10/13/05:
The Antitrust Trap Nets Samsung
SUSIE GHARIB: The world`s largest maker of memory chips for
computers and electronic gadgets is settling antitrust charges
with the U.S. Justice Department. Samsung will pay $300 million
to settle criminal price fixing charges. The government said
today the Korean electronics company conspired in e-mails,
telephone calls and face-to-face meetings to fix prices of
memory chips between 1999 and 2002. Today`s guilty plea from
Samsung follows similar pleas from Korea`s Hynix and Germany`s
Infineon and caps a three-year price fixing investigation
in the market for dynamic random access memory chips, or d-ram
chips. Almost $8 billion worth of d-ram chips were sold in
the U.S. last year.
THOMAS BARNETT, ACTING ASSISTANT ATTORNEY GENERAL FOR ANTITRUST: D-ram
is a key component in computers and other products that are used in nearly
every home in America. By conspiring to drive up the price of d-ram,
Samsung and its co-conspirators forced consumers to pay more for these
products.
GHARIB: The Justice Department began investigating price fixing in
the d-ram market back in 2002, after both Apple Computer and Dell raised
computer prices to compensate for rising d-ram prices.
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) 2005 Community Television Foundation of South Florida,
Inc. ALL RIGHTS RESERVED. Terms of use.
10/13/05:
Economic Outlook With William Dudley, Chief U.S. Economist at Goldman Sachs
SUSIE GHARIB: Our guest tonight says the economy is growing moderately, but
there`s more risk and uncertainty than usual. Joining us now William
Dudley, chief U.S. economist at Goldman Sachs. Hi, Bill.
WILLIAM DUDLEY, CHIEF U. S. ECONOMIST, GOLDMAN SACHS: It`s great to be
here.
GHARIB: Let`s begin with today`s numbers. As we reported, import
prices at the highest level in 15 years. Of course that big trade gap
again and more jobless claims. Just wondering, as you look at all of these
reports, what are they telling you about the economy?
DUDLEY: They are telling me two things. One, energy prices are
definitely distorting the economic data. And two, Katrina is definitely
having its effects on some of the labor market indicators. This just tells
us this it going to be very hard to judge what the true trajectory of the
economy is stripping out, both the energy effects and the Katrina effects
on economic activity.
GHARIB: And you are saying that the economy faces some risk because
of the uncertainty. Give us your analysis on that. What do you mean?
DUDLEY: Well, I think in the very near term, the economy is going to
be weaker because of Katrina. You have two things going on, higher energy
prices that are going to crimp consumer spending and two, you are going to
have the actual physical disruption of activity in Louisiana and
Mississippi. By the time we get to next year, those things should start to
reverse. As you start to rebuild New Orleans and some of the damaged areas
in the Gulf, that will probably actually start to lift economic activity.
So I think the weakness that we have right here will probably be temporary
and we will see actually a little bit stronger growth once we get to next
spring.
GHARIB: So what are your growth forecasts?
DUDLEY: We`re looking for about 3 percent, second half of this year,
rising to about 4 percent first half of next year. Then we think the
economy is going to slow again and the thing that we think is going to be
driving that are two things. One the Federal Reserve continues to raise
rates. And two, housing boom starts to abate. Once housing starts to
settle down, we think that is going to have some pretty meaningful effects
on consumer spending because people won`t be able to use their homes as a
piggy bank to sustain their spending.
GHARIB: Let`s talk a little bit about consumer spending. Tomorrow
we get a number of reports that are going to give us a gauge on how the
consumers feel about things. We`ve got retail sales. We`ve got the
consumer price index and we also have the sentiment, consumer sentiment
index coming from the University of Michigan. What are you expecting is
going to tell us about the state of mind of the consumer?
DUDLEY: Well, the retail sales numbers look like they will be OK
overall but a lot of it is just going to be the effect of higher gasoline
prices. So what we are going to look at is what were retail sales outside
of the gasoline area, because that is mostly price. And I think you will
see that outside of gasoline, that retail sales were a bit soft. On
consumer prices, the key is to look at what happens to the core inflation,
inflation excluding food and energy. If it was a .1 or .2, it is not going
to bother the markets very much. But if you get 3/10 or higher, people
will be very worried about the reaction of the Fed to this inflation news.
The Fed has indicated that they are basically worried about Katrina`s
effects on inflation rather than growth. So any sign of inflationary
pressure will cause the fixed income market to react quite negatively.
GHARIB: And back to this energy prices and the impact on consumers.
We know what they have done in terms of gasoline prices at the pump. But
now everybody is talking about natural gas prices and what it is going to
do to our home heating bills. And the big question is, is this going to in
some ways tap out consumers and that they will spend less on other things.
What are your forecasts in your equation that you are running about natural
gas prices?
DUDLEY: Well, natural gas prices are definitely going to be a lot
higher this winter. How much higher really depends on whether it is a cold
winter or a mild winter. If we have a very cold winter, we could see
natural gas prices spike up to $20 for a million BTUs or if we get a mild
winter, down to 10. So there is a lot of uncertainty with the size of the
energy shock depending on our luck, whether we get a warm or a cold winter.
This is going to extend, though, the blow to consumers. You are going to
see much higher heating bills even if we have a mild winter and that means
consumer spending is going to be a bit weaker for a bit longer than if you
didn`t have this natural gas shock, which is very specific to the U.S. We
have a problem here. We can`t bring more natural gas into the United
States.
GHARIB: Just to wrap up here, I want to pick up on what you were
saying about the Feds, so you said it is going to continue raising rates.
What do you see is going to happen at their meeting two weeks from now?
DUDLEY: Well, the Feds made it pretty clear in their statements and
speeches and the minutes to the last meeting that they are very worried
about inflation. So they are going to keep going. It is going to be 25
basis points, a quarter point hike in the Federal funds rate. That will
take us to 4 percent on November 1st and they will probably keep going
after that.
GHARIB: OK, well, we will keep watching on that and check in with
you. Bill, thank you very much for coming on our program.
DUDLEY: Thank you for having me.
GHARIB: We`ve been speaking with Bill Dudley, chief U.S. economist
at Goldman Sachs.
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) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
10/13/05: Why Search Engines Are Searching For An AOL Alliance
SUSIE GHARIB: Well, that may not be the only change in the works for
Google. According to published reports, Google and Comcast are looking to
strike a joint deal with Time Warner`s America Online unit. Meanwhile, AOL
is also said to be in talks with Microsoft. Erika Miller looks at what`s
at stake.
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: The race is on
for AOL. Search engine Google and cable giant Comcast are reportedly
chasing a joint stake in AOL, a unit of Time Warner. But today, Time
Warner Chairman Dick Parsons called a possible alliance with Google and
Comcast quote market rumor, unquote. He also said his company has no
ongoing talks with Microsoft. There has been speculation for weeks that
Microsoft is trying to strike a deal for all or part of AOL. So why is AOL
so desirable?
SCOTT KESSLER, INTERNET ANALYST, STANDARD & POOR`S: AOL has, number
one, a very strong and well known brand, number two, a substantial amount
of traffic that it can feed to other web sites that, thereby, can be
monetized. And three, it has a number of subscription relationships
already with customers.
MILLER: Kessler owns shares of Time Warner. Experts say the media
giants also want access to AOL`s exclusive content, like celebrity
interviews and concerts. But some analysts say Google`s motivation may
also be self- preservation. The fear is that if Microsoft and AOL strike a
deal, AOL might stop using Google for its search engine, which is Google`s
biggest source of revenue.
RICK SUMMER, INTERNET ANALYST, MORNINGSTAR: They certainly have a lot
more to lose if AOL moves over to Microsoft than if they were to stick with
Google. This is certainly a way to ensure that that relationship will last
at least for the coming years.
MILLER: Spokespeople from Google and Comcast declined to comment. In
spite of Dick Parsons` comments, industry analysts think there could still
be a deal.
KESSLER: My sense is that Comcast and Google very well may be the
winners of a minority stake in AOL and that`s going to result in
essentially a very important and I think strong partnership involving those
three companies going forward.
MILLER: One thing analysts agree on is that any deal for AOL is likely
to be for a minority stake. They say Time Warner is unlikely to sell AOL
outright because it`s too valuable an asset. 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) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
10/13/05: The New Bankruptcy Laws Have Corporations Racing To Reorganize
SUSIE GHARIB: High labor costs, stiff competition, increasing
energy costs and higher interest rates all play a role in sending companies
into bankruptcy court. But lately, there`s been another factor driving
corporate bankruptcies: a change in the law that`s set to go into effect
next week. Stephanie Dhue reports.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: There were a
lot of things wrong at Delphi, Delta and Northwest when they declared
bankruptcy, but their timing was right. Bankruptcy attorney Roger Frankel
says after October 17, companies trying to reorganize in bankruptcy will
fly a more difficult path.
ROGER FRANKEL, BANKRUPTCY ATTORNEY, SWIDLER BERLIN: For any very
large company, if you don`t file Chapter 11 before that time, then you`re
really going to miss a window because the major factor is how long you will
have the exclusive right to file a plan of reorganization.
DHUE: The new law strictly limits the amount of time a company has to
file a reorganization plan to a maximum 18 months. In some cases companies
have taken four to five years to file a plan. It gives creditors more
rights, making it harder for companies to wipe out debts for pennies on the
dollar. It also limits key employee retention plans -- bonuses promised to
executives who stay with the company through a bankruptcy. Failed
companies like Enron which paid more than $55 million in retention bonuses
to executives, were sharply criticized. The United Auto Workers union is
now criticizing Delphi`s bonus plan. Under the new law, those bonuses can
only be approved if they meet a higher standard.
JASON GOLD, BANKRUPTCY ATTORNEY, WILEY REIN & FIELDING: The employee
who stands to get this bonus has a bona fide job offer elsewhere, which
that employee could take, which is at least as good as this proposed plan,
so which raises the question: well, if the employee has this potential job
offer, why doesn`t he or she just take it?
DHUE: Frankel says the changes may force more companies out of
business.
FRANKEL: I do think you are going to see more liquidations. I think
you`re going to see more companies that don`t come out of Chapter 11
because of the various restrictions that have been being placed on them and
you`re going to see more companies that come out with the creditors owning
the company.
DHUE: But Gold disagrees.
GOLD: If you have a business that`s viable but for the fact that it
has a great deal of existing debt, that business should survive. I don`t
think this is going to cause it to liquidate. The key is whether or not
it`s a viable business.
DHUE: While there has been a rush to the courthouse since the law
was signed, bankruptcy filings are expected to taper off in the next few
months. But bankruptcy attorneys are sure to be busy looking for loopholes
in the new law. Stephanie Dhue, 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) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
10/13/05: "Commentary"-The Interest Rate Balancing Act
SUSIE GHARIB: In tonight`s commentary, the Federal Reserve`s delicate balancing act
when it comes to raising interest rates. Here`s Charles Schultze, senior
fellow at the Brookings Institution.
CHARLES SCHULTZE, SENIOR FELLOW EMERITUS, BROOKINGS INSTITUTION: For
over a year the Federal Reserve has been on a course of raising interest
rates in small steps, but the economy now faces some large uncertainties.
While the surge in energy prices has failed to stimulate inflationary
increases in wages, no one can be certain that this wage restraint won`t
give way. Forestalling that possibility would call for larger interest
rate increases.
And then there is the current housing boom, fueled by rising home
prices, favorable mortgage rates and easier lending terms. It`s vulnerable
to a sharp collapse, but trying to take the froth out of that boom with a
large interest rate increase might backfire badly. There is also a
downside possibility. Consumer spending has continued to grow steadily
despite rapidly rising energy prices. But the latest hurricane-induced
jump in those prices might conceivably be the last straw, finally pushing
consumers to retrench and sharply slowing economic recovery.
Forestalling that possibility would, at a minimum, require a halt to
further rises in interest rates. Given these uncertainties, whatever the
Fed does will incur some danger. But a balancing of the different risks
suggests the Fed`s best choice for now is to stay on its present course of
small rate increases and recent history suggests the Fed will be reasonably
prompt to recognize when the balance alters sufficiently to warrant a
change in course. I`m Charles Schultze.
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) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
10/13/05:
"Paul Kangas' Stocks In The News"
PAUL KANGAS: Stocks showed surprisingly little reaction to that bad news on
import prices and the trade gap early today, with just fractional moves in
the major indices. Sellers gradually got the upper hand though after the
oil stocks fell, despite a drop in some types of fuel inventories. The Dow
posted a 40 point loss in early afternoon, while NASDAQ was off five
points. An easing in crude oil futures and some bargain hunting helped
stocks rebound to end the day narrowly mixed. Dow industrial average
closed off only 1/3 of a point at 10,216.59. NASDAQ Composite actually
gained 9 3/4 points to 2047.22, while the Standard & Poor`s 500 lost 0.84
to 1176.84. Over in the bond market, the 10- year note was down 6/32 to 98
9/32, lifting the yield at 4.47 percent.
Most active big board issue on 18.1 million shares, Time Warner (TWX)
moving up a dime. As you heard, speculation is that Google and Comcast want
to buy a minority stake in Time Warner`s AOL unit.
Then came Motorola (MOT) with a $0.14 gain.
Pfizer (PFE) down $0.33, although European regulators are backing the
use of the company`s inhaled diabetes treatment called Exubera (ph).
ExxonMobil (XOM) down $0.78. Oils were definitely under profit taking
pressure today. Let`s have a look at some other majors in the sector.
Almost $1 loss in BP Plc adr (BP) and Chevron (CVX), Conocophillips
(COP) and Total S.A. (TOT) all more than $1 losses.
Then we see Ford Motor Co (F), fifth in volume with a $0.30 gain.
Johnson & Johnson (JNJ) itself up $2.22. You just heard the story and
it`s going after Amgen for sales practices.
General Electric (GE) a $0.22 gain.
No change in Lucent Technology (LU).
Texas Instrument (TXN) rose $0.79.
Chesapeake Energy (CHK) in that weak group, down $1.43.
McDonald`s (MCD) edged up $0.38, traded as high as $32.70. The
company`s forecasting third quarter earnings of $0.58 a share, $0.04. above
the Street estimate. The company`s September same store sales up a
respectable 3.9 percent.
Then we see Monsanto (MON) moving up $3.72. After the close yesterday,
the company did report a fourth quarter loss of $0.47 a share, much bigger
than the $0.16 loss last year, but the Street was expecting a bigger loss
of $0.52, so it`s better than expected. Company also boosted 2006 earnings
forecast from $2.34 a share to as much as $2.50 a share and that`s $0.04
above the Wall Street estimate.
Chicago Mercantile Exchange (CME) down $8.60 at the close, but it
traded as low as $287.05. A significant amount of its business does come
from Refco and when you heard, that company has big problems and is shut
down for the moment.
Veritas DGC (VTS), which is in the oil and gas service industry, had
fourth quarter earnings of $1.31, way up from $0.25 a year earlier, but
most of that boost was due to a one-time tax benefit and the company
actually had a $1.8 million fourth quarter operating loss versus $7 million
in profit a year ago.
Impac Mortgage (IMH) up $0.89. The company will buy back up to five
million of its own common shares.
And another buyback here, Buckle (BKE), the casual apparel retailer
going to buy back up to 500,000 of its shares, nice move in the stock.
Plains Exploration (PXP) down $2.24. The company sees continued
volatility in its third quarter earnings due to the market derivative
contracts.
Topping the active list on NASDAQ, Apple Computer (AAPL) up $4.49.
Positive reaction to the company`s video iPod which it introduced yesterday
and also its content deal with Disney. That could lead to a similar deal
with Pixar.
Google (GOOG) down $3.53. Third quarter results are due out a week
from today.
Microsoft (MSFT) up $0.29.
Intel (INTC) a $0.04 loss.
Amgen (AMGN) moved up $1, even though as you heard, Johnson & Johnson
is disputing its marketing practices, especially for that anemia drug.
Lam Research - whoops, let`s get to the top of the active here,
Qualcomm (QCOM) $0.65 loss.
Cisco Systems (CSCO) down $0.13.
Sandisk (SNDK) fell $0.22.
And then Yahoo! (YHOO) $0.56 loss.
And then tenth in volume was Dell (DELL) with a $0.46 gain.
Now we get to Lam Research (LRCX) with a gain of $3.55. First quarter
earnings sharply lower, $0.35, down from $0.64 a year ago, but that was
$0.05 above the Wall Street estimate. The company`s in the semiconductor
research business.
And elsewhere we see Central Coast Bancorp (CCBN) jumping $4.87 on
news that Rabobank will acquire it for $25 a share in cash.
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) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
10/13/05:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 10216.59 -.32 unch.
HIGH 10241.32
LOW 10156.46
NASDAQ COMP. 2047.22 +9.75 +.5
HIGH 2051.23
LOW 2025.58
VOLUME 1,830.0
PREVIOUS 1,904.8
UP VOLUME 759.6
DOWN VOLUME 1,037.3
DOW TRANSPORTS 3589.50 -37.39 - 1.0
DOW UTILITIES 389.11 -11.12 - 2.8
CLOSING TICK -185
S&P 500 1176.84 -.84 - .1
S&P 100 547.42 +.03 + .0
MIDCAP 400 672.12 -2.91 - .4
REUTERS/CRB 328.92 -3.18 - 1.0
NYSE COMPOSITE 7293.12 -29.62 - .4
VALUE LINE 386.16 +.08 + .0
RUSSELL 2000 623.28 +1.71 + .3
DJW 5000 11722.81 -11.39 - .1
U.S. TREASURIES
5-YEAR NOTE 4.25%
Oct. 15,2010 99 22/32 -1/32 4.32
10-YEAR NOTE 4.25%
Aug. 15,2015 98 9/32 -6/32 4.47
30-YEAR NOTE 5.375%
Feb. 15, 2031 110 -19/32 4.70
LEHMAN BROS.
LONG BOND INDEX 1763.57 -10.75
DOW CLOSE 10216.59 -.32 unch.
ADVANCES 1168
DECLINES 2171
NEW HIGHS 6
NEW LOWS 328
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
TWX Time Warner 17.59 +.10 +.6
MOT Motorola 19.91 +.14 +.7
PFE Pfizer 24.51 -.33 -1.3
XOM Exxon Mobil 58.16 -.78 -1.3
F Ford Motor Co 8.99 +.30 +3.5
JNJ Johnson & Johnson 64.02 +2.22 +3.6
GE GE 34.02 +.22 +.7
LU Lucent Tech 3.05 unch. unch.
TXN Texas Instrument 30.89 +.79 +2.6
CHK Chesapeake Energy 31.75 -1.43 -4.3
NASDAQ CLOSE 2047.22 + 9.75 + .5
VOLUME 1,823.4
PREVIOUS 2,072.6
ADVANCES 1499
DECLINES 1490
NASDAQ ACTIVES
AAPL Apple Computer 53.74 +4.49 +9.1
GOOG Google 297.44 -3.53 -1.2
MSFT Microsoft 24.59 +.29 +1.2
INTC Intel 23.20 -.04 -.2
AMGN Amgen 75.82 +1.05 +1.4
QCOM Qualcomm 41.70 -.65 -1.5
CSCO Cisco Systems 17.30 -.13 -.8
SNDK Sandisk 47.84 -.22 -.5
YHOO Yahoo! 33.37 -.56 -1.7
DELL Dell 33.11 +.46 +1.4
AMEX CLOSE 1594.79 - 28.08 - 1.7
INDEX SHARES
DIA DIAMONDS TRUST 101.95 -.08 -.1
QQQ NASDAQ 100 37.78 +.29 +.8
SPY S&P DEP.RECEIPTS 117.43 -.07 -.1
STOCKS IN THE NEWS
BP BP Plc Adr 65.46 -.96 -1.5
CVX Chevron 59.54 -1.42 -2.3
COP Conocophillips 61.05 -2.42 -3.8
TOT Total S.A. 126.21 -1.74 -1.4
MCD Mcdonald's 32.05 +.38 +1.2
MON Monsanto Co 61.00 +3.72 +6.5
CME Chicago Mercantl 310.40 -8.60 -2.7
VTS Veritas DGC 30.90 -3.55 -10.3
IMH Impac Mortgage 10.15 +.89 +9.6
BKE Buckle Inc 35.67 +2.27 +6.8
PXP Plains Exploration 37.05 -2.24 -5.7
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