Interview: Bernard Ebbers
>> welcome back. bernard ebbers, former chief executive of world come has been sentenced to 25 years in prison for accounting fraud. this 63-year-old ebbers was convicted in march of conspiracy, securities fraud and filing false documents with the securities and exchange commission in connection with the largest bankruptcy in u.s. history. allen?
>> bernard ebbers, the man prosecutors say was responsible, was the ringleader for the biggest securities fraud in history, was sentenced to 25 years in prison. his lawyers tried to convince the judge to go easy on him. they cited his heart ailments, his charitable donations which totaled nearly $100 million and the fact he had not sold world comstock. even after the judge sentenced him, his lawyer, who is appealing the case, maintained his client’s innocence.
>> bernard ebbers was transformed into a distorted picture of corporate corruption. the record is uncontradicted. this is a man who has lived a life unblemished, a life of unbelieveable charity and kindness and compassion.
>> in the end, the judge said she had considered ebbers’ health and his good works and that she had recused the sentence to 25 years from a guideline of 30 years or more. the judge said although this is likely to be a life sentence, i find to sentence him to anything less would not recognize the seriousness of the crime. ebbers did not speak in court. the judge gave him five years for conspiracy, 10 years for securities fraud and 10 years for files false statements with the s.e.c. the judge allowed a former employee who lost his life savings to talk about how he represented thousands of victims of the ebbers fraud.
>> he was one of the top sales people they had in the country, and i was making on average $180,000 a year. so all of that basically is gone.
>> after the hearing ended, bernard ebbers and his wife shared a long, tearful hug before he went off to prepare for prison. he’s scheduled to report there october 12. the judge said she could she would recommend a low-security prison near his home.
>> we have developments today as well on another legal story. the u.s. government dropped its plan to appeal the dismissal of perjury charges against richard scrushy, the c.e.o. of health south corps. he’s now free of any criminal charges in the case. a jury had found him innocent of the 36 charges that accused him of inflating profit from 1996 to 2002. however, he still faces investor lawsuits as well as a civil fraud suit filed by the securities and exchange commission. the bush administration cut its estimates to the budget estimate of $333 billion. comes as job and income growth boosted tax receipts faster than had been expected.
>> tax relief has had a positive effect on the economy and that stronger economy is the source of the tax receipts recorded today. to sustain growth, it is critical that congress make tax relief permanent.
>> the 2005 shortfall would represent 2.7% of u.s. growth domestic product. the figures do not include spending for the wars in iraq and afghanistan. note, sit the first such decline since president bush took office. however, congressional democrats say the improved deficit picture is likely to be temporary. now also for the latest on the bid to buy unical, the chairman of the house armed services committee, the proposed bid poses a security threat to the united states. after hearing the chairman, duncan hunter said he’ll consider legislation to block cnooc.
>> i believe, mr. chairman, the object of china’s strategy is to supplant the united states as the world’s premiere economic power and, if necessary, to defeat us militarily.
>> for anyone who believes that this is purely a commercial undertaking, unrelated to a national strategy of domination of energy markets and of the western pacific, i would suggest that that view is extraordinarily naive.
>> congressional objections work in favor of shev ron which says its lower bid is superior. shareholders are scheduled to vote on the bid on august 10. more congressional scrutiny of this issue however before then. another hearing scheduled in the house energy and commerce committee for next tuesday. unocal’s shares up 1.27% today. the white house cust its estimate for the budget estimate. our editor at large tom keen is going to explain after this break and join us with chart of the day.
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Listen Market briefing --- Ellen (slow)
Apple Computer --- Bob (fast)
NYSE --- Deb (fast)
our top story, apple computer releasing its third quarter earnings. bob bowden has been crunching those numbers and joins me now with more. certainly a very positive report from the company.
>> that’s right. we have a forecast that miss a little bit, but nevertheless, apple’s earnings exceeding estimates. let’s break it down and get the specifics and show you what i mean. apple reporting earnings of 38 cents a share. and a full seven cents a share over the 31-cent estimate. as for revenue, that jumped up 75% to 3.5 billion from about $2 billion last year. so apple exceeded that analyst figure by 5.4%. one of the big focuses was on i-pod shipments. they rose to a record 6.16 million i-pods were shipped. analysts were expecting 5.29 million. so apple beat that by 16%. and it’s over seven times more i-pods than were sold in the same quarter last year. moving on for the forecast, that’s where there’s a bit of a miss here. apple sees a profit of 32 cents a share for the current quarter and that misses the estimate by a penny a share. and also we have these quotes from the press release. “we are delighted to report apple’s best quarter ever in revenue and earnings.”
>> apple stock closed the regular session at 38.35 a share. it’s up 19% year to date. as of the close today i should say. now you see an extended hour’s trading, shares up 65 cents on the performance from last quarter, beating the estimates for earnings and revenues. the conference call should be starting right now, available on bloomberg live go or apple’s website. ellen, back to you.
>> and those shares a topper former in the s&p over the past 12 months. also after the bell, taco bell, out with earnings. net income rose 5%, beating estimates. young brown’s earned 62 cents a share. however, sales growth in china slowed to 2% after a link to cancer was found in five of the menu items back in march. well, talking about markets , let’s go to the stock market where stocks gained today. investors optimistic on signs the economy is going to suss pain its growth. also that profits are increasing. the gain in the dow led higher by i.b.m. the s&p, shy of one 10th of 1% higher. let’s get you those numbers. the dow up .41%, and the nasdaq little changed. in terms of trading volume today, it was down compared with yesterday, shy of 1 hnt 4 billion shares changing hands. and nasdaq, we don’t have that volume number but the decliners outpace the advancers. so let’s get some more perspective.
>> better than expected earnings results plus a report that showed trade gave a boost to the economy for the first time in two years gave investors reason to be optimistic. promise of higher earnings pushed i.b.m. stock up. the stock could rise to $95 within a year, buoyed by an increase in sales from the computer services business. harley davidson advanced as the world’s largest motorcycle maker reported better than expected earnings. some are optimistic about this earnings season.
>> there’s no reason to assume that the profit margins won’t be higher than last year or in the first quarter. we’re looking for earnings to be better than the analysts expectations in the second quarter.
>> there were a few companies that disapointed, though. h.c.a. finished the day down. admissions at hospitals over the year dropped. while the number of uninsured patients rose. universal health services and tenet health care closed lower.
>> apple going to influence trade tomorrow with its earnings results. back to you.
>> speaking of earnings, we bring in a report. here’s deb’s report from the big board.
>> the second quarter earnings season kind of getting underway. this week we only have 24 companies in the s&p 500 scheduled to report their earnings, but things start picking up next week. we have 121 scheduled earnings from companies in the s&p 500. the week after that, 127 earnings reports. so things going to be getting underway here. if you look at what is helping out this market , if you look at the s&p 500 earnings, the earnings growth for the second quarter, what we’re estimated 7.5% earnings growth. same thing for the third quarter. a big jump in earnings growth. 15.5%. however, back on july 1, it was 15.1%. so all of these numbers really being ratcheted up and it helps out this market as what we’ve been seeing here recently, this pretty good run. even though we’re in an environment where we’re seeing high oil prices and also an interest―the interest rate environment increasing. eastman kodak and hewlett packard. kodak rising on speculation that the company may be purchased by hewlett-packard. but these are some kind of things we’ve been hearing about for years, so a possible deal, we don’t know. but helping out both those stocks in today’s session. gainers in the dow jones industrial average, i.b.m. at the top of the list. biggest drags in the s&p 500, the health care and equipment stocks, retailed after seeing a good performance recently. and also the pharmaceutical stocks lower. abbott labs, the third biggest drag in the s&p 500 after they set third quarter profit will be less than expected. at the new york stock exchange for bloomberg news.
>> let’s turn now to the economy where the u.s. trade deficit narrowed in may. exports climbed to a record while falling oil prices cut the value of imports. the deficit was $55.3 billion, a drop of nearly 3%. economists note oil prices rebounded, however, in june.
>> well, i would expect that we’re going to see a bump up in the trade deficit again when we get the june numbers a month from today. and the final month in the quarter, so we have 2/3 of the information already. it’s going to take―this is taking a little bit of the enthusiasm.
>> still, the figures or april and may point to a narrower trade deficit in the second quarter, and that means trade has the potential to contribute to economic growth for the first time in two years. prices of imported goods declined in june by the moat we’ve seen in two years. including petroleum, import prices rose 1%. economists say the inflationary fact of higher oil prices remains limited and in terms of the treasury reaction, they did fall after the government’s action of $5.6 billion. and here are those numbers. that 10-year, down.
>> talking a lot about oil, while crude fell today after government report showed inventories rose more than analysts predicted. and a drop of just over 1%. among other energy movers today, declines for gasoline as well as heating oil futures, natural gas futures continuing to climb up .2 of 1%. and bernard ebbers ordered to surrender to federal prison authorities on october 12 for a term of 25 years. we’ll take a quick break and come back with all of the details.
