Market briefing---Bob (fast)
Gillette--- Su (fast)
NYSE---Deb (fast)
>> welcome to the final hour of “world financial report”. i’m bob bowden. general electric is selling financial guarantee insurance, its bond insurance unit, to a group led by mortgage insurer p.ministered group. the price tag is $1.9 billion. blackstone group and bank of america are backing p.m.i.. p.m.i. is assuming $100 million in debt.it’s part of g.e.’s plan to exit slower growing businesses, disposing of units that do not have leading positions in their markets. it plans to sell $10 billion worth of financial assets and get back to faster growth.
>> when you look at the stock today it’s trading at a discount to the s&p. i think some of that comes with the risk that’s entailed when you have a repositioning of the portfolio towards faster growth. when you do that you have more risk. as a result, people are a little bit concerned. but i think g.e. is up to the task. i think they’ll reposition the portfolio success flimpt i think you get back to the 10% to 15% growth rate as we move into 2005.
>> he expects g.e. to invest in faster growing areas such as hispanic television and medical forp technology. g.e. shares up two cents on the day. speaking of insurance, metlife profit rose 58% in the second quarter on increased sales in mexico. net income at the nation’s second biggest life insurer increased to $611 million or 84 cents a share. excluding certain investment gains and losses, per share earnings came in at 89 cents. wall street had expected only 70 cents a share. metlife’s expansion in mexico reflects the company’s search for revenue as u.s. profit growth slows. mexico contributed $62 million to second quarter after tax earnings. in the regular session, checking metlife shares, they finished up just one penny on the day to $27.36. in the extended hours we see, though, they are up 2 1/3 percent to $28. well, moving on, gillette, the world’s largest razor maker, is expected to report a second quarter gain tomorrow on stronger sales of batteries and ray zors. investors and analysts say they’ll be listening with interest to the company’s forecast. gillette has forecast battery demand will slow this year and there is new competition for its razor business. su keenan has more on gillette.
>> bob, gillette gets more than a third of its sales and more than half of its profit from razors and blades. analysts surveyed by thompson financial say strong sales of dura cell batteries and center three disposable razors will boost second quarter profit to 29 cents a share and that compares with 26 cents a share a year earlier. analysts expect gillette’s second half sales to be under pressure. bank of america’s william steel, one of 10 out of 15 analysts surveyed by bloomberg who rate gillette stock a hold, he says the biggest concern for the company is the competition to its razor business. analysts are watching closely as energizer’s recently acquired schick division prepared to roll out a new four bladed razor called the quantro. gillette faces sluggish sales and competitive pricing pressures in its battery division. last week rival energizer, the second largest u.s. battery maker, reported a 56% drop in third quarter, in part due to slower battery sales. now, analysts say gillette is forced to drop its dura cell battery prices to compete with energizer and rival rayovac which now offers more batteries per pack.
>> the battery market continues to deteriorate and there is no sign of a near-term recovery or even stabilization. number two, you have schick which increases more pressure on the overall sector with new products coming, with intuition and eventually quantro coming from schick and hurting gillette’s ability to be more and more profitable in that sector, their ability to raise prices in that sector, ability to manage their advertising budget in that sector.
>> that spells pressure for bill chapel, the suntrust robinsons analyst predicting gillette stock at best will trade in line with the industry group for the rest of the year. he has an weight or neutral rating on the company. bob, gillette reports earnings tomorrow morning before the market opens. we’ll be sure to have those numbers.
>> i know when the first double bladed razor came out. now they have triple blades. now schick is having a quadruple bladed razor. i shouldn’t be surprised. moving on, stocks rose led by telecom stocks and helped by rebound in treasuries that led investors to believe a bond market rout may be over. let’s get to the numbers as they finished on this monday afternoon t dow increased by 32 points to 9,186 on the saturday. s&p 500 up a little over two points, almost three to 982. the nasdaq fell 1.5 points to 1,714 on the day. checking volume, we see nyse volume at rounded off to 1.3 billion shares, that well below the 1.44 billion 30-day average, decliners beating advancers 18:12. nasdaq 1.55 billion shares, slightly less than the 1.59 30-day average. wilshire 5000 was up 1/10 of a percent, 10 points to 9,464. checking the fixed income group, we see that’s where the rebound came we just mentioned in the bond market, with a 10-year note gaining 24/32. on the shorter end of the curve we see buying action as well for the second straight session. currencies on the day, the dollar falling lower as you see there, down to 120.31 yen, and the euro/dollar finished at $1.1361 on the dampt moving on, the price of crude oil in new york fell after the u.s. army core of engineers said it probably would complete repairs on an iraqi pipeline that was takd last week. crude oil closing at $31.74. natural gas futures in new york dropped 5% in this one session on monday, to an eight-month low. mild weather from the mississippi river to the atlantic seaboard sapped power plant demand for the fuel, allowing utilities to replenish natural gas reserves. gold futures rose for the first time in five sessions in new york, rebounding from a two-week closing low on friday. gold closing at $349 an ounce. shares of qwest communications international gained 9% on the day. that’s because the fourth biggest u.s. local telephone company is in negotiations to sell its ooh wireless network. this news comes after qwest earlier announced plans to switch its one million mobile phone customers to sprint’s network. chief executive officer richard note a barring told bloomberg news that quest has several possible bidders but he declined to elaborate. qwest was not the only telephone related stocks making gains in today’s session. our deborah kostroun is at the big board with perhaps some of those others. deborah.
>> in fact, bob, we did see the telecoms. really it was the biggest gainer in the s&p 500 all day. as the market was making its turn around, reversal in today’s session, we did see many of the telecom stocks , obviously qwest a part of the picture. but verizon, look at the big gain there. verizon was one of the biggest net gainers at the new york stock exchange. the story with verizon and their unions actually representing 78,000 workers, looks like they at least are still in negotiations, averting a possible strike. so one of the reasons that verizon was higher in today’s session. health net, this is an h.m.o., in fact reporting their earnings after the close of stock market trading. you can see how they did in today’s session. second quarter e.p.s. climbing 24% to 63 cents per diluted share, versus the thompson financial estimate of 61 cents. you can see it sharply higher in after-hours. not only did they beat the thompson financial estimate but they also boosted their outlook saying their year e.p.s. $2.63 to $2.67, had seen it at $2.56 to $2.60. health net saying their second quarter plan enrollment of 50,000 versus the first quarter, however, the stock actually, you can see year to date it’s up 26% but it’s still underperforming the morgan stanley h.m.o. index which is actually up 47% year to date. so a little bit, as you can see, that’s actually today’s session. but year to date it’s actually up 47%. some of the other things in today’s session, we are talking about the turnaround. financials, one area of the market that saw this turn around. in fact, the one-day chart of the s&p diversified financial index looks very much like a one-day chart of the dow jones industrial average. of course, many of the financials, well, the financials comprise 20% of the s&p 500. so when you have strength in the financials, generally you have strength in the overall market. generally a pretty mixed picture for some of the financials. also obviously household products, some of the biggest gainers in the s&p 500. as mentioned earlier, gillette will be reporting their earnings tomorrow. monsanto also a big story in today’s session. this is the world’s largest developer of genetically engineered props. looks like their ratings were lowered by bank of america mainly because of legal costs stemming to its―against solutia, a chemical company that monsanto spun off in 1997. back to you.
>> our next guest said it made sense to be short on treasuries until now. but what’s the best way to invest in bonds at this point? we’ll talk with andrew bischel of s.a.b.a.k.capital management.
