10/17/05:
GM & UAW Develop A Tentative Prescription For Healthcare
SUSIE GHARIB: A breakthrough deal today between General
Motors and its auto workers union. GM announced a tentative agreement with
the United Auto Workers union to slash its healthcare costs, saving the
company more than a billion dollars every year. The news came at the same
time that the automaker announced a massive third quarter loss of $1.5
billion. As Diane Eastabrook reports, the sweeping changes at GM could
impact the entire auto industry.
DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: The deal
General Motors negotiated with the United Auto Workers could cut the
company`s health care liabilities by $15 billion. That`s about 25 percent
of its hourly health care cost. Chairman and CEO Rick Wagoner called the
deal a huge move for GM.
RICHARD WAGONER, CHAIRMAN & CEO, GM: I think today`s tentative
agreement with the UAW on healthcare certainly, I think, shows a realistic
and focus on how we can work together to address what are clearly some
competitive challenges.
EASTABROOK: The tentative agreement would cut GM`s health care
expenses by $3 billion annually before taxes. It also includes a defined
contribution Voluntary Employee Benefit Association, or VEBA, that the auto
maker says would help offset health care cuts to UAW retirees. While
industry watchers called the deal historic, some analysts say it doesn`t
solve all of the auto maker`s problems.
JERRY MARKS, AUTO ANALYST, RAYMOND JAMES: Taking away 25 percent of
your (INAUDIBLE) liabilities is nice. But if you`re still having to pay
your UAW workers 95 percent of their pay even if they`re not building a
vehicle, that becomes a problem.
EASTABROOK: The scope of GM`s problem was reflected today when it
announced yet another quarterly loss. Excluding special items, GM lost a
$1.5 billion, or $1.92 a share in the third quarter, more than double the
amount analysts expected. It also stood in stark contrast to the profit GM
made during the same period last year. But GM says more cost-cutting is
needed. It plans to trim materials cost by about a billion dollars
annually and structural costs by $5 billion through the end of next year.
The company also wants to shed up to 25,000 jobs and close some under
performing plants. Marks says those moves could go a long way in GMs
overall recovery.
MARKS: Until you start to rationalize your capacity, which General
Motors talked a little about in their press release today, that`s the real
problem that they need to solve.
EASTABROOK: But before those problems can be fixed, GM and the UAW
leadership need to sell the agreement on health care cuts to the union`s
rank and file, and labor experts say that could be a tough sell.
ROBERT BRUNO, LABOR RELATIONS PROF., UNIVERSITY OF ILLINOIS-CHICAGO:
This appears to be a significant step back, a real punishing concession to
make such a huge cut in the health care that they`re provided. It`s a
significant change for the UAW.
EASTABROOK: Industry watchers say if GM`s workers approve the benefit
cuts, that Ford and Chrysler are likely to press their unionized workers
for similar concessions. Diane Eastabrook, NIGHTLY BUSINESS REPORT,
Chicago.
Nightly
Business Report transcripts are available on-line post broadcast.
The program is transcribed by eMediaMillWorks. Updates may
be posted at a later date. The views of our guests and commentators
are their own and do not necessarily represent the views of
Community Television Foundation of South Florida, Inc. Nightly
Business Report, or WPBT. Information presented on Nightly
Business Report is not and should not be considered as investment
advice. Copyright
(c) 2005 Community Television Foundation of South Florida,
Inc. ALL RIGHTS RESERVED. Terms of use.
10/17/05:
"Market Outlook"-With Jeffrey Saut, Chief Investment Officer of Raymond James
SUSIE GHARIB: Our guest tonight manages investment portfolios that are up 11
percent so far this year and that`s not counting dividends. He`s Jeffrey
Saut, chief investment officer of Raymond James. Hi, Jeff.
JEFFREY SAUT, CHIEF INVESTMENT STRATEGIST, RAYMOND JAMES: Good
evening.
GHARIB: Congratulations on that strong performance. Tell us why,
then, if you are doing so well you are changing your strategy?
SAUT: Well, we`ve done well this year because we were overweight
energy. We were long a lot of mid cap and small cap names which have
tended to outperform their large cap brethren and we`ve underweighted the
consumer. We continue to think the consumer`s reached a tipping point here
with $3 a gallon gasoline.
GHARIB: Now we saw today that the stock market had a healthy gain. Is
this something that you think is going to be -- that they will be able to
build on or was this just a one-day good performance?
SAUT: Well, I think they tried to add on to Friday`s reversal on the
better than expected core earnings -- excuse me, core inflation numbers. I
think we`re in a bottoming process. I put a note out to that effect a week
ago today. And I do think that you will get some whipsaw action as we try
to build a bottom here.
GHARIB: So what does the bottoming out process mean?
SAUT: It means you get both big up moves and then you get pullbacks.
I think you`re going to get a retest of the lows we made last week. And I
would point out that it was GM and Philip Morris that accounted for more
than 51 points of the Dow Jones`s 60 point rally today. So it wasn`t as
all encompassing as it appears on the surface.
GHARIB: Well, speaking of GM, what do you think of GM? Yes, it did
report a big loss but it also had some good news here. Is this a stock
that you would include in your portfolios?
SAUT: I am not a real big fan of the automobile space at all. I think
there`s too much competition there. There`s too much excess capacity.
There was an excellent article in "Barron`s" last weekend and I was just up
in the Detroit area for the past five days. And a lot of talk up there is
centered around a potential strike at Delphi because they are trying to cut
the workers` wages by about 70 percent. And if Delphi goes on strike, it
would tend to shutter some of the plants that GM has in production right
now.
GHARIB: So what are some of the stocks Jeff that you do like, that you
are putting in your portfolio and tell us why.
SAUT: We recommend the Time Warner, "strong buy" or "out perform"
rated by one of our analysts. TWX, the stock is down from $95 a share
during the bubble and you`ve got good content with Time Warner, a nice
network, and you are, in essence, getting AOL for free.
GHARIB: Jeff, do you own it or does your firm have a position in it?
SAUT: I recommended it this morning so I can`t own it as of yet.
But I will own it in another week or so.
GHARIB: You mentioned that you did well on some energy plays. What is
your view on energy stocks now?
SAUT: I continue to think energy will have the wind at their back.
Energy was up strong today. Oil was up, I think, about 3 percent. And of
course, that`s due to the new tropical storm that is building down in the
Caribbean. But I`m a believer in energy, have been a believer in energy,
particularly coal stocks over the past three years.
GHARIB: OK. Real quickly, you said also in your report today that you
believe that investors should put some money in international stocks. What
is your thinking there?
SAUT: If you look at international markets, I think the economies are
going to grow faster there. I think their averages are priced cheaper than
the S&P 500 and some of the other averages here.
GHARIB: OK, Jeff, thank you so much, always a pleasure talking to you.
SAUT: Our pleasure.
GHARIB: We`ve been speaking with Jeff Saut, chief investment officer
of Raymond James.
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.
10/17/05: Top Toy Makers Are Predicting A Ho-Hum Holiday
SUSIE GHARIB: It`s not even Halloween yet, but already toymakers are nervous
about holiday sales. Both Hasbro and Mattel released quarterly earnings
today, providing a glimpse of the all-important season. Erika Miller has a
preview of this year`s toy story.
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Judging by hints
from Mattel, there may not be much cheer for toy makers this holiday
season. The world`s top toy company blames a difficult retail environment,
as well as cost increases, for disappointing quarterly earnings. Profits
fell to $0.55 a share in the third quarter from $0.61 a year ago. That was
$0.06 shy of the mean Wall Street estimate. The biggest surprise was a
sharp drop in Barbie sales, as many girls chose edgier Bratz dolls instead.
SEAN MCGOWAN, TOY ANALYST, HARRIS NESBITT: The weakness in Barbie is
lasting longer than I think they had expected, and a lot of people had
expected and it`s pretty severe. It`s a 30 percent decline in U.S.
shipments of Barbie on top of a 26 percent decline a year ago.
MILLER: Earnings at number two toymaker Hasbro also fell short of
estimates. Profits there rose to $0.47 a share in the latest period from
$0.43 a year ago, but the mean analyst forecast was for $0.51. Sales at
Hasbro were strong in "Star Wars" products, Furbies and board games, among
other areas. It`s only October, but already analysts are warning toy sales
could be weak this holiday season.
MCGOWAN: I don`t think it`s going to be a good year for toymakers.
It`s been a long time since it was a good year. This is probably the
fourth or fifth year of flat or down sales.
MILLER: He says sky high gasoline prices have taken a bite out of many
consumers` wallets. Plus, hurricanes Katrina and Rita have prompted some
families to reprioritize their spending. As a result, stores like Wal-Mart
are already trying to jump start sales by discounting popular toys as much
as 30 percent.
AMY GLYNN, TOY ANALYST, STANDARD & POOR`S: The toy retailers are
discounting heavily and they may exert margin pressure on Mattel and
Hasbro. So they`re sort of being pinched from both ends on this top line
and the cost side.
MILLER: But prices are only part of the problem. So far, there`s no
must- have toy of the season that would encourage parents to splurge.
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.
10/17/05: Defrauded Investors Are Still Waiting For Their Pay Day
SUSIE GHARIB: Investors who lost money in high profile corporate fraud
cases were promised that they would get a portion of their money back. But
while the government has collected billions of dollars for restitution
funds, so far investors have recovered very little. Stephanie Dhue
explains.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: After fraud at
Enron and WorldCom, lawmakers had the Securities and Exchange Commission
set up a fund to pay defrauded investors the money corporations paid in
fines. But so far most investors have yet to see a dime. Attorney Andrew
Stoltmann works with investors who are trying to recover some of their
losses.
ANDREW STOLTMANN, ATTORNEY, STOLTMANN LAW OFFICES: It`s been a
nightmare for these people, trying to contact the SEC, trying to find out
if they are entitled to this money, because the SEC basically isn`t
answering any questions.
DHUE: In total, the Securities and Exchange Commission has collected
over $5 billion. That includes $2 billion from mutual fund companies
involved in market timing and late trading fraud, $750 million in the
WorldCom scandal and more than $400 million from the banks accused of
aiding fraud at Enron. But so far the commission has only paid out only
$179 million. SEC enforcement director Linda Thomsen says getting the
money to investors doesn`t happen overnight.
LINDA THOMSEN, DIRECTOR, DIVISION OF ENFORCEMENT, SECURITIES AND
EXCHANGE COMMISSION: You have to make sure that you identify the right
victims, that you figure out a formula that`s going to be fair to everyone
and recognize that people are not going to be made whole in most instances.
So you need to make sure that you`re not paying anyone who shouldn`t be
paid and that you`re paying everyone that you are paying on as equitable a
basis as possible.
DHUE: Ken Feinberg oversees the $225 million restitution fund set up
for Computer Associates investors. He says it took less than a year to
establish the fund.
KEN FEINBERG, ADMINISTRATOR, COMPUTER ASSOCIATES RESTITUTUION FUND:
While defrauded investors had to wait until the fraud was proven by a
guilty plea on the part of the corporation. So the time frame between the
fraud being committed and the restitution fund being created took a couple
of years, not months. Now the restitution fund has been up and running. We
have formulated a plan. The plan has been approved by the United States
courts and we are in the process now as we speak of mailing the claim forms
and the notices out to investor claimants.
DHUE: Feinberg says Computer Associates investors who file a claim
should get their checks by the end of the year. Other cases may take
longer. In the meantime, restitution funds are invested. The SEC says the
millions of dollars in interest earned will help pay for the cost of
administering the funds. Stephanie Dhue, NIGHTLY BUSINESS REPORT,
Washington.
Nightly
Business Report transcripts are available on-line post broadcast.
The program is transcribed by eMediaMillWorks. Updates may
be posted at a later date. The views of our guests and commentators
are their own and do not necessarily represent the views of
Community Television Foundation of South Florida, Inc. Nightly
Business Report, or WPBT. Information presented on Nightly
Business Report is not and should not be considered as investment
advice. Copyright (c) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
10/17/05: "Commentary"-The Pension Plan Pinch
SUSIE GHARIB: In tonight`s commentary, seeing opportunity in the pension crunch
facing the nation`s airlines and auto makers. Here`s Glenn Hubbard, dean
of the graduate school of business at Columbia University and former
chairman of the White House Council of Economic Advisers under President
George W. Bush.
GLENN HUBBARD, FORMER CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: The
Pension Benefit Guaranty Corporation, PBGC has grabbed headlines, taking
over pension plans of bankrupt firms in the steel and airline industries.
And now Delphi, the nation`s largest auto supplier, seems headed its way.
Two problems account for the PBGC`s woes.
First, current funding rules leave many plans under funded, posing a
risk to taxpayers. Second, the PBGC`s insurance is too cheaply priced,
further increasing risk to taxpayers. The nonpartisan Congressional Budget
Office recently estimated the value of the PBGC`s net costs for pension
insurance to be $87 billion over the next 10 years and the losses get
bigger over time.
To avoid these costs, Congress would need to increase premiums
substantially and base premiums charged on the underlying risk of insured
plans. The budget office estimates a fair premium would be six and a half
times current rates. This reform reduces future taxpayer liabilities. It
also raises the costs to firms of offering defined-benefit pensions, likely
reducing the relative importance of such pensions.
But is this troubling? Defined contribution plans have become much
more popular. Rather than favoring one pension form by focusing on PBGC
reform, Congress should think more broadly about policy toward retirement
income, including Social Security and savings incentives. Sound economic
analysis and thinking more broadly about retirement income can turn the
present problem into an opportunity. I`m Glenn Hubbard.
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.
10/17/05:
"Paul Kangas' Stocks In The News"
PAUL KANGAS: Big earnings for big blue after the bell. Technology
bellwether IBM posted stronger third quarter results. IBM earned a $1.26 a
share during the period, a 22 percent gain from a year ago. The results
also beat analysts` estimates by a wide margin. Revenues fell by 8 percent
to $21.5 billion. That reflects the loss of sales from IBM`s PC division.
That unit was sold to China`s Lenovo Group earlier this year. IBM`s
chairman says the company`s restructuring efforts are, quote, starting to
yield results. The stock ended the regular session up $0.24 at $82.59. In
after hours trading, IBM shares were up over $1.50 from that level.
The most active New York exchange issue on 41.3 million shares, Nortel
Networks (NT) moving $0.18 higher. The company is appointing Mike
Zafirovsky, the former chief operating officer at Motorola as its CEO.
Lucent Technology (LU) up $0.12.
And then you see General Motors (GM) with that rise of $2.11 despite
the big third quarter loss, but that UAW agreement is a major breakthrough
on the plus side.
Ford Motor Co (F) helped along by that probably, up $0.05.
And then Pfizer (PFE) a $0.20 loss. That was fifth in volume.
Altria Group (MO), the parent of Philip Morris, up $4.30, also helping
the Dow a big bunch. As you heard, Supreme Court had a favorable ruling for
the tobacco industry today and let`s have a look at some others in the
group.
Carolina Group (CG), of course this is the tracking stock for Lowe`s
Corporation tobacco operations, up $2.01.
Reynolds American (RAI) up $5.06.
And Vector Group (VGR) edged up $0.15.
General Electric (GE) a $0.33 loss.
Followed by Time Warner (TWX) with a dime gain.
Motorola (MOT) down $0.22.
Tyco Intl (TYC), tenth in volume down $0.15.
Varian Medical Systems (VAR) up $3.65. The company sees an 18 percent
jump in fourth quarter orders over last year for its radiation therapy
products, good demand the company says.
Newell Rubbermaid (NWL) up $1.89. The company sees third quarter
operating earnings at the high end of its previous guidance of $0.33 to
$0.37 a share. Also Chief Executive Officer Joe Galli and a board member by
the name of Mark Ketchum will serve as interim CEO for Newell.
Sensient Technologies (SXT), which is in the flavors and fragrance
business, down $1.34. Third quarter earnings fell to $0.30 versus $0.46 a
year ago and the company sees fourth quarter about the same as third
quarter.
Charles Schwab (SCH) $0.21 gain, a real turn around in the third
quarter with earnings of $0.16 versus a loss of $0.03 last year. Revenues
during the period rose 14 percent.
Dana Corp (DCN) up $0.83. UBS financial upgraded it from "neutral" to
a "buy."
And then Supervalu (SVU) up $1.15. Second quarter earnings were lower,
$0.24 versus $0.55 a year ago, but without a $0.31 non-recurring charge
against earnings, second quarter would have been $0.55, same as the year
ago and $0.06 above the Wall Street estimate. Also Goldman Sachs made
positive comments about the stock.
Google (GOOG) topped the active list, rising $8.86. Piper Jaffray
brokerage boosted third quarter earnings by $0.04 up to a total of $1.26 a
share.
Apple Computer (AAPL) down $0.56.
Microsoft (MSFT) down $0.14.
Intel (INTC) a $0.23 rise. Dow Jones said the sales of notebook
computers should help Intel meet analysts` earnings projections.
Yahoo! (YHOO) was a $0.64 gainer. That was fifth in volume.
Then we see Amgen (AMGN) losing $0.35.
A dime loss in Cisco Systems (CSCO).
Ebay (EBAY) up $1.14.
Sandisk (SNDK) $0.26 gain.
Tenth in volume Oracle (ORCL) with a $0.07 gain.
Advanced Neuromodulation (ANSI) up $13.96. St. Jude Medical will
acquire the company for $61.25 a share in cash. St. Jude stock moved up
$0.89 incidentally.
And Bio-Logic Systems (BLSC) up $2.69, a huge percentage gain. Natus
Medical will acquire this company for $8.77 a share in cash.
And 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.
10/17/05:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 10348.10 +60.76 + .6
HIGH 10350.99
LOW 10269.81
NASDAQ COMP. 2070.30 +5.47 +.3
HIGH 2071.25
LOW 2054.19
VOLUME 1,522.8
PREVIOUS 1,703.9
UP VOLUME 968.0
DOWN VOLUME 518.6
DOW TRANSPORTS 3644.06 +5.45 + .2
DOW UTILITIES 400.51 +6.45 + 1.6
CLOSING TICK +623
S&P 500 1190.10 +3.53 + .3
S&P 100 551.56 +1.07 + .2
MIDCAP 400 684.29 +3.17 + .5
REUTERS/CRB 332.45 +4.81 + 1.5
NYSE COMPOSITE 7370.84 +8.25 + .1
VALUE LINE 391.18 +.86 + .2
RUSSELL 2000 633.37 +.22 + .0
DJW 5000 11872.51 +36.90 + .3
U.S. TREASURIES
5-YEAR NOTE 4.25%
Oct. 15,2010 99 16/32 -3/32 4.36
10-YEAR NOTE 4.25%
Aug. 15,2015 98 1/32 -4/32 4.50
30-YEAR NOTE 5.375%
Feb. 15, 2031 109 22/32 -6/32 4.72
LEHMAN BROS.
LONG BOND INDEX 1751.85 -.23
DOW CLOSE 10348.10 +60.76 + .6
ADVANCES 1792
DECLINES 1505
NEW HIGHS 23
NEW LOWS 128
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
NT Nortel Networks 3.48 +.18 +5.5
LU Lucent Tech 3.18 +.12 +3.9
GM GM 30.09 +2.11 +7.5
F Ford Motor Co 8.66 +.05 +.6
PFE Pfizer 24.12 -.20 -.8
MO Altria Group 74.96 +4.30 +6.1
GE GE 34.01 -.33 -1.0
TWX Time Warner 18.10 +.10 +.6
MOT Motorola 19.94 -.22 -1.1
TYC Tyco Intl 26.56 +.15 +.6
NASDAQ CLOSE 2070.30 + 5.47 + .3
VOLUME 1,305.6
PREVIOUS 1,570.4
ADVANCES 1415
DECLINES 1586
NASDAQ ACTIVES
GOOG Google 305.00 +8.86 +3.0
AAPL Apple Computer 53.44 -.56 -1.0
MSFT Microsoft 24.53 -.14 -.6
INTC Intel 23.46 +.23 +1.0
YHOO Yahoo! 34.16 +.64 +1.9
AMGN Amgen 75.40 -.35 -.5
CSCO Cisco Systems 17.17 -.10 -.6
EBAY eBay 40.84 +1.14 +2.9
SNDK Sandisk 50.70 +.26 +.5
ORCL Oracle 12.38 +.07 +.6
AMEX CLOSE 1623.65 + 3.86 + .2
INDEX SHARES
DIA DIAMONDS TRUST 103.54 +.71 +.7
QQQ NASDAQ 100 38.18 +.12 +.3
SPY S&P DEP.RECEIPTS 119.13 +.46 +.4
STOCKS IN THE NEWS
CG Carolina Group 41.75 +2.01 +5.1
RAI Reynolds American 83.80 +5.06 +6.4
VGR Vector Group Ltd 19.53 +.15 +.8
VAR Varian Medical 40.45 +3.65 +9.9
NWL Newell Rubbermaid 23.73 +1.89 +8.7
SXT Sensient Tech 17.92 -1.34 -7.0
SCH Charles Schwab 13.34 +.21 +1.6
DCN Dana Corp 7.19 +.83 +13.1
SVU Supervalu 31.00 +1.15 +3.9
ANSI Adv Neuromodulat 60.94 +13.96 +29.7
BLSC Bio Logic System 8.56 +2.69 +45.8
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