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Program: Wednesday, September 24, 2003
09/24/03: OPEC's Decision To Cut Oil Production Does Crude Things To Stocks
SUSIE GHARIB: A surprise decision by OPEC today to cut oil production sent oil prices gushing, and stocks skidding on Wall Street. The Dow tumbled 150 points, and the NASDAQ dropped 58, or more than 3 percent. That news from OPEC to drastically slash output ignited investor worries that higher oil prices could slow the U.S. economic recovery. Scott Gurvey has details. SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: The OPEC announcement sent the crude oil futures market into orbit. The price of a barrel of light sweet crude for November delivery traded as high as 28.59 before closing at 28.24, up 1.11, or 4.1 percent, on the New York Mercantile Exchange. The Organization of Petroleum Exporting Countries pumps about a third of the world`s oil, and while it does not have the overwhelming power it once wielded, it does have a significant impact on the price of heating oil and gasoline. OPEC`s decision to cut production by 900,000 barrels a day is said to have come because of concerns among the 11-member nations over recent weakness in price, and increases in inventories among the major importing nations. The markets had expected OPEC to keep its daily production ceiling at 25.4 million barrels. WILLIAM WALLACE, OIL TRADER, MAN FINANCIAL: A 900,000 barrel a day cut is pretty significant, and I think I say more than people thought that would have been here. And we`ve been weak lately. The last week-and-a-half, the market has certainly been trending lower, so all the people who were betting the market was going lower are now having to get out. So it`s little higher pitch than normally we have. GURVEY: It is no coincidence the OPEC cut is about the same size as Iraqi production. OPEC is, in effect, taking back the extra production it added when Iraqi production was cut off by the war. OPEC has had a hard time holding the line on production caps and today`s cut faces a questionable future. JAMES STEEL, OIL ANALYST, REFCO: I think it`s going to be difficult for them to maintain this discipline. There is real financial problems in some of the OPEC countries: they tend to be low growth, they do have trade problems. So it will be difficult insuring this. But the discipline in OPEC overall in the last few years has certainly been better than the historical average. GURVEY: Most economists believe the impact of the OPEC production cuts on the American economy will be minimal, unless the price of crude rises above $30 a barrel. 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.
SUSIE GHARIB: More pressure today on the New York Stock Exchange to change the way it does business. Several high-powered state treasurers met with officials of the NYSE to talk about reforming the Exchange`s corporate governance practices. One of the people at that meeting was Alan Hevesi, New York State comptroller. And he joins us now. Mr. Hevesi, nice to have you on the program. ALAN HEVESI, NEW YORK STATE COMPTROLLER: Thank you very much for inviting me. GHARIB: Let me begin by asking you at the meeting this morning what were the changes that you and the other treasurers were calling for? HEVESI: We requested very forcefully that there be a full, total, complete independent investigation of all the factors that went into the decision-making regarding Richard Grasso`s remuneration and any other decisions that may provide some ethical issues as the stock exchange tries to reform itself. And then we insisted on a group of reform principles including complete transparency, full disclosure, independent board members, independent directors on each of the committees, separation of the regulatory function from the management function, separation of CEO from the chair of the board. A series of reforms in the context of what has become a national issue, I`ll call it, I`ll understate it, that has severely damaged the credibility of stock exchange. GHARIB: What was the response of NYSE directors who were at that meeting? HEVESI: You know, I was very surprised by it. I thought they would hear us out. We had 10 treasurers and comptrollers, representing well over half a trillion dollars in assets, in the room, making the presentation. There were 11 directors of the stock exchange. And I thought that at the end of our presentation they would thank us, have one spokesman respond and then tell us they would report back, and they didn`t do that. Nine of the directors spoke directly to us and said, we get it. We know we have to reform this institution, that there will be a different board, there will be different rules, that the stock exchange has to be a role model for transform. And that sort of surprised me because now this was transcribed on the record, these nine directors committing themselves to a program of reform. And that was very, very surprising to me. GHARIB: As you know, Mr. Hevesi, many people have been calling for the resignations of everyone on the NYSE board, what are your thoughts on that? HEVESI: Well, we didn`t go into an individual accounting and saying, Mr. Jones, you have to leave, and Mr. Smith, you are out. That`s not our role and our function. But the underlying presumption is that there will be a different board at the end of this process. And it`s not going to be a long-term process if it`s going to work. I mean, John Reed, the new interim president, has indicated it will be a smaller board to begin with. We`re insisting on independent board members. We`re insisting that our own institutions be represented in some way by somebody who knows the investing community. That by definition means a different board. GHARIB: Do you have any suggestions for a new leader for the NYSE, any candidates that you would like to see on the board? HEVESI: Well, not that I`m going be public about. First we have to see John Reed`s performance. He has the credentials and he has the independence but the measurement will be or the judgment will be, does he reform this institution and start us on that path? And whoever replaces him has to commit to a program. It`s not just the credibility of the individual, it`s what they are going to do with this in the context of this scandal. GHARIB: Beyond the New York Stock Exchange, have you approached the Securities and Exchange Commission to talk about these changes, structural changes that would you like to have done? HEVESI: Yes. Both by phone and by mail we sent a letter today to Mr. Donaldson, the chair. GHARIB: Any reaction? HEVESI: Yes. I mean, very positive reaction, but it`s in process. We asked the SEC to select the independent investigation of the stock exchange. We think we`ll get a good response. Donaldson indicated he wanted to meet with us. And we were told that we could expect an invitation to meet with Mr. Reed when he gets back to the United States on Monday. So this is a work in progress obviously, but I`m more optimistic after this meeting than I was going in. GHARIB: That`s great. California state treasurer has called that - Dick Grasso, the ousted chairman of NYSE, should give back some of that $140 million compensation. Do you agree with that? and if so, what is an acceptable amount of money to return? HEVESI: Well, we`re not going to negotiate his severance. He`s protected by contract. But the symbols are real. I mean, I hope Dick Grasso does understand that the industry and the institution that he served so well for so long is in grave trouble and a lot of this is communicating of messages. To give back some of that money, I think, is an appropriate message to try to ease some of the pressure of the public reaction to what went on. GHARIB: All right. Thank you very much, Mr. Hevesi. I appreciate your coming on the program. HEVESI: Thank you, my pleasure. GHARIB: We have been speaking with Alan Hevesi, New York State comptroller.
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.
09/24/03: The National "Do Not Call" Registry May Get Put On Hold
SUSIE GHARIB: A federal judge has put the new national "do not call" registry on hold. Fifty million phone numbers are already on the Federal Trade Commission`s list to end unsolicited telemarketing calls. But an Oklahoma federal judge says the FTC overstepped its bounds, and Congress must give the agency the authority to enforce it. The FTC says the court is wrong and will seek a stay to overturn the ruling. Congressional leaders agree, and say they`ll quickly get a new law on the books to make the registry valid. REP. BILLY TAUZIN (R-LA), CHMN., ENERGY & COMMERCE COMMITTEE: When you have that kind of a huge popular support for an activity of our government, to have a court strike it down and not to repair the damage and put it in place immediately would be a travesty. We`re going to do that. We`re going to correct that. GHARIB: The telemarketing industry says the "do not call" registry will cost it $50 billion a year in lost revenues.
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.
09/24/03: "Defending the Franchise"-Part 2: That's The Ticket
SUSIE GHARIB: The National Football League`s teams are finding they can`t take it for granted these days that tickets will sell themselves. While some franchises are in strong football markets where sellouts are routine, weaker teams often have a tougher time. Continuing our series "Defending the Franchise," Jeff Yastine looks tonight at a team that took its marketing tactics from a retailer, and is nailing down results. JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: The Atlantic Falcons. For years, the team has been mediocre. On the field, they went to the playoffs just seven times in 37 years, and off the field, sellouts have been nearly as rare. But all that is changing after Home Depot co-founder Arthur Blank bought the team last year for nearly $550 million. ARTHUR BLANK, ATLANTA FALCONS OWNER: It`s everything you`re doing to create that unique environment where you take ownership over six hours. That`s what fans are investing in: six hours from the time they leave their driveway until the time they get back home. So we take that six hours in a very serious way, and make sure we`re giving them a real good value for their time. YASTINE: But the team`s marketers faced a challenge: how to get fans to care about a team that`s been at best only a marginal success on the field, and is also in a big, fast-growing, transient city like Atlanta, where many fans are still rooting for the teams in the cities where they last lived. And the team`s executives turned to market research for answers. The team conducted an e-mail survey of 6000 season ticket holders to find out their likes and dislikes, and use those results as a starting point beginning with a rollback of ticket prices. Prices were cut in some seating areas by 35 to 70 percent. The cheapest now go for $100, about $12 per game. There are changes outside the Georgia Dome as well. Parking and public transportation were improved based on fans` input, and the team set up what they call "Falcons Landing," a sort of pre-game interactive miniature theme park. There`s live music, you can have your face painted with team colors or make a run for that game-winning touchdown that every fan dreams about. DICK SULLIVAN, EXEC. V.P. MARKETING, ATLANTA FALCONS: We`ve built brands before. And I think when you look at building a brand, you want to make sure that it has a lot of emotion to it. And by creating an experience, you`re going to build brand strength, yore going to build brand stature over time, and that was really a piece of it. It`s not just to be - work just towards more wins and losses. And the fans told us that, just like the Kentucky Derby, people don`t go to a three-minute race, for the Kentucky Derby, they go for the entire weekend. And that was really our goal. YASTINE: So far, it`s working. Average attendance per game three years ago was 55,000 people. That rose to about 70,000 last year; season ticket sales almost doubled. The Falcons are experiencing similar results this year. Of course, it helps to have star quarterback Michael Vick leading the team, although he`s sitting out part of this season with an injury. But Falcons` owner Blank says what`s happening with the franchise is no different than what made Home Depot a success. BLANK: It`s really exactly the same. At Home Depot, we focused on customers, we focused on our associates, and obviously produced great financial results. Here it`s the same kind of philosophy: we focus on fans instead of customers; we focus in on players, coaching staff, organization - instead of associates. And then you produce the kind of results you see here; the kind of energy today you feel in the building. YASTINE: In this home opener, the Falcons lost a squeaker to the Redskins, but 70,000 people showed up. Sellouts like this were once the exception; now, they`re the rule. Jeff Yastine, NIGHTLY BUSINESS REPORT, Atlanta. KANGAS: Tomorrow: the NFL isn`t just selling football anymore, as "Defending the Franchise" continues.
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. 09/24/03: "Money File"-Flexible Funds
SUSIE GHARIB:In the "Money File" tonight, a look at funds that are flexible. Here`s John Waggoner, mutual fund columnist for "USA Today." JOHN WAGGONER, MUTUAL FUND COLUMNIST, "USA TODAY": If you feel like your fund manager is trapped in a box, then you might consider a go-anywhere fund. The only problem: you never know where your fund manager is going to go. Both Morningstar and Lipper, the mutual fund trackers, classify funds according to their investment styles. A fund that looks for stocks of large companies with hot earnings growth, for example, is a "large-company growth fund." One that looks for beaten-down stocks of small companies is called a "small-company value fund." The fund classifications make it easier to compare funds with similar investment styles. But financial planners and investors rail against style drift, funds that move from fund classification to fund classification. After all, it`s nice to know what you own. But if you own a fund that invests only in one type of stock, sooner or later, those stocks will fall out of favor. If your manager stays strictly within his style box, there`s not much he can do to avoid getting clobbered. Go-anywhere funds let managers drift in and out of their style boxes, buying small or large companies as they see fit. Some even have more leeway; they can load up on bonds if they think stocks look awful. The advantage: some go- anywhere managers can produce eye-popping gains and avoid terrible falls. And you won`t have to sell one fund and buy another to follow a market trend. The disadvantage: if your manager stocks up on bonds and the market soars, you`ll feel like the village idiot. Many go-anywhere funds live in Morningstar`s "blend" style box. But you`ll have to read the fund`s prospectus to figure out just how much leeway the manager has. And make sure you look for a go- anywhere fund with a good record, otherwise, you could regret the trip. I`m John Waggoner.
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. 9/24/03: "Paul Kangas' Stocks In The News"
PAUL KANGAS: News of that drop in OPEC oil production didn`t sit well on Wall Street as stocks opened moderately lower. After an hour of trading, the Dow was off 32 points, and the NASDAQ Composite fell 13. Also contributing to the slide was Viacom (VIA) cutting its earnings expectations for the year, and Lehman Brothers downgrading Genentech (DNA) stock. The oil stocks were about the only ones showing gains and they were just modest ones. By mid-session, the Dow was off 110 points, NASDAQ down 38. Persistent selling pressure pushed many stock indices below recent support levels, and that activated even more sell orders, sending the market sharply lower. The Dow Industrial Average fell to a 150 1/2- point, or 1.6 percent, closing loss, putting it at 9425.51. The NASDAQ Composite tumbled 58 points or 3.1 percent, ending at 1843.70. The Standard & Poor`s 500 Index lost 19 2/3 points, or 2 percent, ending at 1009.38. Over in the bond market, the 10-year note advanced 19/32 to par and 29/32, pushing the yield down to 4.14 percent. The most active New York Exchange issue, trading 26 million shares was Viacom B (VIA.B), down $1.44. The company said its full-year earnings will grow less than 10 percent. And then earlier the company had growth projected somewhere in the mid teens. So quite a disappointment there. Accenture Limited (ACN) bucked the overall trend on Wall Street with an $0.86 gain. Today`s "Wall Street Journal" notes the company just got a $500 million contract from AT&T (T) to take over its credit and accounts receivable operations. Motorola (MOT) giving back $0.04 after a little spike up recently. Micron Technology (MU) was down $0.57. After the market closed, Micron reported a fourth-quarter loss of $0.20 a share, nowhere near as bad as last year`s $0.97, and $0.05 better than the $0.25 loss expected on Wall Street. The stock showed little further movement in after hours trading however. Lucent Technologies (LU) dropped a nickel, number five in big board volume. AOL Time Warner (AOL) losing $0.47. NorTel Networks (NT) down $0.13. Pfizer (PFE), a $0.70 loss. General Electric (GE) dropped $0.75. And then EMC (EMC), tenth in volume, down $0.80 a share. McDonald`s (MCD) edging up $0.03, but it traded as high as $24.25 this morning when the company announced it`s boosting its annual dividend by 70 percent. It will go from $0.23 1/2 a share up to $0.40 a share; one of a recent group that have been boosting dividends rather liberally. ExxonMobil (XOM) down $0.16. The big oil didn`t show much reaction to that better than $1 rise in oil prices on the OPEC news. But some of the smaller issues did better: like Amerada Hess (AHC), up $0.91; Occidental Pet. (OXY) rose $0.07; and then the oil-related in the oil service sector did much better, Noble Corp. (NE) up a $1.16; Transocean (RIG), a $1.06 gain. A real mixture there. Genentech (DNA) down $4.55. Lehman Brothers downgraded this stock from overweight to just equal weight. And Biovail (BVF) was down $1.15. Goldman Sachs began covering this stock with just an in-line rating. And that was a disappointment to some shareholders. A.O. Smith (AOS) down $4.68. The company makes electric motors, water heaters, things like that. And it cut its third-quarter earnings guidance from the range of $0.42 to $0.46 a share all the way down to $0.18 to $0.20. It also said 2003 earnings, instead of being $2.40 to $2.60 as originally thought, will be down to $1.75 to $1.80 a share. Then a new issue today, Journal Communications (JRN). This company owns a regional fiber optic network, among other things, 17 1/4 million share offered to the public at $15 a share. The stock opened at $16.10, the high of the day, $16.70, then it settled back a bit. But still up on the day. Beckman Coulter (BEC) moved up $0.95. It traded as high as $49 and then I believe over $49 1/2 at one stage today. The news, a California jury awarded the company $934 million in a breach of contract lawsuit against Flextronics International (FLEX). Flextronics was halted this morning at $15 even. That was down $0.82 and it did not reopen for trading today. J.M. Smucker (SJM) up $1.81. Deutsche Bank Securities upgraded it from hold to a buy. The most active issue on NASDAQ, Microsoft (MSFT) losing $1.14. And Intel (INTC) had a similar loss of $1.16. Cisco Systems (CSCO) down $0.83. Amgen (AMGN) down $2.73. Oracle (ORCL) lost $0.43, number five in dollar volume on NASDAQ. eBay (EBAY), a $0.56 drop. Applied Materials (AMAT) dropping a $1.21. Amazon.com (AMZN) giving back some recent gains, $0.83 loss there. Nextel Communications (NXTL) dropped $0.32. And Yahoo! (YHOO) down $1.21, tenth in NASDAQ dollar volume. FuelCell Energy (FCEL) bucked the overall trend with a very nice gain of $2.13, over 19 percent. The company and its partner, Caterpillar (CAT), sold their first fuel cell generation plant in the state of California. The buyer, the Los Angeles County Sanitation District. And then on the downside on NASDAQ, Aeterna Laboratories (AELA) dropping $2.17. Phase III trials of the company`s Neovastat, a compound to treat a form of kidney cancer, did not meet the primary objective. And those are our "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.
09/24/03:
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