Timer Warner --- Margaret (slow)
>> as the battle for leadership of time warner heats up, both sides are lining up lieutenants. chief executive richard parsons recruited goldman sachs and bear stearns to defend time warner against attacks by carl ichan and lazard. margaret popper has more on the story.
>> before carl ichan and bruce wasserstein released their anti-parsons tome this afternoon, time warner’s chief lined up protection, hiring two top bankers to defend the proposal to split the company into four. alan schwartz advised time warner on its acquisition of cable television systems last year. schwartz will team up with gene sykes, co-chairman of the merger group. in 2005, goldman’s biggest assignments included gillette’s $57 billion sale to procter & gamble, the biggest deal of last year. even though they are at rival firms, schwartz and sykes have collaborated before. they helped michael eisner fend off the comcast hostile bid for disney. this time, the pair will pit themselves against lazard chairman, wasserstein. wasserstein said to investors today, you know, michael eisner hired the same people. icahn hired wasserstein to assess time warner’s breakup valument the billionaire’s reputation as a corporate raider cast a shadow on lazard but wasserstein said he is acting in shareholders interests. if dick parsons has a magic formula to get that stock up, you know, hurrah, wasserstein told the “new york times” last month.
>> in the short run, the market is a voting machine and in the long run, it’s a weighing machine and i think that everybody’s given parsons a chance to move the needle. if it doesn’t continue, he should be at risk but for now we think he’s done a good job of stopping the bleeding.
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Listen Market briefing--- Lori (slow)
NYSE --- Deb (fast)
Nasdaq --- Robert (slow)
Cisco --- Suzanne (slow)
welcome, from world headquarters in new york city, i’m lori rothman. this is bloomberg “after the bell.” lazard’s bruce wasserstein finished his presentation of recommendations for restructuring time warner. lazard recommends time warner be broken into four separate publicly traded companies. the new time warner would keep the film and tv networks. a.o.l. and the publishing arm would be spun off. the report says the breakup my boost the value of the company by $45 billion. put it another way, if recommendations are implemented, time warner’s stock is expected to rise 43%. the report says the implied value of time warner shares between $23.30 and $26.60. what’s more, lazard recommends the board authorize a stock buyback worth $20 billion. meantime, several institutional investors are suing time warner for $1.6 billion, centering around the merger with a.o.l. 100 investors decided to opt out of a $2.4 billion settlement of a class-action lawsuit. investors claim a.o.l. inflated sales to close the deal. the investors’ lawyer said his clients feel they want to maximize whatever recovery they can and that all investors lost as much as $300 billion from the merger, including interest. as for trading today, stocks struggled. for more on today’s action, here’s a report from deborah kostroun at the big board.
>> all the major averages were lower but if you look at a broader trend, since hitting four-year highs on january 11, both the dow and s&p 500 down 2.5%. so what we’ve been seeing, the market in a downtrend. one of the reasons is earnings expectations. if you compare the earnings expectations, fourth quarter, what we saw, an increase in earnings, 14.9%. compare that to the first quarter, we see an increase of only 9.8%. if that forecast is accurate for the first quarter, of 9.8%, that would mean our streak of 10%-plus increases would be snapped and we’ve been seeing those 10% increases each quarter since the third quarter of 2003. that definitely weighing on the market . the laggards today, you saw energy, materials and also capitalr durables. the worst individual performers in the s&p 500, energy stocks were there. energy stocks have been lagging the past week. crude oil plunging more than $2 a barrel to close at $63.0 09, a four-week low, on expectations that the energy department will report tomorrow that u.s. inventories of oil and gas jumped last week so many of the oil-related stocks, the worst performers. laggards in the dow, a turnaround with alcoa. general motors bowing to pressure from investors led by kirk kerkorian cut their dividend in half, slashing top executive salaries and revising health and pension benefits. gold stocks, some of the worst individual performers in today’s session, as well. the gold and silver index lower. mining stocks declining after the price of gold and copper dropping. gold, falling by the most in two years. a drop in the price of oil causing concern there. also, copper prices also - the declining, concerns on stockpiles. i’m deborah kostroun at the new york stock exchange.
>> internet and commodity-related shares led the nasdaq. robert gray has details on the nasdaq trading.
>> the nasdaq composite closing near the lows of the session on tuesday. a lot of the winners, leaders from 2005, were leading the way lower in tuesday’s trading. we saw commodity stocks falling as we saw underlying commodities falling. and we’re continuing to hear from investors and traders, concerns about earnings. there have been numerous disappointments from large cap tech companies over the past several weeks, apple, intel and google, disappointing investors, continuing to weigh on the market . and interest rate concerns when ben bernanke takes over. commodity-related stocks, patterson u.t.i.downgraded to sell from neutral at merrill lynch. joy global touched a record high and turned around to fall on the session. the mining equipment company was up more than 175% over the past 12 months. other commodity-related stocks, including anglo american falling, downgraded at citigroup to hold from buy. also, royal gold falling, other commodity stocks falling, as well. google shares declining during the session, as well. greg palmer with pacific crest securities saying investors were locking in gains and questioning the valuation of google even as the company saying it’s updating its email service to let users see other contacts on line and exchange instant messages and reported that google may be negotiating to buy a chinese blog site. apple computer shares on the move. they rose after unveiling a new one gigabyte ipod nano with a $145 price point, expanding lower-priced ipod options.
>> and cisco systems is out with its latest earnings. suzanne o’halloran has the numbers.
>> thank you very much. investors are pleased with cisco’s results. shares rose as much as 4% in the after-hours session after net income fell nearly 2% to $1.4 billion or 22 cents a share. the drop was a result of costs to expense stock options. excluding one-time items, profit was 26 cents a share, a penny better than analysts’ estimates. revenue rose 9% to $6.6 billion, matching analysts’ expectations. but it was the slowest growth in two years. investors are also cheering rising profit margins which climbed to 68% of sales. the conference call is going on right now. chief executive john chambers saying he is pleased with not only the january quarter but the company’s order momentum. still, plenty of investors are more concerned about the company’s third-quarter sales forecast. we are waiting on that figure. r.b.c. capital’s forecast is already below the average estimate of $6.7 billion while bank of america says its $6.8 billion estimate may be too high. bank of america says large distributors are seeing sales slowing down late in january. still, the broker continues to rate the stock a buy. the reason is, c.e.o. john chambers pushed into the growing market for carrying tv signals over the internet and analysts say his takeover of scientific atlanta, which will close in april, could speed up video equipment sales in the second half.
>> i think cisco realized it was late in the game in terms of video. if we look the marketplace, cable operators want to be a phone company, the phone company apts to―wants to provide tv so they realized they needed an acquisition and once integrated, it will work to its favor.
>> shares of cisco up more than 6% this year. recapping, shares of cisco higher by about 4% in the after-hours session, a positive indication for traders on wednesday. still, we are waiting for the third quarter revenue forecast.
>> let’s go ahead and check treasuries. the benchmark 10-year u.s. note fell after weak demand from the government’s sale of three-year notes. middle of the curve, five-year yield 4.52%, down, also, and on the shorter end, the two-year unchanged, 4.60%. checking commodities today, gold with its biggest drop since 2004. lower energy prices eased concern about inflation. gold for april delivery fell almost $20 an ounce. crude oil prices fell to a three-week low on anticipation that tomorrow’s report from the energy department will show an increase in u.s. inventories. among the other energy movers today, gasoline down 3%, heating oil off 4% and natural gas down 1.71%. still ahead, general motors bows to pressure from shareholders. that means lower pay for the c.e.o. and a reduced dividend. we’ll have the story as bloomberg “after the bell” continues.
