10/20/04:
Major Air Carriers Fly Into Major Financial Turbulence
SUSIE GHARIB: A turbulent day for airline stocks as several
major carriers reported jumbo losses. Taken together, American,
Delta, and Northwest lost a whopping $906 million in the third
quarter, 74 percent of that came from Delta alone. Stephanie
Woods takes a look at the reasons for the poor performance.
STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: High
fuel prices, low fares and hurricanes hit the airlines hard
last quarter. For example, Delta's fuel bill topped $300 million,
a 63 percent increase, which added to the carrier burning through
$550 million in cash. The company is still trying to wring a
billion dollars in concessions from its labor unions. Without
those cuts, analysts say the company could file for bankruptcy
by the end of the month. RAY NEIDL, AIRLINE ANALYST, CALYON:
Delta is in no immediate danger of liquidation. They are on
the verge of bankruptcy and if they don't get immediate and
sharp cost-cutting, they probably will go into Chapter 11. But
they've got enough resources. The franchise is strong enough
where if they reorganize in or out of bankruptcy, they can be
a viable competitor long-term. WOODS: Other major carriers
are not faring much better. American Airlines reported a $214
million loss. To stem the losses, American says it will streamline
operations and cut jobs. It also will add back seats it had
removed to increase passenger leg room. Still, American expects
even larger losses next quarter. Northwest reported a $46 million
loss, compared to a $42 million profit for the same period last
year. The company also revealed that the SEC is investigating
its pension accounting. All three airlines are adding fuel surcharges
to cover the higher costs, but analysts say that won't do it.
NEIDL: The losses for the legacy carriers will continue for
at least the next two or three quarters, especially if fuel
stays above $50 a barrel. WOODS: But higher fuel prices
aren't the only major challenge facing the industry these days.
RANDY BABBIT, FOLAT CONSULTING: Today, I think there's too many
hubs. I think you've got too many seats in the air chasing too
few passengers. And there will be a reconciliation of this over
time. WOODS: With fuel prices high, it's very difficult
for the airlines to recover. Analysts say the airlines are all
trying to hold on longer than the competition. When one goes
out of business, then ticket prices can rise. Stephanie Woods,
NIGHTLY BUSINESS REPORT, Washington.
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.
10/20/04:
Road To The White House-Bush/Cheney Policy Director Tim Adams
PAUL KANGAS: In the last 13 days of the presidential campaign,
the issue of Social Security is also coming under scrutiny.
President Bush wants to reform the system by adding personal
accounts. Democratic challenger Kerry says that will lead
to cuts in guaranteed benefits. Continuing our coverage of
the road to the White House tonight, Darren Gersh talked with
Bush/Cheney policy director Tim Adams, asking him about estimates
that the transition to personal accounts may cost as much
as $2 trillion.
TIM ADAMS, POLICY DIRECTOR, BUSH-CHENEY
'04: First of all I would disagree with the notion of new
costs. The costs are already there. There is a $10 to $12
trillion gap in the current Social Security system, a present
value gap that has to be filled and it has to be filled by
one of three ways. You either have to cut benefits, raise
taxes or increase returns to the system. What the president
has proposed is a conceptual approach of personal accounts
which increases the return to the system. There is a cash
flow issue, but it's not in the magnitudes that are being
discussed.
DARREN GERSH, NIGHTLY BUSINESS REPORT
CORRESPONDENT: If you look at Congressional Budget Office
estimates of the Social Security problem and the transition
to personal accounts, they conclude that you would have to,
if you address this problem now inject some new money into
the system. So does the president propose to borrow that money?
ADAMS: By injecting money into the system now actually strengthens
the system overall. It's like prepaying your mortgage or putting
money away now for your children for them to go to college
in the future. In a sense you're strengthening the system.
You're reducing debt, but you're doing so with current cash
flows. You're prefunding this pension. There are a variety
of ways you can do it. You can find it (ph) by reducing costs
in other parts of government. You could if you use revenues,
new revenues or different kinds of revenues or you could borrow
absolutely.
GERSH: Well, the most likely outcome
that most people are expecting is that the president would
propose to borrow this money to finance the transition to
a new system. Can we still afford to do that with the deficit?
ADAMS: Sure we can. We're talking about
small sums of money stretched over many years and our expectations
for the deficit is that it's going to decline over time, in
fact will probably be about 2.5 percent of GDP for 2005 which
from an historical standpoint is about the average deficit
as a percentage of GDP that we have seen over the last 30
years.
GERSH: Senator Kerry says look, if you're
going to move to a personal account system, you're going to
have to cut benefits, $500 a month for a senior. How do you
respond to that?
ADAMS: The Congressional Budget Office
report says that individuals who -- the average individual
who has a personal account will be better off than an individual
who does not have a personal account. You have to weigh it
against the current system. The current system is not sustainable.
There is a $10 to $12 trillion hole in the system. We have
put forth a proposal, a conceptual approach to fix it. John
Kerry has not. If he does not put forth a proposal, benefits
will be cut or taxes will go up automatically to fill the
hole.
GERSH: But the CBO in the letter to Senator
Craig said that if you move to personal accounts, you have
to reduce the guaranteed benefit and that you really don't
come out ahead under a system of personal accounts than you
would under the current system even with all of its problems.
ADAMS: Actually, I just looked at the
CBO report before I came down here and it does say that individuals
on average, individuals who have a personal account will have
benefits that exceed on average those who do not. And you're
right, those who choose voluntarily choose a personal account
will see a reduced benefit from the Social Security fund,
but the returns that they will realize over the course of
holding that personal account will more than make up for it.
And the Social Security Administration and other - the GAO
and other acronyms in Washington have confirmed that.
GERSH: Let me ask you about jobs. We're
still down about 1.6 million private sector jobs from when
the president first took office. Is that an indication that
the tax cuts maybe didn't do the job they were supposed to
do?
ADAMS: Not at all. If you look at, most
of the job losses that occurred over the past four years occurred
in 2001. Actually most of them occurred before the tax cuts
ever went into place. And don't forget that in the 90 days
after 9/11, we lost about a million jobs. Over the past 13
months, we have seen about 1.9 or close to 2 million jobs
on the payroll survey, even more on the household survey.
So it's a timing issue. The job losses occurred in 2001 when
we had a recession, the aftermath of the implosion of the
financial bubble and 9/1 1.
GERSH: Tim Adams, policy director
for the Bush/Cheney campaign. Thanks a lot.
ADAMS: Thank you.
GHARIB: Next Wednesday Darren Gersh sits
the down with Gene Sperling, former White House national economic
advisor and currently economic advisor to the Kerry/Edwards
campaign.
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.
10/20/04:
"The Business of Broadway"- The Role Of Marketing
SUSIE GHARIB: All this week, PBS is presenting a special series
of programs looking at Broadway, "the American musical." Since it began,
"the great white way" has provided a wealth of business opportunities
for investors-- some successful, some not. One key to that success is
how well a show is marketed. Tonight as we continue our series "the
business of Broadway," Suzanne Pratt looks at the difference that
marketing makes.
SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: After several
weeks in previews, tomorrow is opening night for "Brooklyn, the
musical." It is the only new musical to light up the great white way
this fall. But, its solo status does not guarantee "Brooklyn" will be a
hit in Manhattan. That's up to the critics, the audience and
increasingly how well the show is marketed. At $7 million, "Brooklyn's"
budget is relatively small for a Broadway musical and $1 million of it
is being devoted to marketing. While that may sound generous, the
show's producer says it falls short.
BENJAMIN MORDECAI, PRODUCERS FOUR: As an industry, we don't spend as
much as we need to because we don't have it. You know, raising capital
for Broadway shows is not easy. It's never easy.
PRATT: Initial marketing for "Brooklyn" included direct mail aimed at
traditional theater goers. But the show really wants to appeal to a
younger, hipper audience, much the way "Rent" did in the 1990s. That
means a wide range of marketing tactics and locations, including 42nd
Street and the New York City subway. It also means beer coasters and
ads in teen magazines. Most of all, it means the Internet. "Brooklyn"
has its own web site, where fans can download some of the show's music,
as well as chat online with its creators.
JED BERNSTEIN, PRES., LEAGUE OF AMERICAN THEATERS & PRODUCERS:
Marketing on Broadway has been made much more sophisticated by the array
of communications vehicles. It's been made much more necessary because
of the ease with which people travel around the world and travel around
the country that you can actually take the Japanese audience into
account when you're marketing a musical.
PRATT: "Brooklyn," however, is not the only show on Broadway with
marketing savvy. This past summer, the producers of "A Raisin in the
Sun" scored a Broadway coup when the show regularly sold out to a
younger, non-white audience. That can be attributed to the show's
well-known African-American cast, headlined by hip hop mogul Sean Combs,
a.k.a. P. Diddy. But "Raisin's" producer also credits the show's
urban outreach efforts, which targeted a diverse audience.
DAVID BINDER, DAVID BINDER PRODUCTIONS: We did a lot of e-mail and
Internet marketing. We did street teams where when you - where,
downtown, uptown, on the street, in stores where people would give you a
postcard or flier or what not.
PRATT: "Avenue Q" proved that clever marketing isn't always just for the
audience. At a private party for Tony award voters, the show debuted a
new song entitled "Vote Your Heart." It was designed to sway voters to
choose "Avenue Q" for this year's best musical. Needless to say, it
worked. And, more traditional marketing in the form of TV commercials
also goes a long way in moving theatergoers to shell out a hundred bucks
a ticket. Thanks to a recent reduction in how much theater producers
pay Broadway actors in commercials, Broadway can now afford to promote
its shows with their stars. Some theater experts believe the change
will revolutionize how Broadway is marketed in the future.
NANCY COYNE, CHIEF EXECUTIVE, SERINO-COYNE: I think it's huge. I think
it's very big. I think it's very far thinking of the unions to see that
this is necessary and to realize that marketing is something that keeps
shows running longer and that keeps their actor's employed longer. It's
definitely a win-win situation.
PRATT: And while marketing has always been crucial to a show's financial
success, it's even more important these days. That's because now that
the price tag for musicals can be as high as $13 million, a show needs
to run for many months before it will just break even.
BERNSTEIN: There's less margin for error. It used to be that you could
appeal strongly to a modest or small group of folks and you could do OK
financially. Now you have to appeal strongly to an awful lot of folks
in order to earn your money back.
PRATT: Broadway producers have yet another marketing strategy up their
sleeves: the show's actors. We talked to some who step off stage to
help insure that the show will go on. We'll have that story tomorrow
night. Suzanne Pratt, 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.
10/20/04:
"Money File"-An Education In Saving For College
SUSIE GHARIB: In "the money file" tonight, a good education isn't cheap. Just ask any
parent who saved for years to put their child through college. Here's
Harriet Brackey, personal finance columnist for the "Miami Herald."
HARRIET BRACKEY, PERSONAL FINANCE COLUMNIST, THE MIAMI HERALD: The
question is, what is the best way to save for college? The answer is:
don't let taxes be your guide. Lots of well-meaning families have
jumped into poor investments because they wanted state tax deductions
and Federal tax-free withdrawals.
Take section 529 college savings plans. These things are obscure, hard
to read. You can't compare fees easily. If your plan disappoints you,
you have to pay a penalty to get your own money back. They need to be
better regulated. Yet you get Federal tax free withdrawals and some
state tax breaks.
You get tax advantages too on Coverdale education savings accounts, but
when you take that money out, you aren't allowed to use some of the
other basic tax credits in Federal law.
OK, how about pre-paid tuition plans? This is a contract with a state or
a university. It's not flashy. You can probably actually understand
it. Some tax breaks apply, but better yet, you don't pay the high fees
of 529 plans.
I say, go for the pre-paid, but not alone. Tuition is only half of what
you need for college. For the rest, for the laptops and the clothes and
the pizzas, you need to save and invest that money. If the tax law
gives you a break, that's a gift. It's just not a guide to a great
deal. I'm Harriet Brackey.
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.
10/20/04:
Paul Kangas' "Stocks In The News"
PAUL KANGAS: Wall Street's blue chips opened lower on those high oil prices,
along with disappointing earnings from JPMorgan, more weakness in the
insurance sector and a Bear Stearns downgrade on McDonald's stock. At
mid-morning, the Dow was off 70 points. The NASDAQ down eight. The
semiconductor and biotech stocks led an afternoon rally, helping the
blue chips pare their losses. The Dow Industrial Average came in with a
modest loss of 10.69 at 9,886.93. The NASDAQ Composite actually gained
10 points at 1,932.97. Standard & Poor's 500 rose just a fraction to
1,103.66. In the bond market, the 10-year note closed up 15/32 to 102
5/32, putting the yield all the way down to 3.98 percent.
New York exchange volume leader on 27.3 million shares, Motorola (MOT)
losing $1.75. As we reported after the close yesterday, the company
quadrupled its third quarter earnings, $0.20 versus $0.05, but sales
were below expectations and that's what turned off investors.
Lucent Technologies (LU) was up $0.10. Company in with fourth quarter
earnings today, excluding one-time items, $0.04 a share versus $0.02
last year and a penny above the Street estimate.
Marsh & McLennan (MMC) finally an uptick on the stock after being hard
hit over the last three or four sessions.
Countrywide Financial (CFC) tumbling $4.33. The company in with sharply
lower third quarter earnings, $0.94. That's way down from $1.93. Stock
traded as low as $32.10 today.
Pfizer (PFE) down $0.70. Its third quarter earnings out today, $0.44,
nicely higher than $0.29 last year, but the company was somewhat
cautious about the outlook.
J.P. Morgan Chase (JPM) down $0.73. Company third quarter earnings
excluding charges were only $0.60 and that was $0.14 below the Wall
Street estimate.
American International Group (AIG) down $0.10.
Citigroup (C) off $0.30 in a weak financial group.
General Electric (GE) $0.21 loss there.
And Merck (MRK), tenth in volume, moved up $0.24.
Honeywell International (HON) down $1.64. Third quarter earnings were
higher, $0.43, up from $0.40 last year, but that was just in line with
estimates, no big surprises there.
United Technologies (UTX) down $0.15 a share. Third quarter earnings
nicely higher, $1.43, up from $1.27 a year ago and that was $0.02 better
than the Street estimate, but the stock has had a pretty good run from
its low a few months back.
Eastman Kodak (EK) a $3.05 loss. Third quarter operating earnings only
$0.16 a share, down from $0.40 last year. On top of that, Standard &
Poor's repeated an "avoid" rating on Kodak stock.
Callaway Golf (ELY) up $1.32, one of the better percentage gainers. The
company did report a third quarter loss of $0.46 a share, versus
earnings of $0.03 a year ago, but the AG Edwards upgraded the stock from
"sell" to "hold" and that helped it.
Advanced Auto Parts (AAP) up $4.75. Third quarter earnings $0.68, up
from $0.62 a year ago and Goldman Sachs started rating the stock with an
"outperform."
Colgate-Palmolive (CL) up $2.29. Third quarter earnings $0.58, down
from $0.63 last year, but that was right in line with Street estimates.
Whirlpool Corporation (WHR) down $2.22. Third quarter earnings $1.50,
barely higher than $1.48 last year and $0.02 below the Street estimate.
Company also cut its full year estimate. Standard & Poor's downgraded
Whirlpool stock from "accumulate to just a "hold" rating.
Cott Corporation (COT), the beverage company, down $2.66. Third quarter
earnings fell 14 percent to $0.31 versus $0.36 last year.
Owens-Illinois (OI), the glass containers and packaging manufacturer,
had third quarter earnings sharply higher, $0.42 versus $0.16 last year,
sales jumped a very respectable 31 percent.
Microsoft (MSFT) topped the active list on NASDAQ, $0.52 gain.
Intel (INTC) $0.65 rise.
Google (GOOG) tumbling $7.45. Third quarter earnings from Google due out
tomorrow. Estimates range all the way from $0.21 to $0.62 a share.
eBay (EBAY) down $1.09. After the close, company had third quarter
earnings, $0.27, way up $0.16 last year in line, and the outlook it said
was quite positive. The stock in after hours trading jumped as high as 94.
Research In Motion (RIMM) up $3.60. That was fifth in volume.
Electronic Arts (EA) down $1.87. After the close yesterday, higher
earnings, $0.31 versus $0.25, but it sees flat holiday sales. That hurt
the stock today.
Cisco Systems (CSCO) down $0.25.
Yahoo! (YHOO) off $0.15.
QUALCOMM (QCOM) up $0.61.
And Applied Materials (AMAT) down $.23.
Jakks Pacific (JAKK) down $5.85. World Wrestling Entertainment wants to
void its video game license, alleging bribery.
And finally, Children's Place (PLCE) is going to acquire 313 Disney
retail stores and analysts say it will add $0.30 to Children's Place
earnings in 2005.
Those are the stocks in the news tonight.
10/20/04:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 9886.93 -10.69 - .1
HIGH 9895.70
LOW 9804.19
NASDAQ COMP. 1932.97 +10.07 +.5
HIGH 1934.32
LOW 1910.83
VOLUME 1,689.0
PREVIOUS 1,733.4
UP VOLUME 839.3
DOWN VOLUME 813.2
DOW TRANSPORTS 3386.74 +41.40 + 1.2
DOW UTILITIES 300.93 +1.18 + .4
CLOSING TICK +650
S&P 500 1103.66 +.43 + .0
S&P 100 530.72 -.27 - .1
MIDCAP 400 586.43 +2.57 + .4
REUTERS/CRB 287.62 +2.21 + .8
NYSE COMPOSITE 6539.48 +9.09 + .1
VALUE LINE 355.71 +1.22 + .3
RUSSELL 2000 570.13 +3.46 + .6
DJW 5000 10807.63 +10.83 + .1
U.S. TREASURIES
5-YEAR NOTE 3.375%
Oct. 15,2009 100 18/32 +8/32 + 3.25
10-YEAR NOTE 4.25%
Aug. 15,2014 102 5/32 +14/32 + 3.98
30-YEAR NOTE 5.375%
Feb. 15, 2031 108 30/32 +23/32 + 4.78
LEHMAN BROS.
LONG BOND INDEX 1778.88 8.87
DOW CLOSE 9886.93 -10.69 - .1
ADVANCES 1767
DECLINES 1525
NEW HIGHS 40
NEW LOWS 73
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
MOT Motorola 17.00 -1.75 -9.3
LU Lucent Tech 3.48 +.10 +3.0
MMC Marsh & Mclenn 24.92 +.82 +3.4
CFC Countrywide Fncl 33.17 -4.33 -11.6
PFE Pfizer 28.30 -.70 -2.4
JPM JPMorgan Chase 37.25 -.73 -1.9
AIG Amer Intl Group 57.60 -.10 -.2
C Citigroup 43.29 -.30 -.7
GE GE 33.22 -.21 -.6
MRK Merck & Co 31.40 +.24 +.8
NASDAQ CLOSE 1932.97 + 10.07 + .5
VOLUME 1,666.6
PREVIOUS 1,723.5
ADVANCES 1711
DECLINES 1333
NASDAQ ACTIVES
MSFT Microsoft 28.70 +.52 +1.8
INTC Intel 21.45 +.65 +3.1
GOOG Google 140.49 -7.45 -5.0
EBAY eBay 91.36 -1.09 -1.2
RIMM Rsch In Motion 87.55 +3.60 +4.3
ERTS Electronic Arts 44.79 -1.87 -4.0
CSCO Cisco Systems 18.45 -.25 -1.3
YHOO Yahoo! 34.49 -.15 -.4
QCOM Qualcomm 43.41 +.61 +1.4
AMAT Applied Matl 16.12 +.23 +1.5
AMEX CLOSE 1299.36 + 12.81 + 1.0
INDEX SHARES
DIA DIAMONDS TRUST 98.89 -.21 -.2
QQQ NASDAQ 100 36.07 +.18 +.5
SPY S&P DEP.RECEIPTS 110.52 -.22 -.2
STOCKS IN THE NEWS
Display Name
HON Honeywell Intl 33.80 -1.64 -4.6
UTX United Tech 89.90 -.15 -.2
EK Eastman Kodak 29.50 -3.05 -9.4
ELY Callaway Golf 10.60 +1.32 +14.2
AAP Adv Auto Parts 38.71 +4.75 +14.0
CL Colgate Palmoliv 45.35 +2.29 +5.3
WHR Whirlpool 57.09 -2.22 -3.7
COT Cott Corp 24.30 -2.66 -9.9
OI Owens-Illinois 17.30 +1.64 +10.5
JAKK JAKKS Pacific 12.96 -5.85 -31.1
PLCE Children's Place 29.63 +4.67 +18.7
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