10/14/04:
NY State Atty. Gen. Eliot Spitzer Takes Aim At The Insurance Industry
LINDA O'BRYON: New York State Attorney General Eliot Spitzer has a new target tonight: the insurance industry. The nation`s biggest insurance broker and several top insurers were implicated in a lawsuit filed by Spitzer today. The action came as part of a larger investigation of fraud and anti-competitive practices in the insurance industry. Scott Gurvey has details.
SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: New York Attorney General Eliot Spitzer came out swinging today against the insurance industry. Alleging widespread corruption, Spitzer filed a civil suit against Marsh and McLennan, the world`s largest insurance broker. Also named were several of the country`s biggest insurance firms: AIG, the Hartford, Ace, Chubb and Munich American. In addition, two executives from AIG pled guilty to criminal charges and have agreed to cooperate with the investigation. Spitzer warned that more lawsuits were likely to follow.
ELIOT SPITZER, NEW YORK ATTORNEY GENERAL: These charges go to the heart of Marsh`s and the industry`s business model. And every company implicated is facing potential civil and criminal exposure, as do the individuals who participated and who managed these companies.
GURVEY: Spitzer claims that Marsh and McLennan received illegal payoffs from the insurance companies in exchange for steering unsuspecting clients their way. But the alleged scheme didn`t end there. To cover up the practice, Marsh allegedly solicited phony bids from other insurers, who felt compelled to cooperate in exchange for receiving business from Marsh. Spitzer says the practice proved extremely lucrative for the company, accounting for $800 million or more than half of its total profit last year. And what was good for Marsh`s bottom line was not always in the best interest of its clients according to Spitzer.
SPITZER: The determination about where business would go, how business would be directed, where it would be steered was not predicated upon the product that was appropriate for the client to whom Marsh owed a fiduciary duty, but rather who was going to pay the most.
GURVEY: Shares of Marsh and the insurers named in today`s suit fell sharply in reaction to the news. And analysts say that Spitzer`s probe is likely to keep pressure on the stocks.
KENNETH PAN, INSURANCE ANALYST, FTN MIDWEST RESEARCH: These ongoing investigations could provide an overhang on the sector so any good news in terms of fundamentals with regard to the business in terms of underwriting profits and earnings per share, growth in (ph) earnings per share could possibly be overshadowed.
GURVEY: In its defense, Marsh and McLennan says it is cooperating with the attorney general`s investigation and will deal appropriately with any wrongdoing. 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) 2004 Community Television
Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms
of use.
10/14/04:
General Motors Hits Some Road Bumps In The 3rd Quarter
LINDA O`BRYON: Also out with earnings today, General Motors and as far as Wall Street`s concerned, the numbers are not that good. As Diane Eastabrook reports, analysts say you can chalk it up to a laundry list of problems for the automaker.
DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Negative pricing, a poor product mix and slumping sales in Europe all conspired against General Motors in the third quarter. GM earned $0.78 a share. Even though that`s only a penny less than it earned during the same period a year ago, it is far off from Wall Street estimates. The disappointing quarter also prompted GM to lower its earnings estimate for the year. While nearly all of GM`s global divisions performed dismally in the third quarter, the company believes things are looking up at least in North America.
JOHN DEVINE, CHIEF FINANCIAL OFFICER, GENERAL MOTORS: As the economy improves, we think that will take a little pricing pressure off. The thing that we can do at GM is great products and that`s really our focal point.
EASTABROOK: GM`s biggest concerns, however, are in Europe. Deteriorating prices and weak sales prompted the company to announce a massive restructuring today in that region. GM wants to cut 12,000 jobs in Europe within two years, a move that could save $600 million annually. It is also considering plant closings. European labor unions are already lining up against the plan, but Devine says GM is steadfastly behind it.
DEVINE: The issue for us is we have to cut our cost structure. This will not fix our issue in Europe by itself, but we think it`s an important step and one we have to take now.
EASTABROOK: GM`s stock has been sliding throughout the year and analysts say it could remain under pressure in the fourth quarter. But Merrill Lynch analyst John Casesa, whose firm has a banking relationship with GM, thinks some of the pressure could ease by the second half of next year.
JOHN CASESA, AUTO ANALYST, MERRILL LYNCH: There is practically a scare in the market about steel costs, about oil prices, about the weakness in the consumer and I think it`s probable, three months, six months, nine months from now, those things may be with us, but they probably will not be as acute as they are today.
EASTABROOK: Casesa says General Motors will also roll out more new products next year. If they`re popular, they could give a boost to pricing and profits. 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) 2004 Community Television
Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms
of use.
10/14/04:
Road To The White House-Medicare's Financial Future
PAUL KANGAS: Also from the Treasury tonight, news the Federal deficit surged to a record $413 billion in fiscal 2004. That`s down significantly from estimates made earlier this year. And it`s sure to become an issue talked about in the final days of the presidential election campaign.
But one issue not being talked about may cause a bigger budget hole in the future. As we continue our coverage of the road to the White House, Darren Gersh looks at where the candidates stand on the financial future of Medicare.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: In this election, there seems to be bipartisan agreement to avoid Medicare`s bleak financial future.
ROBERT BIXBY: I haven`t heard either candidates talk about Medicare`s long-term finances and I think the reason why is that they`re pretty scary, pretty unsustainable. And nobody knows quite what to do about it.
GERSH: President Bush says introducing market principles into Medicare will begin to hold down cost increases. And Mr. Bush believes modernizing the program with the new prescription drug plan makes sense for seniors and for taxpayers.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We had a problem in Medicare. Medicine was changing but Medicare wasn`t. For example Medicare would pay tens of thousands of dollars for heart surgery but wouldn`t pay a dime for prescription drugs that could prevent the heart surgery from being needed in the first place.
GERSH: But that drug benefit doesn`t come cheap. It adds $8 trillion to the unfunded liabilities of Medicare. And health economists doubt that private health plans will make much of a dent in rising Medicare costs given the trend towards new, expensive health care technologies.
HENRY AARON ... that improve the quality of life, that reduce pain, that extend life. In that situation, people are going to seek those forms of health care and providers are going to give it to them.
GERSH: Both John Kerry and George Bush talk up disease management and information technology as ways to control costs, but Senator Kerry also wants to put in place a more generous drug benefit while cutting payments to private health plans.
SEN. JOHN KERRY (D) PRESIDENTIAL CANDIDATE: That Medicare bill they passed now takes $550 billion out of your pockets and gives $139 billion to the drug companies and billions more to the HMOs.
GERSH: But analysts doubt Kerry`s plan to have the government negotiate prices will save much money.
JOSEPH ANTOS: Medicare has set prices for hospitals, has set prices for physicians, and yet we see Medicare spending rising at two or three or four times the rate of growth in the economy.
GERSH: To be fair to the candidates, they are not offering solutions such as cutting services or raising taxes because that would cause bipartisan political pain.
ANTOS: Medicare is the largest supertanker that has ever floated on a sea of cash and the truth is, we`re not sure that we can steer this ship at all.
GERSH: The public also has other priorities. According to the Kaiser health poll, most Americans say it is more important to expand health care coverage and provide prescription drugs for seniors than it is to shore up Medicare`s long-term finances. 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) 2004 Community Television
Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms
of use.
10/14/04:
"The Big Squeeze"-Creative Citrus Concoctions
LINDA O`BRYON: Well,ask just about anyone about orange juice and the conversation will center around a fluid drink served in a glass or cup. But that may be changing. As Florida`s citrus industry copes with changing times, it`s developing new and innovative products. As we wrap up our series "the big squeeze," Jeff Yastine, looks at one entrepreneur rising to that challenge.
JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: The town is Lake Hamilton, Florida, population 1,300, in the heart of the citrus-belt in central Florida. The community could be mistaken for dozens of other citrus farming communities that dot the region. But tucked away in a small warehouse is a start-up operation with a product some hope will revive the flagging consumer demand for citrus. These are called "Citrus Pearls", and "Citrabits," pure juice and pulp, but cryogenically frozen in a patented process. You can scoop them out of a container, or press them into popsicle form, to be eaten like any other frozen treat. The idea came from changes in consumer preferences that caught the eye of CitraPac owner Gregg Harshman.
GREGG HARSHMAN, CHMN. & CEO, CITRAPAC: It began in about 1996. I began to see that our sales in a traditional fresh fruit marketing operation had begun a significant decline and that consumers were pursuing, as a for instance, a bag salad versus a head of lettuce. So the trend was beginning even then and I think we recognized that trend.
YASTINE: One of the problems with citrus consumption these days is the lack of convenience of the fruit. In order to get to the juice and the pulp, you have to either cut it, peel it or crush it and that`s not something that most consumers want to do themselves these days. So Harshman is doing it for them. He licensed the patent on the cryogenic freezing from the state of Florida`s department of citrus, and fine tuned the process.
HARSHMAN: So we were really beginning from square one in terms of developing a system to extract what consumers wanted and minimize what they did not.
YASTINE: The result is a production line that takes fresh citrus in at one end, crushes, squeezes, and freezes it in the middle and sends ready to eat citrus-pearls out the other end. Industry officials say they are very much aware of how big a role convenience plays in consumers` food choices.
ANDY LEVIGNE, FLORIDA CITRUS MUTUAL: Orange juice, you`ve got to make it as convenient for the spouse buying it in the grocery store as you do as that spouse going through the 7/11 real quick before the soccer game. They have got to be able to have it in their repertoire for not only their children, but themselves and other people in their daily activities to consume.
YASTINE: CitraPac has begun selling this form of "OJ to go" to a handful of public school districts in Florida and the northeast. And while it hopes the product will prove profitable for the company, CitraPac also hopes it will bear fruit for the industry as a whole.
HARSHMAN: This can be an equally important step for the citrus business here in Florida and other citrus producing areas of the world, in making a brand new citrus commodity if you will.
YASTINE: Jeff Yastine, NIGHTLY BUSINESS REPORT, Lake Hamilton, Florida.
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) 2004 Community Television
Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms
of use.
10/14/04:
"Commentary"-The Business of College Sports
LINDA O'BRYON: Professional sports teams are a big money making venture. But so says tonight`s commentator are college sports teams. Here`s Rick Horrow, president of Horrow Sports Ventures and author of "When the Game Is on the Line."
RICK HORROW, PRES., HORROW SPORTS VENTURES: Besides foreshadowing, perhaps, the 2005 national champion, last weekend`s slate of college football games proved once again that division 1A collegiate athletics is a very big business. $5 billion in revenues annually with 40 million fans attending college football games every year. Caught up in this game day economic glory, many schools have lost sight of the football team`s proper supporting role to academics.
Average football program operating expenses rose 62 percent in the last seven years, compared with a 39 percent increase in total university spending. But the most critical concern revolves around how athletes are educated and protected in the long-term. A recent "Washington Post" study revealed that 11 of the AP`s top 25 football programs are giving academic credit for playing the sport, including Ohio State, where Buckeye players can repeat the course for credit up to five times.
Further, the distinction between student-athletes and young professionals is becoming increasingly murky. The NCA denied Southern Cal wide receiver Mike Williams permission to play this year, largely because he was deemed a professional after signing with an agent. On the other hand, some lawmakers already view collegiate athletics and athletes as budding professionals, reasoning that they deserve compensation for the education they`re really not getting.
Last year, state legislators endorsed a stipend for University of Nebraska football players and Texas and California considered similar measures. As we look forward to the season`s first BCS rankings next Monday, this debate over the role of student athletes as ostensible minor league professionals will certainly intensify. I`m Rick Horrow.
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) 2004 Community Television
Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms
of use.
10/14/04:
Paul Kangas' "Stocks In The News"
PAUL KANGAS: The third quarter earnings season is in full swing tonight, with some of the biggest names in business reporting results today, including Citigroup. The world`s largest financial services firm made $1.02 a share. That`s $0.03 better than estimates and $0.12 better than Citi`s year-ago quarter. The company cited strength in its consumer and international businesses for the good showing. The nation`s third largest bank, Bank of America, says it made $0.91 a share in the quarter, right in line with what Wall Street expected. That`s down from the $0.96 a share that the Bank of America earned in the same quarter last year. But it`s due to an increase in the number of outstanding shares.
Topping the active list American International Group (AIG) named of course in the Spitzer lawsuit tumbling nearly $7 a share. And that accounted for 51 points in the Dow`s 107 point loss incidentally.
The Marsh & McLennan (MMC) stock down 24 1/2 percent, also implicated there, down $11.28.
And then came Pfizer (PFE) - oh, let`s have a couple of other insurance brokers here that are implicated in that Spitzer lawsuit.
ACE Limited (ACE) and Hartford Financial Services (HIG) both lost nearly $4 a share.
Then we get down to Pfizer (PFE), $0.47 loss.
Followed by Lucent Technologies (LU) with a $0.06 gain.
Ford Motor Company (F) in sympathy with General Motors, rather disappointing results, losing $0.57.
Nokia (NOK) moved up $0.22.
And then Citigroup (C), despite the better than expected earnings, down $0.41.
Calpine (CPN) a penny loss.
General Motors (GM) down $2.46 on those disappointing earnings.
And then Bank of America (BAC) earnings right in line, but the stock down $0.81.
Hewlett-Packard (HPQ) lost $0.52. Morgan Stanley today downgraded it from "overweight" to "equal weight" due to concerns about the stock`s valuation and also competition concerns.
Alcon Incorporated (ACL) tumbling $8.56. Problem here the company`s clinical trials of its experimental drug to treat macular degeneration failed to meet the primary goal.
Coventry Health Care (CVH) down $5.76, negative reaction to the company`s cash and stock combination bid worth $1.8 billion. It`s going to buy out First Health Group. First Health`s stock moved up $2 to $17.04 and the deal is worth about $17.67 today.
Supervalu (SVU), the grocery store chain, up $1.21. Second quarter earnings nicely higher, $0.57 versus $0.46 a year ago and that was $0.04 above the Wall Street estimate.
Knight-Ridder (KRI), the newspaper giant, up $1.14. Third quarter earnings $0.99, $0.12 above the Street estimate and comfortably higher than $0.85 last year.
AmeriCredit (ACF) was down $1.41. Wachovia Securities downgraded it from "outperform" to just a "market perform" rating.
And then Eaton Corporation (ETN) down nearly $3 a share. Third quarter earnings were higher, $1.09 versus $0.69 last year, but the company predicting fourth quarter earnings won`t be as high as the third quarter. They`re saying somewhere around $0.98 to $1.08 a share.
Now let`s have some look at some other insurance stocks that were impacted by the probe into the industry, although these stocks were not implicated by the Spitzer lawsuit, but there`s concern the probe of the industry may widen. You can see those losses massive throughout the whole industry group.
NASDAQ`s most active, Apple Computer (AAPL) up $5.23. As we reported after the close yesterday, fourth quarter earnings more than doubled to $0.26 a share. The company`s upbeat on its first quarter. Today Morgan Stanley upgraded Apple from "neutral" to "overweight."
Intel (INTC) down $0.48.
And then SanDisk Corporation (SNDK) tumbling $7.68. Third quarter earnings were sharply higher than last year, $0.29 versus $0.09 then, but the Street was looking for $0.38 a share. This company makes flash storage cards incidentally.
Microsoft (MSFT) $0.23 loss there.
eBay (EBAY) was up $0.91 and that was fifth in dollar volume on NASDAQ.
Yahoo! (YHOO) showed no change on the day.
Google (GOOG) rising $1.10.
And then Cisco Systems (CSCO) $0.27 loss.
Research In Motion (RIMM) fell $1.88.
Applied Materials (AMAT) was down $0.69, tenth in NASDAQ volume.
Novellus Systems (NVLS) down $2.38. Company had a turnaround in the third quarter from last year, earnings of $0.38 versus a loss of $0.64 a year ago. But the company is predicting its fourth quarter earnings will fall 25 percent from the third quarter levels.
And those are the stocks in the news tonight.
10/14/04:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 9894.45 -107.88 - 1.1
HIGH 10003.36
LOW 9875.13
NASDAQ COMP. 1903.02 -17.51 -.9
HIGH 1921.82
LOW 1900.77
VOLUME 1,493.9
PREVIOUS 1,549.0
UP VOLUME 437.8
DOWN VOLUME 1,040.9
DOW TRANSPORTS 3302.90 +20.47 + .6
DOW UTILITIES 299.13 unch. unch.
CLOSING TICK +189
S&P 500 1103.29 -10.36 - .9
S&P 100 529.58 -5.90 - 1.1
MIDCAP 400 583.00 -4.43 - .8
REUTERS/CRB 284.65 +2.09 + .7
NYSE COMPOSITE 6516.10 -40.43 - .6
VALUE LINE 354.47 -3.01 - .8
RUSSELL 2000 564.88 -4.54 - .8
DJW 5000 10788.48 -92.53 - .9
U.S. TREASURIES
5-YEAR NOTE 3.375%
Oct. 15,2009 100 17/32 +6/32 + 3.26
10-YEAR NOTE 4.25%
Aug. 15,2014 101 26/32 +9/32 + 4.02
30-YEAR NOTE 5.375%
Feb. 15, 2031 108 4/32 +17/32 + 4.83
LEHMAN BROS.
LONG BOND INDEX 1775.39 +9.98
DOW CLOSE 9894.45 -107.88 - 1.1
ADVANCES 1349
DECLINES 1939
NEW HIGHS 56
NEW LOWS 64
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
AIG Amer Intl Group 60.00 -6.99 -10.4
MMC Marsh & McLennan 34.85 -11.28 -24.5
PFE Pfizer 29.08 -.47 -1.6
LU Lucent Tech 3.48 +.06 +1.8
F Ford Motor Co 13.12 -.57 -4.2
NOK Nokia Corp 14.20 +.22 +1.6
C Citigroup 43.70 -.41 -.9
CPN Calpine 2.32 -.01 -.4
GM General Motors 38.84 -2.46 -6.0
BAC Bank Of America 44.20 -.81 -1.8
NASDAQ CLOSE 1903.02 - 17.51 - .9
VOLUME 1,598.6
PREVIOUS 1,788.4
ADVANCES 944
DECLINES 2104
NASDAQ ACTIVES
AAPL Apple Computer 44.98 +5.23 +13.2
INTC Intel 20.51 -.48 -2.3
SNDK Sandisk 20.52 -7.68 -27.2
MSFT Microsoft 27.80 -.23 -.8
EBAY eBay 95.47 +.91 +1.0
YHOO Yahoo! 34.96 unch. unch.
GOOG Google 142.00 +1.10 +.8
CSCO Cisco Systems 18.59 -.27 -1.4
RIMM Rsch In Motion 79.80 +1.88 +2.4
AMAT Applied Matl 15.70 -.69 -4.2
AMEX CLOSE 1277.73 + 4.33 + .3
INDEX SHARES
DIA DIAMONDS TRUST 99.18 -.90 -.9
QQQ NASDAQ 100 35.42 -.23 -.7
SPY S&P DEP.RECEIPTS 110.64 -.90 -.8
STOCKS IN THE NEWS
HPQ Hewlett-Packard 18.38 -.52 -2.8
ACE Ace Ltd 36.47 -3.84 -9.5
HIG Hartford Finl 58.40 -3.78 -6.1
HPQ Hewlett-Packard 18.38 -.52 -2.8
ACL Alcon Inc 67.84 -8.56 -11.2
CVH Covent Hlth Cr 46.29 -5.76 -11.1
SVU Supervalu Inc 28.50 +1.21 +4.4
KRI Knight Ridder 67.18 +1.14 +1.7
ACF Americredit Cp 19.84 -1.41 -6.6
ETN Eaton 61.79 -2.96 -4.6
AOC Aon Corp 23.18 -4.48 -16.2
AJG Arthur J Gallagr 30.50 -2.50 -7.6
BRO Brown & Brown 41.11 -3.33 -7.5
CB Chubb Corp 65.65 -4.09 -5.9
WSH Willis Group Hldg 34.48 -2.62 -7.1
NVLS Novellus Systems 24.50 -2.38 -8.9
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