tv Nightly Business Report PBS July 21, 2010 12:00am-12:30am PST
>> tom: iphone, ipad, i-anything-- apple blows the doors off quarterly results with a 75% jump in earnings. >> susie: revenues too, are strong to the core-- up 61%. apple's results, what they mean for tomorrow's trading, and for the rest of the tech sector. you're watching "nightly business report" for tuesday, july 20. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> tom: good evening and thanks for watching. relief will soon be on the way for 2.5 million americans who've lost their unemployment benefits. susie, the senate today cleared a measure to extend those benefits. >> susie: tom, two republicans joined 56 democrats and two independents in voting for the measure, breaking the senate stalemate with a 60 to 40 vote. the house is expected to take up the measure tomorrow, and send it to president obama's desk next week. >> tom: democrats and republicans both agreed the benefit extension was needed, but they disagreed on how to pay for its $34 billion cost. as it stands, new borrowing will pay for the measure.
>> what we do not support and we make no apologies for this is borrowing tens of billions of dollars to pass this bill when the national debt is spinning completely out of control. >> tom: there are almost five million americans getting a weekly unemployment compensation check, and every week, wall street tracks initial claims for unemployment to get a feel for the job market. but what about people who have used up their benefits? that number hasn't gotten much attention. there is a limit on unemployment insurance and, as darren gersh reports, many people have hit it. >> reporter: the official figures will tell you there are 1,371,000 people like randy moe. >> i was unemployed, laid off, august 15, 2008, and collected benefits till about six weeks ago. >> reporter: that's because moe hit the limit on benefits. in most states, that's 99 weeks, which is why many of those who have run out call themselves "99ers."
>> we've become thrown away people. they're losing a lot of valuable people, the country is. >> reporter: randy moe found other 99ers online. a dozen meet regularly in this chat room. they talk about finding a job and about lobbying congress for help. they're part of a grassroots movement to add what's called a tier five to unemployment insurance-- another 20 weeks of benefits. scott mathewson organized tier five to survive. >> we've never asked for a handout from anybody and we're being kicked in the teeth by congress, because they're running scared for their jobs. >> reporter: just after we talked to randy, his new t-shirts arrived in the mail. the unemployed are organizing. the 99ers in this chatroom watched today's senate action, hashing over every word, every vote. >> it's pretty depressing, because no one is mentioning the 99ers in any of the arguments going on.
>> reporter: cindy payoletti's 99 weeks ran out march 28-- the day her last check came. >> right now, we're at a point where we'll never see a normal life again. you know, we'll never get back to where we were. the longer we're left with no job and no safety net, the deeper in debt people are going. >> reporter: the 99ers are hoping to convince a member of congress to sponsor a bill creating a tier five unemployment benefit. but even if congress adds another 20 weeks to unemployment insurance, the 99ers we spoke with don't think it will be enough. they expect the job market will take much longer to recover. which is why randy moe is making other plans. at 59, he's trying to find a way to bridge the time until he can retire. >> that's plan b. i lived in a van 30 years ago, and i'll probably end up doing it again. >> reporter: darren gersh, "nightly business report," washington.
>> susie: here are the stories in tonight's n.b.r. newswheel. stocks turned a negative open into a positive close-- the dow ended up 75 points, the nasdaq added 24 points, and the s&p 500 rose 12. trading volume rose on the big board, and also at the nasdaq. builders broke ground on fewer homes in june-- housing starts tumbled 5% last month to their lowest level since last october. but in a hopeful sign, permits for new construction were up just over 2%. b.p. today kicked off a corporate garage sale of sorts, inking nearly $9 billion in deals. the biggest one-- $7 billion in assets to apache corp, including properties in west texas, new mexico and egypt. b.p. is also selling $1.7 billion in assets to pakistan and vietnam. proceeds will help fund b.p.'s gulf cleanup efforts. and b.p. was on the agenda today at a white house meeting between president obama and british prime minister david cameron. after that meeting, cameron said
he understands americans' anger over the gulf spill and said b.p. must be held accountable. >> tom: still ahead, this chicago duplex is getting a new lease on life with help from uncle sam. we look at a plan rehabbing foreclosures and reselling them. >> susie: apple was the top banana after the market close today. the stock surged more than 3% after the company released stunning quarterly results. apple earned $3.11 a share, 40 cents more than estimates. net income jumped 78% in the fiscal third quarter. revenues were also better than expected-- up 61% to a record $15.7 billion, a billion more than analysts expected. for more analysis, we turn to our in-house technology guy, scott gurvey. scott, wow, that was some quarter. >> it was a blowout
quarter for apple, and reason has to be all of the gadget products which every fan has to have. apple sold 8.4 million iphones. it sold 3.3 million of the new ipads, and it also moved respectable numbers of macintosh computers and ipod music players. steve jobs promised more new products in the second half, and apple's stock soared in after-hours trading. now the question is will the apple shine rub off on the rest of the tech sector, most specifically on microsoft. jim yen of staple standard and poor's says he expects a good report from the company. >> the main driver for this quarter's results is increase of p.c. sales, mostly by consumers. and i.b.c., and other industries analysts thinking that p.c. grew in excess of 20% the first half, and the increase of
window 7. >> susie, while microsoft is certainly happy with the uptic in computer sales, and the uptake of window 7, it has caught the eye of lots of consumers in the world. >> susie: let's talk mour about apple. he said it looking ahead to the rest of the year. it also expects strong sales. you know better than anyone that apple always low-balls it's guidance. >> the guidance they did offer in their conference call and in their statement today came in on the high end of what the current consensus are. they often low-ball it. so they're confident they can make it, if not beat those estimates. >> susie: it looks from the apple iphone 4 sales that you just reported about, that this whole issue about reception issues and the antenna, don't seem to be a problem. consumers are still buying? >> absolutely.
you have to note this happened really towards the end of the quarter, really so it has only built en the last couple of weeks, leading up to the apple announcement about the case and whatever. however, they were asked about that again on the conference call, and they said they're able to sell everything they can make right now. so they're not seeing any decrease in demand. >> susie: now, what about some of these -- what conclusions can we draw about what is going on in technology these days? we've had good earnings from intel, and ibm is mixed. what is the conclusions you're drawing from all of this. >> you're always comparing apples and oranges -- i hate to make the pun. these companies are all very different now. they service different markets. intel is doing well. it makes the chips that go into everything. apple very much a consumer company. microsoft still selling to
businesses, selling operating systems. ibm services solutions. different markets, different problems. >> susie: and since it is selling, since apple is selling to consumers, can we draw any conclusions about consumer spending, or is apple a special case, people will pay the money because it is from apple. >> people will pay the money because it is apple. it is the cool product to have right now. no question about it. i'm sure everybody else in the consumer electronics sphere of things would love to emulate that brand success. >> susie: thanks a lot, scott. and that's scott gurvey reporting. >> thanks.
>> susie: well, it's an interesting view turn on wall street today, tom, with the dow coming back on the positive. it will be very interesting to see what happens. we were just talking about apple, if that sets the tone for trading tomorrow. >> tom: absolutely. lots of positivey. and negative around yahoo. among those things we'll get to in tonight's "market focus." it is the peak weak for earnings, giving the markets plenty to digest. a weak start to the day thanks to a series of revenue misses and a drop in new home construction gave way to afternoon buying.
in addition to apple, after the close, yahoo's profit edged past estimates by a penny. but revenues were lighter than expected and the company saw online display advertising weaken in june. shares came into the report cautious, and sold off more than 7% after hours. despite the anticipation for all things apple, it was material stocks that drove the markets higher, especially steel. iron ore producer cliff's natural led the way, up better than 8%. its earnings come out a week from tomorrow. u.s. steel is due out a week from today, and thursday, nucor earnings will hit the street. u.s. steel and nucor are at one- month highs. bank earnings clouded the market early on and there's a few more to come. goldman's drop in profits from a year ago was not a surprise, but making the drop larger was its big settlement with the securities and exchange commission over disclosure in a mortgage bond derivative deal.
shares were climbing, though, rallying to their highest price since last april. state street bank saw a bigger rally, jumping almost 6%. shares are up 20% since earlier this month, when it said its second quarter was stronger than anticipated back then. and here are the results. stronger fees for its asset management business fueled the rise in profits, as earnings matched its guidance given two weeks ago. three more banks are due to report earnings tomorrow-- wells fargo, morgan stanley and northern trust. it was a mixed performance for these three. healthcare was the leading losing sector, with johnson & johnson as the second biggest percentage decliner of the dow industrials. profits came in as expected, but the disappointment was a cut to its yearly profit prediction, thanks to its recall of several over the counter medicines. the cost of the recall hurt shares, dropping more than 1.5% on stronger than usual volume. the stock is just $1 above its 52-week low hit in june. pfizer was the third worst performing dow component, falling after suspending
experiments with a drug to treat back pain and nerve damage caused by diabetes. the f.d.a. asked for the suspension. the drug will still be tested for treating cancer pain. more evidence of the strength of the consumer in the past quarter, from soft drinks and snacks to motorcycles. pepsi earnings beat the street by a penny, helped by its purchase of its two biggest bottlers. harley-davidson's results blasted through predictions, with its financial services unit returning to profits. this is a one month high for shares. fellow motorcycle maker polaris, which also makes snowmobiles, also had a much stronger than expected quarter with higher sales and margins. and that's tonight's market focus.
>> tom: tonight, we continue our new segment with thestreet.com, looking at investment ideas ranging from mutual funds and e.t.f.'s to small-cap and under- the-radar stocks. we call it "word on the street." and tonight's word is gold. it dates back millennia, but is it an investment for the ages? joining us now from the nasdaq, alix steel. she's a reporter at thestreet.com. >> tom: welcome to "nightly business report." >> thank you for having me. >> tom: has gold changed from a defensive investment to more of an offensive growth-type of investment in this environment? >> that's an interesting question. i think that gold is playing defense and offense, which is what makes it a really interesting metal right now. you have the golden bugs being gold as protection against world disaster and currency devaluation.
but on the flipside, ever since gold has popped from $285, to a record $1262 an ounce, they're playing offense. they want a quick-turn profit. >> tom: you mentioned that significant rally we've seen in gold over the past decade. clearly eight histor it has beea tear. i want to look at gold versus s&p 500. when gold became legal for americans to own it, back in 1975, gold is it 5%, and the s&p 500, including dividends, has performed twice as good. so why be a buy and holder for gold? >> first of all, you have to pick the right stocks to get the right profit. what if the s&p fell 10% and gold fell 5%. you're actually preserving your wealth better. i'm not saying to have 100% of your portfolio in gold. you're looking at 3% to 5%
in gold. you're going to want to buy it to hedge inflation and offset those risks in equities. >> tom: about the age of an invest? how do that imagery pact how they should approach gold? >> there are many theories on how and when to buy gold. the one i laid out in my article is you buy gold based on how old you are. the first step is under 30 crowd. you have to work for 30 plus years before you can retire, so you can take op a lot more risk. you can bet big in order to win big. that means the big gold mining stocks. they're responsible for producing, developing, and selling the precious metals. but they come with a lot of risk. they can have 3 to 1, if gold rises 10%, gold stocks can rise 30%. >> tom: alex, what if we don't have three decades for retirement. you're in the thick of your career. >> in the thick of your career, 30s to 50s,
you want a little risk and a little bit of safety. there are three physically backed gold e.t. s.s in the united states, and basically for every share you own, you own 1/10 of an ounce of gold. there is a controversy if they have the gold they say they have. you definitely want to do your homework. but this is a really safe way to own gold. you don't have to stor it or worry about the risk and you're basically playing the gold price. >> tom: alex, thanks for the ideas. always great to catch up with the word on the street. it is alex porter, she is a reporter at >> susie: here's what we're watching for tomorrow: president obama signs the financial regulatory reform bill; fed chairman ben bernanke gives his semi-annual testimony on the economy before the senate banking committee. also, this man used to work as a construction manager, but he's been unemployed for two years. now, he's being advised to take early retirement. details in tomorrow's "money profile" series. looks like the obama
administration's plan to help struggling homeowners seems to be stalling. new data show more people are dropping out of the program than those who are getting help. 91,000 homeowners cancelled their loan modifications last month. only 50,000 got new modifications. dropouts climbed as borrowers missed loan payments or didn't turn in required paperwork. the administration says many of those homeowners are finding help through other means. >> tom: activist investor carl icahn still wants a bigger piece of lionsgate entertainment. today, he lowered his once- hostile takeover bid for the company to $6.50 a share, down from $7, but this time lionsgate is considering the offer. this ends a 10-day truce during which both sides discussed adding icahn's reps to the board at lionsgate. icahn said those talks led nowhere. euquu
>> susie: amazon says it's now selling more e-books than hardcover books, and that has tonight's commentator thinking about a major change underway at the nationraries. here's harry lin, president of the technology startup taaz.com. >> it's reported that next month, the new engineering library at stanford university is going to open, and that library will have 85% fewer books and periodicals as the old library its replacing.
85% fewer books and periodicals. all that information will instead be digital, in an online format for students and professors to search and download. no stacks and stacks of paper- smelling books. no banks of card catalogs. no shelves full of magazines and journals. just computers. now, generally speaking, i love technology, but i can't help but feel a sense of loss about this library. i recall many intriguing, meandering discoveries amid the bookshelves of the libraries of cornell university, my alma mater. analog findings sparked by my fingers and eyes searching through the shelves. interesting hand-written notes from previous borrowers in the pages of the books. and, yes, even the smell. hot plastic doesn't smell like a library to me. but there are excellent, logical reasons for stanford's decision. engineering formulas change all the time, making books and periodicals quickly out-dated. the power to keyword-search massive numbers of pages. plus, there's space-savings and, heck, kids these days do
everything digitally. and i suppose you can take a nap in front of a laptop just as easily as in a study carrel. i'm harry lin. >> tom: many communities around the country are dealing with the problem of foreclosures. some of them are dealing with it using money from uncle sam. the federal government has set aside six billion dollars in grants to buy up foreclosed properties and resell them. the question is: will people want to buy in neighborhoods where foreclosure has become an epidemic. diane eastabrook reports. >> reporter: in the chicago lawn neighborhood, a duplex is getting a new lease on life with help from developer karry young. >> we put in hardwood floors, we put in plywood and then carpeted. >> reporter: this duplex is one of 80 foreclosed properties the city of chicago purchased, rehabbed, and hopes to re-sell to low and middle income buyers. the city paid $22,000 for this building, which young gutted and completely overhauled inside and out. >> how much do you think you could possibly get for it?
>> i think this building is appraised for something like $200,000. >> reporter: chicago is funding this effort with $55 million in grants from the government's neighborhood stabilization program. the program rehabilitates neighborhoods hard hit by foreclosures. this neighborhood-- which covers about four square miles-- has had more than 7,000 foreclosures in the past couple of years. still, deputy commissioner of community development ellen sahli says the area has a lot going for it. >> we have some of the best housing stock in some of the neighborhoods that we're working in, and with the other kinds of city investment that have happened in those neighborhoods, it does make it an appealing and attractive home to purchase. >> reporter: buying up foreclosed properties may be one of the few options left for communities trying desperately to stabilize at risk neighborhoods. here in chicago lawn, loan modification really isn't working anymore because too many homeowners are either unemployed, underwater on their mortgages, or both. last winter, we told you about volunteers going door to door in
chicago lawn, encouraging at- risk homeowners to restructure their loans through the government's home affordable modification program, or hamp. roughly 90 homeowners got their mortgages modified-- about a fifth of the number the volunteers tried to contact. that was a disappointment for donna stites, whose not-for- profit helped coordinate the effort. her community group is now thinking of buying foreclosed properties and reselling them, but she believes the idea is risky. >> ultimately, you have to know that you can purchase the property, rehab it, and sell it at a cost that at least allows you to break even. >> reporter: geoff smith of chicago's woodstock institute says there also have to be potential buyers. he's been tracking foreclosures in the city for nearly a decade. he wonders if potential buyers will want to live in areas where boarded-up homes dot nearly every block, or if buyers will even be able to get loans. >> there are a lot of people out there who are trying to buy properties, but they just don't qualify for mortgages. and the people who do qualify are perhaps not interested at
this point in buying because they don't see the end of the turmoil in the housing market, and they don't want to invest in a property and, in two or three years, see it still be worth less than what they paid for it. >> reporter: so far, the city of chicago hasn't sold any of the foreclosed properties it purchased and rehabbed, but it says buyers are within days of closing on a handful of homes. diane eastabrook, "nightly business report," chicago. not just in chicago, but many other communities around the country. >> we've seen that nationwide, unemployment and the difficulty in paying those mortgages. >> susie: that's "nightly business report" for tuesday, july 20. i'm susie gharib. good-night everyone, and good- night to you too, tom. >> tom: good-night, susie. i'm tom hudson. good-night everybody. we'll see all of you again tomorrow night. "nightly business report" is made possible by: