11/03/05:
Merck's Vioxx Victory
SUSIE GHARIB: A big win for Merck today, a New Jersey jury
cleared the drug giant in a major lawsuit over its Vioxx painkiller. The
case was brought by a 60-year-old postal carrier who suffered a heart
attack four years ago and blamed it on Vioxx. But the jury found that
Merck had properly warned consumers of the drug`s risks and investors
celebrated the victory by pushing up Merck shares by almost four percent.
Scott Gurvey reports.
Has the jury reached a verdict?
Yes.
JUDGE CAROL HIGBEE, SUPERIOR COURT: As to question one, did Merck
fail to provide an adequate warning to prescribing physicians of an
association between Vioxx and an increased risk of serious cardiovascular
events that the defendant either knew or should have known about prior to
Mr. Humeston`s heart attack? How did the jury vote?
No.
SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: The jury went
on to say no on three other counts, finding in favor of Merck and against
the plaintiff, 60-year-old postal worker Frederick Humeston. It was a
critical victory for Merck, which withdrew its painkiller drug Vioxx after
finding evidence it increased the risk of heart attacks and strokes in
patients who took it for more than 18 months. Merck lost a $253 million
verdict in the first Vioxx case last August in Texas, but that plaintiff
died after using Vioxx for eight months. Merck`s lawyers argued that
Humeston used Vioxx for only two months and had a prior history of heart
disease.
JIM FITZPATRICK, MERCK OUTSIDE COUNSEL: We felt we put in a very
strong case and we think the verdict was consistent with all of our
evidence. There was no causation here. Vioxx does not increase the risk
with short-term use.
GURVEY: Humeston was bitter after the verdict.
FREDERICK HUMESTON, PLAINTIFF: This product is a poison pill. It was
a mistake by Merck and they refused to acknowledge it.
GURVEY: And his lawyer had advice for plaintiffs` lawyers preparing
for future Vioxx trials:
CHRISTOPHER SEEGER, PLAINTIFF`S ATTORNEY: For all you people out
there that are going to try cases against them, you`re up against 20, 30 of
the biggest law firms that money can buy. They got their $675 million and
they`re going to trash their patients until (INAUDIBLE) but we`re going to
keep coming.
GURVEY: Merck`s stock is down more than 30 percent since the Vioxx
was pulled off the market in September of last year. Analysts have
struggled to put a dollar cost on the potential impact of the Vioxx cases.
TOM D`AMOUR, PHARMACEUTICAL ANALYST, MORNINGSTAR: What we`ve tried
to do is say well, realistically, the worst case scenario would be a loss
of a total of $20 billion over the next five years.
GURVEY: Analysts also observe that Merck, like many of the major drug
companies, faced problems even without the Vioxx recall. Analyst Mara
Goldstein owns shares of Merck.
MARA GOLDSTEIN, PHARMACEUTICAL ANALYST, CIBC WORLD MARKETS: The
Merck-based business is really performing at a flat to likely declining, at
least as measured by EPS, flat to declining EPS over the next few years
because of issues like patent expirations and maturation of key products,
and so that has to always be considered at any given point, even though the
verdict today was quite positive.
GURVEY: There are more than 6,400 Vioxx cases still pending against
Merck. The company today says its strategy is unchanged; it will defend
against every one of them. Scott Gurvey, 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.
11/03/05:
Fed Chairman Alan Greenspan Says The Economy Is Weathering This Season of Storms Well
PAUL KANGAS: Outgoing Federal Reserve Chairman Alan Greenspan made one of his last
appearances on Capitol Hill today, giving Congress` Joint Economic
Committee an upbeat assessment on the economy. Greenspan says we seem to
be weathering a trio of recent hurricanes, but inflation still remains a
concern. From Washington, Stephanie Dhue reports.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Fed Chairman
Alan Greenspan told lawmakers, despite massive hurricane damage and soaring
energy prices, the economy is resilient and he gave a strong hint that the
Fed will keep hiking interest rates to keep it that way.
ALAN GREENSPAN, FEDERAL RESERVE CHAIRMAN: So long as the Federal
Reserve is perceived to be holding inflation expectations in check, which
means holding core inflation in check, the pass-through of energy costs
into the underlying inflation rate will be subdued.
DHUE: Greenspan sternly warned Congress to reduce the budget deficit.
The government ran up a $319 billion deficit for fiscal year 2005 and
analysts expect a $400 billion deficit for 2006. Greenspan says continuing
to finance tax cuts by borrowing has the potential to create a serious
backlash in the market.
GREENSPAN: We should not be cutting taxes by borrowing. We should be
cutting taxes by reducing the level of spending and that`s an issue which I
think is critically on the table.
DHUE: Asked why the bond market hasn`t pushed yields even higher in
reaction to the Federal government`s spending spree, Greenspan says it may
be a case of delayed reaction.
GREENSPAN: I find it utterly inconceivable, frankly, that we can
have the type of potential fiscal outlook which now confronts us over the
next 15 to 20 years which, unless addressed, will not have a significant
impact on long-term interest rates.
DHUE: Fed watchers say Greenspan`s remarks confirm the belief that
the Fed will raise rates again when it meets in December and beyond.
LYLE GRAMLEY SENIOR, ECONOMIC ADVISOR, STANFORD WASHINGTON RESEARCH:
My guess is that the Fed will continue to raise interest rates until they
see signs that either the economy is about to slow or one can reasonably
forecast that it will.
DHUE: It probably won`t be on Greenspan`s watch that the
Fed stops raising rates. The chairman`s last day on the job
and his last open market committee meeting is January 31.
Stephanie Dhue, NIGHTLY BUSINESS REPORT.
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.
11/03/05: One On One With Henry Silverman, Chairman & CEO of Cendant
SUSIE GHARIB: Our guest tonight is upbeat about the U.S. economy. Henry
Silverman is chairman and CEO of Cendant, a $20 billion conglomerate that
dominates businesses like travel, hotel and real estate. Cendant owns real
estate brands like Century 21 and Coldwell Banker and hotel chains Ramada,
Days Inn, and Wyndham. It also owns rental car giants Avis and Budget, and
online travel agencies Orbitz and Cheap Tickets. But after assembling this
portfolio of companies over the past decade, Cendant announced last week it
will split itself into four separate companies. When I met with Silverman
today, I began by asking him if he now thinks smaller is better.
HENRY SILVERMAN, CHAIRMAN & CEO, CENDANT: I think in this case it is.
The industrial logic of having a smaller, more focused pure play is that
the management can really be totally involved in their own businesses and
we created three public companies in the last year, each one of which has
performed much better, both financially, operationally, of course, as well
as in the marketplace.
GHARIB: Mr. Silverman, when you announced that Cendant was breaking
into four parts, you said that the market would value the parts more than
the whole. And yet we`ve seen since that time that Cendant stock is down
about 10 percent. So what`s going on here?
SILVERMAN: Unfortunately, at the same time we also reduced guidance
and I`ve been doing this for about four years. I have yet to see an
example when you say earnings might be slightly less in the future and your
stock goes up. So it`s just an unfortunate coincidence of timing. But
that`s really what caused the share decline. The good news is, in the last
few days our stock price is getting close to where it was before the
announcement. We`ve met with virtually every one of our large
shareholders. Without exception, they all applaud the plan to break up,
but without exception, they are disappointed that we had to lower our
forward earning guidance.
GHARIB: You said that you`re going to be CEO of the new travel
network business, which includes Orbitz, cheaptickets.com. Why did you
choose that business?
SILVERMAN: It`s the business that has the most near-term challenges,
but also the most near-term and long-term opportunities. Travel is growing
much faster than the world`s GDP, where it`s really the dominant player in
the travel intermediary space so it`s got a huge upside, but it requires
lots of execution.
GHARIB: So what are your plans to expand the travel business and what
opportunities do you see for growth?
SILVERMAN: Well, for example, we have a large operation in -- large -
- relatively speaking, in each of India and China. Those are two enormous
opportunities for us. There are over 100 million people in China, for
example, who travel out of the country every year. India is probably even
a bigger near-term opportunity. Two point something billion people in
those two countries alone with virtually no online travel services
available. Interestingly enough, the reason there is very little online
travel services in China is that there are virtually no credit cards and so
the mechanism for payment is not existing yet, but that will come.
GHARIB: You`ve also announced that you`re not going to be taking any
salary in this new position with the travel network. Tell us your
thinking.
SILVERMAN: First of all, I`m going to be paid severance, I assume,
because my contract will be terminated. So as for salary or bonus for any
other comp, I would being paid twice. I`d be double dipping and that
doesn`t make any sense. I`m the largest shareholder in the company. If
the shares in the aggregate have a higher valuation, that`s certainly in my
best interest. And last but not least, I`m kind of tired of talking about
my compensation with the media, so perhaps we can get that issue off the
table.
GHARIB: Your businesses deal a lot with consumers, whether it`s your
real estate business, your car rental, hotel, travel. What`s your take on
consumer spending and also consumer confidence?
SILVERMAN: The U.S. consumer remains quite resilient. We`re seeing
quite a bit of consumer travel, airline - (INAUDIBLE) are up for example in
the U.S. Our rental car businesses are very strong. The UK is weak; Italy
is weak, countries in which there was a projected growth for the next year
or two actually had negative GDP growth. The consumer spending and
confidence in the UK for example is at the lowest level in the last 12
years. So it`s really a country-by-country analysis. I would say Asia is
good, but has been better. Europe is not good at all, and the U.S. is
about where it`s been over the last year or two.
GHARIB: So many economists and analysts that we talk to are concerned
about the economy and mostly about the consumer that they`re feeling tapped
out because of high oil prices and other matters. How do you see it?
SILVERMAN: I think there`s probably some truth to that. I think
maybe weighing a little bit on our consumer travel businesses in the U.S.
-- although they`ve been good, they could be better -- is the excess price
of gasoline. You`re right, we`re not into the home heating oil season yet
which is going to be a real jolt to many households. But I think it`s only
on the margin that that really has an impact. We have not seen that really
show up in any material way yet.
GHARIB: And what is your outlook for housing and real estate? A lot
of people think that, you know, it`s a bubble that`s about to burst. What
are your views?
SILVERMAN: We sell about 30 percent of all the existing homes in the
U.S., so I think that statistically we are the market. We continue to see
that market growing very nicely. Volume may be flat, price continues to
appreciate, net-net the housing market remains extremely strong, very
vibrant and at really historically good levels.
GHARIB: Mr. Silverman, thank you very much for talking to NIGHTLY
BUSINESS REPORT.
SILVERMAN: You`re welcome.
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.
11/03/05: "Commentary"-China's Economic Evolution
SUSIE GHARIB: Tonight`s commentator is looking east, at China and changes that the
Chinese could be making in their economy. Here`s Barbara Hackman Franklin,
president of Barbara Franklin Enterprises and former U.S. Secretary of
Commerce.
BARBARA HACKMAN FRANKLIN, FORMER U.S. SECRETARY OF COMMERCE: I was in
China again a couple weeks ago and was surprised by what I heard from some
government officials. They questioned whether the export-driven economy
that has fueled China`s rapid growth is the best thing for the country.
They said China needs to move toward a consumption-driven economy.
This is a challenge. GDP per capita is about $1,300. It is much
higher in the urban areas along the coast where a middle class is emerging.
But the majority of people are in the countryside and they are poor. That
is why the national GDP per capita figure is so meager. This disparity
between the haves and have-nots is one of China`s greatest problems. The
Chinese leadership seems to be facing up to the issue. The next five-year
program, to be ratified by the national people`s congress in March, sets a
goal of raising GDP per capita to $1,700 by 2010.
And in the joint communique signed last month with Secretary Snow,
the Chinese government pledged to better balance savings and investment by
encouraging consumption. Over time, this will help to redress the huge
trade deficit China runs with the U.S. This focus on raising GDP per capita
and increasing consumption signals a new stage in China`s development. If
the Chinese leadership can pull this off, it will be a tremendous
accomplishment. The world will be watching. I`m Barbara Hackman Franklin.
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.
11/03/05:
"Paul Kangas' Stocks In The News"
PAUL KANGAS: That overall retailing scenario helped stocks open broadly
higher, as did a solid 4.1 percent surge in third quarter productivity. At
the outset of trading, the Dow rose 51 points and NASDAQ gained 15. That
Merck victory and Fed chief Greenspan`s positive comments on the economy,
which we`ll detail next, also helped boost stocks. At midday, the Dow was
up 85 points, NASDAQ rose 25.
A rebound in oil prices this afternoon trimmed the market`s gains.
The Dow Industrial Average closed up 49.86 points at 10,522.59. The NASDAQ
Composite rose 15.91 to 2160.22, while the Standard & Poor`s 500 gained
5.18 points ending at 1219.94. Over in the bond market, the 10-year note
was down 10/32 to 96 28/32, lifting the yield to 4.65 percent.
New York exchange volume leader on nearly 34 million shares, Pfizer
(PFE)
Moving up $0.27 and strong on Merck`s Vioxx victory because Pfizer makes a
similar painkiller which it calls Celebrex.
Then Time Warner (TWX) in there with a $0.24 loss.
Merck (MRK) itself up $1.07 as we mentioned earlier.
Lucent Technology (LU) an $0.08 gain.
Qwest Communications (Q) gained a nickel. Yesterday as we reported,
the company cut its third quarter loss to $0.08 from $0.31 a year ago.
Chesapeake Energy (CHK) $0.46 gain there.
SBC Communications (SBC) down $0.39.
ExxonMobil (XOM) on those higher oil prices, up $1.19.
Motorola (MOT) lost $0.04.
Micron Technology (MU), tenth in volume, a $0.60 gain.
Scientific-Atlanta (SFA) up $1.73. The "New York Post" today reported
the company has hired two investment banks to explore the sale of the
company for what analysts say could be as much as $42 a share. Standard &
Poor`s repeated a "strong buy" on Scientific Atlanta.
Symbol Technologies (SBL) gained $2, a gain of almost 25 percent.
Third quarter earnings were flat, $0.07, same as a year ago, but the Street
estimate was only for $0.03 and the Baird brokerage upgraded the stock from
"neutral" to "out perform."
CVS Corp (CVS), the big drug store chain, up $1.95. Third quarter
earnings higher, $0.30 versus $0.22 last year in line with estimates.
Third quarter same store sales were up 5.7 percent, respectable there.
Standard & Poor`s repeated a "strong buy` on CVS stock.
Becton Dickinson (BDX), a $4.35 gain. Fourth quarter operating
earnings $0.76, up from $0.70 last year, $0.06 better than the Wall Street
consensus.
Then a major loser, First Marblehead (FMD) tumbling $7.29. Bank of
America is seeking to avoid automatic annual renewal of its direct to
consumer student loan program with First Marblehead.
Montpelier Reinsurance Holdings (MRH) down $2.93. The insurance
company had a third quarter loss of $12.47 a share. The Street was
expecting a loss, but only around $8.68. Of course the company cited huge
catastrophe insurance losses for that problem.
John H. Harland (JH), the check printer, down $5.34. Third quarter
earnings were higher, $0.65, up from $0.43 a year ago, but that was $0.04
below Wall Street`s average estimate.
Prudential Financial (PRU) up $3.81. Third quarter earnings jumped to
$1.46 from $0.93 last year and that was $0.30 better than the consensus on
the Street.
Guess? Inc (GES), the retailer, up $3.60, $0.46 in third quarter
earnings up from $0.27 last year and same store sales rose 8.9 percent in
that third quarter period.
Finally JCPenney (JCP) rising $1.95. October same store sales up 2.4
percent, better than the Street was expecting, which was 1.6 percent and
also JCPenny boosted its third quarter outlook.
Google (GOOG) hitting another record closing high with that gain of
$6.27, closing in on $400 a share now.
Apple Computer (AAPL) up $1.90. First Albany brokerage boosted its
price target on Apple by $6 to $66 a share.
Qualcomm (QCOM) up $3.64. Fourth quarter earnings $0.32, up from $0.23
last year. Revenues jumped 40 percent. The company sees first quarter
coming in around $0.37 a share and that`s $0.02 better than the Street
estimate.
Microsoft (MSFT)
$0.02 loss there.
And Intel (INTC), fifth in dollar volume was up $0.60 a share.
Oracle (ORCL) fell $0.28.
Symantec (SYMC) losing $0.85.
But Amgen (AMGN) up $3.61. The company and Abgenics Corp. say that
late stage studies found their colon cancer drug slowed tumor growth.
Abgenics stock was up $3.53 at $12.90 a share, huge percentage gain there.
Sandisk (SNDK) $2.38 gain.
A $0.47 rise in Ebay (EBAY), tenth in volume.
Finally Comcast "A" (CMCSA) down $1.44. Third quarter earnings flat,
$0.10, same as year ago and the company said it lost 46,000 subscribers in
the third quarter.
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.
11/03/05:
Market Stats
DOW CLOSE 10522.59 +49.86 + .5
HIGH 10561.16
LOW 10470.49
NASDAQ COMP. 2160.22 +15.91 +.7
HIGH 2169.98
LOW 2153.20
VOLUME 1,998.2
PREVIOUS 1,997.9
UP VOLUME 1,138.2
DOWN VOLUME 840.6
DOW TRANSPORTS 3973.44 +45.40 + 1.2
DOW UTILITIES 394.22 +1.20 + .3
CLOSING TICK +103
S&P 500 1219.94 +5.18 + .4
S&P 100 561.40 +2.28 + .4
MIDCAP 400 715.10 +2.32 + .3
REUTERS/CRB 321.29 +4.84 + 1.5
NYSE COMPOSITE 7534.81 +24.99 + .3
VALUE LINE 401.34 +1.30 + .3
RUSSELL 2000 658.77 +1.72 + .3
DJW 5000 12218.27 +50.13 + .4
U.S. TREASURIES
5-YEAR NOTE 4.25%
Oct. 15,2010 98 22/32 -7/32 4.55
10-YEAR NOTE 4.25%
Aug. 15,2015 96 28/32 -10/32 4.65
30-YEAR NOTE 5.375%
Feb. 15, 2031 107 20/32 -22/32 4.85
LEHMAN BROS.
LONG BOND INDEX 1725.51 -8.51
DOW CLOSE 10522.59 +49.86 + .5
ADVANCES 1699
DECLINES 1586
NEW HIGHS 178
NEW LOWS 70
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
PFE Pfizer 21.87 +.27 +1.3
TWX Time Warner 17.66 -.24 -1.3
MRK Merck & Co 29.48 +1.07 +3.8
LU Lucent Tech 2.78 +.08 +3.0
Q Qwest Comm Intl 4.59 +.05 +1.1
CHK Chesapeake Energy 30.51 +.46 +1.5
SBC SBC Comm 23.52 -.39 -1.6
XOM Exxon Mobil 58.57 +1.19 +2.1
MOT Motorola 23.00 -.04 -.2
MU Micron Tech 13.87 +.60 +4.5
NASDAQ CLOSE 2160.22 + 15.91 + .7
VOLUME 2,364.8
PREVIOUS 2,223.4
ADVANCES 1666
DECLINES 1359
NASDAQ ACTIVES
GOOG Google 385.95 +6.27 +1.7
AAPL Apple Computer 61.85 +1.90 +3.2
QCOM Qualcomm 44.02 +3.64 +9.0
MSFT Microsoft 26.44 -.02 -.1
INTC Intel 23.89 +.60 +2.6
ORCL Oracle 12.20 -.28 -2.2
SYMC Symantec 18.52 -.85 -4.4
AMGN Amgen 77.51 +3.61 +4.9
SNDK Sandisk 64.51 +2.38 +3.8
EBAY eBay 41.55 +.47 +1.1
AMEX CLOSE 1694.21 + 13.00 + .8
INDEX SHARES
DIA DIAMONDS TRUST 105.29 +.59 +.6
QQQ NASDAQ 100 39.94 +.59 +1.5
SPY S&P DEP.RECEIPTS 122.27 +.52 +.4
STOCKS IN THE NEWS
SFA Scientific Atl 38.13 +1.73 +4.8
SBL Symbol Tech 10.12 +2.00 +24.6
CVS CVS Corporation 26.44 +1.95 +8.0
BDX Becton Dickinson 56.10 +4.35 +8.4
FMD First Marblehead 25.10 -7.29 -22.5
MRH Montpelier Re 18.55 -2.93 -13.6
JH John H Harland 37.50 -5.34 -12.5
PRU Prudential Finl 75.60 +3.81 +5.3
ANF Abercrombie &Fit 56.27 +2.42 +4.5
GES Guess? Inc 31.60 +3.60 +12.9
JCP JC Penney Co 53.40 +1.95 +3.8
CMCSA Comcast "A" 27.36 -1.44 -5.0
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