Investment banking fees---Mike (fast)
Earnings report---Dane (slow)
>> when it comes to investment banking fees in the third quarter, who’s number one? merrill lynch. the top spot in wall street’s rankings for commission frunds writing stocks and bonds on advising on mergers. the world’s biggest firm by capital made $539 million from investment banking followed by goldman, citigroup and morgan stanley.
>> hopfully translites to good revenues and good earnings as well. with the drastic expenses it’s really important it drops to the bottom line if we just see revenue grow.
>> stock market gains helped boost merrill’s earnings to the second highest quarter on record. profits increased after chief executive stanley o’neill eliminated 18,000 jobs and focused on the most lucrative businesses. it ranks seventh in new deals in the latest quarter. and that suggests merrill’s ranking may decline since fees are paid when a takeover is completed. one investor says he’s waiting to see how they perform when venture capital picks up.
>> i think that’s a piece of business that leads to further improvements in capital market a tivety. the question is will merrill be able to capture that number one ranking.
>> still, some of the biggest u.s. investors have been buying merrill shares and reducing their holdings in morgan stanley. they clind fidelity and the fund manager groups of citigroup and morgan stanley itself. it should be noted that mir rillslinch a massive minority investor in bloom bers l.p., the parent of bloomberg television. david dorman says prices of long distance telephone calls and date fa transmission is falling that’s expected to hurt third quarter earnings at the nation’s biggest long distance carrier when it reports tomorrow. it would be the 15th straight quarterly sales decline. for a closer look at at&t and what’s expected, let’s bring in dane that. what hurt at&t sales in the third quarter?
>> well, among other things, they’re having trouble from the sluggish u.s. economy. in particular, the lack of job growth. that hurt the company on a couple of different fronts. its corporate customers, commr main business, firing workers, they simply don’t need as many phone lines. and then, offing, with consumers out of work, they’re less likely to spend on at&t’s consumer long distance offer. then finally there’s one other factor, which is consumers are using email and fireless phones for what they used to use regular long distance phones for.
>> what’s the outlook for the rest of this year then?
>> the comments you alluded to, some investors i spoke to says he talked about increasing pricing pressure come out of the third quarter, which some read as a sign from him that in, you know, in the end of this year decreasing prices which have plagued the company for years now may be continuing.
>> what does he then do to manage that in this environment?
>> folks i’ve spoken so to the have said the most he can do, and what he is doing, they say, is cutting costs aggressively. he’s reducing the company’s head count by 9% this year that. comes to about 6,000 workers. he’s also cutting the debt dramatically. that peaked at about over 50 billion in the year 2000. by the end of this year, he’s said it will be less than $10 billion.
>> if we’re expecting bad news and the environment not good going forward, why was the stock up today?
>> well, since he made the comments i spoke about at the very beginning of this month, the stock has sold off a bit. some folks told me those comments were taken as a sign that things might not be going as well as they thought. some other analysts i spoke to said the fact that the stock was up might be a sign that some investors are betting that the stock has sold off a little bit too much and we might get some kind of positive surprise tomorrow. maybe the company will come out and say things aren’t quite as bad as you think.
>> well, what’s the long-term outlook for the company, at least from analysts’ views at this point?
>> a lot of them say that ultimately this company needs to be bought. by a big local phone company such as bell south or s.b.c. bell south and s.b.c. have held talks, but folks we spoke to a couple of months ago told us they’re still very far apart on price. so it remains to be seen whether it will happen, but a lot of people say that’s what needs to ultimately happen. at&t needs to sell itself.
>> ok. we’ll check with you tomorrow on the earnings. thanks. japanese eck porters trading in the u.s. advance after the yen had its biggest decline against the dollar in almost four month. when we come back, we’ll preview how technology eck porters such as hitachi and n.e.c. may fair in japanese trading as the dollar continues to rally.
