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Program: Thursday, October 20, 2005

One On One With Hank McKinnell, CEO of Pfizer
Falling Oil Prices & Rising Natural Gas Inventories Fuel New Energy Forecasts
One On One With Ford`s Chief Financial Officer Don LeClair

Tech Talk- Video & Venues on the Vista
"Commentary"-The Virtues of Variable Annuities
Paul Kangas' Stocks In The News
Market Stats

10/20/05: One On One With Hank McKinnell, CEO of Pfizer

SUSIE GHARIB: A big surprise from Pfizer today: third quarter earnings plunged at the world`s largest drug maker and shares tumbled almost 9 percent. Excluding special items, Pfizer earned $0.51 a share, $0.03 above estimates, but 7 percent below year-ago results. Revenues fell for the first time in four years. Pfizer now says it expects earnings for the full year to drop as much as 9.4 percent, a steeper decline than earlier predicted. But Pfizer won`t look beyond this year and has withdrawn its financial outlook through 2007. The reasons for all this: sagging sales of its arthritis drug Celebrex and an unexpected drop in its cholesterol fighter Lipitor. Late today, I talked with Pfizer`s CEO Hank McKinnell and I asked him if the slowdown is temporary or longer lasting.

HANK McKINNELL, CEO, PFIZER: Well, that`s a question we don`t know the answer to. Our assumption is the slowdown in the third quarter does not reflect any underlying long-term systemic problem in the industry. We do expect a return to growth in the fourth quarter or certainly next year. There`s certainly lots of unmet medical need there. But in the light of a slowing market in the third quarter and our need to revise our plans for the next two years, we`ve withdrawn guidance for that period and will get back to the analysts in January with a new forecast.

GHARIB: Mr. McKinnell, why were Lipitor sales weaker than expected? Is it because of slowing demand or is it just because of more competition?

McKINNELL: Well, Lipitor slowed in the third quarter for two reasons. One is the overall market growth fell from 14 percent to 7 percent. Secondly, we were in the process of reorganizing our sales force to be more aligned with the new Medicare prescription drug benefit. And during that period, the transfer of territories and the retraining that was necessary probably did have some impact on overall demand.

GHARIB: So what is your strategy, then, to boost sales and also to make up for lost sales when many of your drugs are going to be coming off of patent protection soon. I understand that Zoloft and Zipomax (ph) for example account for $4 billion in annual sales and they`re going to be coming off patent protection soon. So what`s your strategy?

McKINNELL: Well, the challenge is replacing sales we lose because of expirations of patents. But of course, we`ve known that for a long time and we`ve been planning for this period for more than a decade. What was overlooked today, I think, is the remarkable progress we`re making in the development and registration of new products. We launched three in the third quarter alone and we`ve had some very important developments on the regulatory front during the quarter. So I`m quite pleased that while we`re in a difficult period, that we`re going to be returning to good growth rates in the near future.

GHARIB: But didn`t you also have some disappointments on the regulatory fund? I understand that you had two drugs that were recently -- their applications were rejected by the FDA. You said on the conference call that two years ago, they probably would have been approved. Do you find that the FDA is tougher these days on drug approval?

McKINNELL: Well, the regulatory environment has always been stringent. But it`s probably more difficult and more risk averse today than it was two years ago. We have had a number of important approvals and advisory board recommendations. Those two that were not approved we`ll be back in the next year or so with additional data, additional clinical studies seeking approval.

GHARIB: I know you have a cost-cutting program already in place. But do you feel a need to step up the pace of the cost-cutting because of the recent results today?

McKINNELL: I don`t. We`ve announced plans already internally and externally and we`ll have completed those announcements within the next month or two on actions which will both make the company more efficient and effective and save $4 billion over the next three years. That should be enough to ensure our long-term success.

GHARIB: Now your stock was down almost 9 percent today. Do you think that the sell-off was justified?

McKINNELL: Well, I can never answer that question. I think I have mentioned previously that six or seven years ago, our stock price had a price-earnings ratio of 60. Today it is more like 11. It probably shouldn`t have been 60 and it probably shouldn`t be 11 today.

GHARIB: Some of the Wall Street analysts I talked to said that Pfizer may be should have pre-announced these earnings and that might have been a better course of action. Your thoughts on that.

McKINNELL: Well, we learned -- we learned less than a month ago that our third quarter was going to be better than expected, but that our planning process was just beginning. And it looked like the fourth quarter, because of the slowing of business in the third, probably would continue into the fourth. So we thought it was prudent to announce this year`s shortfall. But the quarter, actually, was stronger than anybody expected including ourselves.

GHARIB: All right, Mr. McKinnell. We will leave it there. I hope to talk to you again soon. Thank you very much.

McKINNELL: Thank you, Susie.

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.


10/20/05: Falling Oil Prices & Rising Natural Gas Inventories Fuel New Energy Forecasts

SUSIE GHARIB: Oil prices tumbled today as December crude futures closed off $1.49 to $60.02. Today`s decline was fueled by a government report showing a bigger-than-expected rise in natural gas inventories. And that has some experts rethinking their energy forecast. Suzanne Pratt reports.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: For months, crude oil prices have remained solidly above $60 a barrel. That has led to painfully high prices at the gas pump and worries about home heating costs as winter approaches. Today, however, crude slipped below that psychologically important $60 level for the first time since late July and some oil experts are starting to rethink the outlook for energy costs this winter.

BRUNO STANZIALE, DIR. OF COMMODITIES, SG CIB: I don`t think that oil is going to trade consistently at a level above $68 going into Q4. I think we`re looking at more of a range of like $58 to $62.

PRATT: Behind today`s drop in oil prices, news of a larger- than- expected build in natural gas inventories last week. The increase came in spite of the continued closure of natural gas facilities on the Gulf coast as a result of the recent hurricanes and today`s numbers followed similar data yesterday showing increased stockpiles of crude and gasoline.

ANTHONY GRISANTI, TRADER, GRZ ENERGY: It`s about inventory numbers; it`s also about demand figures. Demand for gasoline during the summertime ran at about nine to 9.5 million gallons a day. Now it`s running at about 8.5 million gallons a day. We have record imports coming into the country over the last three weeks, so that`s all helped to ease the prices.

PRATT: On top of that, the International Energy Agency is now discussing the possibility of releasing more oil to help ease the pressure on pricing. And finally, mother nature may have the last word on what happens with oil prices this winter.

STANZIALE: Oil prices I think are going to be driven on weather going forward and particularly how natural gas responds to weather and natural gas being the more volatile of the two commodity groups. But it really is becoming more of a weather game than anything else.

PRATT: Speaking of weather, hurricane Wilma remains a wild card for oil prices in the near term. Experts say the storm needs to bypass oil facilities in the Gulf in order to keep oil prices from spurting higher. 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.

10/20/05:One On One With Ford`s Chief Financial Officer Don LeClair

SUSIE GHARIB: Ford Motor posted a loss in the third quarter, as sales of SUVs declined. Excluding special charges, it lost $0.10 a share. That was in line with estimates. Ford still expects to be in the black for the year. CEO Bill Ford said the auto maker will announce a restructuring plan in January that will include quote significant plant closings. I talked with Ford`s Chief Financial Officer Don LeClair this morning and asked him what`s different about this plan from all the other turnarounds Ford has tried before.

DON LeCLAIR, CFO, FORD MOTOR: This one is basically not that much different than the last one. We have more work to do. And so we`re going to be working on our cost structure with our supply base. We`ve taken a lot of steps with visiting on our largest supplier to ensure that we make progress there. We recently announced a consolidation of our supply base. We are going to -- we know we have excess capacity. We have been entrusting that as we have gone through this year and the last couple years as well. We have more work to do there. I think the thing that makes this plan more encompassing and in that sense different than before is what Bill Ford announced last month in terms of innovation. We`re going to try very hard to harness the capability of our organization to have more innovative products, products that customers want that are more in tune with the changing environment, in terms of the environment and fuel prices. And I think that`s probably the thing that makes this different and will make it more sustainable and therefore successful.

GHARIB: So Mr. Leclair, what will Ford look like, let`s say, five years down the road that is going to be dramatically different?

LeCLAIR: I think we`re going to be a company that is operating at 90 plus percent capacity utilization with a balance of good participation in cars, SUVs, trucks, minivans and so on. We`ll have a good geographic dispersion. We`re increasing our market share in Asia now, and in South America where the markets are growing. We`re participating in that. And so I think we`ll see a broad-based, you know, from a product standpoint and from a geographic standpoint, a better participation in the marketplace.

GHARIB: In the meantime, what is Ford`s strategy to boost sales given that high gasoline prices are maybe deterring some consumers and also consumers have gotten so conditioned to having incentives?

LeCLAIR: Well, that is a good question. You know, we just finished up the Ford family plan where we basically gave employee discounts to people. And that ended up being a very successful 2005 model closeout program for us. And so we are now in a good position with 2006 models out. Interestingly we have a new range of midsized passenger cars, very fuel efficient in a large segment of the marketplace that we haven`t participated in for many years. So we expect to do very well going forward. In fact, our market share was up in the third quarter over last year`s third quarter and our car market share was up, is up for the first nine months of this year for the first time in over 10 years. So we think the strategy is paying off and we`re going to continue to see benefits going forward.

GHARIB: As you know, this week General Motors announced that it reached a health care deal with United Auto Workers union. Can Ford count on the same deal? Can you count on pattern bargaining here?

LeCLAIR: Well, you know, you can`t count on anything but I think going forward, I just say this, we have been in constructive but private discussions with the union on this subject for some time. And the pattern certainly has been in the past that the union would not do anything to disadvantage one of the three domestic automakers. So I -- you know, that is how we are looking. We are working with the union and let`s just leave it there.

GHARIB: OK. I just want to end off asking you about your stock. It has been -- Ford has been kind of on a slide. Is the market incorrectly judging the prospects for Ford? Are they missing something?

LeCLAIR: Well, certainly I think we -- I think the market is. And I think that we`re -- in the next, you know, well, when we get to our announcements at the end of January, I guess people will be in a better position to judge that. But I think our stock is an excellent buy right now.

GHARIB: All right, well, we look forward to hearing more from you. Thank you so much for today, Mr. Leclair.

LeCLAIR: You are quite welcome. Thanks, Susie.


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.

10/20/05: Tech Talk- Video & Venues on the Vista

SUSIE GHARIB: In our "tech talk" segment tonight, the three Vs-- Vista, video and venues. Here with an explanation on all of them our technology maven, Scott Gurvey.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: A new test version of Microsoft`s next Windows system is out. We`ve taken a look and found that it appears to have a place for built-in anti-spyware software. Microsoft has been distributing this software as a separate download for current systems. Bundling it in Windows Vista would be a good move for consumers, but it might bring complaints from makers of other anti-spyware products and anti-trust regulators. Microsoft is also working on anti- virus software, so stay tuned. Steve Jobs and Apple have a hit with the new iPod that can play video, but the deal with Disney to sell popular TV programs like "Desperate Housewives" is raising lots of eyebrows. Disney`s ABC affiliates are not happy that viewers will have access to shows without tuning in. Advertisers are not happy the shows will be sold without commercials and consumer groups fear the studios may push for laws restricting the right of consumers to makes recordings of broadcast TV shows. That`s because you pay when you download the show from iTunes. If you`re tired of paying for directory assistance, check this out. Dial 1-800-free-411 and get the number for free. Of course, there is no such thing as a free lunch. If you call and ask for the local pizza man, you might get an ad for another pizzeria in the neighborhood. The company promises the ads will not run more than nine seconds. This is the Google search engine business model now playing on your telephone. You`ve seen navigation devices which use the global positioning satellite system. These gadgets keep getting smaller and more accurate, because chip makers like SIRF of San Diego have reduced the circuits to a single chip, cutting cost and power requirements.

KANWAR CHADHA, FOUNDER, SIRF TECHNOLOGY: It`s that magic price point, you know, below $500. A large market opens up and that`s what`s happening in this portable navigation system.

GURVEY: The new chips have also led to neat new products. This cell phone for children has five buttons parents can program to call numbers like home or work. The phone also has GPS and the parent can check a web site at any time to find out where her kid is. Available now in Europe, this gadget is a GPS panic button. One press and an alert, including location, is sent to a monitoring site. It is first being sold in countries where kidnapping is a major problem. You can run, but you cannot hide. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.

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.

10/20/05: "Commentary"-The Virtues of Variable Annuities

SUSIE GHARIB: There are all kinds of investments on the market today. Tonight`s commentator looks at one of them with a somewhat checkered past. Here`s Myron Kandel, founding financial editor of CNN.

MYRON KANDEL, FOUNDING FINANCIAL EDITOR, CNN: Variable annuities can be a useful investment product. One problem, though, is they can be misused, or should I say, mis-sold, meaning they may not be suitable for all those who buy them. The sellers can be overzealous. Also, annuities are complicated and investors may not understand all their ramifications. Regulators at the state level have been flooded with complaints from investors who contend they`ve been victimized one way or another. Patricia Struck, president of the North American Securities Administrators Association, notes that for many years, violations of variable annuities sales practices have been among the group`s top 10 list of scams, schemes and scandals. As a result, the state officials want stricter regulation and they want investors to receive disclosure documents written in plain English. And so they and other consumer groups are supporting a proposal now being considered by the SEC to tighten regulatory treatment for deferred variable annuities. But they also want the stricter regulation to apply to all variable annuities, not just deferred ones. For its part, the industry says the proposed regulations would be overly burdensome and would tend to demonize a legitimate product. I feel their pain, but I still believe investors deserve all the protection they can get and I hope the SEC agrees. I`m Myron Kandel.

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.

10/20/05: "Paul Kangas' Stocks In The News"

PAUL KANGAS: An opening downturn in Pfizer stock kept the blue chips under pressure early today despite solid earnings from Coca-Cola and SBC. The Dow rose only eight points at the outset of trading and then fell to a 14- point loss at noontime when the NASDAQ was off seven points. The sell off worsened this afternoon as long-term mortgage rates rose to 15-year highs and some more companies lowered their outlooks. A steep late downturn left the Dow down 133 points at 10,281.10. The NASDAQ Composite fell 23.13 to 2,068.11. Standard & Poor`s 500 down 17.96 points ending at 1177.80. In the bond market, the 10-year note rose 8/32 to 98 17/32, putting the yield at 4.44 percent. Far and away the most active big board issue was Pfizer (PFE) on 68.8 million shares. The stock closing at the low of the day with that loss of $2.07. As you heard, the company`s outlook less than upbeat at the moment.

Nokia (NOK) down $1.15, even though its third quarter earnings were up 29 percent over last year on an 18 percent rise in sales, but the good news was offset by concern over lower gross profit margins, lower selling prices for its products and the lack of any fourth quarter guidance from the company.

ExxonMobil (XOM) down $1.91 in the weak oil group as crude fell below $61 a barrel.

Lucent (LU) a $0.03 loss.

And Time Warner (TWX) down $0.46, fifth in big board volume.

Chevron (CVX) another weak oil, off $2.59.

General Electric (GE) fell $0.53.

And a gainer finally, the only one in the active 10, SBC (SBC) up $0.13. Third quarter earnings higher, $0.47 versus $0.38 a year ago, $0.06 above the Street estimate.

And Bank of America (BAC) down $0.24.

And tenth in volume was Motorola (MOT) with a $0.13 loss.

Coca-Cola (KO) moved up $0.30. Third quarter earnings $0.57, up from $0.50 a year ago, $0.04 above the Street consensus and the company`s boosting its quarterly dividend from $0.25 to $0.28 a share.

McDonalds (MCD), another Dow stock, but down $1.29. Third quarter earnings were lower, $0.58, versus $0.61 a year ago, but that was in line with Street estimates.

Home Depot (HD) yet another Dow stock, edging up $0.31. Bear Stearns upgraded it from "peer perform" to "out perform."

Convergys Corp. (CVG), which is in the billing services business had higher third quarter earnings, $0.30 versus $0.21 a year ago and the company says it`s comfortable that it will meet or exceed 2006 Wall Street earnings projections of $1.07 a share.

Carlisle Company (CSL) gained $5.42. Third quarter earnings nicely higher, $1.24 versus $1.04 last year and the company boosted its 2005 outlook on top of that.

Whirlpool (WHR) was up $1.14. Third quarter earnings $1.66, up from last year`s $1.50. Revenues rose 8 1/2 percent during the period.

City National (CYN) gained $4.90. Third quarter earnings $1.17, up from $1.04 last year and that was on a 13 percent rise in revenues. The Sandra O`Neil (ph) brokerage upgraded it from a "hold" to a "buy."

West Pharmaceutical (WST) big loss of $1 or $3.97. Third quarter earnings $0.22, same as last year and $0.11 below the Wall Street estimate.

Textron (TXT), another big company, up $2.15. Third quarter earnings came in at $1 a share and that was $0.08 better than the Street was expecting.

Apple Computer (AAPL) up $1.20. It topped the active list.

And then came Google (GOOG) closing down $5.50 in regular way trading. After the close, Google announced third quarter earnings of $1.51, $0.15 better than the Street was expecting and revenues up 96 percent. In after hours trading, the stock jumped $27 to the $330 range.

eBay (EBAY) down $2.86.

Intel (INTC) $0.07 loss there.

Microsoft (MSFT) off $0.30, fifth in dollar volume.

Amgen (AMGN) fell almost $4 a share. After the close yesterday, revenues were disappointing.

And then Yahoo! (YHOO) $0.65 loss.

Cisco Systems (CSCO) fell $0.27.

Qualcomm (QCOM) $0.67 loss.

Juniper Networks (JNPR) moved up $0.80. Higher earnings, third quarter $0.14 versus $0.08 last year.

And finally Intersil (ISIL) in the integrated circuit business up $1.58, a third quarter turnaround, $0.19 in earnings versus a $0.21 loss last year.

Those are the stocks 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.

10/20/05: Market Stats

 
                                      NET    PERCENT
                         CLOSE     CHANGE     CHANGE
DOW CLOSE 10281.10 -133.03 - 1.3 HIGH 10432.78 LOW 10252.13 NASDAQ COMP. 2068.11 -23.13 -1.1 HIGH 2096.43 LOW 2058.52 VOLUME 1,976.0 PREVIOUS 2,064.4 UP VOLUME 307.1 DOWN VOLUME 1,638.5 DOW TRANSPORTS 3624.07 -7.44 - .2 DOW UTILITIES 380.98 -12.19 - 3.1 CLOSING TICK +11 S&P 500 1177.80 -17.96 - 1.5 S&P 100 545.13 -8.93 - 1.6 MIDCAP 400 676.05 -9.11 - 1.3 REUTERS/CRB 322.36 -4.39 - 1.3 NYSE COMPOSITE 7234.09 -128.98 - 1.8 VALUE LINE 386.49 -5.52 - 1.4 RUSSELL 2000 627.54 -10.74 - 1.7 DJW 5000 11748.94 -170.53 - 1.4 U.S. TREASURIES 5-YEAR NOTE 4.25% Oct. 15,2010 99 25/32 +4/32 4.30 10-YEAR NOTE 4.25% Aug. 15,2015 98 17/32 +8/32 4.44 30-YEAR NOTE 5.375% Feb. 15, 2031 110 17/32 +15/32 4.66 LEHMAN BROS. LONG BOND INDEX 1755.85 unch. DOW CLOSE 10281.10 -133.03 - 1.3 ADVANCES 820 DECLINES 2490 NEW HIGHS 39 NEW LOWS 148 NET PERCENT NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE PFE Pfizer 21.90 -2.07 -8.6 NOK Nokia 15.90 -1.15 -6.7 XOM Exxon Mobil 55.26 -1.91 -3.3 LU Lucent Tech 3.12 -.03 -1.0 TWX Time Warner 17.38 -.46 -2.6 CVX Chevron 55.75 -2.59 -4.4 GE GE 33.88 -.53 -1.5 SBC SBC Comms 22.54 +.13 +.6 BAC Bank Of America 42.20 -.24 -.6 MOT Motorola 20.89 -.13 -.6 NASDAQ CLOSE 2068.11 - 23.13 - 1.1 VOLUME 1,873.2 PREVIOUS 1,956.8 ADVANCES 945 DECLINES 2041 NASDAQ ACTIVES AAPL Apple Computer 56.14 +1.20 +2.2 GOOG Google 303.20 -5.50 -1.8 EBAY eBay 39.15 -2.86 -6.8 INTC Intel 23.62 -.07 -.3 MSFT Microsoft 24.79 -.30 -1.2 AMGN Amgen 74.10 -3.99 -5.1 YHOO Yahoo! 35.26 -.65 -1.8 CSCO Cisco Systems 16.93 -.27 -1.6 QCOM Qualcomm 43.35 -.67 -1.5 JNPR Juniper Networks 22.79 +.80 +3.6 AMEX CLOSE 1576.79 - 39.24 - 2.4 INDEX SHARES DIA DIAMONDS TRUST 102.82 -1.53 -1.5 QQQ NASDAQ 100 38.31 -.36 -.9 SPY S&P DEP.RECEIPTS 117.69 -2.05 -1.7 STOCKS IN THE NEWS KO Coca-Cola Co 42.10 +.30 +.7 MCD McDonald's 32.40 -1.29 -3.8 HD Home Depot 39.57 +.31 +.8 CVG Convergys 15.76 +1.83 +13.1 CSL Carlisle Cos 65.04 +5.42 +9.1 WHR Whirlpool Corp 74.37 +1.14 +1.6 CYN City National 72.85 +4.90 +7.2 WST West Pharm Svcs 23.43 -3.97 -14.5 TXT Textron 72.99 +2.15 +3.0 ISIL Intersil 22.68 +1.58 +7.5

 

 

 

 

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