points at 9576.04. The NASDAQ Composite ended up 27.10 points, that's 1 ½ percent, and now stands at 1901.72. The Standard & Poor's 500 Index rose 6.21 points ending at 1029.03. In the bond market, the 10-year note edged up 3/32 to par and 11/32, putting the yield down at 4.21 percent. The most active New York Exchange issue, Motorola (MOT), 22 million shares traded. It moved up $0.24 on the day. It traded as low as $11.90 this morning. The "Heard on the Street" column in "The Wall Street Journal" suggests Motorola's stock is quite fully valued here because all of its major units are actually losing market share. And some of it is going to Nokia (NOK) which was up a dime today. Then Verizon Communications (VZ), which is now, of course, the largest U.S. phone company. The stock down $1.58. As I touched on earlier, the company slashed its 2003 earnings forecast from a range of $2.70 to $2.80, all the way down to $2.56 to $2.60. The company is citing weak local phone service demand. And of course, the stocks of other phone companies fell in sympathy. Also Verizon shareholders will now have to approve any new severance agreements awarded to senior executives. Lucent Technologies (LU) gained a penny. Number five in big board volume was Pfizer (PFE), moving up $0.46 a share. Liberty Media (L) dropped $0.12. And SBC Communications (SBC), one of those weak phone company stocks, down $0.88. NorTel Networks (NT) managed to move up $0.11. Micron Technology (MU), a $0.32 gain there. But BellSouth (BLS), another weak phone stock in that sector, down $1.04 a share, tenth in big board volume. And you heard about the good earnings, Goldman Sachs (GS) had the least increase and the stock fell over $3 ½. Just a fractional gain in Lehman Brothers (LEH). And Morgan Stanley (MWD), the star of the day in that group, up $1.18. Lockheed Martin (LMT) down $1.85. Smith Barney downgraded it from buy to hold on indications that public support for defense spending is waning. And Smith Barney also downgraded a host of other stocks in the defense group: General Dynamics (GD) was downgraded from hold to sell, and then L-3 Communications (LLL), Northrop Grumman (NOC) and Raytheon (RTN) were all downgraded by Smith Barney from buy to just holds. Starwood Hotels & Resorts (HOT) moving up $2.15. The company's chief executive officer says that Starwood's occupancy and room rates are rising because he feels the recovery in the hotel industry is under way. And that might be one of the reasons why Merrill Lynch upgraded Marriott International (MAR) from neutral to buy. And the stock had a nice move up. Right Management Consultants (RHT), a nice gain of nearly 15 percent with that rise of $2.33. An investor group led by Chief Executive Officer Richard Pinola is proposing to acquire Right Management Consultants for $17 a share cash. Another nice mover was Speedway Motorsports (TRK), jumping $3.67. The Raymond James financial brokerage upgraded it from outperform to a strong buy. And John H. Harland (JH) checked in with a $2.15 gain. Of course, it's a printer of checks and other business forms. The SunTrust Robinson Humphrey brokerage upgraded it from equal weight to overweight. And then LeapFrog (LF) did just that, up $2.91. The C.S. First Boston brokerage began covering this stock with a rating of outperform. NASDAQ's most active issue was Microsoft (MSFT), moving up $0.53. Followed by Intel (INTC) with a $0.42 gain. Amazon.com (AMZN) had a good day, up $2.97. Cisco Systems (CSCO), a $0.37 rise there. And JetBlue Airways (JBLU) up $2.30. That stock today was added to the Standard & Poor's Midcap 400 Index, so obviously index funds in there helping to boost the stock. Applied Materials (AMAT) edged up $0.02. Yahoo! (YHOO) up $1.24. Dell Incorporated (DELL) rose $0.59. Qualcomm (QCOM), a $0.16 gain. And then eBay (EBAY), tenth in NASDAQ in dollar volume, was up $1.25 a share. Geron Corporation (GERN), look at that gain, almost 55 percent, up $5.23. It traded as high as $15.05. The story, the company says the latest trials of its prostate cancer vaccine are showing significant immune responses. And that is really good news, the stock certainly reacted like it. Adolor Corporation (ADLR) rising $4.33. This drug developer's constipation treatment called Entereg has apparently met its main goals in late stage trials. And then we see Vaxgen (VXGN) rising $2.67, 27 percent run-up, and that's on optimism that the company may get federal government contracts to do research in combating bio-terrorist agents like Anthrax. 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.
09/23/03:
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