Market briefing --- Mate (slow)
Goodle --- Bob (fast)
NYSE --- Deb (fast)
Verizon --- Reporter (slow)
welcome to “world financial report.” i’m matt nesto. topping our news, google, a price range finally set. the company behind the most-used web search engine says it plans to raise as much as $3.3 billion in its initial public offering. bob bowden has been tracking that story and has details. bob?
>> thank you. the news broke at about 9:00 a.m. this morning, new york time. an s.e.c. filing showing google will sell 24.6 million shares to investors for a price of between $108 and $135 a share, an i.p.o. value in the range of $2.7 to $3.2 billion. google is only selling a 9% stake to investors. this pricing action values google’s overall market cap, therefore, between a range of $29 and their 36 billion. it’s useful to compare google’s valuation to yahoo. the $39 to $36 -- $29 to $36 billion valuation is within striking distance to yahoo’s $37 $37.5 billion value. both companies more than doubled their revenue in the first half of the year compared to the year before with yahoo’s revenue growth larger than google’s, as its revenue number and market cap, higher than the google figure. an i.p.o. attorney who has helped in i.p.o.’s of broadcom and geocities says google is a solid company selling shares at a high price.
>> these are some big numbers and that’s a huge valuation and numbers we haven’t seen in quite some time. i think there will be incredible scrutiny from wall street on this company. but it’s a market leader with dominant technology and hot management team. i think it has staying power.
>> google did not say when its dutch-auction-style i.p.o. would be held. it plans to list the class a shares on the nasdaq under the symbol goog. the company has stated it expects profit margins to decline as growth slows it and it invests in product development. it plan plans to acquire a company that makes software for organizing and storing digital photos. new services will be critical for google, according to one portfolio manager. he says that’s because slower growth in internet advertising is likely.
>> i think it can only be natural that yahoo and google will see some deceleration. it’s been a great advertising climate in the past six to 12 months for internet advertising. you have the election and sports advertising on the internet. there’s pricing pressure to the upside for those using advertising on the internet. i think there will be deceleration in the growth rate.
>> checking shares of yahoo, they’re up 24% year to date. they had been trading lower earlier in the session but have fought back to edge a two-cent gain by the end of the regular assassination an hour ago.
>> i just looked up. bob bowden, 9100 hits when you google yourself. interesting statistic. let’s give you the closing numbers today. if we look at the markets , little changed. the dow statistically unchanged, almost the same for the s&p 500 and nasdaq, the worst of the three, down a full .5%. on to bonds we go, down a surpriseing increase and continued strength in the housing market , yields pushing higher. the dow and s&p ended almost unchanged today. it was choppy throughout. deb kostroun was there at end and has details.
>> we didn’t klez on the lowest delve of the day, near the unchanged level. the big concern is that earnings will slow in the second half of the year. we know second-quarter profit as we finish up the earnings in the s&p 500 companies, likely up 24% and third-quarter profit up 14.8%. that, a dramatic downward trend from the second to third quarters. we also have the g.d.p. report coming out on friday, likely to show a slowdown in the second quarter, especially compared to the first quarter. also, the major averages as we close, technically weak, below the 200- and 50-day moving averages, not only on the dow and s&p, but also the nasdaq. telecom, the best performer in the s&p 500 today. bellsouth, the third largest local telephone company, they said second-quarter profit coming in a little bit better than analysts estimates. talk that at&t might be up for sale according to “newsweek.” as we look at are the areas in the market , focused on crude oil. although crude oil in the $41 to $42-a-barrel area, it was lower today, but oil services performing well. pharmaceuticals, a large drag on the market . schering-plough at a 52-week high, however. glaxosmithkline report earnings tomorrow. the food and drug administration approving merck and schering-plough’s vitorin, a combination of two medicines and the companies say could be more effective than pfizer’s lipitor. pfizer, lower on all that news. back to you.
>> thank you very much. moving on now to verizon. the company may post record mobile phone sales in the second quarter, the largest provider of phone services in the u.s. expected to announce that sales at the mobile unit increased 21%, according to analysts’ estimates. profits, however, probably fell to 60 cents a share down from 69 a year ago due to a drop in revenue from the fixed-line business. joining us now is our bloomberg news reporter with details and a preview of what’s on tap for tomorrow. so the number is up for a decline, but increase continuing the pressure and importance of the mobile phone verizon wireless unit.
>> right. the mobile phone revenues are expected to go up 21% according to analysts whereas the fixed-line division’s revenues are suppose to drop 3.1% and that continues the trend we’ve seen of big local phone companies such as verizon losing revenue from that latter business while the mobile phone revenue gains and in the case of verizon, it’s a real powerhouse.
>> what are we expecting verizon to say to explain their results tomorrow?
>> what they’ve said in the past is they’re adding customers due to their reputation. they like to say how many awards they’ve won and customers they’re adding and people are signing on to services and still benefiting from a u.s. government rule that was instituted back in november that allows people to keep their phone number when they switch from one cell phone carrier to another.
>> is that part of the reason why verizon―that wasn’t only them that was able do the number portability, but what is the reason behind the fact that they’ve added 1.5 million subscriber that’s wireless division?
>> it’s a combination of having the reputation among consumers, getting the wireless number portability rule instituted and being in front of competitors in that and having a competitive product offering and not having the bad news that some of the other carriers have had, such as at&t wireless, which had some problems with its billing software and systems and that sort of thing.
>> just for the record, remind us who verizon’s partners are in its wireless operation.
>> verizon wireless is a joint venture with 55% owned by verizon communications and the other 45% owned by vodafone group p.l.c. of the u.k., the world’s largest operator of cell phone service.%
>> if i recall from my time in london, one of the 100 million subscribers. finally, scott, what are the quarterly profit numbers analysts are looking for exactly.
>> it’s looking for about 60 cents per share in the quarter compared to 69 cents in the year earlier period because the fixed line business is still declining and the mobile phone numbers are not rising fast enough to make for an overall revenue increase.
>> thanks, appreciate you joining us. that’s on verizon due out tomorrow. sunoco’s profit nearly tripled. we’ll hear from the c.e.o. on what’s next for this oil company company.
