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Program: Tuesday, November 4, 2003
11/04/03: Former HealthSouth Chairman Richard Scrushy Is Accused Of Some Sickening Accounting
PAUL KANGAS: The former Chairman of HealthSouth, Richard Scrushy, was indicted today for masterminding one of the biggest accounting frauds in U.S. corporate history. Prosecutors say Scrushy called the shots on a wide ranging, long running scheme that netted him more than $260 million. Scrushy now faces 85 criminal counts, including charges that make him the first corporate leader accused of violating the new Sarbanes-Oxley law. Stephanie Woods reports. STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Prosecutors charge that when HealthSouth couldn`t make its numbers, Chairman Richard Scrushy devised a plan to add almost $3 billion in fictitious income to the books. CHRISTOPHER WRAY, ASSISTANT ATTORNEY GENERAL: Instead of telling the public the truth, Scrushy and his accomplices lied. They cooked HealthSouth`s books and filed false financial statements with the SEC to cover up their scheme. WOODS: The indictment alleges Scrushy threatened, intimidated and paid off employees to get them to go along with the fraud. WRAY: Scrushy also eavesdropped on HealthSouth employees` telephone calls and e-mails and tried to buy their silence. WOODS: Already, 14 HealthSouth executives have pled guilty and are cooperating with the government. Scrushy pled not guilty today. His attorneys plan to fight the charges in court. DONALD WATKINS, SCRUSHY`S ATTORNEY: They don`t have a smoking gun. If they had a smoking gun they would not have waited all these months to bring charges. WOODS: Prosecutors are also going after Scrushy for signing off on false financial statements, which violates the new Sarbanes-Oxley law. Former SEC Commissioner Isaac Hunt says the law makes it impossible for executives to plead ignorance. ISAAC HUNT, FORMER SEC COMMISSIONER: It would have been easier for somebody like this to walk away and say I didn`t do it, my financial underlings did it. But I think this statute is specifically designed not to allow people at the top to walk away anymore. WOODS: The government doesn`t want Scrushy walking away with ill gotten gains. It`s moving to seize more than $278 million worth of Scrushy`s possessions, including various houses, a 92 foot yacht, a Rolls Royce, a Cessna aircraft, artwork by Picasso and Renoir and a 22 carat diamond ring. HealthSouth is cooperating in the investigation. Tomorrow its new executives will update Congress on changes in the works, when they appear before the House Energy and Commerce Committee. 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.
SUSIE GHARIB: When the much awaited "Matrix Revolution" hits movie theatres tomorrow, it`ll be a big test for Imax (IMAX). For the first time ever, the small company will feature a new release on its very big Imax screens. It hopes the move from educational movies to Hollywood blockbusters will supersize its sales. When I talked with IMAX co-founder Richard Gelfond this morning, I asked him about the importance of "Matrix Revolutions" for his company's future. RICHARD GELFOND, CO-CHAIRMAN & CO-CEO, IMAX:(audio gap) increase the box office for the theaters, increase the royalty for Imax and increased the demand for more Imax theaters in North America and the world. GHARIB: Rich, if "Matrix Revolutions" is a box office hit, do you think it`s going to create a chain reaction for other theaters to sign up for an Imax screen? GELFOND: That`s exactly the idea, Susie. By having the same release window, we think we could create a much larger box office in Imax and we think that larger box office for Imax theaters will mean that other exhibitors around the world will want to go into the Imax business. GHARIB: What`s considered a success? I mean what kind of box office sales do you have to see? GELFOND: During the last Matrix film, "Matrix Reloaded, " it was released four weeks later in Imax and it`s now up to close to $14 million domestically. I think we`d like to see somewhere between $20 million and $25 million, and we`d consider that a success. GHARIB: What is it that Imax is offering to a theater? Why should a theater spend millions of dollars to convert to an Imax screen? GELFOND: An analogy we like to use is the coffee business before Starbucks (SBUX) came along. If you wanted coffee, you went to 7-Eleven (SE), you went to the deli, you spent $0.75, you bought coffee. Starbucks came along with a premium coffee and charged a premium price. Imax is creating sort of a first class movie experience, screens up to eight stories high, 12, 000 watts of digital sound. So the theaters can attract bigger audiences, charge a premium ticket price and therefore make a better return on their investment. GHARIB: If Matrix three does poorly, whether it`s because the movie is not good or that people don`t want to pay that premium to see it on an Imax screen, does this change your strategy? GELFOND: No, I don`t think so. I think the ship has sailed on that. I think the studios have seen the results of the three films we`ve done before this. I suppose the only thing it might cause us to rethink is whether it has to be day and day, or perhaps you launch it a week later or two weeks later. And I think we`re all looking at a lot of data with respect to that. But I think this strategy has already proven itself, irrespective of how successful this film is. GHARIB: I understand that you`ve done a good job of signing up theaters overseas. What kind of growth do you expect internationally? GELFOND: International has been a huge growth market for us over the last several years, especially the developing nations, places like China and India, Eastern Europe and South America. That`s almost independent of this strategy we`re talking about today. It has to do with improved demographic, love of technology, love of family entertainment. So I think that`s going to continue however "Matrix" does. GHARIB: There`s been a lot of growth in Imax`s stock. It`s more than doubled for this year. Now there`s all this speculation about which movie studio is going to buy Imax. What are your thoughts on this? GELFOND: My thoughts are it`s not surprising when you`re a small company surrounded by larger companies in an industry like the entertainment industry that there`d be a lot of speculation. But we embarked on a strategy several years ago. We announced it. It`s coming together. This week it`s coming together in a more significant way. And I think our stock has a way to go and I think we have a way to go before our strategy proves itself out. During that period of time, we`re just not interested in selling ourselves. GHARIB: Rich, thank you very much and good luck. GELFOND: Thank you so much, Susie.
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.
11/04/03: Bouncing Back-Part 1: The Knicks Tricks
SUSIE GHARIB:This is one of the most anticipated pro basketball seasons in years. A hot new rookie class and a slew of new international players has hoops fans excited. So tonight we begin a three part series, Bouncing Back, looking at how the NBA hopes to revive its industry. Erika Miller begins with a look at the New York Knicks, who are finding they need to go on a marketing offensive to sell tickets. ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Go to a Knicks game this season and you`ll see Woody Allen and other celebrities sitting courtside. Higher up in the arena, you`ll find supporters who may be less famous, but are no less passionate about the team. UNIDENTIFIED MALE: I don`t even care where the seats are. We`re in the building. It`s opening night. There`s nothing like that. We`re here early to watch the guys work out and just get psyched up. UNIDENTIFIED MALE: Love the Knicks. Big Knicks fan. Big Knicks fan my whole life. MILLER: The Knicks sold out opening night for the 15th year in a row despite a disappointing season last year. But selling tickets to regular season Knicks games is no longer a slam dunk. For the second year in a row, the Knicks did not sell out the entire season in advance. Part of the problem is that the renewal rate for season tickets has fallen to 85 percent from 90 percent in good years, although that`s still above the league average of 79 percent. The Knicks say the weak economy is partly to blame. Another reason, the team failed to make the playoffs two years in a row. Like other NBA teams, the Knicks are taking steps to bring fans back, including changing the way tickets are sold. Instead of forcing fans to buy an entire season`s worth of games, they now offer a wide variety of options. STEVE MILLS, SPORTS TEAMS OPERATIONS, MADISON SQUARE GARDEN: Now what we`ve done is we look and see what, you know, what the expectations and what the desires of many of the customers are. And in some cases, they`re looking for opportunities where they can`t come to a full complement of games. So they want to figure out a way that they can come to 10 games or 15 games. So we create packages that satisfy that need. MILLER: For the Knicks, a lot is riding on the success of the strategy. Ticket sales make up more than half of the team`s annual revenues. That`s roughly in line with the average for most NBA teams. The NBA has also pitched in to help get fans excited about the start of the season, by sponsoring the first ever premier week, with special events like this one at the NBA Store in Manhattan. DAVID STERN, NBA COMMISSIONER: In a very crowded entertainment and television market, it`s become increasingly necessary over the years to have a focus on what we now call premiere week. MILLER: The NBA also brought back its popular "I love this game" commercials, featuring celebrities like Jessica Simpson and Larry King. Experts say the increased marketing at the start of the season is a wise strategy. But they warn some teams like the Knicks will continue to have trouble selling out the entire season, until they start winning more games. In addition, some marketers say pro basketball could also do a better job of appealing to families, a strategy adopted by other sports leagues, like the NFL. ROBERT PASSIKOFF, PRESIDENT, BRAND KEYS: The issue is are you on the shopping list? Meaning that when someone in the family says, OK, what are we going to do this weekend, I`m willing to bet you dollars to donuts that the NBA doesn`t come up high on a list like that. MILLER: But for hardcore basketball fans, it`s not just about their team`s record. It`s also about tradition. Many are second and third generation ticket holders who enjoy being close to the action and rooting for their favorite team. 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.
11/04/03: Market Outlook With James Hunt, Co-Manager of Tocqueville International Value Fund
PAUL KANGAS: It`s no secret that some of the hottest markets in the world right now are overseas. And one fund that`s profiting from that is Tocqueville International Value Fund. So far this year, it`s up more than 41 percent and its long-term performance is even more noteworthy, with a five year annualized return of 7.7 percent. The Co-Manager of Tocqueville International Value Fund is James Hunt, who joins us now from New York. And welcome to NIGHTLY BUSINESS REPORT, James. JAMES HUNT, TOCQUEVILLE INTERNATIONAL VALUE FUND: MILLER: Good to be here. KANGAS: First, it`s interesting to note that you`re truly invested all over the world, with about a third of your fund invested in Japanese stocks. That`s about three times what you`ve invested in any other country. What`s so attractive about Japan? HUNT: Well, we`re first and foremost contrarians. And we started looking at Japan a year and a half or two years ago, when everyone thought the country was going to fall off the end of the earth. But at the end of the day we`re stock pickers and the reason we`ve got a big exposure to Japan is because we`ve found a number of stocks which fit well with our investment discipline, which is to say unique franchises, little or no debt, and cheap on a free cash flow basis. KANGAS: OK. You`re also invested in a number of other Asian markets, including Singapore, Indonesia and Hong Kong. But China is notably missing from the list. And why is that? HUNT: Well, we`re actually cautious about China as a whole because the investor sentiment has become resoundingly positive and as contrarians that concerns us. And the shares in the local markets have been bid up to ludicrous levels by local speculators. But having said, that actually do have a large exposure to China through Singapore and Hong Kong listed companies, which do most of their business in the mainland. KANGAS: OK. HUNT: And, also, importantly, through Industrial metals producers all over the world, whether they`re located in Australia or Canada, it`s the huge demand for things like copper and nickel which is driving -- coming out of China -- which is driving the investment story for those companies. And so in a way the industrial metals are also a play in China. KANGAS: Well, can you name a few stocks that are in you`re mutual fund portfolio that our viewers might find attractive buying individually? HUNT: Sure. G.P. Batteries, a Singapore listed company. It`s the leading Asian brand of batteries, 15 percent market share in China, trading at eight times earnings. A great bargain. KANGAS: Looking ahead, do you think we`ll continue to see the overseas markets outpace the American stock market? HUNT: Well, it`s hard to talk about entire markets. What I do know is that there are great inefficiencies in pricing of international, non-U.S. securities, and that provides super opportunities. KANGAS: OK. All right, we`re going to have to cut it off there, James. But I want to wish you continued good luck in your stock picking and we`ll pay very close attention to those that you suggested. Thanks very much. HUNT: Thank you. KANGAS: My guest, James Hunt of the Tocqueville International Value Fund. HUNT: Thanks very much.
Nightly Business Report transcripts
are available on-line post broadcast. The program is transcribed
by eMediaMillWorks. Updates may be posted at a later date. The views
of our guests and commentators are their own and do not necessarily
represent the views of Community Television Foundation of South
Florida, Inc. Nightly Business Report, or WPBT. Information presented
on Nightly Business Report is not and should not be considered as
investment advice. Copyright (c) 2003 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
11/04/03:
"Paul Kangas' Stocks In The News"
PAUL KANGAS: Wall Street opened modestly lower on profit taking, which was widely expected after the substantial gains of the last week.
A half hour into the session, the Dow was down 31 points, the NASDAQ Index off about 10.
The market gradually erased its early losses on brokerage upgrades on Hewlett-Packard (HPQ) and McDonald`s (MCD), along with a solid earnings report from Gillette.
Just before noon, the Dow was up 6 points. The NASDAQ gained 3.
But the rally just plain pooped out, as buyers stayed on the sidelines of Cisco (CSCO) -- ahead of Cisco`s earnings report tomorrow and the October jobs report due out on Friday.
So the Dow Industrial average came in with a loss of 19.63, at 9, 838.83. The NASDAQ Composite fell almost 9 3/4 points, to 1, 957.96. The Standard & Poor`s 500 lost 5 3/4 points, to 1, 053.25.
In the bond market, the 10-year note rose 12/32, to 99 20/32, pushing the yield to 5.30 percent.
The stock barely budged on that news, Susie, falling $0.38, to close at $58.66.
Now let`s look at the rest of our stocks in the news tonight.
The most active big board issue, trading 34.9 million shares of big board volume, Lucent Technologies (LU) down $0.12.
Then AT&T Wireless (AWE) a $0.26 loss. Goldman Sachs downgraded it from "in line" to "under perform."
Tyco International (TYC) rising $1.48. Fourth quarter narrowed its loss to $0.11 versus a $0.77 loss last year. But excluding charges, the company actually earned $0.34 a share, a $0.01 above Street expectations. It plans to sell over 50 of its smaller businesses and cut 7, 200 jobs.
General Electric (GE) dropped $0.14.
But Advanced Micro Devices (AMD) gained $0.62, number five in big board volume.
Pfizer (PFE) down $0.16.
ExxonMobil (XOM) fell $0.36.
Time Warner (TWX) a $0.07 loss.
But Corning (GLW) moved up $0.43.
Hewlett-Packard (HPQ), tenth in volume, up $0.28. J.P. Morgan upgraded Hewlett from "neutral" to "over weight" in the belief the stock`s discount to its peers will narrow.
Gillette (G) had a great day, up $1.65. Third quarter earnings $0.41, a $0.05 better than the Street expected and up from $0.33 last year. Sales up a respectable 11 percent, and that was partly because its battery sales were strong due to the Northeast power blackout and Hurricane Isabel.
McDonald`s (MCD) moved up $0.72. That`s a new 52 week high. The S.G. Cowen Brokerage upgraded it from "outperform" to a "strong buy" on the improving outlook for U.S. and European growth, according to Cowen.
Credit Suisse Group (CSR) down $2.16. The company`s investment unit, C.S. First Boston, was unhappy with the 21 percent drop in third quarter profits versus the southern California levels.
Fair Isaac & Company (FIC) down $7.50. The low of the day, $53.10. The company`s in the data management systems business and its fourth quarter earnings came in at $0.64, a $0.01 below the Street estimate. Full year earnings $2.12. That was also a $0.01 below the Street. But RBC Capital, meanwhile, downgraded it from "top pick" to just a "sector performer."
Marvel Enterprises (MVL) fell $2.14. Third quarter earnings sharply higher, $0.85 versus last year`s $0.17. But the thing that hurt the stock, the company suggested 2004 earnings could fall below this year`s levels.
CNA Surety (SUR) one of the biggest percentage losers, off nearly $2 a share. The company in with a third quarter loss of $1.14 versus earnings of $0.06 last year. The company blamed adverse claim developments.
Another insurance company on the down side, Aon (AOC), losing $1.17. Third quarter earnings lower, $0.36 versus $0.46 last year, and the revenues were up 6.6 percent. But that wasn`t as good as expected.
Actuant Corporation (ATU) down $3.44. The company is in the electronic systems and components. It plans a private placement of $100 million of its convertible senior subordinated debentures.
On the up side, we see MSC Industrial (MSM) up $2.77. Fourth quarter earnings higher, $0.20 versus last year`s $0.13. Sales up 3 1/2 percent. The company sees first quarter rising to $0.21 to $0.23 a share. BB&T Capital Brokerage upgraded it to a "buy."
Another good gainer, Southern Peru Copper (PCU) rising $2.85 after copper and nickel prices hit fresh highs on the London metals exchange.
The NASDAQ`s most active, Microsoft (MSFT), down $0.61.
Followed by Intel (INTC), a $0.36 loss.
Applied Materials (AMAT) edged up $0.34.
Cisco Systems (CSCO), these earnings are due out after the close tomorrow, down $0.13.
Novell (NOVL) rose $1.28. The high of the day was $8.80. The company is going to acquire Linux Technology Company`s SuSE Linux of Germany for $210 million. Also, IBM (IBM) is going to invest $50 million in Novell convertible preferred stock. That`s a vote of confidence, apparently, in Novell.
Dell (DELL) down $0.33.
A $0.06 drop in Amgen (AMGN).
Oracle (ORCL) gained $0.02.
IDEC Pharmaceuticals (IDPH) down $1.94. The company`s lymphoma treatment trials are inconclusive so far.
eBay (EBAY) up $0.24, tenth in volume.
PMA Capital (PMACA) tumbling $8.11. The company suspended its $0.105 quarterly dividend. The insurance holding company is going to take also a $150 million pretax charge to increase its loss reserves.
And Hollis-Eden Pharmaceuticals (HEPH) down $3.33. The company`s experimental cholesterol treatment did not prove effective.
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.
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