Market briefing---Bob (medium)
Martha Stewart--- Su (fast)
NYSE---Deb (fast)
>> welcome to “world financial report.” i’m bob bowdon. microsoft must pay $521 million to the university of california and eolis technology. a jury decided patents were infringed by the internet web browser. the plaintiffs argue their method of allow ago browser to access interactive applications was critical to the success of explorer. they have sought as much as $1.2 billion, claiming the adventure let microsoft compete with netscape that is owned by aol time warner. microsoft plans to appeal the ruling. checking the stock in the regular session, it was up three cents stao r to $25.61. in extended hours, up eight cents. aol time warner chairman and chief executive officer richard parsons considers changing its name back to time warner. a spokesman said the c.e.o. of the company’s america online division made the request. he argued keeping aol in the name creates confusion among consumers and in the press. a number of longtime time warner executives supported a name change as america online faces subscriber losses in a federal accounting probe. shares have plunged 66% since america online’s 2001 purchase of time warner. shares are up 2% today. a management clash put time warner executives in control of the company. the board may consider the name change next month. shares of martha stewart living omnimedia closed 2% lower after profit tumbled. the company said second quarter earnings plunged 86%. it’s also lowering its outlook. su keenan has more on that story.
>> bob, the company said it expects the properties that use martha stewart’s name to remain closed under pressure until criminal charges are resolved. one analyst says an up front analyst discussion of such issue sincere one thing that stood out in the conference call. there was one other change. the first time since the company went public that martha stewart was not on the call. this is the first quarterly earnings report since the founder and namesake was indicted on obstruction of justice charges. she has since stepped down as chairman and c.e.o. the trial is set for january. a quick review of the numbers. second quarter profit dropped 86%. revenue fell 16%. sales across all business units, merchandising, television and publishing were down. on a per share basis, as you see the company earned two cents a share. that compares with 14 cents last year. the company says a 40% decline in magazine ads, a major source of the company’s revenue, will hurt third quarter sales. martha stewart living predicts a third quarter loss of twice the six-cent loss forecast by analysts at thomson financial. a look at how shares performed today. at one point they dropped more than 5% in early trading. they recovered most of the loss half the loss by the close. down 1.75%. morgan stanley analyst douglas arthur says the cash position remains strong. he says this buys the company time to weather the psyche loan. he rates it underweight based on what he calls a lack of positive indicators such as stability in the advertising pages. more critical view of the company comes from a manager of $110 million. he says the decline in martha stewart living stock―he shorted the stock $18 last year and closed his position when the stock fell from this level down to $10 a share late last year. he continues to be the company’s reliance on k-mart in a weak retailing environment as the key vulnerability. he says “i did see k-mart was not a healthy partner and that hasn’t changed.” revenue from merchandise took the steepest drop to $11.8 million. martha stewart omnimedia is downplaying the founder’s image such as launching a magazine that doesn’t bear her name. her fall and stature appears to be hurting her cbs television show. this is a one-hour show that the network is moving from the morning to after midnight slot. it runs close to 2:00 a.m. here in new york. shares are down 20% year to date. bob?
>> su keenan on martha stewart. this newsbreaking after the closing bell. pacific sunwear’s second quarter earnings came out. net income of 26 cents a share, a penny better than wall street expected. revenue came in at $324 million. in the regular sessions, the shares were down over 1%, down 35 cents to $30.20. in extended hours, we see they’re up, however, after beating earnings and revenue expectations. up 10 cents to $30.30. well, treasuries fell today on speculation that the federal reserve will say that economic growth is accelerating. that boosted expectations it will raise rates in the coming quarters. checking the 10-year and five- year notes, selling in both of those notes, down 21 and 11/32 respectively. similar selling action in the shorter end of the curve. three-year and two-year notes down 7/32 and 4/32. stocks were higher across the board. semiconducter and industrial shares led the gains. let’s get to the closing numbers. dow up 26 points to 9,217. s&p up three points to 980. nasdaq leading percentage gainer of the day, up 1%, 17 points. nyse volume very light. just over one billion shares traded. that well below 1.4 shares in the 30-day moving average. advancers beating decliners at nasdaq. wilshire 5000, broadest look of the u.s. markets. up .4% or 38 points to 9,431. well, the dollar fell to a three week low versus the yen on speculation that a government report out tuesday will show japanese economic growth picked up in the second quarter. today was the lightest volume this year. deborah kostroun has been at the new york stock exchange tracking the action or lack of it as we have been saying earlier in the program. she’s here with a wrapup.
>> bob, obviously a lot of kind of wait and see attitudes that we were getting from the trading floor today. that as many people wait to see what the fed will do and what comments the fed makes tomorrow at its fed policy making meeting. ken shapiro, manager of $450 million at condore capital management, says the federal reserve meeting is certainly coming up and people are not expecting a change in the interest rates. what the fed comments will be likely about early signs of a recovery in place. one area he points to is technology stocks . he says they have gotten beaten up the last couple of weeks but people feel tech is an area that does a little better in a recovery. the tech sector definitely has potential. we saw that in today’s session. look at utilities. this is one of the underperformers in today’s session. in fact you can see that dow utility average was lower. while we had the dow jones industrial average up 26 points on the day, some of the utilities lower. also transports actually. one of the outperformers doing quite well in today’s session. airlines performing quite well. delta airlines, their top five executives will forego bonuses. that came out near the close of trading. tobacco is one area that performed quite well. as we were mentioning, the technology area last week was not that great of a performer, but today we really saw the technology doing quite well. oracle, we’re hearing the merrill lynch report that oracle is lickly to do better in the economic recovery. earnings from applied materials. that helping semiconducters in today’s session. back to you.
>> every day is deborah kostroun day at bloomberg television. thank you for that. moving on, the price of crude oil in new york fell on slowing demand for gasoline in the u.s. they closed at $32 a barrel. gold futures had their biggest gain in two weeks, closing at $361 an ounce. well, bloomberg news exclusive. u.s. and canadian authorities investigate whether a former merrill lynch employee embezzled $43 million and disguised it as an energy trade. daniel gordon allegedly laundered the money three years ago and sent it to the caribbean company he controls with the help of a canadian banking consultant. merrill lynch has not disclosed the loss in financial filings. civil court papers last month said it recognized the possibility of the alleged fraud. a spokesman says the company was unaware of the alleged theft until last october and says the company is fully cooperating with law enforcement officials. mr. gordon is now chairman of datacom, a legal document storage company in connecticut. he didn’t respond to interview requests. merrill lynch is a passive minority investor in bloomberg l the parent of this network. when we come back, we talk about cisco, the largest north american distributor of food. that is sysco.
