Market briefing---Matt (slow)
H.P.---Carmen (fast)
NYSE---Deb (fast)
Currency markets
Interview: Investors Bank and Trust---Mazanec, Tim--- Currency Strategist
welcome to “world financial report.” i’m matt nesto. shares of hewlett-packard are higher in extended trade after the company said fourth-quarter net profit more than doubled from a year ago as the company made money in all four of its main business units for the first time since it bought compaq. net income rose to $86 62 million. revenue grew 10%, nearly twice the pace expected to $19.9 billion net earnings, 28 cents a share, earnings on a continuing operating basis, 36 cents a share and that figure a penny better than the thomson financial estimate. carmen roberts, who’s been tasked with sorting this out, joins us with details.
>> there are many numbers because hewlett-packard has many businesses. this is certainly an important quarter for c.e.o. carly fiorina who has said that the $19 billion purchase of compaq computer in may of 2002 would strengthen the company. for the past five quarters, h.p.’s two computer businesses, p.c.’s and enterprise, have lost money. this quarter she stopped those losses for the fiscal fourth quarter and says sales in the first quarter will rise 90% from a year ago. as analyst martin reynolds said before earnings were released, this is the first quarter we may see financial signs on whether the merger will work.
>> the merger really was about the enterprise systems and personal computers. services and printers were separate and successful business units. if they can deliver revenue, growth against dell and a measure of profitability over the next couple of quarters, we’ll think they’re turning where they need to be.
>> looking at h.p.’s four main businesses, how they came out for the fourth quarter. enterprise systems, which has been losing share to competitor, earned operating profit of $106 106 million on revenue of $4.1 billion. services was $391 billion of profit on sales with 3.2 billion. personal systems or mostly p.c.’s earned 21 million in profit and h.p. lost its number one position in that area to dell earlier this year. for imaging and printing, h.p.’s crown jewel, profit topped $1 billion for the first time on sales of $6.2 billion, also a record. record. shares higher in after-hours trading, up fractionally there after rising 3% today. even with the better-than-expected earnings, many investors want more proof that the merger is working. maria thompson who helps manage 100,000 h.p. shares at clark capital management said h.p. made headway with the merger, but has work to do and that the restructuring has taken longer than expected and the outlook is still questionable. h.p.’s conference call just getting underway right now. if there is any news, we’ll have it for you.
>> somehow i believe you. thank you very much, carmen. deb kostroun is at the big board today tracking the action there where the losing streak is over, i understand.
>> finally, after four days being lower, the market rebounding and getting back to a position where it’s comfortable, or at least the area in the market, the 97, 9800. i was talking with peter mancuso, performance specialists, and he said we’re in the quasidecember holiday mode already as things slow down around the thanksgiving holiday, into the christmas holiday and towards the end of the year as many people are looking at the gains we have had this year up to now and looking at good performances. market rising for the first time in five days led by g.e. g.e. said it’s going to return to double-digit profit growth in 2005. really planned to have little or no gains in 2004 and that profit going to be helped by its i.p.o. of most of its mortgage and life insurance companies. they’ll have a 30% stake in genworth financial for that high i.p.o. and the s&p capital goods index, for the second day in a row, the biggest gainer in the s&p 500 and g.e. the biggest gainer in the daej for the past two days. and telecom among some of the biggest losers and remember, starting monday we have that f.c.c. rule going into effect on number portability which means that cell phone users can switch carriers without switching numbers. we have that coming up. a lot of marketing promotions coming out of that. utilities outperforming the rest of the market in today’s action. you see it performing well. looking over the past month, utilities have been trending lower and today trending higher so hitting a low spot there. also, firstenergy, a government report saying their failure to monitor their electric transmission system or to keep trees from touching power lines leading to the blackout we had in the northeast in august so firstenergy one of the few utilities that was lower. back to you in the studio. >> i’ll take the courtesy and take a look at how the indexes have finished here today. as we said, the losing streak over. the dow, s&p and nasdaq all higher. .7%, .8% and .9% respectively. volume about average on the new york stock exchange, 1.3 billion shares. nasdaq volume a little bit on the light side, 1.8 billion shares, almost traded there with rising stocks outpacing those that fell. and the wilshire 5000 index, .7 .75% higher today. both the 10-year and five-year note in the bond market under pressure today. today. bonds down the as a result of housing starts up, the fastest pace since 1986. you see the dollar buying a little bit less yen. you get a little less yen for your buck right now, 109.26. euro and pound little changed on the day. talking about currencies, the yen with its biggest drop in eight months after the bank of japan sold its currency in a bid to slow the advance and protect an export-led recovery. how many times have i said those words? the dollar rose a day after it fell to a record low versus the euro and joining us to discuss the day’s market, tim mazanec with investors bank and trust in boston. “nikkei english news” reports that the japanese government and bank of japan sold one trillion yen, or $9 billion worth of their currency. is this number possible?
>> it is possibly right and that shows how strong the trend is for a weaker dollar and there’s multiple reasons why. the treasury data, the report on the fact that the u.s. may impose quotas on chinese textiles and other manufacturing objects. yes, so that has been the trend, a stronger yen, stronger euro, stronger canadian dollar. most currencies this year are rallying against the dollar.
>> $9 billion, let’s talk in dollar terms or a trillion yen, call it what you will, took the market from 107.50 to 109. is that a good investment?
>> no, probably not. what they’re looking at is obviously ex porters out of japan. if you look at the previous tankan survey, most traders -- it will take a lot more money to get us back up to 115. they know if we can get back down to 108, it will take a lot more money to get back to 115.
>> at what level does dollar weakness invoke a response from the u.s.?
>> not for some time to come. that’s a political question. all these things we’re seeing right now with the trade in chine and the yuan flexibility, bush is gearing up for a presidential run for next year and i think the question right now is when will other countries such as the euro zone, germany and other countries, when will they speak up and say, hey, the euro’s too strong for our companiesex porting products. but as we head towards un20, that voice is picking up. >> how and when can the b.o.j. intervention stop?
>> don’t expect it to stop. it has been frequent this year. and i think it will be frequent. they will come in when they deem necessary.
>> thank you very much, appreciate you joining us here today. ggood to get your insight, the senior currency strategist at investors bank and trust. stick with us, intel is gearing up to host its fall analyst meeting tomorrow. we’ll take a look at what the chip giant might have to say to wall street. rick whitington,
