Program: Wednesday, December 17, 2003

Lehman Brothers & Bear Stearns Have A Bullish Quarter
The NYSE's Division of Power
Inside the Boardroom-Part 1: The Sarbanes-Oxley Influence
Money File-Investors Should Take A Shine To Gold In 2004
Last Word: Santa Bags Some Big Winners
Paul Kangas' Stocks In The News
Market Stats

12/17/03: Lehman Brothers & Bear Stearns Have A Bullish Quarter

SUSIE GHARIB: On Wall Street today, stocks ended with little change. The Dow rose 15 points and the NASDAQ slipped 3. But it was a rosier picture for two of Wall Street's biggest brokerage firms. Lehman Brothers and Bear Stearns both reported strong earnings for the latest quarter. Erika Miller reports.

ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Bear Stearns and Lehman Brothers have bond investors to thank for stellar earnings. A strong fixed income business continued to power profits at both firms, just as it has done for the past few years.

LAUREN SMITH, BROKERAGE ANALYST, KEEFE BRUYETTE WOODS: For the earnings that were just reported, we saw again a very, very strong contribution from the fixed income businesses, although not quite as strong as last quarter.

MILLER: Bear made $2.19 a share during the period, up from $1.50 a year ago. And Lehman earned $1.71 a share, a huge increase from the $0.69 cents last year. But analysts were more impressed by upbeat comments from both companies about their fixed income businesses. Many investors had been fearful that bond revenues could fall off a cliff in 2004 before equity revenues rise enough to carry the firm's profits.

CHRISTOPHER ECCLESTONE, BROKERAGE INDUSTRY ANALYST, CANTILLON & COMPANY: They're very vulnerable to a downturn in fixed income because, particularly Bear Stearns, doesn't have a very strong position in equity IPOs. They tend to even in the best of times do like the second tier issues.

MILLER: But Bear Stearn's chief financial officer said, We think the fixed income environment continues to be quite robust." And Lehman's CFO said, "Broadly, we are bullish on fixed income," although he did warn that bond issuance will likely fall about 11 percent next year from 2003's record level.

SMITH: I think that's reassuring. I think most of us were expecting a more substantial decline. It still remains to be seen and, of course, it's just a projection. But it's coming off a tremendous base. So, to me 10, 11, even 15 percent decline year on year is not tremendous.

MILLER: The brokerage firms also reassured investors that most of their businesses are improving, including stock trading and underwriting. But analysts warn there are still significant risks to the sector.

ECCLESTONE: If we start to see fixed income, and that would be particularly the case in a higher interest rate environment, then some of these companies could have some problems.

MILLER: Goldman Sachs and Morgan Stanley report their results tomorrow. Although those firms have smaller bond trading operations, analysts still predict their results will still be strong. 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.

12/17/03: The NYSE's Division of Power

SUSIE GHARIB: The Securities and Exchange Commission OKed the overhaul plan of the New York Stock Exchange today on one condition -- the big board must split the job of chairman of the board and chief executive officer. The new reforms are one response to the scandal over the lavish pay package of former NYSE Chairman Richard Grasso. Here's Darren Gersh with more.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Citing what he called the unfortunate experience of the recent past, Securities and Exchange Commission Chairman William Donaldson says he pressed the New York Stock Exchange to make sure its next chairman will not also hold the title of CEO. This morning, Donaldson announced Interim Exchange Chairman John Reed had agreed to the split.

WILLIAM DONALDSON, CHAIRMAN, SEC: In this way, the New York Stock Exchange should be in a better position to protect against the concentration of too much executive authority in one individual.

GERSH: With that deal in hand, the SEC went on to approve an overhaul of the big board's governance rules. A new, smaller board of independent directors will now oversee the Exchange. Those directors must not work for the Exchange, its members, or listed companies. The Exchange will also create a new regulatory office run by a chief regulatory officer who is appointed by and reports to the independent board. Without mentioning Richard Grasso by name, the commissioners made it clear they hoped the new rules would lead to tougher oversight, avoiding a repeat of the furor over the $188 million pay package for the former chairman. But for now, the commissioners refused to go further and split off completely the exchange's widely criticized regulatory office, though it is still an option.

HARVEY GOLDSCHMID, COMMISSIONER, SEC: I'm not sure that these changes will be enough. But we will watch them carefully. In voting to approve the rule changes today, we are making -- or certainly I am making no commitment to continue them in the future.

GERSH: Pension funds continue to step up the pressure for reform at the New York Stock Exchange. The AFL-CIO says it may join the lawsuit filed yesterday by California pension giant CalPERS.

WILLIAM PATTERSON, OFFICE OF INVESTMENT DIRECTOR, AFL-CIO: We support their claim and we will be -- we're reviewing the law suit right now and we'll be taking up the same issue, the lack of market regulation and the lack of effective oversight, and addressing it ourselves.

GERSH: Donaldson defended the commission, saying an intensive investigation of self dealing by exchange specialists was launched as soon as the issue came to light. 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.

12/17/03: Inside the Boardroom-Part 1: The Sarbanes-Oxley Influence

SUSIE GHARIB: The boardrooms of American public companies are undergoing a revolution in corporate governance thanks to the Sarbanes-Oxley legislation, which was approved last year. The new federal law was designed to give greater scrutiny to corporate boards of directors, but the law is having a far reaching impact. In the first of a two part series, Inside the Boardroom, Jeff Yastine looks at how Sarbanes-Oxley is influencing behavior in boardrooms everywhere.

JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: It is a scene replayed thousands of times around the country each month -- a board of directors meeting and a dozen or more people sitting around a conference table. But instead of a Fortune 500 publicly traded company, this is a board meeting at the University of Miami, a private and not for profit institution of higher learning. With a budget of more than $1 billion and more than 8,000 employees, the University has started changing how its board of directors works and makes decisions, not because it has to, but because it wants to.

DAVID LIEBERMAN, SENIOR V.P., FINANCE, UNIVERSITY OF MIAMI: Only public companies are subject to Sarbanes-Oxley. So theoretically we could have ignored it. But we chose not to because I think that those constituencies whom we serve, especially our board members, who are also, many of whom are corporate executives and directors of public companies, are seeing what's going on in corporate America and would expect their favorite university to behave similarly.

YASTINE: The Sarbanes-Oxley law does not apply to non-profit and not for profit groups, but most experts believe it's only a matter of time before many institutions, from charities to universities, face similar reforms. New York Attorney General Eliot Spitzer has already proposed new state legislation aimed specifically at non-profit boardroom governance. And the National Association of College and University Business Officers or NACUBO, for short, has issued its first ever recommendations for adapting to the new standards of corporate governance.

JAMES MORLEY, PRESIDENT, NACUBO: The budgets of some colleges and universities, or some universities, rather, are in excess of $2 billion. And those, in the corporate world, would be quite a large corporation. So there is a lot of accountability that's expected of boards and I think in this day and age of expected improved governance, it will have an impact.

YASTINE: The group's recommendations mirror the Sarbanes-Oxley law. Audit committees, which are supposed to make sure money is spent correctly, should be given greater independence; boards should adopt a code of ethics for themselves and define potential conflicts of interest. The group also recommends the adoption of so-called whistleblower protections, so fraudulent activity can be reported without fearing the loss of a job. However, non-profit boards, as a group, appear to be slow to change. A recent survey by the Grant Thornton accounting firm found that little more than one third of non-profit boards had even discussed the impact of Sarbanes-Oxley on their own operations. And a little more than 10 percent had made any effort to increase the independence of their own audit committees.

ROBERT LEAVY, NATIONAL MANAGING PARTNER, GRANT THORNTON: So many of the people who sit on the boards of these not for profits are the movers and shakers of the community. They're involved with public companies. They should be aware of what's going on for Sarbanes-Oxley. You would think that their funders are interested in this, you would think that their donors are interested in this and you would think that the readers of their financial statements are interested in this.

YASTINE: Experts say the lack of change is due in part to habit, no great desire for the extra scrutiny and the increased cost of complying with a higher governance standard. But there are costs for not complying, as well.

LEAVY: I sit on some boards, too. And the last thing I want to do is open the newspaper in the morning over my coffee and read my name or the name of my organization.

YASTINE: The man leading the changes at the University of Miami puts it a different way.

LIEBERMAN: We sell only two things in higher education. We sell our ability to deliver research, teaching and patient care; and we sell our reputations. So integrity is the cornerstone of our reputation.

YASTINE: A reputation the University hopes to enhance with better boardroom governance. 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.

12/17/03: Money File-Investors Should Take A Shine To Gold In 2004

SUSIE GHARIB: In tonight's money file, why gold is key to predicting next year's stock market performance. Here's Bill Barnhart, Financial Markets Columnist at the "Chicago Tribune."

BILL BARNHART, FINANCIAL MARKETS COLUMNIST, "CHICAGO TRIBUNE": Wall Street is brimming over with expert forecasts next year. Since we seem to have avoided a fourth straight annual decline in stock prices, predicting the coming year is a bit more fun this time. Call me a contrarian, but I've got my eye on another market: gold. During the bull market in stocks in the late 1990s, hardly anyone paid attention to gold. The metal was stuck below $300 an ounce for nearly four years in a row. But when gold marched above $400 earlier this month and held at nearly eight year highs, many investors took notice. If you're familiar with the notion of matter and anti-matter, think of gold as anti-stock. The optimism reflected in current stock prices stands in sharp contrast to the pessimism embedded in the broad-based demand for gold. Investing in stock means willingness to take risks. Buying gold is viewed as a safe haven against risk. Stronger gold prices mirror a weaker dollar. A weaker dollar, in turn, reflects a lack of confidence in the United States. Higher gold prices also represent fears of inflation. The threat of terrorism already has helped pushed gold higher and will continue to do so in 2004. My forecast for stock prices would be a lot more bullish if the anti-stock was in retreat. I'm Bill Barnhart.

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.

12/17/03: Last Word: Santa Bags Some Big Winners

SUSIE GHARIB: And finally, it looks like Santa's portfolio went from naughty to nice in 2003, outpacing the Dow with an increase of 41 percent. Southwest Bank (SWCB.OB) of Texas tracks a hypothetical portfolio of 21 companies that Santa might invest in. As a frequent purchaser of reindeer, toys and sleigh supplies, Santa's portfolio includes firms like Petsmart (PETM), Tractor Supply Company (TSCO) and Hasbro (HAS). And with increased demand for electronics like DVD players, Santa has added Best Buy (BBY) to his bag of winners. Santa has had a few stinkers this year, including retailer Mothers Work (MWRK) and video game makers Nintendo and Nintendo Midway Games (MWY). But, Paul, after the lumps of coal investors have had to bear in the last few years, I guess you could call Santa's portfolio performance a miracle on Wall Street.

KANGAS: And I think it would be a good idea to save those lumps of coal if you got them, because the price of coal has gone up rather sharply and so have the stocks.

GHARIB: I think I'm going to ask Santa as my Christmas present that I want his stock portfolio.

KANGAS: There you go.

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.

12/17/03: "Paul Kangas' Stocks In The News"

PAUL KANGAS: Wall Street opened modestly lower on profit taking in the blue chips after yesterday's solid rally and high tech stocks remained under selling pressure as investors locked in this year's sizable profits in that sector. Early in the session, the Dow fell nearly 30 points. The NASDAQ dropped 12.

The market stayed modestly lower as the dollar fell to another new low against the Euro. But in the absence of any major economic reports, trading activity was lackluster.

The orderly retreat gradually did attract some buyers, who felt the path of least resistance was higher. And that helped the Dow Jones Industrial average close with a gain of 15.70, at 10,145.26.

The NASDAQ Composite ended down just about 3 points, at 1,921.33.

The Standard & Poor's 500 Index rose 1.35, to 1,076.48.

In the bond market, the 10-year note climbed 8/32 to, par and 17/32, putting the yield at 4.18 percent.

Topping our stocks in the news tonight, a hot initial public offering.

And there we see it, China Life Insurance (LFC), the largest life insurer in that country, went public on the big board today, trading 100 or offering 153.7 million American depository shares. The offering price was $18.68 a share. It opened at $23.25, got as high as $25.15, back down a bit, but still up $5.04 from the offering price on the day. That's a 27 percent gain. It traded 30.4 million shares. And incidentally, the trading symbol on the big board is LFC.

G.E. (GE), second in volume, moved up $0.08.

Interpublic Group (IPG) up $0.85. The global advertising firm sold $325 million in convertible preferred stock. And the chief exec said that this year is going to be a record year for new business.

Nokia (NOK) down $0.47.

Wal-Mart Stores (WMT) up $0.60, number five in big board volume.

Circuit City Stores (CC) lost $0.74, as you heard. The company lost $0.12, about a $0.05 worse than expected.

Then Pfizer (PFE), a $0.25 loss there.

Lucent Technologies (LU) dropped $0.03.

Motorola (MOT), a $0.16 loss.

Tenth in big board volume, Liberty Media (L), up $0.13.

There you see Best Buy's (BBY) stock rising almost $2, or four percent. Third quarter earnings, as you heard, were strong, and now that caused Jefferies Brokerage to upgrade it from "hold" to "buy," with a $58 a share target. Standard & Poor's also repeated a "buy" on Best Buy.

Family Dollar Stores (FDO), another retailer, up $1.80. This stock was recommended on this program nearly two weeks ago by our market monitor Bob Drach and today the W.R. Hambrecht Brokerage began covering the stock with a "buy" recommendation.

FedEx (FDX) down $3.30. Second quarter earnings came in at $0.87. That was $0.03 below the Street estimate. The company blamed costs for early retirements and severance pay for the drop.

Boston Scientific (BSX) moved up $1.98. A Dutch court found the company infringed on just one Israeli firm's patent, not four, as alleged. But it did rule also that Boston Scientific had continued to sell its heart devices outside the Netherlands.

Commercial Metals (CMC) had a big day, up $2.90. The steel recycling company came in with first quarter earnings of $0.44, way up from $0.08 last year, and revenues jumped 30 percent.

Winnebago Industries (WGO), the recreational vehicle maker, up $4.85. First quarter earnings, $1.01, up from last year's $0.85. And the Street estimate was for only $0.86 in earnings. Beat that easily.

Black Hills Corp. (BKH) had a rough day, down $4.33. The company sees fourth quarter earnings of only $0.25 to $0.30. That's versus a $0.55 Wall Street earnings estimate. The company blamed poor results from its power generation business and losses from its communications segment. The firm is based in Rapid City, South Dakota.

The NASDAQ's most active was Intel (INTC), moving down $0.09.

Microsoft (MSFT) lost $0.02.

Cisco (CSCO), a $0.28 loss there.

Amgen (AMGN) moved up $1.77, however.

And Dell (DELL), a $0.29 gain, fifth in dollar volume.

Orbitz A (ORBZ), this is the third largest online travel reservation firm. It went public. 12.2 million shares offered at $26. The stock opened at $30. It traded as high as $30.75 and then came the selling. It dropped to as low as $24.44 and then back up a little bit, to $24.98, but still down $1.02 from the offering price.

Applied Materials (AMAT) down $0.32.

Amazon.com (AMZN) fell $1.92.

SanDisk (SNDK) recovering $1.54.

And Oracle (ORCL) down $0.13.

Another new issue, Provide Commerce (PRVD). Now this company went public today on 4.3 million offered at $15. It traded, it opened at $15.50, traded as high as $16 and then down she went, to $13, $2 below the offering price. Incidentally, it sells perishable goods on the Internet.

Netflix (NFLX) up $5.69. The online DVD rental company has increased its fourth quarter subscription growth forecast and said its fourth quarter will be profitable.

Lacrosse Footwear (BOOT) up $1.09. The company got a $4.9 million contract from the U.S. military to make desert boots.

And Rambus (RMBS) down $4.17. A judge has asked the Federal Trade Commission for a two month extension in order to make a ruling on charges the company illegally monopolized key computer chip technologies.

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.

12/17/03: Market Stats

   
                                      
                                      NET    PERCENT 
                         CLOSE     CHANGE     CHANGE 
DOW CLOSE             10145.26     +15.70       + .2 
HIGH                                        10146.38 
LOW                                         10094.75 

NASDAQ COMP.           1921.33      -2.96        -.2 
HIGH                                         1926.00 
LOW                                          1910.24 

VOLUME                                       1,406.7 
PREVIOUS                                     1,511.3 
UP VOLUME                                      751.8 
DOWN VOLUME                                    598.3 

DOW TRANSPORTS         2966.30       -.98       - .0 
DOW UTILITIES           257.60      +1.93       + .8 
CLOSING TICK                                    +703 

S&P 500                1076.48      +1.35       + .1 
S&P 100                 535.20       +.45       + .1 
MIDCAP 400              560.14      +1.48       + .3 
REUTERS/CRB             261.35      +2.04       + .8 

NYSE COMPOSITE         6215.99      +8.94       + .1 
VALUE LINE              349.72       +.82       0.24 
RUSSELL 2000            538.72       +.98       0.18 
WILSHIRE 5000          10455.4     +14.00       0.13 

U.S. TREASURIES 
5-YEAR NOTE 3.375% 
Nov. 15,2008         100 28/32      +1/32       3.18 

10-YEAR NOTE 4.25% 
Nov. 15,2013         100 17/32      +8/32       4.18 

30-YEAR NOTE 5.375% 
Feb. 15, 2031        105  5/32     +21/32       5.03 

LEHMAN BROS. 
LONG BOND INDEX        1734.55      +6.72 



DOW CLOSE             10145.26     +15.70       + .2 
ADVANCES                                        1924 
DECLINES                                        1302 
NEW HIGHS                                        250 
NEW LOWS                                          11 

                                      NET    PERCENT 
NYSE MOST ACTIVES    4PM CLOSE     CHANGE     CHANGE 
LFC   China Life Insur   23.72      unch.      unch. 
GE    GE                 30.73       +.08        +.3 
IPG   Interpublic Group  14.62       +.85       +6.2 
NOK   Nokia              17.12       -.47       -2.7 
WMT   Wal-Mart           51.90       +.60       +1.2 
CC    Circuit City       10.34       -.74       -6.7 
PFE   Pfizer             34.35       -.25        -.7 
LU    Lucent Tech         2.87       -.03       -1.0 
MOT   Motorola           13.17       -.16       -1.2 
L     Liberty Media      11.07       +.13       +1.2 

NASDAQ CLOSE           1921.33     - 2.96       - .2 
VOLUME                                       1,505.3 
PREVIOUS                                     1,811.5 
ADVANCES                                        1426 
DECLINES                                        1746 

NASDAQ ACTIVES 
INTC  Intel              30.17       -.09        -.3 
MSFT  Microsoft          27.04       -.02        -.1 
CSCO  Cisco Systems      23.49       -.28       -1.2 
AMGN  Amgen              62.15      +1.77       +2.9 
DELL  Dell Inc           32.94       +.29        +.9 
ORBZ  Orbitz "A"         24.98      -1.02       -3.9 
AMAT  Applied Matl       21.00       -.32       -1.5 
AMZN  Amazon.com         47.58      -1.92       -3.9 
SNDK  SanDisk            56.79      +1.54       +2.8 
ORCL  Oracle Corp        13.25       +.13       +1.0 

AMEX CLOSE             1135.24     + 5.86       + .5 

INDEX SHARES 
DIA   DIAMONDS TRUST    101.86       +.36        +.4 
QQQ   NASDAQ 100         34.92       +.07        +.2 
SPY   S&P DEP.RECEIPTS  108.50       +.34        +.3 

STOCKS IN THE NEWS 
BBY   Best Buy           51.50      +1.98       +4.0 
FDO   Family Dollar      34.45      +1.80       +5.5 
FDX   FedEx              71.01      -3.30       -4.4 
BSX   Boston Scientific  35.78      +1.98       +5.9 
CMC   Commercial Metal   30.00      +2.90      +10.7 
WGO   Winnebago Inds     65.23      +4.85       +8.0 
BKH   Black Hills        28.21      -4.33      -13.3 
PRVD  Provide Commerce   13.00      -2.00      -13.3 
NFLX  Netflix            50.49      +5.69      +12.7 
BOOT  LaCrosse Footwear   6.81      +1.09      +19.0 
RMBS  Rambus             25.88      -4.17      -13.9