10/18/04:
Oil Vs. Earnings What's Wall Street's Real Inspiration?
SUSIE GHARIB: The world's largest computer company says
tonight business is getting better and it's reporting earnings that
prove it. IBM made $1.17 a share in the third quarter, $0.03 above what
Wall Street analysts were looking for and $0.15 more than the same
quarter last year. The company also reported a charge for a pension
lawsuit settlement of $0.11 a share. IBM says the last quarter was one
of the strongest third quarters in years, delivering solid revenue and
earnings growth. And the outlook is healthy as well, with the company
seeing improvements in technology spending and growth in markets like
Brazil, China and India. IBM stock rose a dollar in after hours trading
to $86.92. In regular trading, IBM was up $1.07.
Well, despite those strong earnings from IBM, investors have been
nervous about the quality of corporate profits in the third quarter.
That nervousness dominated Wall Street today, even though the Dow and
the NASDAQ both rose about 25 points. Suzanne Pratt takes a closer look
at what's troubling investors.
SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: No matter how you
look at it, most stock investors are not having an easy time this fall.
October started off full of promise, the Dow and NASDAQ rallying in
the first few days of the month. Since then, however, it's been pretty
much down hill. And, on a year-to-date basis, both indexes are soundly
in negative territory. Only the S&P 500 has been held its ground.
There's a long list of trouble spots for the stock market this year.
But most experts agree, high oil prices are at the top.
DAVID KATZ, CHIEF INVESTMENT OFFICER, MATRIX ASSET ADVISOR: Clearly it's
put a significant overhang on stocks. The economy has been good,
earnings have come in very nicely this year, stock prices haven't risen.
We'd say a large part of that is fear of higher oil prices. We think
if oil prices start to go lower, it should not have a major long-term
impact on the economy and that would be a big plus for stocks.
PRATT: On top of that, some experts say the recent negativity of the
presidential election, particularly with respect to the economy, is
making investors less confident. And then there's third quarter
earnings. According to Thompson First Call, S&P 500 companies are still
expected to show average profit growth as high as 17 percent for the
third quarter. While that's more than double the historic average, it's
still a drop from recent quarters. And to some experts, the drop in
profit growth is key to the stock market's problems.
KARI BAYER PINKERNELL, SR. MARKET STRATEGIST, MERRILL LYNCH: I think the
biggest thing that investors need to be concerned about is what's going
on in the profit cycle. Corporate profits are starting to decelerate.
Just as cyclical companies showed their cyclicality on the upside in
2003, as the profit cycle decelerates, you should expect cyclical
companies to show their cyclicality on the downside.
PRATT: Even though the first nine months of this year have been pretty
lackluster, most market pros are still optimistic about next year --
that is if oil prices fall back to more reasonable levels and corporate
profits don't slip too much. 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) 2004 Community Television
Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms
of use.
10/18/04:
Southwest Airlines CEO Gary Kelly, Shares Future Flight Plans
SUSIE GHARIB: U.S. Airways outlined changes in its flight schedule today.
Starting in February, it will increase flights at its Charlotte and
Philadelphia hubs and create a mini-hub in Fort Lauderdale, Florida.
The changes are part of the bankrupt airline's plans to transform its
operations into a low-cost carrier. U.S. Airways joins the list of
so-called "legacy airlines" trying to duplicate the success of low-cost
carrier Southwest Airlines. Southwest recently posted third quarter
earnings of $0.15 a share, a 12 percent jump over the same period last
year.
Joining us now to talk about Southwest Airlines and the outlook for that
discount airline is Gary Kelly, CEO of Southwest Airlines. Mr. Kelly,
welcome to NIGHTLY BUSINESS REPORT.
GARY KELLY, VICE CHAIRMAN & CEO, SOUTHWEST AIRLINES: Thanks, Susie. It's
a pleasure to be here.
GHARIB: Well, let's begin with this news out of U.S. Air today. What
impact does that added competition in the Philadelphia market going to
have for Southwest Airlines which also recently added new flights out of
there?
KELLY: We started service in Philadelphia in May, with record load
factors and have increased our service since then. We'll be up to 41
flights a day. So we're seeing very strong demand. It's too early to
tell, obviously, what impact the additional flights that U.S. Airways
puts in might have on us. But we're off to a great start.
GHARIB: There was a time that Southwest Airlines was the dominant
discount airline. Now that we've seen rapid growth of other discount
carriers like Jet Blue or Airtran, are these in any way hampering
Southwest' growth?
KELLY: We just reported our third quarter earnings last week and our
earnings were up 12 percent and $119 million. So we're in fine shape
right now. I think the keys for us are to keep our costs low. Right
now we're still the low cost producer after 33 years, as long as we can
do that and keep our service levels high, I think we'll a very, very
strong competitor.
GHARIB: Do you have any plans in any way to change the business model
for Southwest? We've seen some of these discount airlines having special
features like TVs in JetBlue or larger airplanes?
KELLY: It's a very low fare environment and we're a specialist at
offering low fares. All the customer research that we do, that is the
number one criteria that they have. So we're going to continue to focus
on offering low fares, offering lots of flights, great service and we
think that that will again be our key to success.
GHARIB: You mentioned your recent third quarter earnings. Yes indeed,
you came off of a good quarter and some of it was because of some smart
moves that you made with hedging oil prices. Are you continuing to hedge?
KELLY: We're 80 percent hedged here in the fourth quarter of 2004 at
about $24 a barrel and we're 80 percent hedged all of next year at $25 a
barrel and about 60 percent hedged in 2006 at 31 and hedges after 2006
as well. So we have insurance in place to protect against $55 crude oil
prices, but we'll see increasing energy prices over time, but certainly
not to the extent that our competitors are seeing.
GHARIB: With all of these good things that you've been talking about
that are going on at Southwest, still your stock has been stagnant over
the past couple of years. Make a pitch for why investors should be
interested in investing in Southwest.
KELLY: I think Southwest is the best product going. We're the low fare
airline. We're the low cost producer. Clearly we've got the best
employees in the industry. We've got a very long track record of
outstanding customer service. We're going to be adding over 300
airplanes between now and 2012 and we're superbly positioned to take
advantage of opportunities as they arise.
GHARIB: You're new in the job as CEO. You took over over the summer.
What kind of mark do you want to leave on the company?
KELLY: I just want Southwest Airlines to continue to be a great company,
I want it to be a great place to work. If our employees love the
company and provide the great customer service that they're famous for,
I think everything will take care of itself. Obviously we're interested
in creating wealth and creating shareholder value for all of our
shareholders and especially our employees. But I just want it to be a
great company and it's obviously a real honor and a treat to be part of
that.
GHARIB: Well good luck to you and I hope that you'll come back on
NIGHTLY BUSINESS REPORT and give us an update on how things are going.
KELLY: Well, thanks, Susie, it's a pleasure being here.
GHARIB: Thank you very much. We've been speaking with Gary Kelly, CEO of
Southwest Airlines.
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.
10/18/04:
"Business of Broadway"- A Look Behind The Scenes
SUSIE GHARIB: Well, it's "Broadway week" on public television
as PBS kicks off a six-hour series, "Broadway: the American
Musical." Hosted by Julie Andrews, the series looks at the
stars, the shows and the songs. Tonight NIGHTLY BUSINESS REPORT
dusts off the floorboards for a look at the "business of Broadway."
Scott Gurvey begins our week of coverage.
SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Forty new shows,
over 11 and a half million tickets sold, $770 million in gross revenue.
That's Broadway, where the curtain went up more than 11,000 times in
the last year. Behind the glamour of the stage is a business which
directly employs 10,000 and indirectly claims to generate work equal to
another 26,000 full-time jobs. Radio was supposed to kill the theater;
then, television. Now the Internet and computer games are supposed to
bring down the curtain. Don't bet on it. After a 9/11-induced dip, the
audience is growing and the head of the industry's trade organization
says new technologies are only making Broadway stand out.
JED BERNSTEIN, PRES., LEAGUE OF AMERICAN THEATRES & PRODUCERS:
Broadway, which you might consider the simplest and most basic form,
will become more unique, more attractive, more successful because it
will stand alone and stand separately from everything else. You can't
meet the maker of the video game after you play it. You can stand
around back stage or outside the stage door to meet the cast of the show.
GURVEY: Actors agree. The eight-performance a week Broadway schedule is
hard work. Television and film pay better and are less taxing. But
some of the biggest stars in Hollywood still make time for live theater
on Broadway. Mandy Patinkin, well-known from TV's "Chicago Hope" and
"Dead Like Me," also created landmark roles on stage in "Evita" and
"Sunday in the Park with George." He still brings his live one-man show
back to Broadway.
PATINKIN: The audience affects the performers; the performers affect the
audience. There are no tricks between editing and lighting. It is
absolutely immediate. It can never be repeated. If you are there and
you caught it, great. If you didn't get it, you are going to see
something different tomorrow night even if they say the same words and
sing the same tune.
GURVEY: One place where Broadway is challenged is on cost. Ticket
prices for musicals are approaching $70 on average. Musicals now cost
$9 to $10 million to stage and $500,000 a week to operate. Blockbusters
cost more. With only one of five shows making a profit, it asks a lot
of investors to put up that kind of money, or, of course, it takes one
investor with deep pockets. The Walt Disney company's theatrical
division contributes only a small amount of revenue to the entertainment
giant, but it has developed a string of hits, from "Beauty and Beast" to
"Aida" to the spectacular "Lion King."
THOMAS SCHUMACHER, PRESIDENT, DISNEY THEATRICAL DIVISION: We are
producing a show that builds audience, that expands the brand of the
Walt Disney company, that associates the Walt Disney company with some
of the finest artists working today and genuinely makes money. This is
not a vanity project. If you or I were investors in this, we would be
very, very happy.
GURVEY: Which brings us to "Avenue Q." Just in case you think a small
production can't make it, consider this "Sesame Street" parody which
started way off Broadway and moved to the great white way with a
capitalization of only $3.5 million. Featuring tunes like "The Internet
is for Porn" and "Everybody is a Little Bit Racist," "Avenue Q" was the
sleeper winner of this year's Tony award for best musical and has been
sold out ever since.
JEFFREY SELLER, PRODUCER, AVENUE Q: You know, people were investing
maybe as little as $12,500, $50,000, $100,000, but there was no
million-dollar investor in "Avenue Q." It was the sum of many little
investors, all of whom are now absolutely delighted that they will
multiply their investment by maybe four or five or six times.
ROBIN GOODMAN, PRODUCER, AVENUE Q: Investors are like producers. They
fall in love because if you are going to invest your money there are a
lot of smarter things to invest in than the theater. You do it for love
and passion. The people who invested in "Avenue Q" love it. They have
seen it five, six times, maybe more some of them and they just wanted to
see it go on and on and on so they could keep seeing it.
GURVEY: If you'd like a love affair with the theater, you too can invest
in a Broadway show. We talked to some people who did, and we'll have
their story tomorrow. Scott Gurvey, NIGHTLY BUSINESS REPORT on Broadway.
To Learn More about this topic, click
here.
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.
10/18/04:
"Commentary"-The Role of Economics In The Race For The White House
PAUL KANGAS: In tonight's commentary, the role of economics in this year's
presidential election. Here's Alan Blinder, partner in the Promontory
Financial Group and former vice chair of the Federal Reserve.
ALAN BLINDER, PARTNER, PROMONTORY FINANCIAL GROUP: The election now
looks like a virtual dead heat. Polls show the electorate favoring
President Bush on terrorism, but favoring Senator Kerry on virtually
every economic issue. Elections usually turn on pocketbook issues, but
not always. And this election may yet turn on something else: the Iraq
war, the absurd Nader candidacy, or even the whimsy of the Supreme Court.
On the other hand, it might revert to type and become a referendum on
President Bush's economic record. If so, Senator Kerry should win. You
probably know that the Bush presidency will be the first since Hoover's
to end with a net loss of jobs. You have probably also heard President
Bush brag about 1.9 million net jobs created over the last 13 months.
Both claims are true. But did you know that President Bush's best year
of job creation is worse than President Clinton's worst?
Was the dismal jobs performance entirely the president's fault? Of
course not. But economic policies do matter at the margin and the Bush
tax cuts seem perversely designed to lose the most possible revenue
while creating the fewest jobs. They were weapons of mass budget
destruction. Mr. Bush wants to blame both the huge deficit and the
dismal jobs record on 9/11, but the story won't wash. 9/11 happened
three years ago and it did not cause a recession; and its budgetary
impact is dwarfed by the tax cuts. Those are facts that voters in this
referendum should know. I'm Alan Blinder.
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.
10/18/04:
Paul Kangas' "Stocks In The News"
PAUL KANGAS:Stocks opened broadly lower as the price of oil surged to yet
another record high early today. Other negatives included a shortfall
in 3M earnings and negative comments by analysts on the semiconductor
sector. At mid-morning the Dow was down 70 points, NASDAQ off seven.
A reversal to the downside in oil helped stocks make a nice comeback
this afternoon, as did optimism about IBM's after the bell earnings.
The Dow Industrial Average bounced back to close up almost 23 points at
9956.32. The NASDAQ Composite was up just over 25 points to 1936.52.
Standard & Poor's 500 up 5.82, ending at 1114.02. Treasuries ended
modestly higher. The 10 year note was up 4/32, putting the yield at 4.05
percent.
For the second straight trading session, Marsh & McLennan (MMC) led the
active list on the big board today, 25 million shares and the stock down
another $3.63. That stock was in the mid 40s less than a week ago, 12 ½
percent drop today and the company postponed today's scheduled news
conference until later this week or perhaps next week. Standard & Poor's
downgraded it from "avoid" to "sell."
Lucent Technologies (LU) no change there.
Pfizer (PFE) moved up a half a dollar.
American International Group (AIG), which is involved in the Marsh
McLennan scandal, rebounding $1.83 after sharp recent losses.
General Electric (GE), fifth in volume, a $0.34 gain.
Texas Instruments (TXN) down $0.13. After the close, the company in with
third quarter earnings, $0.32, up from $0.25 a year ago and $0.04 above
the Street estimate, although the company was cautious about the fourth
quarter, but in after hours trading, TXN was as high as $22.20 a share.
Then 3M (MMM) down $1.88. As I touched on earlier, third quarter
earnings disappointing, $0.97 versus $0.83 last year, but a penny below
the Street estimate and the company sees fourth quarter earnings falling
to around $0.84 to $0.85.
Merck (MRK) up $0.40.
Hewlett-Packard (HPQ) a $0.04 rise.
EMC Corporation (EMC) gained $0.16, tenth in big board volume.
American Standard (ASD) down $1.74. Third quarter earnings were higher,
$0.71, up from $0.55 a year ago, but the company sees the fourth quarter
earnings falling to $0.40 to $0.44 and that's well the $0.46 Wall Street
estimate.
Briggs & Stratton (BGG) tumbled $7.34. The company sees the need to
increase reserves for uncollectible receivables by $10 million in the
first quarter and says it's going to have a first quarter loss of $0.06
a share. Wall Street was expecting earnings of $0.25, quite a
disappointment there.
Select Medical (SEM) up $3.18. An investment group headed by Welsh
Carson et al, will take the firm private or wants to at $18 a share in cash.
Gold Fields Limited (GFI) down $0.65. Harmony Gold is bidding $8.2
billion of its stock, that's 1.275 shares for each share of Gold Field.
Today that's a value of about $14.10. Harmony stock fell $1.06 to 11 ½ even.
Mattel (MAT) big toy maker, down $0.47. Third quarter earnings flat,
$0.61 same as a year ago and revenues fell 2.2 percent.
The other big toy maker, Hasbro (HAS) down $1.20. Third quarter earnings
for Hasbro $0.48, $0.03 below the Street estimate. Third quarter
revenues dropped 2 ½ percent.
Then the big loser of the day, Star Gas Partners (SGU) tumbling $17.28
or 80 percent of its value. Company said its petro heating oil unit may
have to file for bankruptcy because of high oil prices which it can't
pass on to customers. The company suspended pay outs to shareholders.
The last one was 57 ½ cents per unit back in August. The whole sector
was weak on this news. Look at these.
Amerigas Partners (APU), Energy Transfer (ETP), Ferrellgas Partners
(FGP), Suburban Propane Partners (SPH), all down on the news of Suburban.
The NASDAQ most active, Microsoft (MSFT) $0.42 gain.
Followed by Intel (INTC), $0.18 rise.
Google (GOOG) hitting a new closing high, $149.16.
Apple Computer (AAPL) up $2.25.
Research In Motion (RIMM) up $3.93, some nice gains on that board.
Cisco Systems (CSCO) up $0.17.
eBay (EBAY) gained $0.95.
Yahoo! (YHOO) a $0.78 rise.
QUALCOMM (QCOM) up $1.13, tenth in volume.
Applied Materials (AMAT) $0.16 gain there.
Check Point Software (CHKP) technology up $3.18. Company in with third
quarter earnings, $0.27 up from last year and $0.02 above the Wall
Street estimate.
And Isonics (ISON) it's pronounced, up $2.11, huge percentage gain.
There's excitement about the company's unveiling of its prototype
explosive detection device this coming Thursday.
Those are the stocks in the news.
10/18/04:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 9956.32 +22.94 + .2
HIGH 9960.15
LOW 9861.63
NASDAQ COMP. 1936.52 +25.02 +1.3
HIGH 1936.52
LOW 1904.50
VOLUME 1,377.5
PREVIOUS 1,651.2
UP VOLUME 734.3
DOWN VOLUME 603.2
DOW TRANSPORTS 3382.71 +30.03 + .9
DOW UTILITIES 301.43 -.20 - .1
CLOSING TICK +427
S&P 500 1114.02 +5.82 + .5
S&P 100 535.18 +3.38 + .6
MIDCAP 400 588.14 +2.88 + .5
REUTERS/CRB 283.18 -2.41 - .8
NYSE COMPOSITE 6572.37 +12.99 + .2
VALUE LINE 357.44 +1.17 + .3
RUSSELL 2000 572.03 +2.61 + .5
DJW 5000 10894.87 +56.20 + .5
U.S. TREASURIES
5-YEAR NOTE 3.375%
Oct. 15,2009 100 11/32 +2/32 + 3.30
10-YEAR NOTE 4.25%
Aug. 15,2014 101 20/32 +4/32 + 4.05
30-YEAR NOTE 5.375%
Feb. 15, 2031 107 28/32 +5/32 + 4.84
LEHMAN BROS.
LONG BOND INDEX 1769.36 +.69
DOW CLOSE 9956.32 +22.94 + .2
ADVANCES 1801
DECLINES 1495
NEW HIGHS 117
NEW LOWS 48
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
MMC Marsh & McLennan 25.57 -3.63 -12.4
LU Lucent Tech 3.50 unch. unch.
PFE Pfizer 29.00 +.50 +1.8
AIG Amer Intl Group 59.68 +1.83 +3.2
GE GE 33.89 +.34 +1.0
TXN Texas Instrument 21.09 -.13 -.6
MMM 3M Company 76.10 -1.88 -2.4
MRK Merck & Co 30.90 +.40 +1.3
HPQ Hewlett-Packard 18.25 +.04 +.2
EMC EMC Corp 12.15 +.16 +1.3
NASDAQ CLOSE 1936.52 + 25.02 + 1.3
VOLUME 1,512.0
PREVIOUS 1,650.6
ADVANCES 1820
DECLINES 1245
NASDAQ ACTIVES
MSFT Microsoft 28.41 +.42 +1.5
INTC Intel 20.79 +.18 +.9
GOOG Google 149.16 +5.05 +3.5
AAPL Apple Computer 47.75 +2.25 +5.0
RIMM Rsch In Motion 85.68 +3.93 +4.8
CSCO Cisco Systems 18.65 +.17 +.9
EBAY eBay 94.71 +.95 +1.0
YHOO Yahoo! 35.30 +.78 +2.3
QCOM Qualcomm 43.60 +1.13 +2.7
AMAT Applied Matl 15.86 +.16 +1.0
AMEX CLOSE 1281.38 - 4.27 - .3
INDEX SHARES
DIA DIAMONDS TRUST 99.63 +.25 +.3
QQQ NASDAQ 100 36.15 +.48 +1.4
SPY S&P DEP.RECEIPTS 111.70 +.44 +.4
STOCKS IN THE NEWS
Display Name
ASD Amer Standard 36.46 -1.74 -4.6
BGG Briggs Stratton 71.26 -7.34 -9.3
SEM Select Medical 17.40 +3.18 +22.4
GFI Gold Fields Ltd 14.29 -.65 -4.4
MAT Mattel 17.50 -.47 -2.6
HAS Hasbro 17.26 -1.20 -6.5
SGU Star Gas Partner 4.32 -17.28 -80.0
APU AmeriGas Partner 27.75 -2.32 -7.7
ETP Energy Transfer 49.30 -.85 -1.7
FGP Ferrellgas Part 20.10 -1.89 -8.6
SPH Subrbn Propane 32.47 -2.96 -8.4
CHKP Check Point Soft 21.10 +3.18 +17.8
ISON Isonics Corp 5.48 +2.11 +62.6
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