Program: Thursday, December 11, 2003

The Return of Dow 10,000
President Bush's Iraq Contract Payback
One On One With American Association of Advertising Agencies President Burtch Drake
"Help Wanted"-Part 3: Video Game Industry Opportunities
Commentary: Tis The Season For Scandal & Bankruptcy
Paul Kangas' Stocks In The News
Market Stats

12/11/03: The Return of Dow 10,000

SUSIE GHARIB: It's Dow 10,000 again. A rally in stocks pushed the blue chip average over that milestone for the first time since May 2002. The Dow added 86 points, closing at 10,008. And the NASDAQ also rose sharply, gaining almost 38 points. Helping to propel stocks higher today, an upbeat report on retail sales. Suzanne Pratt has more.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: The latest measure of retail spending suggests American consumers are full of holiday cheer. The Commerce Department says retail sales rose a better than expected 0.9 percent in November. On top of that, October's sales were revised higher, to unchanged, after a previously announced drop. Experts say the report indicates the recovery may be more durable than originally forecast. And many say the data helps put to rest concerns that growth might slow sharply in the fourth quarter.

LAKSHMAN ACHUTHAN, MANAGING DIRECTOR, ECONOMIC CYCLE RESEARCH INSTITUTE: This is one of the key coincident indicators of the economy. So, they tell you what the economy is like right now outside your window. And the answer is the economy continues to grow faster, essentially, than expected.

PRATT: Purchases of electronics, furniture and automobiles helped to fuel the increase in November retail sales. But some economists are concerned that the composition of spending suggests a level of cautiousness on the part of the consumer.

DREW MATUS, SENIOR MARKET ECONOMIST LEHMAN BROTHERS: When consumers are spending based on things such as low interest rates, prompting people to go and try and buy autos, or they're just filling up homes, all those things are temporary factors and therefore we have to watch to make sure that the spending growth continues in the U.S. economy.

PRATT: Still, most economists believe that consumer spending now has the momentum to continue strongly into 2004. They say not only are Americans becoming less worried about their jobs, but they believe tax cuts and low interest rates will continue to encourage spending.

ACHUTHAN: It may simply be that the stimulus has jumpstarted enough confidence to bring back a more healthy recovery that is not simply the consumer, that also begins to include the business side of our economy.

PRATT: Economists forecast a healthy recovery will translate into a four percent increase in fourth quarter GDP. That's a respectable number, but still slower than the third quarter's torrid pace. 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.

12/11/03: President Bush's Iraq Contract Payback

SUSIE GHARIB: France, Russia and Germany need not apply. The President is sticking to that message when it comes to handing out U.S. contracts to rebuild Iraq. And as Darren Gersh explains, the controversy could complicate the administration's efforts to pare back Iraq's staggering debt.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The President was standing his ground today, defending his administration's decision to restrict contracts to rebuild Iraq to countries that have, as the Pentagon would say, put boots on the ground.

GEORGE W. BUSH, PRESIDENT, UNITED STATES OF AMERICA: It's very simple. Our people risked their lives. Coalition -- friendly coalition folks risked their lives and therefore the contracting is going to reflect that. And that's what the U.S. taxpayers expect.

GERSH: The decision means countries ranging from Albania to Uzbekistan can bid on more than $18 billion in Iraqi reconstruction contracts, but France, Germany and Russia cannot, though an exception might be made for Canada. Analysts say while the contracts to rebuild everything from bridges to oil wells are valuable in the short run, the contracting controversy could jeopardize opportunities for American businesses in the long run.

STEVEN SCHOONER, GEORGE WASHINGTON UNIVERSITY: If we signal to other nations that we're going to exclude their firms from opportunities to compete when we spend money, we invite them to do the same to us, and that has to be concern to us firms.

GERSH: Russia, Germany and France reacted with furor. The E.U. called the decision "gratuitous." The controversy comes just days before the administration will send former Treasury Secretary James Baker on a mission to ask these same countries to forgive much of Iraq's massive prewar foreign debt.

G.W. BUSH: If these countries want to participate in helping the world become more secure by enabling Iraq to emerge as a free and peaceful country, one way to contribute is through debt restructuring.

GERSH: The Center for Strategic and International Studies estimates Iraq's total debt at $383 billion. That figure includes $57 billion in contracts signed between Saddam Hussein and Chinese, Russian, Dutch and French companies. The timing of the contract announcement seemed to link debt relief with future work in Iraq. But analysts say such a strategy could backfire.

BATHSHEBA CROCKER CENTER FOR STRATEGIC & INTERNATIONAL STUDIES: So rather than being leverage to get other countries to come toward what we would like to see on the debt, that this will actually just alienate those countries even further.

GERSH: The E.U. is studying whether the contract exclusions violate international trade agreements. But the U.S. says companies from countries left out of the initial bidding, could still participate as subcontractors. 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.

12/11/03: One On One With American Association of Advertising Agencies President Burtch Drake

SUSIE GHARIB: The advertising industry is also trying to boost business. The American Association of Advertising Agencies, or the AAAAs, announced plans today for a festival in New York called Advertising Week, showcasing the industry's creativity. When I talked with AAAAs President Burtch Drake today, I asked him why he's hosting the event.

BUTCH DRAKE, AMERICAN ASSOCIATION OF ADVERTISING AGENCIES: Everybody thinks of Madison Avenue and Wall Street and 7th Avenue. So we're kind of known but we have never done anything to publicize ourselves. So the thought was maybe we'll take a lesson from 7th Avenue with Fashion Week and create an event to celebrate and also showcase our industry.

GHARIB: Mr. Drake, that's interesting because the advertising industry has been hesitant to promote itself. Why the change?

DRAKE: We spend so much time promoting our clients' products and services that I think we've forgotten how to promote ourselves. And the light has gone off of our industry, maybe because we have been so reticent. So the thought was, you know, we've got some pretty smart people and a very creative business and maybe we can do something to put, you know, raise our level out there.

GHARIB: Several forecasters have been saying that ad spending is picking up. Why are things looking better?

DRAKE: Well, I think the recession is well past us. The economy is in very healthy shape. The Bush tax cuts seem to be working. The Iraqi war is pretty much behind us in terms of what that was doing. And all the forecasts are much more bullish, actually, than I would have thought. Next year is going to be even better. The two outside forces are the Olympics and the presidential elections, which always bring new money into the business.

GHARIB: Can you put this in perspective? How does this compare with 2000, which was the best year ever for advertising?

DRAKE: For the first time in the history of the industry since the Depression, in 2001 we actually had a decline in ad spend. Ad spending has always been kind of bulletproof. But in 2001, we actually had a year to year decline. It came back in 2002 modestly, I think two or three percent. And then 2003 is going to be four or five percent. And now we're looking at 2004, seven or eight percent. So we're on a pretty good track, but I think the absolute numbers shows that 2004 will just be barely ahead of where we were in 2000.

GHARIB: Where will we see the growth? Is it mostly going to TV or across the media spectrum?

DRAKE: Television, despite all the questions about TiVo and viewing falling, continues to be the real engine of ad spending.

GHARIB: Well, there was a time that there were only three TV networks. But now with so many channels, how difficult is it for advertisers to get their message out?

DRAKE: Viewers are more diverse, but they're also more targeted. So that you can rifle shot your advertising more today, even though there are a thousand channels, than you could have when there were three channels only. So, by example, if you advertised on "I Love Lucy" 20, 30 years ago, you would reach hundreds of millions of people. Not all of them might have been candidates to buy your product.

GHARIB: And what about the impact of personal video recorders like TiVo, where people can just skip through the commercials? How do advertisers reach their audience?

DRAKE: The challenge for advertisers will be to have advertising that's creative enough that people will not want to skip through it. And if you use the Super Bowl as an analogy, actually, the most watched portions of the Super Bowl happen to be the advertising. So if the setting is right and the advertising is right, people will watch it. If it's boring, then they're going to snap through it.

GHARIB: And what are the prospects for the Internet?

DRAKE: I think Internet sales this year are going to hit, you know, all kinds of records around the Christmas season. So it has its strengths. But it's not a mass market advertising medium and it will not ever reach or influence people in the same way, say, that television or radio or some of the mass media does.

GHARIB: When you talk about ad spending picking up, which advertisers are spending the most? Which industry sectors?

DRAKE: The very healthy sectors right now are automobiles, telecommunications -- think of the all the wireless people out there trying to get people to switch and carry their numbers over. Movies is a very large industry and health care.

GHARIB: Mr. Drake, thank you very much.

DRAKE: Thank you very much. I enjoyed it.

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.

12/11/03: "Help Wanted"-Part 3: Video Game Industry Opportunities

SUSIE GHARIB: Game Cube, Xbox and PlayStation have turned video games into a multibillion dollar industry. They've also opened up job opportunities for many game enthusiasts. As we wrap up our series Help Wanted, Diane Eastabrook looks at lucrative careers in the video game business.

DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: What started as a pastime could turn into a profession for these students at the Illinois institute of Art. In a world where laughter was king.... 21 year old marshal is one of several students who wants a job developing video games after he graduates next week. Anything with character animation, hopefully with games or movies. Pixar's (PIXR) a really nice company. I'd like to work there. the $10 billion video game industry is becoming an attractive career choice for a generation that grew up with the Sims and Mario Brothers. So attractive, in fact, the Illinois Institute of Art.

UNIDENTIFIED MALE: In a world where laughter was king.

EASTABROOK: Twenty-one-year-old Marshall Bock is one of several students who wants a job developing video games after he graduates next week.

MARSHALL BOCK STUDENT ILLINOIS INSTITUTE OF ART: Anything in character animation, hopefully with games or with movies. Pixar is a really nice company. I'd like to work there.

EASTABROOK: The $10 billion video game industry is becoming an attractive career choice for a generation that grew up with the Sims and Mario Brothers, so attractive, in fact, the Illinois Institute of Art recently launched a game art and design program that focuses specifically on video game production.

CARRIE GALE, ILLINOIS INSTITUTE OF ART: I think our players in gaming are very excited about it. You know, we're going to be having graduates that are more qualified for what they're looking for.

EASTABROOK: The company that developed The Haunted Mansion, Hunter the Reckoning and nearly 40 other titles says it's constantly seeking new talented. High Voltage Software has grown from less than a dozen employees to nearly 150 in 10 years. The company expects to add even more producers, animators and audio engineers down the road.

ERIC NOFSINGER, V.P., HIGH VOLTAGE SOFTWARE: The player is demanding more depth in their game play, a more rewarding experience for their $50. And in order for games to keep up with film, we've found that teams need to get larger and the time frames involved in creating those games needs to get longer.

EASTABROOK: Wages in the video game industry are attractive. Starting salaries range anywhere from $35,000 a year for audio engineers to $67,000 annually for producers. Since video games appeal primarily to young males, most of the staff at High Voltage are men under age 35. But Nofsinger hopes that will change as the industry broadens its audience base.

NOFSINGER: You know, I've got a 10-year-old daughter who I'm very proud of and she doesn't -- the games that she, that are available for her and for her interests are very limited.

EASTABROOK: Industry watchers say as video games become more realistic, they could become even more popular than movies, making careers in gaming more appealing and profitable. Diane Eastabrook NIGHTLY BUSINESS REPORT, Chicago.

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.

  12/11/03: Commentary: Tis The Season For Scandal & Bankruptcy

SUSIE GHARIB: In tonight's commentary, a holiday lesson. Here's Tom Stewart, Editor of the "Harvard Business Review."

TOM STEWART, "HARVARD BUSINESS REVIEW": It's hard to imagine Christmas without FAO Schwarz, but this may be the last year when children and parents, their breath steaming, line up to get into the famous Manhattan store. FAO Schwarz declared bankruptcy for the second time and may not live to see another Christmas. It's a bittersweet season, too, at the Condit household. Phil Condit, the CEO of Boeing (BA), resigned last week after, here we go again, a series of scandals. Condit might have survived the scandals, which didn't touch him personally, but for the fact that during his tenure, Boeing's stock has gone essentially sideways. Toy planes, big planes, they have more in common than you think. Lesson number one -- beware of mergers. A big merger helped to undo both companies. Mergers rarely live up to expectations and they devour management time. Larry Selden, a professor at Columbia, says that you shouldn't think of a merger as an acquisition of a company. You're really buying its customers. And unless you know how profitable those customers are, and you probably don't, you're liable to make a bad deal. Lesson number two, it's not one punch that kills you, it's the old one-two punch. For Condit, there was scandal and mediocre results. FAO took on a complicated merger and the restructuring of the whole retail sector under pressure from Wal-Mart (WMT) and electronic commerce. Why stand in the cold when you can Google from the den? So if you're shopping for companies this season, be extra careful. And wherever you shop, remember, it's the thought that counts. I'm Tom Stewart.

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.

12/11/03: "Paul Kangas' Stocks In The News"

PAUL KANGAS: Stocks opened broadly higher as those encouraging November retail sales figures overshadowed news that weekly jobless benefit claims rose 13,000. After an hour of trading, the Dow was up 68 points, the NASDAQ up 22 points. The market held its gains for the rest of the morning on word that October business inventories rose 0.4 percent, suggesting businesses are growing more confident of the economic recovery. Early afternoon brought a fade, but stocks came on strong again after the minutes of the Fed's October 28th meeting were released. They downplayed inflation, suggesting interest rates should stay low for up to two more years. With that, the Dow Jones Industrial average surged to an 18 month high with a closing gain of 86.30 points, at 10,008.16, a psychological victory for the bulls. The NASDAQ Composite jumped 37 2/3 points, or two percent, to 1,942.32. The Standard & Poor's 500 Index gained 12.16, ending at 1,071.21. Despite lukewarm demand for the Treasury's 10-year note auction today, the 10-year note did advance 21/32, at par and 4/32, pulling the yield below 4 1/4 percent, and that was thanks largely to the release of those October Fed meeting minutes.

Then Concord EFS (CE) up $1.38. The "Heard on the Street" column in today's "Wall Street Journal" reviews First Data's (FDC) anti-trust problems in its plans to acquire Concord. Rumor today was that First Data may have reached a settlement with the Justice Department allowing the acquisition to go through. First Data was up $0.85, at $39.06.

Lucent Tech (LU) up $0.15.

Pfizer (PFE) rose $0.58.

Nortel Networks (NT) up $0.09, number five in big board volume.

Time Warner (TWX) gained $0.38.

A $0.05 rise in AT&T Wireless (AWE).

Citizens Communications (CZN) up $2.15. The company has hired a financial adviser to explore strategic alternatives. That often means the sale of part or all of a company.

Home Depot (HD) up $1.45. The company completed a $1 billion share buyback program and now has approved the buyback of an additional $1 billion shares in stock.

Liberty Media (LR) was tenth in volume and moved up $0.26 a share.

AT&T (T), which, of course, is a Dow stock, down $0.26, not helping it get above 10,000. The company is going to cut 12 percent of its workforce, not 10 percent, as previously planned. Also, it sees business services revenues this year dropping six percent. On top of that, the company plans to offer Internet-based phone service in the top 100 U.S. markets by the end of next year.

Procter & Gamble (PG), still another Dow stock, down $0.88. It backed its previous second quarter and 2004 earnings forecasts thanks to good volume growth in fabric, home care and health care sales, especially in Russia and China.

Caterpillar (CAT), yet another Dow stock, up $1.94. The best gainer in the Dow, incidentally, point wise. The Chairman and CEO, Glen Barton, plans to retire at the end of this coming January.

Goodyear Tire & Rubber (GT) down $0.84. The company is going to delay a 10K SEC filing until the new year because of possible improper accounting. Standard & Poor's repeated a "sell" recommendation.

And Goodrich (GR), not to be confused with Goodyear -- Goodrich no longer makes tires. It's an aerospace components company. Jeffries Brokerage upgraded it from "hold" to "buy."

And then Cascade (CAE) down $2.12. The company's in the lift truck business and it had higher third quarter earnings, $0.41 versus $0.36 last year. But that was $0.09 below the Street estimate.

And Unisys (UIS) fell $1.46. The company sees 2004 pension expenses, well, they are large enough that they have investors concerned. They're going to be triple what they were this year. Morgan Stanley cut earnings estimates. Soundview Financial downgraded Unisys from "outperform" just to "neutral."

And then Right Management Consultants (RHT) up $1.23. Manpower (MAN) will acquire the company for $488 million in stock. That works out to $18.75 a share. Manpower was unchanged today, at $45.23.

Microsoft (MSFT) topped NASDAQ's active list, rising $0.02.

Followed by Intel (INTC), up $0.49.

A $0.15 gain in Cisco (CSCO).

Dell (DELL) up $1.25.

Sandisk (SNDK) gained $2.67, fifth in volume.

Applied Materials (AMAT) was up $0.61.

And then a $0.53 gain in Amgen (AMGN).

A $1.39 rise in Qualcomm.

EBay (EBAY) gained almost $2.

And Electronic Arts (ERTS) up $2.28 after J.P. Morgan upgraded it from "neutral" to "over weight." That upgrade bolstered a lot of the video game stocks today.

Patriot Bank (PBIX) up $5.40. The Pennsylvania bank holding company will be acquired by Susquehanna Bancshares (SUSQ) for $30 a share in cash or 1.14 shares of Susquehanna. That would be worth today $28.60 because Susquehanna's stock fell $0.31, to $25.09 a share.

And Pharmaceutical Product Development (PPDI) down $1.90. The Robert Baird Brokerage downgraded it from "outperform" to "neutral" after the company said it sees lower than expected 2004 earnings. Baird also cut the price target by $8, down to $26 a share, about where it closed today.

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.

12/11/03: Market Stats

   
                                      NET     PERCENT
                         CLOSE     CHANGE     CHANGE
DOW CLOSE             10008.16     +86.30       + .9
HIGH                                        10026.53
LOW                                          9920.97

NASDAQ COMP.           1942.32     +37.67       +2.0
HIGH                                         1945.92
LOW                                          1903.93

VOLUME                                       1,443.0
PREVIOUS                                     1,412.4
UP VOLUME                                    1,236.4
DOWN VOLUME                                    185.1

DOW TRANSPORTS         2965.90     +53.23      + 1.8
DOW UTILITIES           254.13      +1.06       + .4
CLOSING TICK                                    +715

S&P 500                1071.21     +12.17      + 1.2
S&P 100                 530.16      +4.83       + .9
MIDCAP 400              564.47      +9.19      + 1.7
REUTERS/CRB             259.09      -1.35       - .5

NYSE COMPOSITE         6176.85     +68.20      + 1.1
VALUE LINE              351.17      +6.81       1.98
RUSSELL 2000            542.92     +14.43       2.73
WILSHIRE 5000         10430.54    +134.84       1.31

U.S. TREASURIES
5-YEAR NOTE 3.375%
Nov. 15,2008         100 24/32     +19/32       3.21

10-YEAR NOTE 4.25%
Nov. 15,2013         100  4/32     +21/32       4.24

30-YEAR NOTE 5.375%
Feb. 15, 2031        103 29/32     +22/32       5.11

LEHMAN BROS.
LONG BOND INDEX        1726.91     +10.86


DOW CLOSE             10008.16     +86.30       + .9
ADVANCES                                        2478
DECLINES                                         795
NEW HIGHS                                        263
NEW LOWS                                          13

                                      NET    PERCENT
NYSE MOST ACTIVES    4PM CLOSE     CHANGE     CHANGE
GE     GE                30.40       +.68       +2.3
CE     Concord EFS       12.85      +1.38      +12.0
LU     Lucent Tech        2.94       +.15       +5.4
PFE    Pfizer            34.68       +.58       +1.7
NT     Nortel Networks    4.24       +.09       +2.2
TWX    Time Warner       16.78       +.38       +2.3
AWE    AT&T Wireless      7.23       +.05        +.7
CZN    Citizens Comms    12.50      +2.15      +20.8
HD     Home Depot        34.53      +1.45       +4.4
L      Liberty Media     10.63       +.26       +2.5

NASDAQ CLOSE           1942.32    + 37.67      + 2.0
VOLUME                                       1,810.5
PREVIOUS                                     1,952.5
ADVANCES                                        2359
DECLINES                                         821

NASDAQ ACTIVES
MSFT   Microsoft         26.61       +.02        +.1
INTC   Intel             30.91       +.49       +1.6
CSCO   Cisco Systems     23.93       +.15        +.6
DELL   Dell Inc          34.21      +1.25       +3.8
SNDK   SanDisk           63.00      +2.67       +4.4
AMAT   Applied Matl      22.26       +.61       +2.8
AMGN   Amgen             58.74       +.53        +.9
QCOM   Qualcomm          50.14      +1.39       +2.9
EBAY   eBay              57.39      +1.99       +3.6
ERTS   Electronic Arts   43.63      +2.28       +5.5

AMEX CLOSE             1120.49     + 8.10       + .7

INDEX SHARES
DIA    DIAMONDS TRUST   100.38       +.78        +.8
QQQ    NASDAQ 100        35.30       +.74       +2.1
SPY    S&P DEP.RECEIPTS 107.96      +1.23       +1.2

STOCKS IN THE NEWS
T      AT&T              19.62       -.26       -1.3
PG     Procter & Gamble  96.00       -.88        -.9
CAT    Caterpillar       77.94      +1.94       +2.6
GT     Goodyear Tire      6.52       -.84      -11.4
GR     Goodrich          29.38      +2.01       +7.3
CAE    Cascade           21.90      -2.10       -8.8
UIS    Unisys            14.44      -1.46       -9.2
RHT    Right Management  18.39      +1.23       +7.2
PBIX   Patriot Bank      28.45      +5.40      +23.4
PPDI   Pharm Product     26.64      -1.90       -6.7