10/18/05:
Intel's Mixed Message
SUSIE GHARIB: Mixed results for Intel during the third
quarter. The giant chip maker posted record revenues, but missed estimates
on the earnings side. Intel earned $0.32 a share in the quarter, a penny
shy of analyst estimates. But those numbers include a one-time legal
charge of $0.02 a share. Intel came in slightly ahead of the Street on its
third quarter revenue numbers, at just under $10 billion, the company`s
best quarterly revenues ever. As for the current quarter, Intel`s Chief
Financial Officer Andy Bryant sees revenues solidly over the $10 billion
mark, somewhere between $10.2 and $10.8 billion.
ANDY BRYANT, CFO, INTEL: We do expect the fourth quarter to be higher.
In reality if you try to look at the consumption of PCs, we think in the
third quarter, it was about seasonal consumption. Even though our revenue
report was a little bit better than seasonal, we think in the fourth
quarter there will be about seasonal consumption as well.
KANGAS: Bryant also says so far soaring energy prices and rising
interest rates are not showing an impact on Intel`s fourth quarter sales.
Intel shares ended the regular session up $0.26 at $23.72 and then fell
almost a dollar in after hours trading.
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.
10/18/05:
Hurricanes Cause A PPI Storm Surge
SUSIE GHARIB: A surprise on the economic front today. Wholesale inflation
posted its largest one month gain since the early 1990s. The producer
price index surged 1.9 percent in September, exceeding forecasts and
disappointing Wall Street. As Suzanne Pratt reports, economists blamed
much of the increase on the recent hurricanes.
SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Weeks after
hurricanes Katrina and Rita ravaged the Gulf coast, the storms` aftermath
continues to take a heavy toll on the economy. A hurricane-led surge in
energy costs was largely responsible for the 1.9 percent jump in the
producer price index in September, the largest one-month gain in more than
15 years. As expected, energy prices spiked after the widespread shutdown
of refineries and oil platforms.
But food prices, which had been declining, also surged higher, posting
their largest increase in nearly a year. The up tick in inflation wasn`t
confined to the usually volatile food and energy sectors. The core PPI,
which excludes those costs, gained 0.3 of 1 percent. Despite the ugly
headline number, the core rate also garnered attention on Wall Street.
Some economists say it could put significant pressure on retail prices,
while others believe surging oil prices won`t do as much damage to the
overall economy as they have in the past.
DAVID WYSS, CHIEF ECONOMIST, STANDARD & POOR`S: It is a little bit,
but not as much as you might think, because energy is a much smaller share
of the economy than it was 15 years ago back in 1980-`81 which is the last
time we had a major inflation push from energy. This time around energy
just isn`t as big, and we`re working with a much lower underlying rate of
inflation going into the problem.
PRATT: Federal Reserve Chairman Alan Greenspan echoed those
observations in a speech today in Tokyo. Greenspan said quote, the recent
jump in energy prices will undoubtedly be a drag from now on, end quote,
but added they will be less of a problem than in the `70s. Still, most
economists expect the Fed to boost short-term interest rates when it meets
November 1.
MICHAEL MORAN, CHIEF ECONOMIST, DAIWA SECURITIES: The growth rate of
the economy is still solid even with the effects of the hurricane built in.
We are seeing the economy perform well and Fed officials are very much
concerned about high energy prices feeding through to other goods and
services and leading to a pickup in the inflation rate.
PRATT: Economists predict inflation will continue to be a problem in
the months ahead. That means consumers can expect the Federal Reserve to
keep raising rates to contain those higher prices. Suzanne Pratt, NIGHTLY
BUSINESS REPORT, New York.
Nightly
Business Report transcripts are available on-line post broadcast.
The program is transcribed by eMediaMillWorks. Updates may
be posted at a later date. The views of our guests and commentators
are their own and do not necessarily represent the views of
Community Television Foundation of South Florida, Inc. Nightly
Business Report, or WPBT. Information presented on Nightly
Business Report is not and should not be considered as investment
advice. Copyright (c) 2005 Community Television Foundation
of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
10/18/05:One On One With Jeffrey Kupfer, Executive Director, President's Advisory Panel on Federal Tax Reform
SUSIE GHARIB: The president`s commission on tax reform is making what one
member calls a huge move towards simplification. Today the group endorsed
a plan to make the 1040 form easier to file. The panel wants to slash the
number of lines on that commonly used form from 75 to 32. It also wants to
cut the number of tax brackets from six to four and tweak things so most
taxpayers would fall into the 15 percent bracket. The commission will also
suggest eliminating the alternative minimum tax. It would pay for all of
this by capping deductions for mortgage interest and taxing employer-
provided health care. For more details on the plan, Washington bureau
chief Darren Gersh talked today with Jeffrey Kupfer, the commission`s
executive director. Darren began by asking him why the panel also wants to
eliminate the deduction for state and local taxes.
JEFFREY KUPFER, EXEC. DIR., PRESIDENT`S ADVISORY PANEL ON FEDERAL TAX
REFORM: It`s clear that people who are in low-tax states end up subsidizing
people who are in high-tax states. And the idea is that many people who
live in high-tax states get a certain level of government services which is
an additional level of government services that people get who are in these
other states. The idea was that those people actually get a benefit for
that. They don`t just pay the taxes and get the same level of benefit as
everybody else. They get a higher level of benefit. And therefore there`s
not necessarily a rationale for why people who get a smaller level of
benefit from their government services should subsidize those folks.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: What are you
going to say to critics who argue, look, my property taxes help support
schools and we need good schools for competitiveness. What would you say
to the people who are concerned about that?
KUPFER: I`d say that the property taxes that are paid to support good
schools, that`s great. We`re all in favor of having good schools. But the
people who then go to those schools get the benefit of those schools and
that`s fine. I mean they`re paying for it and they get the benefit of it.
The issue is whether someone who is in another state or another
jurisdiction somewhere else in the country should subsidize the person who
is living somewhere else who has chosen to pay for that higher level of
government services so it`s an overall equity decision for people around
the country.
The other point is that the way the current state and local tax
deduction is structured is that it is an upside down benefit in that it
goes disproportionately to high-income people. Right now it`s only
available to people who itemize, that`s about a third of the population.
So those are the only people who get a benefit for that deduction at all.
The other 65 percent of American taxpayers do not get any benefit.
And the third - and the third point is that with the increasing reach
of the alternative minimum tax, many of the state and local tax deductions
that people think that they are going to get over time is actually going
away. And so unlike in 1986 which was the last time there was a real
discussion about eliminating the state and local taxes, we`re in a much
different environment now where the state and local tax deduction is
effectively going away as it is.
GERSH: One of the things that hasn`t changed about this environment is
you have senators who are very concerned from states where people pay a lot
of state and local taxes with maintaining that. Senator Chuck Schumer of
New York vowed to defeat this proposal even before he had written it. How
are you going to overcome these political hurdles to getting a simpler,
flatter tax system?
KUPFER: What I would urge people to do who live in those high tax
states and have a benefit from the state and local tax deduction now is to
look at the entire package that the panel is going to bring forward. First
of all the panel has said that we will eliminate the alternative minimum
tax. That`s something that definitely benefits people who live in those
same states. Other things that we are planning to do, in the proposal for
instance there is no more phase-out of personal exemptions. There is no
more phase-out of the child credit. Everybody in the whole income
structure anywhere along those lines will get those benefits something that
currently does not happen.
GERSH: But the mortgage deductions. You`re talking about capping that
at around $300, $12,000. Couldn`t somebody look at that and say well, you
know, that`s a tax increase?
KUPFER: It`s another example of looking at each provision in isolation
and not looking at the entire package. The way the mortgage interest
deduction is currently structured is it does give a higher benefit to
higher income people. What the panel has proposed is to bring down that
cap, make it available to everybody, not just people who itemized, try to
tie into the median home price and then use not only, do you have a fair
provision but you`re also able to do other things in the tax system.
For instance we bring down the top rate in this plan from current 35
to 33 percent. So many of the people who may feel that they are not
benefiting anymore from the mortgage interest deduction will have a lower
rate on their total income. So when you look at everything as a package,
people may not be affected as badly as they think they are and in fact will
be much better off because they will have a much simpler more
straightforward tax system.
GERSH: Jeff Kupfer, executive director of the president`s commission
on tax reform. Thanks a lot.
KUPFER: Thank you.
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.
10/18/05: Pension Plans Become A Capitol Concern
SUSIE GHARIB: On Capitol Hill today, a comprehensive plan to reform
the nation`s pension system is running into trouble. The problem: how to
make sure the Federal agency that guarantees pensions has the money to pay
out future claims, while still making sure employers provide pensions. As
Stephanie Dhue reports, a Senate committee today took a stop-gap approach
to solving the nation`s pension problems.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: As steel,
airline and auto companies struggle with pension obligations, lawmakers
today voted to dramatically boost the premiums companies pay to fund the
Pension Benefit Guaranty Corporation. But not everyone thinks that`s a
good idea.
SEN. JEFF BINGAMAN,(D) HEALTH, EDUCATION, LABOR, & PENSION COMMITTEE:
It strikes me that the whole effort we`ve had in doing this pension
legislation was to encourage companies to continue with defined benefit
plans. And it strikes me that what we`re doing here goes very much against
that.
DHUE: The committee vote today is part of the larger budget
reconciliation bill. It`s aimed at making the Federal budget look better.
It would generate $6.7 billion over five years by increasing the premium
paid by all single employer plans from $19 to $46.75 per participant, and
it raises the premium on multi-employer or group plans from $2.60 to $8.
SEN. MICHAEL ENZI, CHAIRMAN, HEALTH, EDUCATION, LABOR, & PENSIONS:
None of us want this premium ultimately to be enacted into law. Adopting
the comprehensive reform will solve this problem. But for now, a flat rate
premium increase of $46.75 is the least bad option that we face.
DHUE: James Klein, who represents pension plan sponsors, says the
premium increases will make it harder to pass reforms that give employers
greater flexibility to fund their pensions.
JAMES KLEIN, PRESIDENT, AMERICAN BENEFITS COUNCIL: The money that is
raised from these premium increases really is needed to help pay for
strengthening the funding rules. If Congress only raises the premiums but
leaves for another day strengthening the funding rules, they will have to
find additional money to pay for it at that time.
DHUE: Still, many observers expect Congress to pass comprehensive
reform before businesses will have to pay more.
TIM VANDENBERG, POLICY ANALYST, WASHINGTON ANALYSIS: When the rules
that dictate pension contributions are going to change in an adverse way
for industry, at that point we`re expecting that a lot of these companies
are going to basically start lobbying Congress very, very vociferously for
this change.
DHUE: Today`s proposed bill also puts steep penalties on companies
that dump their pension obligations on the Pension Benefit Guaranty
Corporation in bankruptcy, an idea that may get more debate as lawmakers
work to pass broader pension reform. 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.
10/18/05: Commentary-Dipping For Profit
SUSIE GHARIB: Investing in stocks has been compared to gambling and investors
compared to gamblers. Tonight`s commentator says a big bet is riding on
Kirk Kerkorian and General Motors. Here`s Allan Sloan, Wall Street editor
of "Newsweek" magazine.
ALLAN SLOAN, WALL STREET EDITOR, NEWSWEEK: Those of us who grew up
during the heyday of Wilt Chamberlain, the late great basketball player,
remember him as "the big dipper." These days, though, Kirk Kerkorian, the
billionaire takeover artist, has become the biggest dipper of all. That`s
because he`s one of the few people left who buys stocks on dips.
Last week, with General Motors in free fall because of the Delphi
bankruptcy, the big dipper shelled out $67 million of borrowed money yet,
to buy more shares. That gave him a 9.9 percent of GM, the most he can own
for now. That was on top of the $600 million Kerkorian spent in the spring
buying GM when it went into a swoon and the billion dollars he spent buying
it at a premium after his interest had driven up the price. Now, he`s back
to form, buying on dips. He looked pretty bad last week as GM kept
falling, giving him a $200 million paper loss on his investment.
But the deal between GM and the United Auto Workers made him look a
lot smarter. After yesterday`s run-up of GM stock, he was even ahead a
couple bucks on his investment. Kerkorian, a long-term thinker at 88, is
betting that yesterday was the start of a major turnaround at GM. If he`s
right, the big dipper will be the big winner and will become the richest
90-year-old on the planet. I`m Allan Sloan.
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.
10/18/05:Last Word-Whale Mail
SUSIE GHARIB: And finally tonight, beluga whales don`t do a lot of flying.
When you weigh 1,600 pounds and you are 12-feet long, it does kind of
limits your options for traveling by air. But not when your airline is
UPS. This week, the air freight service delivered two whales to the
Georgia aquarium, flying them in from Mexico City. As you might expect,
the Boeing 767 cargo plane used for the move had to be modified for these
two particular passengers, including installing custom tanks that weighed
26,000 pounds once filled with water and whales. The UPS pilots had to fly
high and fast to keep stress on the animals to a minimum, including special
care during take off and landing. The whales are named Nico and Gasper.
They`re now safe at home Paul at the new aquarium and that`s set to open
next month.
KANGAS: I guess you could call that a whale of a fish story, Susie.
GHARIB: But it`s a true one.
KANGAS: That`s interesting.
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.
10/18/05:
"Paul Kangas' Stocks In The News"
PAUL KANGAS: Investors were torn between that worrisome wholesale inflation
report and solid earnings from Merrill Lynch, 3M and United Technologies.
So this morning the Dow moved in just single-digit gains and losses while
the NASDAQ Composite did about the same. Just after 1:00 p.m. though, a 24
million share block of ExxonMobil traded on the downside, undermining the
oil sector and the market in general. So the Dow industrial average fell
to a closing loss of 62.84 at 10,285.26. The NASDAQ Composite was down
14.30 at 2056.00 even. Standard & Poor`s 500 fell 11.96 to 1178.14. In the
bond market, the 10-year note rose 6/32nds to 98 7/32nds, putting the yield
at 4.48 percent.
By far the volume leader was ExxonMobil (XOM) on 45.6 million shares
and of course that included that 24 million share block that I mentioned
earlier that traded just after 1:00 p.m. and it led the whole oil group
lower. Oils were lower in general because crude prices fell after hurricane
Wilma was forecast to bypass the Gulf oil production platforms.
Here we see some other majors, Chevron (CVX), Conocophillips (COP) and
Marathon Oil (MRO) all dropping over $2 a share.
Then we go back to Nortel Networks (NT) with a penny gain.
Followed by Guidant (GDT) down $8.28. As you heard, Johnson &
Johnson`s takeover could be in jeopardy.
Ford Motor Co (F) was down $0.19. Merrill Lynch downgraded it from
"neutral" to "sell."
Motorola (MOT) a $0.23 gain. Just after the close, Motorola reported
third quarter earnings of $0.30, $0.02 above the Street estimate and I saw
the stock trading as high as $20.78 in after hours.
Lucent Technology (LU) $0.07 drop.
Followed by Calpine Corp (CPN) $0.38 loss there.
And then Johnson & Johnson (JNJ) itself managed to gain or loss $0.03
on the day. And now, besides its possible change of heart regarding the
Guidant takeover, J&J posted third quarter earnings of $0.87, up from $0.78
a year ago and a penny better than Wall Street was expecting.
Interpublic Group (IPG) a $0.50 loss.
And Pfizer (PFE) managed to gain a penny, tenth in big board volume.
3M Co (MMM), this is a big Dow stock, up $2.24. Third quarter earnings
of $1.10, up from $0.97 last year, $0.02 better than the Street was
expecting.
United Technologies (UTX), yet another big Dow component, third
quarter earnings $0.81 versus $0.68 last year. Revenues up 17 percent.
Those earnings were $0.02 better than the Street consensus.
American Standard (ASD) down $7.60. The earnings didn`t sit too well
with investor. Third quarter, $0.75 up from $0.71, but $0.03 below the
Street estimate and the company cut 2005 overall earnings estimate from
around $2.68 down to $2.56 a share. Standard & Poor`s downgraded the stock
from "strong buy" to just a "hold" recommendation.
Merrill Lynch (MER) up $0.12. The third quarter earnings came in at
$1.40, up from $0.93 last year, $0.22 above the Street estimate.
Great Atlantic & Pacific (GAP) up $2.93. The company posted second
quarter earnings, listen to this, $14.40 a share, but that does include a
gain and a big gain from the sale of A&P Canada. A year ago, the company
lost $1.67 a share.
Borders Group (BGP) down $1.58. The company sees a wider than expected
third quarter loss ranging from $0.16 to $0.20 a share. Prudential
downgraded the stock from "neutral" to "under weight."
Google (GOOG) topped the active list on NASDAQ, losing $1.72.
Microsoft (MSFT) $0.04 gain.
Intel (INTC) $0.26 gain, but as you heard, after the close, those
earnings were a penny shy of estimates. Stock dropped about $0.80-$0.90.
Apple Computer (AAPL) down $1.23.
And Yahoo! (YHOO) was off $0.46 in regular way (ph) trading. After the
close, Yahoo! Reported third quarter earnings of $0.17. That was the same
as last year, but $0.03 better than the Street consensus. In after hours
trading, Yahoo! stock around $33.97, moved up pretty nicely.
Dell (DELL) was a $0.97 loser.
Cisco Systems (CSCO) $0.19 drop.
Amgen (AMGN) moved up $0.47.
Ebay (EBAY) $0.42 loss.
Tenth in volume was Qualcomm (QCOM) with a $0.26 gain.
Novellus Systems (NVLS) down $3.06. Third quarter earnings way down,
$0.17, versus $0.45 a year ago and revenues fell 19 percent. The company`s
chief exec cited higher warranty costs in the integrated circuit business.
And finally a very nice sweet gain, Imperial Sugar (IPSU) up $1.82.
The company declared a special $2.50 per share cash dividend.
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.
10/18/05:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 10285.26 -62.84 - .6
HIGH 10361.47
LOW 10285.26
NASDAQ COMP. 2056.00 -14.30 -.7
HIGH 2072.50
LOW 2055.96
VOLUME 1,628.7
PREVIOUS 1,522.8
UP VOLUME 310.3
DOWN VOLUME 1,296.6
DOW TRANSPORTS 3589.04 -55.02 - 1.5
DOW UTILITIES 392.14 -8.37 - 2.1
CLOSING TICK +44
S&P 500 1178.14 -11.96 - 1.0
S&P 100 546.66 -4.90 - .9
MIDCAP 400 675.96 -8.33 - 1.2
REUTERS/CRB 329.18 -3.27 - 1.0
NYSE COMPOSITE 7277.91 -92.93 - 1.3
VALUE LINE 386.83 -4.35 - 1.1
RUSSELL 2000 625.36 -8.01 - 1.3
DJW 5000 11749.26 -123.25 - 1.0
U.S. TREASURIES
5-YEAR NOTE 4.25%
Oct. 15,2010 99 20/32 +4/32 4.33
10-YEAR NOTE 4.25%
Aug. 15,2015 98 7/32 +6/32 4.48
30-YEAR NOTE 5.375%
Feb. 15, 2031 110 1/32 +11/32 4.69
LEHMAN BROS.
LONG BOND INDEX 1753.70 +1.85
DOW CLOSE 10285.26 -62.84 - .6
ADVANCES 919
DECLINES 2375
NEW HIGHS 19
NEW LOWS 159
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
XOM Exxon Mobil 56.30 -2.56 -4.4
NT Nortel Networks 3.49 +.01 +.3
GDT Guidant 64.10 -8.28 -11.4
F Ford Motor Co 8.47 -.19 -2.2
MOT Motorola 20.17 +.23 +1.2
LU Lucent Tech 3.11 -.07 -2.2
CPN Calpine 2.45 -.38 -13.4
IPG Interpublic Group 10.51 -.50 -4.5
PFE Pfizer 24.13 +.01 +.0
NASDAQ CLOSE 2056.00 - 14.30 - .7
VOLUME 1,520.2
PREVIOUS 1,305.6
ADVANCES 951
DECLINES 2029
NASDAQ ACTIVES
GOOG Google 303.28 -1.72 -.6
MSFT Microsoft 24.57 +.04 +.2
INTC Intel 23.72 +.26 +1.1
AAPL Apple Computer 52.21 -1.23 -2.3
YHOO Yahoo! 33.70 -.46 -1.4
DELL Dell Inc 32.18 -.97 -2.9
CSCO Cisco Systems 16.98 -.19 -1.1
AMGN Amgen 75.87 +.47 +.6
EBAY eBay 40.42 -.42 -1.0
QCOM Qualcomm 42.45 +.26 +.6
AMEX CLOSE 1600.27 - 23.38 - 1.4
INDEX SHARES
DIA DIAMONDS TRUST 102.89 -.65 -.6
QQQ NASDAQ 100 37.91 -.27 -.7
SPY S&P DEP.RECEIPTS 117.82 -1.31 -1.1
STOCKS IN THE NEWS
MMM 3M Company 74.71 +2.24 +3.1
UTX United Tech 49.95 -1.16 -2.3
IBM IBM 83.48 +.89 +1.1
ASD Amer Standard 36.48 -7.60 -17.2
MER Merrill Lynch 61.21 +.12 +.2
SXT Sensient Tech 17.92 -1.34 -7.0
GAP Great A&P 28.29 +2.93 +11.6
BGP Borders Group 19.51 -1.58 -7.5
NVLS Novellus Sys 21.83 -3.06 -12.3
IPSU Imperial Sugar 15.23 +1.82 +13.6
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