12/16/04:
Johnson & Johnson Buys Guidant In A $25B Deal
PAUL KANGAS: Just call it a day of M&A, with two huge
deals making news. The biggest: Johnson & Johnson is buying medical device
maker Guidant. The $25 billion deal is the largest ever in the medical
device industry and the largest ever in the 118-year history of J&J. Erika
Miller reports.
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: It has been a
long courtship. But after months of on-again/off-again talks with Guidant,
Johnson & Johnson has finally won its prize. The healthcare company has
agreed to pay $76 in cash and stock for each Guidant share. The deal will
give J&J a bigger piece of the fast-growing medical devices market, by
adding defibrillators and pacemakers to its product line. The merger will
also strengthen J&J`s position in the vascular products arena, especially
stents to prop open clogged arteries.
MICHAEL DORMER, MEDICAL DEVICES CHAIRMAN, JOHNSON & JOHNSON: If we
look at the rationale, it gets us into cardiac rhythm management. It
strengthens our combined vascular intervention business. It enables us --
gives us a platform to move into other therapeutic areas using
microelectronics.
MILLER: J&J hopes Guidant`s technology and strong sales force will
help it bring new products to market faster. Specifically, J&J wants to
create a new drug-coated stent that will rival Boston Scientific`s top-
selling device. J&J is betting that strong sales of medical devices will
help offset a slowdown in its pharmaceutical business.
MARA GOLDSTEIN, PHARMACEUTICAL ANALYST, CIBC WORLD MARKETS: They have
a number of products that will be facing patent expiration, and a handful
of products that are also reaching maturation to begin with, and a pipeline
that is, quite frankly, not the most robust in the pharmaceutical industry.
MILLER: Some Wall Street analysts are concerned that J&J is
overpaying for Guidant. They also warn the deal is likely to face serious
antitrust hurdles. But J&J says it is confident the deal will get approved
without major divestitures.
DORMER: We see the businesses being complimentary. We also are
operating in a marketplace at this point in time that is already very
competitive.
MILLER: The Guidant acquisition isn`t even done yet, and already
Johnson & Johnson is hinting that more deals could soon be on the way.
Analysts say it`s all part of a plan to broaden the company`s product line
away from pharmaceuticals. 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.
12/16/04:
Economic Summit: Strategizing Job Growth and Social Security Reform
PAUL KANGAS: From Wall Street to Washington, America`s business and government
leaders gathered in the nation`s capital today, to wrap up a two-day summit
on the economy. Also there covering the day`s news, my co-anchor, Susie
Gharib, who joins us now from the White House. Susie?
GHARIB: Paul, you can summarize today`s agenda of the economic summit
with two points: job growth and Social Security reform. Both are key
issues for the president`s second term in office, and both will be a tough
sell for the administration. But as Stephanie Woods reports, the president
made it clear he thinks America needs both to keep our economy flexible.
STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: In a state of
the union-style address closing the summit, President Bush promised to
execute an ambitious second-term agenda to keep the nation strong.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Great economies do not
get weak all at once. They are kind of eaten away, year by year by
challenges that people just refuse to meet.
WOODS: The challenges Mr. Bush promised to meet include reining in
class action and medical malpractice lawsuits, making tax cuts passed in
his first-term permanent and generating new jobs. He promised to do all
this at the same time cutting spending and reforming Social Security.
BUSH: We talk about the deficit. And there is a short-term deficit
here in Washington which we`re going to close in half over a five-year
period of time, but there is a long-term deficit as well. And that long-
term deficit really is the unfunded liabilities of the entitlement programs
which make up roughly two-thirds of the United States budget.
WOODS: Social Security is facing an estimated $3.7 trillion shortfall
over 75 years to pay off promised benefits.
RICHARD PARSONS, CHAIRMAN & CEO, TIME WARNER: We`re on a collision or
a train wreck course. You can`t fix this problem with no pain without
making some sacrifices. But the time to start making those sacrifices is
now.
WOODS: The president wants to remake the program so younger workers
can divert a portion of their payroll taxes into personal accounts, but
critics say that will make the shortfall worse and there could be an easier
fix.
HENRY AARON, ECONOMIST, BROOKINGS INSTITUTION: Very modest
adjustments in either the benefits paid or in the revenues generated can
restore the system to financial stability for the indefinite future. The
idea that somehow one helps deal with that problem by draining off revenues
into individual accounts is, in my view, inaccurate and a deception.
WOODS: The president offered few specifics, just broad principles for
his agenda. The details will begin to unfold when Congress convenes next
month. Stephanie Woods, NIGHTLY BUSINESS REPORT, Washington.
GHARIB: Now let`s take a closer look at the nuts and bolts of that
Social Security reform issue. Earlier today I talked to the chairman of
President Bush`s Council of Economic Advisors, Greg Mankiw. I began by
asking him what were the accomplishments of the president`s economic
summit?
GREGORY MANKIW, CHAIRMAN, PRESIDENT`S COUNCIL OF ECONOMIC ADVISORS:
What we saw today was a renewed focus on the themes the president has
talked about. The president will be moving forward with more specific
proposals, reforming Social Security, also reforming the tort system. You
heard people talk today about the cost of lawsuits in the economy, talked
about the need for affordable health care and we have a very ambitious
agenda. We have big ideas and lots of legislation that still needs to be
enacted.
GHARIB: And Mr. Mankiw, the president talked a lot about Social
Security reform. What`s the next step to get a proposal on the table?
MANKIW: The president will be developing a specific proposal and
putting that on the table. What he`s trying to do now is educate the
American people about the importance of Social Security reform. The one
thing we know is we can`t do nothing.
GHARIB: How will the proposal come about? Will it come from the
administration? Will it come from a panel? What`s going to be the process?
MANKIW: The president had a Social Security commission in his first
term and they came back with a series of possible models for reform. This
legislation proposed by various members of Congress that are very similar
to some of the ideas that the commission has proposed. So I think we have
lots of ideas floating around. The president will be coming out in the
months and weeks to come with specifics about where he wants to head on
Social Security.
GHARIB: One of the things that came out of the commission that you
refer to was the need for a year-long public debate. Will there be public
debate to look at all the options and alternatives?
MANKIW: I`m sure there will be. I`m sure if you will see members of
Congress with different ideas. There are a variety of very credible plans
in Congress right now. The president is looking at those as well as ideas
proposed by the Social Security commission that he appointed and will
eventually decide on the road he wants to go down.
GHARIB: How is the administration going to sell the president`s ideas,
given that a new poll today showed that the public is pretty skeptical
about putting Social Security money into the stock market.
MANKIW: Well, it`s going to involve education. The president will be
giving speeches on it. His economic team will be giving speeches on it. I
wrote an op-ed in today`s "Wall Street Journal" to try to explain the need
for Social Security reform and you`ll see a continued dialogue with the
American people.
GHARIB: The whole idea of Social Security reform is confusing, a lot
of misunderstandings about it. To what extent will the president be engaged
in explaining the problems and the solutions?
MANKIW: Well, the president will be very engaged in explaining the
problems and the solution. People -- the opponents of Social Security have
often tried to scare people. They try to suggest that seniors are going to
see their checks being stopped. The president has made it very clear that
there is no need to touch the system for people who are now retired and
near retirement. This is a long-term issue that requires a long-term
thinking and a solution that`s really going to work for future generations.
GHARIB: Although there are many people who are saying that with or
without these retirement savings accounts, the need to fix Social Security
near term is going to require some kind of cut in guaranteed benefits. How
are you going to go about convincing the public and Congress about that?
MANKIW: There will be difficult choices to make. There`s no question
about that. One thing that`s very clear is that the projected path of
Social Security benefits exceeds the projected path of Social Security
revenues. So the projected promises for future generations are really
empty promises. There is nothing there to back them up. We`ll need a
system that doesn`t give people empty promises. It gives people real
promises. It gives people really a system that we know will work.
GHARIB: It`s an ambitious agenda that the president has. Social
Security reform, tax reform. Which ones of these are going to actually
become law?
MANKIW: I think they`re all going to become law. I think the president
has a very ambitious agenda, but he`s going the accomplish most of it and
perhaps all of it. Social Security reform is obviously a very important
priority. Tax reform is a very important priority. Tort reform is an
important priority. Making health care more affordable is an important
priority. All these things are, I think we`ve talked about the past couple
days, things you`ll see legislation moving on them in the months and years
to come.
GHARIB: And as for the timetable for that agenda, Mankiw told me that
the president will begin to talk with Congress about that. And Paul, when
I asked how realistic is it to expect legislation on Social Security
reform, tax reform, and cutting the budget, Mankiw said the president
believes they are all realistic goals.
KANGAS: Well, Susie, so now what happens next?
GHARIB: Susie: Paul, this economic summit was the president`s show.
The people who took part in it were all of his supporters, whether they
were CEOs or economists, everyone. Now it`s the critics turn. They will be
weighing in with their opinions and we`ll be hearing from them in the next
couple of weeks and months. I`m Susie Gharib at the White House.
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.
12/16/04:
Lenovo Gets On Line With Being A World Class Computer Company
JEFF YASTINE: China`s largest computer maker, Lenovo, is beginning
the process of integrating its new purchase, the PC division of IBM. The
deal announced earlier this month brings great opportunities, but also
great challenges for the Chinese firm. From Hong Kong, Cathy Robinson has
a closer look at Lenovo.
CATHY ROBINSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: China`s largest
computer maker has made a giant leap forward on to the world stage.
JOHN JOYCE, IBM GLOBAL SERVICES: Today we`re announcing the new
company in the $180 billion global information technology industry.
ROBINSON: Lenovo spent more than a year working on the deal that
catapults it to number three in the world of PC makers. The acquisition of
IBM`s personal computer business for $1.75 billion marked a breakthrough
for Lenovo`s long-term ambition to go global.
MARY MA, CFO, THE LENOVO GROUP: (INAUDIBLE) is not only a Chinese
company going overseas, but at the same time, we bring our partners into a
very good, very high-growth market.
ROBINSON: It`s a dream come true for Lenovo, which was founded two
decades ago by academics at the state-run Chinese Academy of Sciences. The
company was created to distribute equipment by IBM and other computer
makers to the Chinese. But by 1990, the company was steam rolling ahead,
selling PCs under its own brand name, Legend.
Just 10 years later, Legend had become Asia`s top PC maker, thanks to
the thriving demand in one of the world`s fastest-growing economies. Last
year it rebranded under the name Lenovo, laying the ground work for
expansion into the overseas market and its partnership with IBM.
MICHELE MAK, HEAD OF CHINA RESEARCH, ABN-AMRO: For Lenovo itself,
obviously it makes a lot of sense because their core domestic PC market is
reaching a very mature stage and so therefore they need new growth drivers,
as well.
ROBINSON: As part of the deal, Lenovo will use the IBM trademark and
logo on all its products for the next five years. The purchase reflects
the Chinese government`s goal of moving its IT industry beyond
manufacturing and assembling goods, but going global brings new challenges.
Analysts say the deal could be a disaster in the making for Lenovo because
of slow growth in global PC sales and other problems that come with a
merger.
MAK: Whether it is in customer retention, employee retention, the
whole business integration itself is going to be a daunting task and I
think whether they will be able to create synergies going forward is still
a big question mark at this stage.
ROBINSON: Analysts also predict that even under the new partnership,
Lenovo will not be able to make any significant gains against its
competitors, Dell and Hewlett Packard. But Lenovo is shrugging off the
critics, saying it`s a win-win deal for both China and Lenovo.
MAK: The message we`re going to deliver is a business as usual, and
then, of course, both Lenovo and PC division of IBM is committed to provide
sort of premium and high-quality, value-added products for customers. We
believe that in the long run, this company will get a very competitive
representation in the market.
ROBINSON: As part of its bid to become a member of the global
corporate elite, Lenovo has already set up sales and marketing offices
across Europe and the United Kingdom and it`s sealed an exclusive
sponsorship deal for the upcoming winter Olympics in Turin and the Beijing
summer Olympics is 2008.
The Lenovo merger with IBM is more than just a business deal. It`s
significant because it`s the dawn of a new era in China`s mergers and
acquisition market. It`s the kind of milestone that`s sure to mark a new
level of business and trade development between China and the U.S. Cathy
Robinson, NIGHTLY BUSINESS REPORT, Hong Kong.
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.
12/16/04:
Kevin McCormally's Tax Tips-Charity Pays Off At Tax Time
JEFF YASTINE:
`Tis the season for giving, and that holds true for your year end tax
planning as well. In tonight`s "tax tips" segment, a look at how your
generosity can reap big rewards on April 15. Here`s Kevin McCormally,
editorial director for "Kiplinger`s Personal Finance."
KEVIN McCORMALLY, EDITORIAL DIR., "KIPLINGER`S PERSONAL FINANCE":
Yesterday I talked about how strategic buying and selling can drive down
your tax bill. Tonight, how what you give away and what you put away can
save you money. This is a great time for generosity and, of course, you
get to deduct what you give to charities.
But before you write another check, consider giving appreciated
securities instead. When you do that, you get to deduct the current market
value of the stock and you escape the tax on the appreciation. Now if you
don`t want to part with the stock, give it away anyway and then buy it back
in the open market with the cash you would have donated. If you give
children or other loved ones cash gifts, think about giving them
appreciated stock, too. You don`t get a deduction, but you do get to give
away the tax bill on the profit. If the kids are in a lower bracket when
they sell, the family saves money.
If you`re thinking of giving an old car to charity, get moving to
avoid a tough crackdown that arrives in 2005. Under current rules, you get
to write off the vehicle`s fair market value based on used-car pricing
guides, for example. Starting next year, deductions will be limited to
what the charity actually sells the vehicle for. That might sound fair,
but it will usually stick you with a lower wholesale value.
There are a couple of ways that putting money away can be a profitable
year-end move. If you have a year-end bonus coming, steering part of it
into your 401(k) cuts today`s taxes, as well as saving for tomorrow. And
if you`re saving for a child or a grand child`s education, you may earn a
state tax deduction by contributing to your state`s 529 college savings
plan by December 31. Check with your state`s plan for details. I`m Kevin
McCormally.
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) 2003 Community Television Foundation of South
Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
12/15/04:
Paul Kangas' "Stocks In The News"
PAUL KANGAS: Wall Street opened lower on profit taking after three days of
gains. A 13 percent drop in November housing starts was another negative,
but all that merger activity helped lift the Dow to a 35-point gain at noon
time when the NASDAQ was up two points. More profit-taking undermined the
NASDAQ market this afternoon, but the Dow ended higher. It closed up 14.19
at 10,705.64. The NASDAQ Composite fell 16.40, ending at 2146.15. Standard
& Poor`s 500 down 2 1/2 points to 1203.21. In the bond market, the 10-year
note fell 29/32 to par and 16/32 putting the yield at 4.19 percent.
Big board volume leader Pfizer (PFE) on 39 million shares edged up
$0.66.
Followed by Lucent Technologies (LU) with a $0.13 gain.
And then Sprint (FON), which is merging with Nextel, up $0.55.
Guidant (GDT) was actually down $0.35. As you heard, J&J`s buy out
worth about $76 a share in cash and stock to Guidant. Interestingly,
Deutsche Bank Securities downgraded Guidant stock from "buy" to "hold"
today.
News Corp. A (NWS.A), fifth in volume, was down $0.16.
Then we see Merck & Company (MRK) doing well today, up $1.31.
Yesterday Raymond James Financial brokerage issued a "strong buy" on it.
And finally Johnson & Johnson (JNJ) up $2.55. That helped the Dow
Industrial Average incidentally by 18 1/2 points and Deutsche Bank
Securities upgraded J&J from "hold" to "buy."
Time Warner (TWX) a $0.12 gain.
Nortel Networks (NT) rose $0.04.
And General Electric (GE), tenth in volume, down $0.28.
FedEx (FDX) lost $1.04 even though second quarter earnings jumped to
$1.15 versus only $0.30 last year. That was in line with the company`s
guidance but it was $0.02 below the Wall Street estimate. Stock down.
Goldman Sachs (GS) down $3.85. Fourth quarter earnings jumped 23
percent over last year to $2.36 versus $1.89, $0.06 above the Street
estimate, but analysts were not happy with a 13 percent increase in
revenues. They thought that was a little questionable.
Texas Industries (TXI) up $2.20. Second quarter turn around, earnings
of $1.28 versus $0.31 loss last year and good news for shareholders. The
company is going to spin off its steel business in the form of a tax-free
dividend.
Patina Oil & Gas (POG) had a big day on the upside, up $4.69. Noble
Energy will acquire the company for $3.4 billion. That works out to about
$37.90 a share.
McAfee (MFE) down $3.48. Standard & Poor`s linked the weakness of the
stock to Microsoft`s acquisition of private held Giant software which makes
anti spyware products just like McAfee does, competition there.
We had a lot of public offerings and IPOs today, starting with
Advanced America (AEA) which is in the payday cash advance services
business, 21 1/2 million shares offered at $15 and it moved up nicely on
the day.
Spirit Finance (SFC) up $1.40 from its offering price of only $11,
26.1 million shares.
And then we move along to another new offering which was KMG America
(KMA) life insurance company, 18.9 million shares offered at 9 1/2 and it
moved nicely higher to $1.30 gain on the day.
And Interline Brands (IBI), that`s $17.30, up $2.30 from the $15
offering price. It`s in construction repair products, 12 1/2 million
shares came to market.
Finally NASDAQ 100 (QQQ) topped the active list again, $0.38 drop
there.
Then Symantec (SYMC) down $2.25. Of course it`s acquiring Veritas.
Microsoft (MSFT) slipped in there with a $0.05 gain.
Veritas Software (VRTS) down $0.12. That buyout bid from Symantec
worth about 28 1/4.
Nextel Communications (NXTL) up $1.08. That was fifth in NASDAQ volume
today.
Cisco Systems (CSCO) no change.
Google (GOOG) down $3.31.
Intel (INTC) $0.27 loss.
Apple Computer (AAPL) up $1.34. "Wall Street Journal" reports the
company`s popular iPod is in short supply.
And Sepracor (SEPR) up $4.85. FDA has approved the company`s insomnia
drug called Lunesta.
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.
12/16/04:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 10705.64 +14.19 + .1
HIGH 10726.85
LOW 10661.67
NASDAQ COMP. 2146.15 -16.40 -.8
HIGH 2164.80
LOW 2138.81
VOLUME 1,790.8
PREVIOUS 1,693.9
UP VOLUME 789.8
DOWN VOLUME 982.0
DOW TRANSPORTS 3733.23 -26.38 - .7
DOW UTILITIES 328.26 +.29 + .1
CLOSING TICK +409
S&P 500 1203.21 -2.51 - .2
S&P 100 573.46 +.01 unch.
MIDCAP 400 651.88 -4.02 - .6
REUTERS/CRB 282.99 -1.53 - .5
NYSE COMPOSITE 7131.98 -27.67 - .4
VALUE LINE 397.30 -2.17 - .5
RUSSELL 2000 642.23 -6.38 - 1.0
DJW 5000 11847.04 -36.05 - .3
U.S. TREASURIES
5-YEAR NOTE 3.50%
Dec. 15,2009 99 22/32 -14/32 + 3.57
10-YEAR NOTE 4.25%
Nov. 15,2014 100 16/32 -29/32 + 4.19
30-YEAR NOTE 5.375%
Feb. 15, 2031 108 5/32 -1 24/32 + 4.83
LEHMAN BROS.
LONG BOND INDEX 1766.66 -13.82
DOW CLOSE 10705.64 +14.19 + .1
ADVANCES 1149
DECLINES 2170
NEW HIGHS 248
NEW LOWS 17
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
PFE Pfizer 28.98 +.66 +2.3
LU Lucent Tech 3.73 +.13 +3.6
FON Sprint 24.57 +.55 +2.3
GDT Guidant 71.70 -.35 -.5
NWSa News Corp "A" 18.21 -.16 -.9
MRK Merck & Co 31.79 +1.31 +4.3
JNJ Johnson & Johnson 63.45 +2.55 +4.2
TWX Time Warner 19.50 +.12 +.6
NT Nortel Networks 3.56 +.04 +1.1
GE GE 37.11 -.28 -.8
NASDAQ CLOSE 2146.15 - 16.40 - .8
VOLUME 2,382.9
PREVIOUS 2,381.4
ADVANCES 1201
DECLINES 1930
NASDAQ ACTIVES
QQQQ Nasdaq 100 39.95 -.38 -.9
SYMC Symantec 25.13 -2.25 -8.2
MSFT Microsoft 27.16 +.05 +.2
VRTS Veritas Software 27.99 -.12 -.4
NXTL Nextel Comms 29.78 +1.08 +3.8
CSCO Cisco Systems 19.40 unch. unch.
GOOG Google 176.47 -3.31 -1.8
INTC Intel 22.87 -.27 -1.2
AAPL Apple Computer 66.60 +1.34 +2.1
SEPR Sepracor 55.30 +4.85 +9.6
AMEX CLOSE 1407.90 - 7.88 - .6
INDEX SHARES
DIA DIAMONDS TRUST 107.16 +.31 +.3
QQQ NASDAQ 100 39.95 -.38 -.9
SPY S&P DEP.RECEIPTS 120.81 -.07 -.1
STOCKS IN THE NEWS
FDX FedEx 97.71 -1.04 -1.1
GS Goldm Sachs Group 105.40 -3.85 -3.5
TXI Texas Industries 62.65 +2.20 +3.6
POG Patina Oil & Gas 36.61 +4.69 +14.7
MFE McAfee 29.23 -3.48 -10.6
AEA Advance America 20.50 +5.50 +36.7
SFC Spirit Finance 12.40 +1.40 +12.7
KMA KMG America 10.80 +1.30 +13.7
IBI Interline Brands 17.30 +2.30 +15.3
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