朗读练习作业

Boeing --- Greg (slow)
American Express --- June (slow)

>> john mack, who’s helping coordinate a possible takeover the new york stock exchange, said c.e.o. john thain has agreed to meet with wall street firms investigating the deal. the people who work on the floor of the new york exchange may be wondering how long they have a job. billionaire kenneth langone, considering a takeover of the new york exchange, would close the trading floor, ending a system that’s been around for two centuries. members of the exchange aren’t sure what to make of a possible langone bid, according to tom caldwell, whose company controls 13 nyse seats.

>> we’re a pretty disparate bunch with a lot of interests and concerns because we look upon our seats differently, whether floor traders, volume traders and specialists. so he has to get one of the groups that might be―that might not be happy and say, i can give you a better mouse trap.

>> if langone makes a bid for the exchange, it would disrupt the exchange’s own plans which include maintaining the trading floor. john thain wants to purchase the electronic trading system, archipelago, and take the exchange public, maintaining the floor and adding electronic trading. two in a row for boeing, the company winning an order for 50 passenger jets from air india, beating out airbus. yesterday, boeing beat airbus in winning an order from air canada. the air india sale valued at $6.9 billion. investors are waiting for boeing to report earnings tomorrow. the number two commercial aircraft maker probably going to say first-quarter earnings fell 15%, to 55 cents a share, hurt by competition from airbus. investors will focus less on first-quarter results and more on boeing’s progress in turning around the commercial aircraft business. the deals today and yesterday, greg miles here with a preview.

>> the multi-billion dollar deals add up after a while. boeing’s top management was shaken in the first quarter by the firing of c.e.o. harry sten cypher stemming from an affair with an employee and by a 7% decline in passenger aircraft deliveries as it lost business to airbus. since the rise in boeing stock, it reflects optimism that boeing will make progress in reviving its aircraft business. the analyst at p.c.w. group put it this way -- after rising 1.4% last year, boeing forecasts that deliveries will rise 12% to 320 jets this year and higher next year. rising passenger air travel sparked increasing sales of boeing jets including the lower margin 737 jet, a single aisle aircraft.

>> i think we’re seeing a turnaround. these are―this is a long cycle we’re looking at, four to five years from trough to peak so pretty clearly, 320 is up from where we were last year, even if the mix isn’t great. by the way, normally, in the early part of an uptick, you don’t expect to be led by high margin planes.
>> orders also increasing for the higher margin jets, including the 787 dreamliner, including $13 billion in orders this week from air canada and air india. this will help boost sales this year from 3% growth in the first quarter to 9% in the second quarter to 11% in the third quarter and 17% in the fourth quarter. of course, that turnaround is crucial to offset slowing growth in the defense business because of budget cuts. boeing forecasts defense sales will rise 7% this year, slower than the 11% growth last year. back to you.

>> greg miles. american express’s first-quarter profit rose 19% as the company added new credit card customers. june grasso is here with the details. june?

>> thank you. shares of american express higher on the latest earnings report. looking at the numbers, net income rose to $959 million or 75 cents a share for the fourth largest u.s. credit issuer, matching the average analyst estimates. the gain means chief executive ken chenault can brag about an earnings streak growth of 10%.

>> american express has been pretty good about hitting targets and i think this year was no exception. i would say we certainly feel it’s possible for them to earn around the popular estimate of $3 or $3 and change, which would, i think, be a very, very nice performance for them.

>> the company is benefiting from a deal with mbna to issue american express credit cards, piggy bagating on the―backing on the success of the biggest credit card company. american express has made a similar agreement with citibank.

>> clearly, it’s a positive from the standpoint that before the agreement, american express could only sell their product themselves. now they have two of the top three credit card players marketing their product. so certainly that’s going to enable their product to become more widely distributed and over time, that will benefit american express.

>> american express also taking steps to boost future profits by spinning off its financial advice business.

>> thank you very much.%  june grasso. stay with us. we’ll have more, including earnings at southern company.

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Listen Market briefing --- Mike (fast)
Wall Street today --- Deirdre (slow)
NYSE --- Deb (slow)

welcome to news, i’m michael mckee, reporting tonight from washington. to the latest on amazon.com. shares are tumbling, down as much as 6% in the extended hours after the world’s largest internet company said it missed analysts’ estimates for the first quarter by a nickel a share. this is the fourth quarter in a row that amazon has missed analysts’ estimates. su keenan has details.

>> we’re now seeing shares down as much as $2. chief executive, jeff bezos, of course, has been trimming prices and fees and spending more on site design, betting a short-term sacrifice of profits will cement amazon’s lead over rivals. amazon’s sales were in line with expectations, rising 24% this quarter. analysts say new discounts and development costs hurt profits. amazon reported profit falling to 18 cents a share, including a six-cent-a-share gain from a change in accounting,ating,a 30% drop compared to last year’s 26 cents a share. it is also five cents a share below the estimate of analysts surveyed by thomson financial. revenue was $1. 9 billion, in line. amazon has been spending money on software engineers and offering discounts in order to make its online marketplace more attractive to vendors and customers of the before the numbers were released, analyst mark mahaney expressed concern about profitability, saying shipping and discounts would drive down amazon’s operating margin and predicts it will drop a full percent in 2005 and says investors may doubt the company’s pledge to raise margins to 10% down the road.

>> all you know now is that margins are under pressure, going down on a year-on-year basis, reducing anybody’s confidence in the ability of the company to gain 10% operating margins.

>> he and others say margin contraction is a major reason the stock has declined nearly 30% in the past year. there’s another reason amazon’s sales growth is slowing worldwide, although the international rate still outpaces the u.s. the conference call just underway at this hour and pacific crest security’s analyst says he’s listening closely for details on sales growth.

>> the key issue to us on amazon will be how much do they have to sacrifice margins in order to get growth. that’s what’s critical to building our forecast going forward and ultimately bringing it back to valuation.

>> as far as outlook, amazon.com sees 2005 revenue at $8.18 billion, a range of $8.18 billion to $8.68 billion. the midpoint is in line with estimates of $8.42 billion. headlines crossing now and the c.e.o. saying the amazon earnings shouldn’t be compared to the thomson estimates.

>> they have always talked about cash flow rather than earnings. let’s get you to the overall numbers. the dow jones industrials, on the day, having their worst day in a week, losing 91 points, finishing at 10,1 51 -- the broader major indexes finishing down, st. louis 5050 treasury notes fell after sales of new homes set a record, giving some hope about the economy. the 10-year note down almost 1/8 on the day, the yield up a basis point to 4.27%. in the belly of the curve, the five-year note down 1/16, the yield down to 3.95%. the two-year note little changed. a burst of optimism that washed over wall street this morning when the new home sales were announced faded, as we’ve been talking about. you can see that in the results at the end of the day. deirdre bolton has the day on wall street.

>> mike, investors were served a confusing cocktail, the seemingly good news with lower oil prices offset by mixed economic earnings and earnings news. on the earnings front, dupont, lexmark, both of those stocks falling on disappointing results. altria soaring, pushing semiconductor stocks higher on altria’s better-than-expected first-quarter results. overall, first-quarter earnings have come in higher than forecast, but not enough of a catalyst. earnings season has been as good if not better than people expected. the key question is whether or not investors really care.

>> malone says investors continue to worry about how high the federal reserve will raise interest rates.

>> visibility going forward is lacking to really prompt investors to put money at work at this point in time.

>> the housing report seems to say the economy is not in a soft spot so rates can keep rising. one place where investors are willing to put money, real estate and home home building stocks. record new home sales and historically low mortgage rates show the boom is not losing steam. centex, d.r. horton and pulte pushed the index of home building stocks higher for the second consecutive session. lower oil prices pushed energy prices lower. even higher-than-expected earnings at schlumberger didn’t help their stock. retailers were mixed, as well, the five-month low in consumer confidence suggesting americans may spend less. still, companies that sell to high-end consumers continue to grow. coach rallied as much as 7% after reporting third-quarter sales growth of 53%. coach is also taking control of its japanese unit. it wants to double its sales there within four years. coach, by the way, is up 26% over the past year, compared to wal-mart’s 19% loss. s&p 500, as we know, up close to 2% over the same time frame. mike, back to you.

>> deirdre bolton. traders say the market seems to be preoccupied by earnings and concerns about growth in the economy these days. for more on today’s trading action, we have a report from deborah kostroun at the big board.

>> and the big question for the markets right now is how much is the economy slowing down? we will get first-quarter g.d.p., that number on thursday. that will answer that question. and a lot of concern about slowing growth and rising interest rates have the indexes down for the year. in tuesday’s session, the dow jones industrial average closing at its lowest level of the day. in fact, stocks started on the wrong foot. lexmark ended up at a 52-week low, its biggest drop in nearly two years after they said their first-quarter numbers were disappointing and the outlook for the second quarter also disappointing. that, of course, is the number two printer maker that also led the number one printer maker, hewlett-packard, to the lower side. looking at other numbers, with the economy, the housing market , a report showing new home sales unexpectedly increased to the highest level on record, helping to lift shares of homebuilder. centex reports earnings tomorrow. meritage homes, that stock traded higher. they expect full-year earnings to come in better than expected, with an increase of 22% to 27%. i.b.m., the biggest gainer in the dow jones industrial average and that after the company saying it will buy back as much as $5 billion in shares. they also boosted their quarterly dividend 11% to 20 cents a share. looking at american express, this is the fourth biggest credit card issuer. they released earnings during the session. income rose 19% to a record as the company attracted new credit card customers from its partner with mbna and mbna issues american express credit cards along with mastercards and visa cards, providian financial and metris companies also beat analysts’ estimates with their earnings.%  boeing, world’s number two commercial airplane maker, won another order today from air india after winning an order yesterday from air canada. i’m deborah kostroun at the new york stock exchange, bloomberg news.

>> we want to check oil prices, now. crude oil down for a second day on optimism about production after the president’s meet with the saudi crown prince yesterday. crude oil futures finishing lower 37 cents at $54.20. among other energy movers today, unleaded gasoline down two cents, heating oil and natural gas futures lower on the day. boeing beats airbus for a second day in a row but investors are also focusing on tomorrow’s earnings report. coming up, we’ll tell you what wall street is expecting.

Interview: Valero energy

>> more on the big energy deal, valero energy buying premcor for $6.9 billion in cash and stock to form the largest u.s. refiner. william greehey is the chief executive officer of valero energy and he spoke with brian sullivan earlier today.

>> we’ll have, you know, about 16% of the market when the premcor deal is done. we’re in a global market but we’re satisfied for now.

>> who approached whom on this deal?

>> we were talking on and off. tom mcnally is a good friend. we’ve been talking since 2001 on the transaction.

>> you and i have chatted before and you may know a secret that you thought the way to grow was through acquisition because of the tough environmental regulations surrounding new building.%  but with your stock up and the political climate the way it is around high gasoline prices, do you think you can build new refineries at this time?

>> the economics are becoming closer. if you look at this transaction, we maid about 70 -- paid about 70% of replacement costs and i think with refining margins as good as they are that acquisitions will be replacement cost economics.

>> it’s not like an oil deal, but harder to do a refining deal. we worked out stats, $8,090 per barrel of refining capacity per day. right now, you’re valued at $7,680. cuconvince the market you did not overpay for premcor?

>> absolutely. this thing is 15% accretive. we’re going to generate a lot of cash flow o.. on the cash portion, we’ll only borrow $3.4 billion, to be paid next year -- $1.4 billion.

>> how fast can you pay down the $1.4 billion?

>> it will be paid next year.

>> the whole thing?

>> absolutely.

>> do you expect earnings and margins to continue to be that strong?

>> i think margins will be better next year. the united states goes for a lower sulphur for gasoline than on-road diesel so you’ll have less production. so improved sour discounts will be wider.

>> you’ve been buying up and have grown through the use of heavy sour. it’s a higher profit margin if you can refine that. premcor, interesting, they have four refineries, two are heavy sour and two are light sweet. are you going to keep ahold of all four?

>> absolutely. they have plans for their refinery in ohio and are doing a study right now to process the heavy sour cruised coming from canada in the future.

>> so heavy sour will be the future in the short term for valero or long term, as well?

>> absolutely. our strategy is to continue the heavy for barrel of crude oil.

>> but you want to keep the light and sweet refineries of premcor just in case?

>> absolutely. memphis has a niche market and it’s a sweet refinery, but very, very profitable.

>> talk about possible regulatory issues. you have counsel and have spoken with lawyers about this. do you anticipate any regulatory difficulty over the deal?

>> no. first of all, we’re not in a u.s. market , but a global market .%  but if you look at the east coast, we’ll be number three, about 250,000 or 300,000 barrels a day less than sunoco. on the gulf coast, we’ll be number two, about 250,000 barrels behind exxon so we don’t have a problem at all. we’re not number one in any marketing region.

>> 124 the end―is this the end of the deal making for valero? you are making $9 a barrel on profit, a lot of money, earning record earnings. is this the end of the deal making?

>> not at all. we’ve continued to grow through acquisitions. seven years ago, we had one refinery. this will now make 19 refineries so we’ll continue to look at refineries and acquisitions and then organic growth.

>> at some point down the road when bill greehey decides maybe to hang it up, how many refineries would you like valero to have?

>> i don’t know. that’s speculation. i think we’re going to have to move beyond the united states and we are looking at europe right now.

>> you are?

>> we are.

>> what looks attractive to you in europe right now?

>> we’re not that far along. but we are looking. we think that’s probably the next logical step.

>> that was william greehey, chief executive officer at valero energy. u.s. sales of previously owned homes unexpectedly rose in march. sales rose 1% in march to an annual rate of almost 6.9 million dollars. february’s figure was revised to $6.82 million. no change in the bond market in reaction, though. the 10-year note unchanged on the day, yielding 4.25%. the five-year note’s yield on the day little changed at 3.94 3r5067ing the―approaching the end of trading, the two-year note yield up two basis points. the dollar trading lower against the yen and pound, higher against the euro. the new york stock exchange may be facing a roadblock in its plan to merge with archipelago, or maybe not. we’ll tell you what one former new york stock exchange board member may be ready to do.
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Listen Market briefing --- Mike (fast)
What drove up stocks today --- Deirdre (slow)
Nasdaq --- Robert (slow)
Valero --- June (slow)

s&p 500 closed 10 points higher and nasdaq finishes up at almost 19 points with a gain on the day -- deirdre bolton has a store of what drove up stocks today.

>> amid the market ‘s sea saw ride lately, a gain today. mergers lifted investors’ spirits, the biggest, valero oil’s purchase of premcor. shares of other refiners soared, as well, on hopes of a merger soon, too.

>> investors are also taking earnings to heart. profits are growing 12%, far stronger than the 8% analysts expected when the quarter began.

>> during earnings season, you have a lot of news and when you have good earnings, the market moves up and negative earnings sees the market moving down and that’s why you have seen choppy trading.

>> earnings optimism lifted starbucks. prudential upgraded the stock, saying earnings per share would increase at least 20% over the next three to five years and current stock price does not reflect that growth. hsbc closed higher after reporting better-than-expected first-quarter results and record number of d.s.l. customers. apple computer was upgraded to outperform at cbs. and a day ahead of a report that may show a drop in consumer confidence, americans showed no fear about buying a home. home resales posted a gain last month as home prices jumped to an all-time high. an index of home building stocks closed higher today. year to date, this index has outperformed the s&p 500 by about 6%. back to you.

>> deirdre bolton. crude oil fell today after president bush said high oil prices damaged markets . his remarks coming prior to his meeting with saudi arabia’s leader, crown prince abdullah. the saudi prince is visiting bush at his ranch in crawford, texas. after-the-meeting, a saudi spokesman said the u.s. did not ask for more oil production and national security adviser said the saudis came with a plan in reference to last week’s proposal by saudi oil minister who increased production cast by 12.5 million barrels a day by 2009 from the plevent million.

>> it addresses the underlying issue you have when you talk about price, an issue of availability of oil and availability of capacity.

>> crude at the close of the regular session finished down 82 cents at $54.57 a barrel. among other energy movers today, they followed oil down -- gasoline, heating oil and natural gas futures lower on the day. energy shares stole the spotlight in the market . for more, here’s a fromraeborah kostroun at the big board. >> energy shares, one of the biggest gainers although crude oil fell for the first time in seven sessions as president bush met with saudi crown prince abdullah. merger talk helped things out with premcor at a 52-week high. the owner of four u.s. refineries agreed to be bought by valero energy for $6.9 billion in cash and stock to become the largest u.s. oil refiner. are the refiners gained on ideas that we could see more mergers in the works. refiners, a major part of the equation as they’ve been running at full capacity to meet the needs of gasoline for consumers. boeing, the biggest gainer in the dow jones industrial average. they won an order valued at as much as $6.1 billion at ace aviation holdings for 32 jets, helping the airline cut fuel costs . that areer is first from air canada since 1989 and the second biggest for 787’s. those are the airplanes boeing will be producing. looking at telecom, s.b.c., the biggest u.s. phone company, after their $16 billion purchase of at&t, they said first-quarter earnings fell 54% after a gain from a a year earlier. sales rose as customers bought wireless service and high-speed internet access. reebok, second biggest maker of athletic shoes, said first-quarter earnings rose 5.1% helped by footwear endorsements by wrap stars jay-z and 50 cent. maytag at a 52-week low and maytag slipping for a second day. the appliance maker said last week their profit slid 80% as oil and fuel cost rose.

>> breaking news from the new york stock exchange, the exchange is defending its proposed merger with archipelago, saying the planned merger makes strategic sense. the comments in response to a report that former stock exchange board member, kenneth langone, wants to break up the merger with archipelago. allan dodds frank will have more on langone’s bid coming up in this hour. optimism over tech earnings and several upgrades sent the nasdaq higher. robert gray has details on the trading there from the nasdaq marketsite in times square.

>> optimism over earnings and technology companies helping boost the nasdaq composite 1% in monday’s session. the volume, though, coming in well below the 1.9 billion share traded daily average for 2005 so far. we heard from rod smyth, chief investment strategist with wachovia, saying stocks may have made multimonth lows since they view current stock market weakness as a buying opportunity with a 15% potential upside to the top of the trading range. he says the top of that range is the 1300 level. we’ll keep an eye on that. the nasdaq going out at 1950, near the highs of the session. the 1950 level was resistance for monday so it will be interesting to see how the markets open but many traders and investorsgating charts to base strategies upon were watching the 1950 level. some of the upgrades today helping to lift the nasdaq 100, apple computer raised to outperform from neutral at csfb, raising the price target by $5 to $45 a share, saying the next leg of gains will be from the mac, not the ipod. they’re seeing apple’s 2% share with significant upside. starbucks also raised to overweight at prudential, from neutral, on valuation, saying they have highly predictable earnings growth. ciena also upgraded, raised to outperform at piper jaffray, liking the large contracts with phone companies such as verizon and m.c.i. shares of google rising to a record intradade and closing at a record high monday, announcing they will sell animated display ads that appear on other websites and give advertisers a way to target which sites where their spots will be seen. at the nasdaq, i’m robert gray.

>> want to get more details on the valero energy deal that helped send stocks higher. june grasso has details. and the implications of the deal.

>>it purchase pushes valero past exxon-mobil and conocophillips among u.s. oil refiners. valero will pay $3.4 billion in cash and issue $3.5 billion in stock. holders of premcor can sell each share for nearly one valero share or $72.76 in cash, 23% more than friday’s closing price.

>> this thing is 15% accretive. $1.67 a share. we’re going to generate a lot of cash flow. on the cash portion, we’re only going to end up borrowing $1.4 billion, paid next year out of cash flow. this is a tremendous deal for premcor and valero shareholders. the profit refiners get from converting a barrel of crude into gasoline and heating oil has averaged about $9 so far this year, up from $4 in the 1990’s. the last refinery built in the u.s. dates back to 1976.

>> we continue to have increasing demand for gasoline and distillate products, even at these higher levels, that we don’t have enough refining capacity to meet all our country’s needs. and therefore, you know, until the new refineries are built, which may never occur, we’re going to continue to see very strong and very favorable refining and marketing environment.

>> valero is a top performer in the standard & poor’s 500 index this year, shares up 57% after almost doubling last year. premcor shares have risen 65% this year. valero’s chief executive has built the company through more than $7.5 billion worth of acquisitions and he says this is not the end of deal making.

>> we’ll continue to grow through acquisitions. seven years ago, we had one refinery. this will now make 19 refineries. so we’ll continue to look at refineries and acquisitions and then organic growth.

>> under president bush, the federal trade commission has not tried to block any proposed refinery takeovers and during president clinton’s eight years of government, only once was an oil industry merger blocked.
>> june grasso. we’ll have more on valero, the entire interview with valero’s c.e.o., william greehey, next.

Interview: Wachoiva securities

>> crude oil rose more than 6% this week, the biggest rally in three months. concern u.s. gasoline demand will not―demand will overreach summer production. the concern about gasoline pushing gasoline higher by almost 2%. heating oil and natural gas futures up, as well. looking forward to next week, traders and analysts having a hard time figuring out which way the markets will trade. the benchmark stock indexes have been whipsawed, as well, over the past week by earnings reports and inflation concerns. the dow moving more than 100 points in five of the past eight trading sessions. doug sandler is chief equity strategist with wachovia securities and joins us from his office in virginia with his view on the market . thanks for joining us this friday. i guess the markets this week would be what they used to call in disney world, an e-ticket ride. is there any way to know whether we need to strap ourselves in for next week or not?

>> there’s a lack of conviction in the market and that’s where you find the most opportunities. i get excited when you see the market churn as it did over the last week or so. it means a lot of people are selling out of fear and i think there’s a lot of opportunity. i’m excited, more excited friday, today, than i was on monday.

>> we lost big today. why are you excited today?

>> well, exactly, i think people are running for the exits for no good reason. in the end, we think the economy’s going to slow. that’s happening. but we think people are―or investors are generally thinking the economy will stop. if it just slows, there are still a lot of opportunities. one of my favorite parts of the market is the secular growth stories. those are the stocks that can grow in a good economy or a bad economy. a good example of those would be like the starbucks where it’s more a penetration story than it is a story about the underlying economy. in the end, these stocks are cheap. these are like the real jewels of the market that you rarely get a chance to buy at a decent valuation, you’re getting an opportunity today and go theeing that opportunity because investors have only focused on cyclicals for the last three or four months―i’m sorry, the last 12 or 18 months and i think that’s what you’re getting, that’s where the opportunity is, that’s where we’re most excited.

>> you think, though, that people will start thinking that and we’ll see more days like we saw yesterday?

>> yeah, yeah. yesterday was a perfect example of what we like to see more often, which is generally mass entrance into the market but the stuff that really worked yesterday were the real companies, the companies that weren’t just economically sensitive and that’s what got us excited.

>> a lot of companies are reporting better than expected earnings but we also saw, as you mentioned, the economy slowing. what’s your outlook for earnings in the second quarter if things tailed off at the end of march, but not enough at that point to affect first-quarter earnings?

>> i think in the end it’s a good environment for companies. i think the economy, like i said, is still chugging along, maybe slower than what people expect but still chugging. i think that’s a good environment for companies. in the end, you know, it will be a little bit about cost cutting, too. but we like the market . we think we’re in the goldie locks economy and i hate to use the overused word but it’s not too hot, not too cold and that’s not a bad environment in which to operate.

>> as an equity strategist, give me your thoughts on the mergers of the exchanges over the past couple of days. will it make a difference in the way you do your business?

>> i don’t have a lot of insight into any of that. in the end we think the markets are generally fair t.may help big institutions but for us, i don’t have a lot of comment on those mergers. we get a lot of questions from retail investors every day asking how to play the mergers, should i buy the next big likely takeover candidate? and from our perspective, that’s one of the most foolish things you can do is try to figure out who gets taken over next, pay the extreemual already built into the stocks and in the end, nine times out of 10, those mergers don’t happen. if you’re looking to play the m&a game, you ought to play the m&a advisers, the goldman sachs is a great example, number one m&a adviser out there. they make money when the deals get done. we own that stock and recommend it here, as well.

>> anybody you want to stay away from?

>> who do you stay away from? a lot of the interest-rate-sensitive companies, some of the cyclicals. the pure cyclicals. think about the companies that can only do well if the economy’s really humming. those kind of companies, i think, will have a problem going forward. it may be semiconductor equipment companies, it may be the pure industrials like the caterpillars of the world. those are the kind of companies we’re a little cautious with, paring back, trimming. they’re the sources of funds investors need to look at those.

>> thank you very much, doug sandler, chief equity strategist at wachovia securities.

>> thank you.

>> next week, we’ll move deeper into earnings season. how is the market interpreting first-quarter results and what are they likely to do next? we’ll bring in june grasso with investor analysis after this break.
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Listen Market briefing --- Mike (fast)
Instinet --- Allan (slow)
NYSE --- Lisa (slow)

instinet, as well as the announcement of the new york stock exchange merging with archipelago.

>> after the news conference, i spoke with the c.e.o. of instinet about how the competitive landscape has changed.

>> i think one of the reasons why there is this need to get bigger on the part of people in the business is because the business is extremely competitive and very low prices, commoditized business without much differentiation between competitors.

>> i also spoke with nasdaq c.e.o., robert greifeld, about whether the timing of his deal had anything to do with the new york stock exchange’s announcement two days ago.

>> two deals this week, is there a nuclear arms race between the exchanges?

>> you’re seeing the reaction to the regulations coming in 2006 where you’re redefining the equity landscape nationally. when we started to think about it, we thought we would expand our view of the market internationally, also.

>> how does this change the competitive landscape overall? you compete with london, with germany, with tokyo.

>> with the new regulations, you’ll see a floor-based market going to an electronic platform following the lead nasdaq established in 1971. the fact that they go electronic allows the participants with nasdaq to trade more effectively with and against them. that’s an opportunity for us. this transaction puts us in an ideal position to gain share in the trading of listed stocks.

>> were you pushed into this direction to close this deal more quickly because of what the new york stock exchange did?

>> we’ve been involved with this transaction since the auction started last fall. we went to an exclusive state with the seller three weeks ago. there are a lot of players in the transaction, three deals in one. we had zero time to think about anything else.

>> flip it around. you’re already taking market share from the new york stock exchange, do you think they were pushed into their deal as a result of what you were up to?

>> i think the losers in the auction for instinet had to make certain decisions and they probably had to make them fairly rapidly.

>> you’re saying the new york stock exchange was one of the losers?

>> i’m just saying that the losers in the auction, i don’t know who they were, really had to rethink their strategic options.

>> did you look at the company they are doing the deal with?

>> what i say is my job is to talk to everybody in the space, whether they be from london, deutsche bourse, chicago, it’s part of my job responsibility and something we’ve done in the past and will continue to do in the future.

>> in the press conference, you said you would be maniacle, explain what that means?

>> we want to be focused on completing our trading plan, whether that’s to exceed for volume or new listings or in the financial products reason a.it’s the hallmark of the management style of nasdaq and of our corporate culture.

>> in terms of trading volume and the number of listings you have, what are the targets you’re setting for a year from now as a result of this transaction?

>> we decent have a hard target but clearly we want to win an increase percentage of companies that come to market . we typically win around 60%. we’d like that number to be higher. as we have the opportunity to community the value proposition of the nasdaq market model where you have electronics but you also have market makers competing with each other, we stand a very good chance of winning a listing.

>> in your vision of the world, do you see the floor traders at the exchange disappearing?

>> the floor traders are going to have to compete in the new electronic world. it’s their fundamental business challenge to make sure they’re able do that. if they do that well, they’ll prosper, if they cannot, they will have a difficult time.

>> i think small investors will look at these giants and wonder if prices will go up.

>> what you’ll see is better prices within our auto matching engines, enhanced liquidity, increased time priority in addition to price priority so we think all investors will win through this transaction. we think the american capital market system will be strengthened.

>> how dramatic a shift do you envision in the way people are buying stocks?

>> i don’t see a dramatic shift. we have seen a trend line where more people buy stocks electronically, directly accessing the market through their broker. that trend will continue. the fact that we have a large electronically accessible liquidity pool will help accelerate that trend.

>> one quick last question, what do you expect this deal to do for your own stock.

>> as we said, this deal will accrete to our shareholders within the first year. we also will see that in the second year we’ll realize about $100 million of cost synergies so it should be a very good transaction for our shareholders.

>> bloomberg l.p., owner of bloomberg news, competes with reuters in providing news, information and trading systems to the financial services industry. bloomberg tradebook competes with instinet in the business of matching stock trade orders. mike?

>> allan dodds frank. instinet shares sold off on the news of the deal. robert gray has more on that and the rest of the selloff on the nasdaq. robert gray is not with us but we’ll go to the new york stock exchange where bloomberg’s lisa leiter is at the big board. consumer stocks leading the way lower there in friday afternoon’s selloff.

>> the markets not only failed to build on yesterday’s rally, which was the best in a year and a half,,the dow and s&p erased most of their gains for the week. both indexes finish said slightly higher on the week. the benchmark indexes were lower most of the session, but late in the afternoon, the market indexes really took a turn for the worst after the “wall street journal” reported that north korea may be planning a nuclear test. weaker-than-expected earnings were the initial catalyst behind the move lower in household names. maytag, the stock falling the most in percentage terms after its profit plunged and fell short of forecasts. its credit rating was lowered. eastman kodak debt downgraded to junk, the company posting its second straight loss. the s&p retailing index, one of the worst performing groups on the s&p. the costco effect sending retailers lower. target, home depot and lowe’s among retailers moving lower after costco said it would miss its quarterly earnings. medtronics stock lower after the world’s biggest maker of spinal implants agreed to pay $1.35 billion to end a lawsuit. stocks moving higher today, there were some, oil-related stocks. oil had its biggest weekly gain in three months on concern that gasoline demand will outpace production. shares of exxon-mobil, conocophillips, chevrontexaco and schlumberger all higher. the major indexes have been whipsawed over the past week and a half by earnings reports and a concern that a pickup in inflation will force the federal reserve to step up the pace of interest rate hikes. the dow has moved 100 points in five of the past eight trading sessions. mergers were a theme in the market this week with the nyse-archipelago deal and today’s deal between nasdaq and instinet. i’m lisa leiter at the new york stock exchange.

>> eastman kodak said it lost money for a second straight quarter. red ink coming from the costs of plant closings and job cuts. excluding special items, the operating profit was a big miss and sales fell 3%. chief executive dan carp calls the results disappointing.

>> we had a number of executional issues. that doesn’t mean there’s a problem with the market demand. our digital products in march were up 31% in sales, only up 17% in january and february. as that continues on and we’ll have more digital sales this year than traditional sales, then we can close the gap as we go through the rest of the year. we won’t close it right away, but we can see market demand there and we’ll get operational issues behind us.

>> sales of film and other traditional photo products and services fell 18% last quarter. revenue from digital increasing nearly 1/4. a u.s. grand jury plans to investigate tom coughlin, former vice chairman of wal-mart. coughlin, who was the president and c.e.o. of wal-mart’s sam’s club stores, retired january january 24 after allegations of misappropriation of funds. last week, wal-mart stores suspended coughlin’s benefits after an investigation into his financial transactions. wal-mart says it’s not the subject of the probe. we’ll look at where stocks may be headed next with doug sandler, chief equity strategist at wachovia securities. that’s next at bloomberg news continues.

Google --- Deirdre (slow)
NYSE --- Lisa (slow)

>> google shares surging after beating analysts’ forecasts. internet sales rising in the u.s. and overseas. deirdre bolton has details. $216 on that stock we just saw!

>> google really benefiting from the fact they are expanding overseas, opening offices in india and adding a portuguese version of google email. one analyst with piper jaffray saying the overseas market is the wave of the future for google.
>> the international market to be in parity in terms of the generation with the u.s. in five years so it is really important for google to dominate that market the way they dominated the u.s. market , as well.

>> net income soared sixfold resulting in earnings per share of $1.29, sales also leaping last quarter to a higher-than-expected $794 million. google does face competition from m.s.n. and yahoo, the analyst says the company’s technology is the most innovative.

>> google established a very strong brand and brand loyalty and googling is a verb and as hard as others may try, it is difficult to unseat google.

>> in the past, investors had been concerned about internet ad revenue. one analyst with r.b.c. capital markets changed his outlook on google only yesterday after seeing yahoo’s results last evening. there is a tidal wave taking place with the internet advertising space, according to john tinker.

>> there’s a tidal wave taking place with internet advertising and it will only accelerate as more people go the cable and more time is spent on the internet and advertising is proved effective.

>> since the i.p.o., google shares up over 100%.

>> certainly during the day, we had stronger-than-expected earnings and economic news, both of those together lifting the major stock indexes from 2005 lows. we’ll get more on the trading action with a report from lisa leiter at the big board.

>> this was the dow industrials and s&p 500’s best rally in a year and a half, ending a string of losses that sent the dow down nearly to 10,000 on wednesday in both indexes to their lows of 2005. the rally primarily driven by a spate of better-than-expected earnings reports. money managers saying the tone of recent reports is more positive offsetting pessimism prevailing in the markets in recent days. the dow was down five out of the past six sessions and almost fell bow low 10,000 on a fear of inflation, following a bigger-than-expected jump in consumer prices on wednesday. warren buffett does see value in the market , at least in budweiser beer. the market gained momentum after anheuser busch announced berkshire hathaway became a significant shareholder in the company. another catalyst, economic news. a report from the philadelphia federal reserve showing that manufacturing activity in the region was at its highest level in the year and first-time claims for unemployment benefits dropped more than expected last week to a 10-year low, both of those reports allaying concerns about a slowdown in the economy and stocks supporting the rally, motorola, its quarterly profit, excluding an investment, topped estimates. u.p.s. with a 16% gain in profits and archipelago shares soared on news of the new york stock exchange buyout of the electronic market and that stock has almost tripled since going public last august. drugmakers, also big winners, schering-plough increased sales of cholesterol drugs, stemming losses from a year ago earlier. merck stocks higher after its quarterly earnings topped profit estimates, as well. i’m lisa leiter at the new york stock exchange, for bloomberg news.

>> we’ve been telling you the latest headlines crossing the last few minutes on the bloomberg terminal having to do with qwest raising its offer to $30 a share for m.c.i. more details available in the last empty or so, qwest saying it has $850 million in equity commitments from shareholders and qwest saying isis is its best and final offer for m.c.i. m.c.i. has accepted a lower offer to be taken by verdson -- verizon and qwest coming out with a higher offer, $30 a share, and also has $850 million in equity commitments from shareholders. we’ll bring you details as they are available. time for a break and coming up, time warner and comcast with a deal to buy the cable tv assets of brupt adelphia. devil ,

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Listen Market briefing --- Ellen (fast)
NYSE --- Allan (fast)
Interview: Both traders and investors win

biggest in in a year -- [captioning made possible by bloomberg television] investors are signaling they like the deal between the new york stock exchange and archipelago holdings. archipelago shares closed up nearly 60% on the day. now it is up to the members of the big board to decide if they like the terms. allan dodds frank is outside the new york stock exchange with the chief executive of revere data.

>> johna thain is upstairs explaining to members why he thinks the deal should go through. we are joined by the head of revere data and was a long-time employee of bloomberg. why does the new york stock exchange need to do this deal?

>> i think it’s a great deal because it gives investors what they’ve wanted all along, which is choice. archipelago has done a phenomenal job of developing a great o.t.c. business, derivatives business and are well along in that, have developed a fairly good listings effort and it pls a lot of destinations at this time and is better for investors.

>> how much was the stock exchange lacking in terms of what the deal brings them, especially electronically.

>> a lot of the criticism leveled against the stock exchange was the specialist system didn’t have the anonymity that an electronic system would have, it didn’t have the speed of execution, things like that. many of those topics were debated recently in washington with the s.e.c. i think this brings the best of both worlds to the stock exchange and is a phenomenal deal.

>> do you expect anyone else to make a bid? if this is such a great deal, the stock went up so much today?

>> it’s hard to say. it’s very hard to say.

>> how do you expect the management to work?

>> they’re working that out now, i guess, right. i guess they also announced they would be going public, as well. that takes a lot of the conflict out out of some of the things people were saying where it was a not-for-profit and so i think it’s―they’re making all the right moves.

>> two quick questions, do you expect the specialists to disappear in a couple of years and do you think the average man on the street buying stock will get better prices?

>> no and yes. i think the specialist system may be different from what it is now. certainly you don’t need a specialist to buy i.b.m. or g.e. or johnson & johnson but for a stock that doesn’t trade as liquidly as that, you do need a specialist and they provide tremendous value and i think where you have an electronic system, it will be the best of that world and the human system, the best of that world.

>> do you expect the stock to keep going up more if the deal is approved?

>> it’s hard to say but it should be. i think it’s a great deal for both parties.

>> glen woylner, thanks for joining us.

>> thank you very much. for more, we’re joined by c.e.o. of cybertrader and chief executive of options express holdings. thank you very much for joining us. vince, you think both traders and investors win. start with the investors. how do they win?

>> well―investors, because what we’re going to see here is more automated trading and that’s why the new york stock exchange want dodd this deal. they were tiptoeing with the hybrid system they had been working on but now with archipelago they’ve gone whole hog into electronic trading and will drive down costs for investors.

>> we have headlines our viewers want to hear about, qwest raising its offer for m.c.i. to $30 a share. we’ll bring you more details as they’re available. we turn our attention back to the conversation and david, let me ask you, how much of a threat is this to your company? i want to point out that you list your company on archipelago.

>> we are listed archipelago firm but we are so excited about the innovation archipelago will bring to the new york stock exchange. archipelago has made an aggressive move into the options space and that is our sweet spot and archipelago, with their acquisition of the pacific options exchange, now with the backing of the new york stock exchange, we think this is big for options and we think archipelago will bring the innovation, the technology and passion to the new york stock exchange system and remain in the leadership role that they so need.

>> how is that not a threat to you?

>> as we are a brokerage firm, we are there working with retail investors ensuring they are getting the best possible execution on their trade so we like exchanges. we like competition. we think archipelago has a great business model and what they will bring to the new york will only enhance the overall market . we benefit by having great liquidity and great exchanges.

>> vince, what’s your perspective? is this a threat to you?

>> it’s definitely not a threat and our customers and the clients of schwab, as well, have driven up the volume at the archipelago because they are an innovative company and that speaks for itself.

>> in terms of that innovation, what can that mean in terms of better pricing and faster execution? how quickly can people expect to see improvements.

>> vincent, i’m sorry about that. i would expect that immediately archipelago would be able to get access to the listed market and intface with specialists in a way that would allow new york stock exchange-listed stocks to trade at a better price quickly even while rolling out their hybrid.

>> i know jerry putnam will be aggressive and work towards integrating with the new york stock exchange environment.

>> i would say that that may be one place they struggled, not capturing a lot of the listed volume and this gives archipelago an opportunity to take a chunk of that.

>> how do you think nasdaq will respond, vince?

>> they’ve already made a deal or at least one in the making here with instanet so what we’re seeing now is the new york stock exchange, archa may be responding to that so you’ll have two large players in the u.s. equity markets competing aggressively head to head, i think that’s good stuff.

>> david, does this give you incentive to get bigger through a merger. you have done an i.p.o. recently and have that cash and i know expansion is a goal.

>> we’re very focused on our business and see great growth opportunity, organic growth on the existing business. we are always looking for opportunistic synergies, more so on technology side. our goal is to continue growing, our core business is the options space and we see tremendous opportunity ahead as a standalone firm.

>> where will that growth come from specifically?

>> that growth comes from growth overseas, growth in australia, singapore, hong kong, the pacific rim. we see great growth opportunities in our technology partnerships where we’ve leveraged our platform to interface with other software and financial service firms.

>> and, vince, what other consolidation do you think we can see in this space? we talked about the fact that nasdaq is reportedly in talks with instanet. what else can we see?
>> i think this definitely may be represents a wave of consolidation in the exchange area and i think that probably will lead to more looking around, what deals could be made. i don’t want to predict one but i think there are opportunities out there and some of the players will look around and say, what can i do to compete with these two gigantic players now.

>> we wrap it there and appreciate your perspective.

>> thank you.

>> have a great afternoon. right now, we want to bring you the latest on the headlines coming out having to do with qwest. qwest communications, fourth biggest u.s. local phone company, raising its bid for m.c.i. to $30 a share or $9.75 billion. this is part of the company’s attempt to derail m.c.i. what, it has done, it’s agreed to be bought by verizon communications. all along, qwest has offered more money and m.c.i. repeatedly has accepted verizon’s lower offer, saying the liquidity and other issues having do with verizon make it a better combination. the latest salvo in this ongoing battle for m.c.i., qwest raising its offer to $30 a share, according to those familiar with negotiations. qwest will pay, it says, $16 a share in cash and $14 a share in stock, increasing the previous offer from $27.50 a share. this is according to people familiar with the talks. m.c.i. shares currently up 3.4% in after hours trade. so we’ll bring you more details as they do become available. that is all we currently have. in the meantime, another stock higher in after-hours trade, google. after the earnings beat forecast.%  deirdre bolton has the story%  behind the numbers and joins us next.

Nasdaq --- Robert (slow)
Interview: Ford

>> shares of qualcomm are down in extended trading after the company cut its forecast. robert gray is standing by at the nasdaq marketsite. i have a feeling you have other companies to talk about, as well.

>> indeed, qualcomm shares down 5% in extended hours trading after they cut their forecast for the full-year profit, sales and handset sales. they see third-quarter earnings per share at 24 cents to 26 cents, below the average estimate of 28 cents per share for qualcomm. you see the shares on the screen, now down 4.6%. those shares, incidentally, already down 22% year to date, particularly after their last quarter forecast for the quarter just ended, saying those were disappointing forecasts, as well. it will be interesting to see, the stock dropped 8% the day after their last earnings forecast and we’ll see how they fare tomorrow, as well. albert lin telling us the biggest challenge for them is breaking into new markets and on the chip side, they are running into major competition from texas instruments. ellen mentioned other stories, today. ebay, that stock initially was lower on the earnings report, although they were boosting their forecasts. the shares have turned around, now up 1.3%. the conference call has begun and we’ll have more for you. meg whitman will be on with greg miles coming up shortly. they’re boosting their 2005 earnings per share forecast to 76 cents to 78 cents a share, pretty much bogating the average analyst estimate of 77 cents per share and boosting their revenue, as well. the upend of the forecast barely meeting the average analyst estimates of $4.36 billion. the growth slowing, the smallest profit gain of in three years, one of the reasons the shares haven’t risen more after their disappointing earnings and profit forecast from last quarter and analysts pointing out that they may be raising it, but the bar had been lowered after the profit disappointment from last quarter. david garrity says he’s cautious on the stock, that investors aren’t willing to pay up for ebay, still trading at over 40 times this year’s earnings.

>> robert, thank you very much. what we’ll do is put this into broader perspective, looking at how the averages closed for the day. stocks resumed their 2005 decline. government reports showed inflation rose more than had been forecast. the decline in the dow and s&p put those averages at their lows for 2005. the nasdaq, that drop represents a 1% decline. volume, 11% more than this time a week ago and over on the nasdaq, quick check there, over two billion shares changing hands --

>> ford stock up for the first time in nine sessions, but the outlook for the auto giant is not improving. deirdre bolton tells us why.

>> excluding some costs, first-quarter earnings and revenue declined less than forecast. net income dropped to 60 cents a share. sales last quarter also dropped. here, again, they were better than what investors and analysts expected for the current quarter, though, ford says it may post a loss. its auto operation is not making money. only its auto loan business is generating profits. portfolio manager at m.t.b. investment advisers says ford needs to cut production. ford is cutting output of cars and trucks 5% from a year ago. ford, like g.m., is losing market share to toyota and other asian automakers gaining ground. one analyst says the loss of market share is appalling. as for the stock, the analyst says it will get worse before it gets better. over the past year, ford down 30%, g.m. off 44%. s&p 500 during that time unchanged. some analysts saying ford’s only hope is continued cost-cutting. dan gentener with r.n.c. capital management saying what it comes down to for ford and g.m. is the need to cut costs like healthcare, pensions and benefits. the real financial difficulties revolve around those factors, he says. ford bonds dropping, as well. whether it will go to junk status or not, traders pointing out that the bonds are already trading at that level so no real practical impact on that space.

>> thanks so much. one money manager described it as a little better than we were expecting. he is talking about j.p. morganchase, which announced record first-quarter earnings, thanks, in part, to investment banking and bond trading. the company was also helped by the purchase of bancon. the net income rose over 17% to over $2.2 billion. earnings per share fell because the company issued stock to pay for the bank one purchase. coming up, the heads of fannie mae and freddie mac tell congress not to cut their portfolios, or else. learn what the “or else” means when we return.
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Listen Market briefing --- Ellen (fast)
NYSE --- Julie (fast)

>> the new york stock exchange has just announced it is buying the archipelago electronic trading system.

>> we believe our new combined company will be a world-class competitor in every respect. it will be good for investors and good for america. we will be stronger, more diverse.

>> people holding seats on the nyse will be given a chance to trade in their seats for stock in the new company and will own 70% of the shares. the big board has been trying to fend off challenges from electronic systems and from the nasdaq. john thain says the nyse trading floor will remain, it will not trade nasdaq stock. s.e.c. commissioner william donaldson had this to say.

>> it is ilstrative of the intense competition growing between the various marketplaces and i think that it illustrates vividly with the crossover with, let’s say nasdaq issues traded in archipelago and new york stock exchange issues, it illustrates the importance of the level playing field that we have tried to put in place between the various markets .

>> joining us now to get his reaction is professor, director of the center of study of securities markets at pace university, he was chief economist of the big board for 18 years . what is the most important thing to take take away from this?

>> it was quite a surprise. i do believe it’s a brilliant move by john thain. what it does is recognize that institutions now dominate the trading of stocks.

>> what do you mean by institutions?

>> the large mutual funds, the large pension funds, large retirement funds and they trade not in 100 shares or 1,000 shares or even 5,000 shares. they trade in very large lots, very large orders to execute and what has happened is competitors have grown up known as e.c.n.’s, or electronic communications networks, archipelago was one. that electronically match these large orders.

>> did he have any other choice?

>> i don’t think they had much choice but to provide an electronic execution service and of course the new york stock exchange was planning to do that in any case with its hybrid markets system, announced some months ago. what the new york stock exchange has accomplished, it has killed not two birds with one stone, but three birds with one stone. it becomes, as you said, it becomes a public company. a for-profit company with all the incentives that provides to the management. secondly, it becomes an electronic communications network, able to compete with the others, like instanet, recently acquired by nasdaq. and thirdly, it provides a diversification of products because archipelago trades nasdaq stocks.

>> reports that instanet will be acquired.

>> yes, reports, and i assume that will happen.

>> in terms of that, how much is his hand being forced? the real question becomes is this too little, too late for the big board?

>> i don’t believe so. i think archipelago is one of the largest players in the field and i foresee a great success for the merger.

>> is this the correct partner? reports that instanet is in play. is archipelago a second choice, is it the right choice?

>> archipelago has been an immensely successful e.c.n. and i think the combination will work very well to maintain the dominance of the nyse and not only in its dominance in trading, its listed stocks, but in trading other products it’s not now trading. it’s been largely a one-product shop but now it will trade nasdaq stocks, options, as well as companies that have not been listed on the big board.

>> you know, it’s interesting that it is archipelago because a.i.g., back in january, started talking about and doing a dual listing with the new york stock exchange and with archipelago as a sign that the nyse was perhaps losing significance. so in terms of that issue, tell us more about why this is the right deal in terms of keeping companies listed with the nyse.

>> the new york stock exchange has had 80% of the trading in its listed stocks and the fear has been that market share would decline. one brilliant stroke, the new york stock exchange has expanded its opportunities immensely. i will also like to mention this. there is ongoing a consolidation of trading markets . we’ve seen that in europe. we’ve seen it all over the world. there is over capacity in the industry, by that i mean too much capacity to execute trades in stocks and so there is every reason to consolidate.

>> what happens, then, to the regional exchanges?

>> i think, well, you know, as i recall, the pacific stock exchange was acquired by archipelago.

>> william, we’ll leave it there, thank you very much for your time.

>> my pleasure.

>> william freund is director of securities markets at pace university. we have julie hyman live at the new york. tell us, what are we watching for there?

>> definitely this has been a topic of conversation among traders. in talking to them what, we really need to be watching in tomorrow’s session to find out exactly how the folks who are members here at the new york stock exchange, the people receiving the shares in the transaction, how they’re reacting. we have to watch the seat prices. the last seat sold on april 15 for $1.6 million. according to john thain, what he talked about in the pres conference, these seats will be valued around $300,000 per seat, exchangeable for shares and $400 million in cash exchanged in this transaction in addition to the share trades. so that will being it, to see where seat prices to, to see if the members believe this transaction fairly valued the new york stock exchange versus archipelago, if it’s a good deal in their minds. it’s an interesting quandary because not only will someone who owns a seat here have to think about, is this a good deal in the grander scheme of things for the new york stock exchange. if they trade here on the floor, if they use that seat, they’ll have to think about whether it’s good for business for them versus how archipelago will be integrated into the business of the new york stock exchange so a lot of questions for folks here to ponder and definitely this is a sign that john thain is trying to move things forward and take the new york stock exchange into the next era. not only is this going on, there have been talks about early trading, an extended trading day. john thain at the press conference saying that has not been decided, whether the trading day here will be extended. the c.e.o. of archipelago, jerry putnam, pointing out that their trading day goes from 4:00 a.m. to 8:00 p.m., which is not an option on the trading floor but john thain is considering that option and has been talking about the hybrid system which is expected to be enacted around the same time that this merger would close, which is in about 12 months’ time. a lot of changes in store for the new york stock exchange and definitely a lot of things for people here to digest. ellen?

>> julie, the report came out about an hour before the press conference happened so i’m curious to hear what kind of buzz and reaction there was in the initial minutes when people were anticipating and figuring out what was going on.

>> there was a lot of buzz. people have been talking about it all day, trying to figure out what was going on. the problem, before the press conference happened, there were few details so people were reluctant to talk about it. they heard that archipelago and the new york stock exchange was doing a deal but it wasn’t clear what. if it was going to be an acquisition, a merger, if the new york stock exchange was just buying some of archipelago’s technology so people weren’t talking a lot about it. they are excited about it but wanted more detail it’s financial nature of the transaction to decide exactly how they felt about it. most of the people here have left the day so we’ll bring you more detail tomorrow in terms of trader and member reaction.

>> julie, thanks so much for the report. we will continue to track the story and get reaction throughout the afternoon. also reaction to the host of earnings that came out after the bell today. qualcomm, motorola, ebay. ebay boosting its forecast and profit and revenue this year. also, you have the dow and s&p closing at new 2005 lows. we’ll also bring you details on the trading day. keep it here.

Interview: Wells Fargo
>> wells fargo turned in a record profit thanks to growth in consumer lending. earnings up 5%, coming in at $1.08 a share. chief financial officer, howard atkins, joins us from san francisco to go over the numbers. thank you very much for joining us. when i saw your numbers and it was better consumer lending, i thought, well, you know, mortgage business but the mortgage business has to start tailing off because interest rates are rising and then i looked at the latest interest rates from freddie mac last week, 5.9%, lower than in the same week a year ago, it was over 6%. so your business has to look good going forward?

>> on average, interest rates were higher in the first quarter than they were a year ago but despite that, our mortgage volumes were as strong in the first quarter this year as they were the first quarter last year. there has been a shift from refinancings from a year ago to more of a purchase mortgage market and that plays to our strength.

>> how much do you think that that is going to continue? a lot of people saying at some point the business has to tail off and we saw a big drop in housing starts today.

>> again, a lot of people predicted a year ago that volumes are going to drop and in fact they haven’t. what’s happening is, as the economy expands, more people are buying homes and financing those home purchases with mortgages and that trend could very well continue.

>> we’ve seen interest rates very low. a lot of companies refinanced over the past year or two. they can issue stock, they can issue debt. how’s your corporate loan business going? do they need to go to you and are they doing it?

>> we’ve been very fortunate, six quarters in a row, now, seeing increases in commercial loan volume at wells fargo. the last two quarters, we saw double-digit increases. the last quarter, first quarter of this year, i should say, our commercial loan and commercial real estate loan volume combined was up 12% to 15%. so we are seeing and have seen for a couple of quarters now, good increases in commercial loan volume.

>> is this short term commercial paper kind of loan volume or long-term expansion, business is getting better, we’ll keep coming back to you for more money kind of volume.

>> i wouldn’t characterize it as short-term commercial paper. we’re seeing loan demand from small business borrowers, middle market customers. those are the markets we are in as opposed to the large corporate market and we see pretty much across our geography and the states and sectors that we deal with at this point.

>> you mentioned the states that you do business in, any thought of expansion at this point by acquisition outside of your footprint right now?

>> no. we’ve been really articulate in the past about that. we like our markets . they’re very high-growth markets , high population growth, high income levels. we have strong positions in our markets . we know these markets very well and if we do any acquisitions, we like doing fill-in acquisitions in these markets . i should also say our growth is not dependent on acquisitions. we’ve been getting double-digit growth without having done major acquisitions in the last couple of years.

>> you’re not a small bank. you cover quite a bit of the united states. what you do see for the economy and for your bank going forward? continued strength in a lot of questions in the stock market recently about how strong the economy really is.

>> the economy, i think, has been on an upward trend for a period of time. obviously, it may not go up in a straight line fashion. it usually doesn’t. it does have ebbs and flows in it but certainly through the fourth quarter of last year, early part of the first quarter of this year, we’ve been seeing reasonably good strength, both consumer and commercial.

>> you’re not hit as hard by energy costs perhaps as some, but what are you doing to control costs as prices start to rise? we’ve been talking in our show today about inflation picking up a bit.

>> i think energy has clearly picked up. inflation in general hasn’t picked up significantly. so our costs are well controlled. what we’re aiming for is double-digit top-line revenue growth and expense growth to make that happen but expense growth at a lower rate than our revenue growth and that’s where we’ve been in the past couple of years.

>> are you raising prices for services at this point?

>> prices go up periodically in line with market demand. but basically in line with inflation.

>> one last question. as your company goes forward, the economy in reasonably good shape, what about hiring at wells fargo?

>> great question. we’ve actually been hiring all along, particularly sales people across virtually all of our businesses. we really believe that increasing our distribution capability, both sales people as well as branches, is the way to grow the company and we’ve been doing that consistently and successfully for a while now.

>> thank you very much. howard atkins, chief financial officer, wells fargo and company.

>> thank you.

>> speaking of banks, sovereign bancorp coming out with stronger-than-expected quarterly earnings.%  we’ll go over those numbers with their chief executive when we return.

在线播报
Listen Market briefing --- Mike (fast)
Intel --- Deidre (slow)
Nasdaq --- Robert (slow)
NYSE --- Julie (fast)

deirdre bolton has been crunching the intel numbers and joins us with the latest. deirdre?

>> the semiconductor maker reported better-than-expected first-quarter earnings lifted by sales of chips that power laptop computers. intel saying while second-quarter sales will meet analysts’ forecasts, there have been concerns about a tech spending slowdown. let’s give you the numbers. earnings came in at 34 cents a share, three cents above analysts’ forecasts. revenue also coming in higher-than-expected, at $9.43 affect tech trade for the entire semiconductor group. the s.g. cowen analyst says the rally may not last long, since chip sales tail off in the summer.

>> a lot of concern about the summer months. july and august are a big concern to us. we see strength in the early part of the second quarter, strength from september through december. there’s a rough patch in between and i think investors are pricing that in.

>> for the moment, intel likely to help tech sentiment.

>> deirdre bolton. yahoo shares also rising in extended hours after their earnings beat the average estimate. they’re up about 5% right now. for more, we turn to robert gray standing by at the nasdaq marketsite with the latest.

>> deirdre mentioned helping sentiment, absolutely. pat becker jr. at becker management telling me today prior to the release that he saw the market responding well to the earnings and expected more of the same through today and throughout the busy week of earnings and he is getting it here in the after hours. nasdaq futures rising after the yahoo-intel, one-two combination. you see the futures rising there and the nasdaq 100 after-hours indicator rising, as well. as soon as intel came out, it started rising. yahoo came in, the one-two combination and sending that higher, as well. now to the numbers. yahoo seeing second-quarter sales of $855 million to $905 million dollars, above the range. so, helping to boost the stock as we were getting an idea that yahoo is bullish on this quarter and beyond. for the full year, they see revenue, excluding items, $3.57 billion, up to $3.75 billion, higher than the average analyst estimates, the entire range. the estimate there, $3.52 billion. as for the first quarter they reported, profit more than doubled. they sold more banner ads, more paid search results, coming in at 13 cents per share, higher than the average estimate of 11 cents per share and matched the whisper.com number, many traders use which can be higher than the average analysts’ estimates. these estimates do include the stock-based compensation and american technology research mark mahaney was looking for that beat and raised quarter on both of those factors, as well as jerry byrne. google shares up $7, ebay rising and amazon.com rising, as well. during today’s session, amazon was near a two-year low. ebay’s stock was also falling, down more than 1% in the session. ebay reporting tomorrow after the close and we have amazon reporting next tuesday after the close. again, mike, it looks like we’re pointing towards a higher open as far as the earnings go this afternoon.

>> futures prices up about 11 points right now for the nasdaq. robert gray. let’s get you to today’s closing numbers. stocks ended higher thanks to stronger-than-expected earnings at coca-cola and general motors, which was a little bit less of a loss than people had forecast. the dow jones industrials finished the day up 56 points at 10,127. the s&p 500 up six points, call it almost seven, 1,153 for the close there and nasdaq finishing higher by 19 points, 1,932. the benchmark 10-year u.s. treasury note surged today. march wholesale prices climbed less than expected after you factored out food and energy and the 10-year note up .5, the five-year note up, in the belly of the curve, up 3/8. bank of st. louis president william poole saying this afternoon that inflation is well contained. intel’s news today, adding to a day when a number of technology companies’ earnings beat estimates. we’ll go to julie hyman at the new york stock exchange for% -another look at today’s trading session.

>> stocks indeed continuing their rally today. there are a number of reasons behind the rally. we did see semiconductors and energy lead and a couple of reasons for that. energy shares doing well with the price of oil gaining. no earnings out from energy-related companies, nonetheless, their earnings are expected to outperform the rest of the market when they report later this month. earnings and forecasts that were released today generally did beat analysts’ estimates in a wide variety of industries, helping matters. and the producer price index report this morning reassuring folks about the pace of inflation in a potentially slowing economic environment. if you look at the breadth of the market , a positive sign, more than two-to-one margin of advancers beating decliners in the session and volume not as heavy as it was at the end of last week but nonetheless, above the average for the year. to give a few more details on what we saw in today’s session, texas instruments, beating analysts’ estimates, mostly with its forecast. because of that, those shares up 5%. the company saying chip demand is recovering and chip sales should recover. we saw other semiconductor makers and semiconductor equipment makers also recover in the session on t.i.’s news. also in technology today, we heard from e.m.c. that company doing very well, a gain of 13% in today’s session. that company saying their net income in the first quarter almost doubled. sales up 20% as they sold more profitable software and lucent, another company in the technology group that did very well today, second-quarter profit quadrupling as demand for wireless gear boosted sales. as for particular energy movers, valero, whot, a couple of gains there. also natural gas stocks on expectations their earnings as a group will rise 40% in the first quarter. that gain second only to that of basic materials. i’m julie hyman, bloomberg news, at the new york stock exchange.

>> we have headlines, now, crossing from the u.s. capital. a senate panel, foreign relations committee, has delayed a vote on john bolton’s nomination to be ambassador to the united nations. it said it will explore further allegations against mr. bush’s pick to be u.n. ambassador. mark crumpton was discussing that a short time ago and will bring you the latest in 20 minutes. crude oil had its biggest gain in eight weeks as speculation grew that gasoline demand will strain supplies. general motors, falling u.s. sales and market share produced a loss for the latest quarter, a penny better than expected by analysts after their mid quarter update. we’ll have a detailed look at g.m. later in the hour. merrill lynch says profit fell for a second straight quarter. costs rising and revenue growth slowing. first-quarter net income $1.21 a share. revenue rose 3% to $6.2 billion. the company plans to buy back as much as $4 billion in stock and is boosting its dividend. pfizer said today first-quarter earnings fell 87%, because of costs to return overseas profits to the u.s. the decline on the heels of expenses related to the bextra painkiller suspension. excluding special items, earnings for pfizer per share 54 cents. we will, as we mentioned, take a closer look at general motors later in the hour. we’ll also look at wells fargo. it turned in record earnings just shy of what analysts predicted. we’ll look at the numbers with the company’s chief financial officer, howard atkins, coming up.

Interview: Nasdaq site

>> the nasdaq ended three days of hoss with a―losses with a small gain ahead of a busy week for tech earnings.

>> the nasdaq composite posting a small gain as the busiest week of earnings reports gets underway this current earnings season. investors looking for a catalyst to see if stocks will continue sliding or going higher. john glassman not seeing followthrough today, seeing further downside ahead for stocks. he says if earnings come in better than expected, then well won’t be an upside surprise to send them higher. he says major indexes will find their lows in the next four to six weeks. the strongest groups in monday’s session, among them semiconductors, the s.o.x. rebounding from a loss last week. texas instruments up after the close and intel reporting on tuesday after the close of regular trading, a big one that will send stocks either higher or lower, according to traders and investors. wanted to look at internet stocks reporting this week. google rising on monday’s session. ebay, the best performer in the nasdaq 100. google reports thursday after the close. ebay, wednesday after the close. ebay, incidentally, intraday, touching its lowest price since january 12 of last year so it illustrates the push and pull of today’s session, bouncing between gains and losses ofch of the day. amazon shares rising, they report tomorrow after the close. a couple of m&a’s deals to tell you about today. in the software group, adobe systems buying macromedia. macromedia, which makes dream weaver and flash media web design software programs and macromedia shares surging and in the video game retail group where they sell video game software and hardware consoles, as well, electronics boutique purchased by gamestop, both of those shares rising on news of that deal.

>> we have headlines crossing on “monday night football,” moving from abc tv to espn, replacing that on the “sunday night football” on nbc. nbc announcing a deal with the national football league to televise 17 regular season games and super bowls xxxxiii and xxxxvi. espn, which had telecast sunday might football gives way to nbc. more news coming up on that as it becomes available but lots of changes in the rights business for nbc. budgetf america came in with first-quarter earnings and profits soared 75%, thanks to the takeover of fleetboston.

>> we did see that company top analysts’ forecasts, excluding one-time yms, topping the consensus by 22 cents. even though profit growth may slow 5% this quarter, c.f.o. markoten―oken expects the business loan demand to continue to grow.

>> the level of dialogue between our commercial customers and our associates continues to be very active and we’re optimistic they’ll continue borrowing.

>> on the consumer side of the bank, investors wonder if americans faced with rising oil and higher borrowing costs will spend less. oken says, so far they have not seen changes.

>> at this point, there’s no noticeable change. underlying credit quality continues to be very good. our equity borrowings from consumers was above 20% for the quarter.

>> but, some say bank of america is overdependent on retail banking.

>> the the thing that keeps me on a hold on bank of america is i have trouble growing the top line in the 2005 and 2006 given their relative overdependence on retail banking domestically.

>> there are concerns that bank of america’s growth may be weaker than what the bank itself is forecasting. richard bove saying there were a lot of good things in the quarter but more than half of the earnings increase was due to non-re-occurring events and none of that is sustainable. the pressure point for all of these banks is the federal reserve’s future moves. as alan greenspan raises%  interest rates, companies’ profit margins are squeezed. jeff harte says the rate increases are important.

>> if they’re raising rates because the economy is strong, that’s good for business. if they’re raising as a preemptive move on inflation, that’s not as good.

>> 18 analysts following bank of america consider it a buy, eight consider it a hold and one recommends selling the stock.

>> coca-cola has settled a complaint with the securities% -and exchange commission after being accused of urging japanese bottle ters to boost revenue. if you’re a sirius satellite radio subscriber, soon you can tune into the martha stewart channel. allan dodds frank will have that story next.
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Listen Market briefing --- Mike (fast)
Interview: Adobe & Macromedis
NYSE --- Julie (fast)

the company says revenue may be as high as $3.25 billion next quarter. the c.e.o. says the market environment is improving. we have a major deal to tell you about today. adobe systems is buying macromedia for $3.4 billion in stock. the deal bringing the world’s biggest maker of graphic design software together with the maker of flash web design software. each macromedia share will be worth about .69 adobe shares, valuing macromedia at $41.86 a share, a 25% premium from friday’s closing price. adobe’s c.e.o. says the deal helps the company expand into new markets . speaking of the adobe c.e.o., bruce chisholm and macromedia c.e.o. join us from california for a look at the deal. let me ask you first, bruce, if i could, everybody is saying this is essentially putting a slingshot in david―a rock in david’s slingshot to take on the giant, microsoft, as they prepare to move into your territory. is that how you see it?

>> absolutely not. i think people like drama and that’s why they say that. if you look at adobe and our mission, it’s always been about helping people and organizations communicate better and what i mean by better, making sure that information that needs to be compelling or impactful or reliable or relatively secure, people who need to diso do that or organizations that do that use adobe solutions. that’s not a major focus of microsoft. and while they might try to or might plan on doing something there, the reality is, we have been at this for so many years, we don’t see it as that big of an issue.

>> i think it’s safe to say, as well, that for both macromedia and adobe over some number of years, there have been areas where we’ve been cooperative with microsoft and other areas where there’s natural overlap and it’s safe to say those conditions will prevail.

>> stephen, let me ask you, you have been at this for a long time. you’ll end up with about 100% of the software design market for webpages when this deal is concluded of the if it’s concluded. do you expect any antitrust problems?

>> i wouldn’t characterize it that way at all. in the context of microsoft, they have a product called front page, which, for a certain component of the market , is a very competitive product so so i don’t look at it at all as 100% but i see an opportunity to take two complementary agendas, put them together and allow us to compete more competitively in the future.

>> bruce, do you see problems from the justice department?

>> not at all. not only is microsoft front page a competitor in that category, but there’s a number of other hand coding tools and other offerings. if you look at go live, adobe’s web layout source, it’s mostly toward the designer and dream weaver is mostly toward the developer so we don’t think it’s a dealer.

>> your stock many trading -- has been trading at a historical premium but with a liquid balance sheet. is your use of stock a comment on the stock’s valuation, that it might be overvalued?

>> i can’t comment on the value of my stock. i’ll let the financial community determine that. all i could do is talk about the growth opportunities that are ahead of us both as an independent company and in the future as a combined entity. we participate in market segments that have a lot of growth opportunities to them. whether it’s digital photography, with products like photoshop and photoshop elements, whether it’s the creative professional space with products like in design and the creative suite or whether it’s the enormous enterprise market , for us the mission critical document work load. those are big opportunities and we think they represent large potential for adobe and over time, that will be reflected in the stock price.

>> mr. elop, you were trading at multiyear highs, the most expensive p.e. ratio multiples since 2003. what drive the timing, begin that?

>> a couple of things drove the timing. it was our feeling that the best time to consider a combination like this is when you’re doing so through a period of success and strength. the same is true for adobe. both companies over the last couple of years have been doing remarkably well and for combinations like this to be successful, bringing together two strong, successful companies makes it a whole bunch easier. also, as we considered something like this, it wasn’t at all about a particular point in time or spot price or anything like that. it’s very much about the long-term potential and as we considered what the complementary agendas could look like over time, it was clear to us this would be great for shareholders, customers and employees.

>> looking back historically, there have been problems with software mergers in terms of integration. what are you going do to make sure this works? this is much different. i have said numerous times that in order for adobe to do a large acquisition as we are are with macromedia, there would be two conditions, one being that it would need to be very strategic and clearly this one is. the second is, we would need to be convinced that we could integrate the company into adobe and because the cultures are relatively the same, because our visions are common in nature, because people are passionate about innovation and technology, we’re located locally here in the bay area and our business models are very similar, even though we do believe integrations are difficult, we believe this one is certainly doable.

>> thank you very much for joining us, bruce chizen, c.e.o. of adobe systems and stephen elop, c.e.o. of macromedia. u.s. stocks were mixed after last week’s drop in semiconductors. for more, a report from julie hyman at the big board.

>> the same concerns that plagued the market last week were still around this week but some investors could not resist the bargains to be had after we had the declines in the dow and s&p and nasdaq last week. if you talk to investors today, they were still talking about concerns about slowing economic growth and slowing profit growth but on the other hand they were also talking about attractive valuations. i talked to director of value strategies at fifth third bank, managing $10 billion under their value investing arm and he said you have the worst of both worlds, higher interest rates and lower earnings. on the other hand, the lower the markets go, the more attractive and better the values become. that was the push and pull we had today. as for groups that did the best and worst, it was a flip-flop of what we saw last week. some of the groups seen as most economically sensitive suffered last week and came back today. some examples, semiconductors recovering in today’s session. the dow transports, which have gotten a lot of attention this year as they’ve been lagging, doing well today, and basic materials coming back with steelmakers and chemical makers participating in a rally in that group. the groups that did the best last week declined in today’s session. healthcare equipment and services companies did not necessarily participate in a rally last week but they definitely got hit today, down about 1% in anticipation of earnings later this week. we had drug stocks doing poorly today after doing very well last week, one of the few groups that did well and we had food and beverage stocks declining today. one of the reasons the dow underperformed the s&p so much today was mostly because of 3m, coming in with its smallest sales gain in 2 1/2 years’ time and that drop in the stock of 6% is its biggest drop since july of 2002, holding back gains in the dow today. i’m julie hyman, bloomberg news, at the new york stock exchange.

>> let’s go through the numbers that julie referenced -- looking at the other major indexes today, the new york stock exchange composite finished. up as did the russell 2000, the amex down on the day but the wilshire, broadest measure on the market , finishing higher by almost 37 points. looking at the bond market , a losing day for bonds with the 10-year note down 1/4, yield at 4.26% -- more detail it’s bank of america record first-quarter earnings report coming up with deirdre bolton. stay with us.

Interview: Al Goldman

>> here’s something to consider. general electric reports a 25% gain in profit. citigroup said profits are a record for the first quarter and the dow jones industrials fall almost 2%, the nasdaq hits a six-month low. to find out what’s going on, we’re joined by al goldman, chief market strategist with a.g. edwards, joining us from st. louis. thank you very much for joining us. awful lot of fear, it seems, on wall street right now. is this a herd thing that maybe after we take a weekend break we’ll see it turn around?

>> i think you described it pretty well. i saw a high degree of just dumping of stocks today, kind of the washout phase. we’ve had three nasty days in the market . investors have been in a bad mood ever since the stiff correction started in the first part of march and that’s understandable. the mood has become one of the glass is half empty and therefore even good news is looked at negatively like the drop in oil and the drop in the c.r.b. index and the rise for the dollar. these are positive for the economy. but we did see a degree of capitulation today and i think a couple of days on the golf course over the weekend and you’ll see the market attempt a reflex oversell rally at least on monday.

>> we’ve seen a big rise in volatility this week. the v.i.x. index, to look at that on a friday, it’s jumped over 16 and it was down at 11 yesterday or the day before. does that tell you anything about how much saying power -- staying power people have in the markets right now?

>> not really. the v.i.x. indicator is not a very good good short-term indicator but at this point out, people are not complacent and that’s understandable. portfolios are down sharply. people have forgotten the big rally from october 26 and after the november 2 election but the mood is what controls the market . and when folks are feeling grouchy, they look at everything in a negative mood. markets were thin until today. today we had a big increase in volume, which makes me feel a little more comfortable that we have gotten that bang in the market , you know, the bear market―i should say bull market corrections end with a bang, not a whimper, as the poet said. we had a pretty big bang today.

>> people have often said that two bellwether stocks are i.b.m. and general electric. they had diametrically opposed earnings releases. which one will the street believe long term? they went to the i.b.m. story today.

>> i don’t think it’s like it used to be when the country was controlled by big blue and we were a purely industrial nation. it used to be general motors, but in today’s world, i think we’re a much broader scope. the important point is that corporate earnings, whether you look at g.e. or i.b.m., corporate earnings will be up in the area of 7% to 9% this year and so far even preannouncements have been better than expected, have been up from consensus so far and we haven’t gotten the good earnings releases so i’m not worried about corporate earnings and we’re still optimistic on the economy but we did have a soft patch in the economy that started in mid march probably because of the jump up in oil and gasoline prices and retail sales did come down a bit but we think that’s temporary. we think we’ll see 3.6% g.d.p. growth this year.

>> what’s your forecast? are you changing?

>> no. i’m not. i started―well, in december, my prediction for the s&p 500 was up 7% to 1300. right now, it’s closer to make my 1300 would be a 11% or 12% rally and that may be aggressive but the important point is not a specific guesstimate on where the market will be, but the direction. based on a pretty good economy, pretty good corporate earnings and a market selling at 15.9 times this year’s estimated earnings, indicates the market will be higher. exactly where, nobody knows.

>> we were speaking with craig coach a few minutes ago, a bond strategist, about the treasury department report on foreign investment in the united states. while people have been buying a lot of u.s. bonds overseas, there has been weakness in equities. why aren’t we attracting a lot of foreigners to u.s. equities right now?

>> we will. foreigners classically are not great timers of our market . i was pleased to see foreign money come into our bond market in february and march because everyone thought the opposite would happen. but we’re still the safest economy, marketplace to invest in the world and i think that will continue. and with the dollar doing better, people have seemed to have forgotten the last couple of weeks, that will also help. i’m optimistic and believe that this sharp drop off in interest rates, particularly the 10-year treasury, is due to more of a flight to safety rather than prediction of a bad economy.

>> i have 30 seconds left. any worries about the federal reserve? are they steady as she goes and off the charts right now, off the mind?

>> i think the fed is going to continue to raise something like 25 basis points. fed funds are now 2.75%. by year end, maybe 3.75% or 4%, something like that, and it will be steady as you go, i believe, and the recent market pullback helps them in that case.

>> thank you very much, al goldman, chief market strategist with a.g. edwards. as we’ve been talking about shares of general electric and citigroup rising after both companies report higher profits. su keenan will take a closer look at the earnings season thus far, next.
在线播报
Listen Market briefing --- Mike (fast)
Slowing earnings growth --- Deirdre (slow)
NYSE --- Bob (fast)
Nasdaq --- Robert (slow)
>> interest rate futures indicating traders expect the fed’s target lending rate to be closer to 3.75% rather than 4%. the rate currently 2.75%. for the week, all of the indexes down quite a bit. the dow jones and s&p more than 3%, the nasdaq finishing down more than 4.5%. i.b.m.’s disappointing earnings sparked losses in technology shares worldwide. i.b.m. at the close finishing down almost $7 on the day, $76.70, an 8% loss. also helping the decline, a dollar loss for general motors, almost 4%, and alcoa down on the day by almost 50 cents. an improved profit outlook from general electric and better-than-expected numbers from citigroup failed to boost the market . we’ll speak with the chief market strategist with a.g. edwards coming up. investors are worried about the one-two punch of slowing earnings growth and higher interest rates. deirdre bolton has the story.

>> stocks dropped worldwide as earnings fell short at i.b.m., samsung, ericsson and citigroup, disappointing investors. i.b.m. closed down 8%, the biggest drop since april 2002, the latest news to push investors to rethink their forecasts for the economy.

>> the bulls and bears will agree that the economy is slowing down.

>> some say the slow revenue growth at i.b.m. and citigroup is particularly disturbing.

>> especially on the revenue side. the revenues are reflecting what’s happening in the economy.

>> technology and hardware companies were the heaviest weights on the stock market . a who’s who of high-tech names sank. i.b.m. said it had trouble closing deals at the end of the quarter, a sign that c.e.o.’s are pulling back on spending. consumers appear to be doing the same thing, which raises a new batch of questions about how the federal reserve will react to a slowing economy.

>> the question being, will they continue to raise, will they raise too high, to where this will totally choke off growth in our economy and really cause a big problem for the stock market ?

>> if alan greenspan raises rates too high, the u.s. could fall into recession. the only group with any sizable gains today, drug stocks. eli lilly won a court case protecting its best-selling schizophrenia treatment from generic drug competition, lifting other drug stocks with patent fights of their own -- pfizer, bristol-myers squibb and abbott labs closed higher. genentech with an all-time high, a study showing their drug, avastin, slows down the progression of breast cancer. this pharmaceutical group is one of the five worst performing groups in the past year, underperforming the s&p 500 by 6%. mike, back to you.

>> deirdre bolton. more on i.b.m., which led technology shares lower. bloomberg’s bob bowden has more on that from the new york stock exchange.

>> yesterday, on thursday, the dow and s&p 500 fell to their lowest points of 2005. today, both indexes fell to new lows of 2005. checking the dow jones industrial average, there’s the year-to-date chart on the right side, 10,087, down 6.5% for the year. the intraday chart showing a linear, downward move for the dow and s&p for three sessions in a row, not just friday’s session. and at 10,087, one more day like friday and we’ll be below the 10,000 mark, not seen since october 2004. i.b.m. reporting first-quarter earnings only 85 cents a share. analysts expected 90 cents. revenue also missed estimates. that stock down 8.3%, shares falling to a two-year low, down for their 11th consecutive session. the rest of the tech market went with it. texas instruments, a.m.d., national semi down and micron down on the day. a.m.d. now down 30% year to date. data storage stocks like e.m.c., seagate, storage technology and western digital down on the day. computer services also down, including e.d.s., down 4.6%. computer sciences, s.r.a. international, both down over 4%. oil stocks also down. they had been the darling so far in 2005 but fell today as crude prices were down with exxon-mobil and occidental -- all down between 4% and 5%. conocophillips and marathon, as well. saks shares fell the most in 3.5 years today, the company saying they’re expanding an internal accounting probe and will not meet the deadline for their annual report. other retailers flounder, as well, like j.c. penney, home depot and abercrombie & fitch. i’m bob bowden, reporting from the new york stock exchange for bloomberg news.

>> want to go over to the nasdaq where tech shares led the nasdaq to its lowest close in six months. robert gray has details on the nasdaq trading from the market site in times square.

>> i.b.m.’s profit disappointment and concerns that the u.s. and global economies are slowing sent the nasdaq to a six-month low in friday’s session. we did see volume exceeding two billion shares for the first time sincesfriday, march 18, also a day of declines for the nasdaq. we also saw a measure of volatility on the nasdaq, rising some 21% to its highest reading since election day. we did see today’s decline was fairly widespread, led by telecom and tech stocks and also transport stocks were falling as there was concern there would be fewer commodities and consumer goods to ship if the economy is slowing down. the decline was widespread and broad throughout different groups, as well. we saw sun microsystems, after their profit disappointment from thursday evening. apple computer falling for a second day after its profit disappointment, the worst performer on the nasdaq composite index. we also saw petco shares falling as it said its fourth-quarter profit will fall and asked for a 15-day extension to determine whether or not it will restate fourth-quarter results. google shares also falling below its 200-day moving average, just ahead of its earnings, due out next thursday after the close of regular trading. there were a few gainers in friday’s session. we saw cree, maker of chips that light dash boards and cell phones, their earnings came in better than the average estimate and forecast at the high end of their forecast exceeding the average analyst estimates by one cent. starbucks rising, bear stearns raising it to an outperform with a $60 target and electronic arts and video game makers rising after data showed sales up 32% in march year over year, piper jaffray saying that beat their estimates and software publishers benefiting from the launch of the sony p.s.p. model.

>> crude oil fell for a second week as higher output from opec countries bolstered inventories. crude for the week is down a little over 5%. friday’s close, oil finishing down, as well, over 8%, a 64-point loss. currently, a barrel of crude oil going for $50.49. among other energy movers, unleaded gasoline, heating oil and natural gas all lower. what’s the outlook for oil prices heading into next week? the latest bloomberg survey shows the majority of traders and analysts expect prices to continue falling. in the industrial production report today, the fed said overall production rose .3% in march, reflecting increases in mining and utilities. manufacturing fell .1%. the gain compares with a .2% increase in february. the share of industrial capacity in use rose to 79.4%, the highest since december 2000. the fed admits, by the way, the report was accidentally released 15 minutes early on its website and they blame human error. mixed reaction from bond traders. a big move on the long end in the trading day but not much in other durations. the 10-year note finishing up almost 7/8 -- the dollar, on the, trading lower, falling against the yen, euro and british pound. the chicago board of trade is one step closer to becoming a public company. members of the 157-year-old exchange approving a plan to convert to a for-profit company. the vote, 98-1. the vote may be followed by a ballot as soon as this quarter to allow a public share sale. the chicago board of trade is the second biggest u.s. futures market . the benchmark stock indexes had their steepest weekly declines since august . when. when we return, we’ll speak with one equity strategist who expects the volatility to continue, but to the upside. hear more from al goldman of a.g. edwards, next.

Interview: MCN Capital Management

>> morgan stanley lost another senior banker today. making it the fifth departure from the firm in the past two weeks. vikram gandhi will be joining credit suisse first boston. he has held his position at morgan stanley since 2003. phil purcell has lost bankers recently as he battles calls by former executives for his ouster. also making news today, sales at u.s. retailers rose in march. demand for easter goods offsetting record gas prices. the shift of the easter holiday this year to march from april helped retailers. u.s. retail sales climbed as much as 4.5% according to an estimate by the international council of shopping centers. gas prices as high as $2.15 a gallon and the coldest march in four years limited sales gains. larry jones, portfolio manager at m.c.n. capital management, joins us for a closer look at the retail industry. he helps manage $2.2 billion in retail shares, including wal-mart shares. what’s your take on the data today?

>> it’s really interesting. we have changes in the calendar to look at, anniversary of strong versus weak numbers depending on which retailer you want to look at and we have the impact of high gasoline prices. all in all, it was a reasonably good period for teen apparel retailers, with the discounters having more difficulty. and the department stores were spotty, depending on which name you want to talk about.

>> and among the discounters specifically, you have target coming in stronger. but wal-mart saying the first quarter will be at the low end of its profit forecast. is it the low-income consumer that is slowing down the most?

>> well, we were surprised that sam’s didn’t come in with a better number. wal-mart was ok. perhaps people were looking for something closer to 5% rather than the 4.3% they released. but it’s a reasonable job and we are to see how―have to see how well april comes in so you can look at the entire easter and spring break holiday season too see how the two years compare against each other this year versus last. we expect a 3% or 4% secular rate of comp store sales growth is what we should see in the next several months.

>> wal-mart shares are at a two-year low. what are you doing with your holdings?

>> in the portfolios that we manage that compete against the s&p 500, we’re about at the benchmark weight in our growth portfolios with a growth style benchmark, we’re at that benchmark rate, as well, or slightly higher. wal-mart has very low expectations built in it, to it right now. unlike the successful teen retailers, where they’ve sustained very strong price action and very strong comp sales, wal-mart may be washing out in here and beginning in june, they have very easy comparisons year over year. that’s not true of some of the other retailers that have had strong performance.

>> larry, when it comes to wal-mart, can you really call it a growth stock at this point?

>> well, yes. i think most people would agree that the long-term growth rate for wal-mart should be around 14% to 15% so that’s clearly a growth stock, especially when you consider in the first quarter mostly s&p 500 companies in the aggregate will be reporting a 7% or 8% gain. if you can sustain almost two times the growth of the s&p 500, that’s clearly a growth stock.

>> now, in terms of problems we’re seeing for retailers, how much of the problem is about oil?

>> i think quite a bit. i was talking to someone on the west coast yesterday and they paid $2.79 for their gasoline. i just paid $2.33 for mine here on the east coast. and so this does put a hole in your wallet and takes some discretionary spending out of your budget. so retailers are indeed feeling that impact and you might not get in the car and go to the mall on the weekend as often as you did previously. so there’s a dual impact of higher energy prices.

>> who is most at risk for the april sales?

>> well, a number of the retailers have reported disappointing results―gap’s number was especially weak and limited was weak. may department stores was weak. obviously, the merger with federated may improve that going forward. and sam’s stores reported relatively weak numbers with a 2% gain.

>> thanks so much, larry jones, we appreciate it.

>> thank you. larry is with m.c.n. capital management. we are spanning the globe for our world’s biggest mover today. it may mean higher prices at the pump. that’s next.
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Listen Market briefing --- Ellen (fast)
FDA's unit on new drugs --- John (slow)
despite the fact that the markets opened lower. the dow gaining 60’s points of the you had a stronger-than-expected earnings forecast from alcoa, the biggest contributor to the dow’s gains. in terms of the seven-point advance for the s&p, looking broadly at the 10 economic groups that make up the s&p, only energy shares traded lower at the end of the close. in terms of the nasdaq, bed bath and beyond, microsoft and apple shares giving the biggest contribution there. pfizer is suspending sales of the bextra painkiller at the request of the food and drug administration.%  the f.d.a. went against advice from a panel of doctors and scientists at a february hearing , when they said bextra’s benefits outweighed risks and should remain on the market . pfizer said it disagreed with the findings that bextra should be withdrawn. joining me is dr. john jenkin, director of the f.d.a.’s unit on new drugs. thank you for your time.

>> thank you.

>> it’s considered unusual for the f.d.a. to go against an advisory panel’s advice. what is different in this particular case with bextra?

>> we don’t really view this as going against the panel’s advice. the panel vote was close on bextra and many of the panel members voiced concerns about the same issues that we’ve raised in reaching our decision about the overall benefit versus risk profile for bextra. we don’t view this as necessarily going against the panel’s advice, but we think it’s incorporating their advice into the decision.

>> i heard an interview earlier today with one of the advisory panel members who said if they perhaps had known as much about a rash problem related to bextra, he might have voted differently. what new information has come out in the interim?% 

>> no new information but the panel focused primarily on the cardiovascular risk of the cox-2 agent, including bextra. they did not really focus on the other risks, including the skin reactions, which are one of the reasons we felt that the product should be removed from the market .

>> in terms of celebrex, what can we learn from this, if anything? what are the chances celebrex might be taken off of the market ?

>> our best interpretation of the available data right now is that all the products in this class have a cardiovascular risk, or at least a potential for increased cardiovascular risk. we don’t feel we can rank order the drugs in the class against one another as being better or worse. right now we don’t think we can conclude that celebrex is better or worse than the other drugs in the class for cardiovascular risk. that’s all subject to change, of course, as we get new information from additional studies.

>> given that, then, why ask them to take bextra off the market , not celebrex?

>> again, we consider the cardiovascular risks to be a class effect for the entire class of non-steroidal agents, including the cox-2 selective agent. bextra had a unique risk, which was a higher risk of serious skin reactions that the other members of the class did not have and bextra had no unique benefit so we felt like there was nothing to justify the increased risk of skin reactions for bextra given that there’s no unique benefit.

>> what, then, does all of this mean for the cox-2 drugs that await approval? glaxosmithkline, for example, is developing one of these drugs.

>> that’s a very good question. we clearly will be expecting more data for approval of drugs in this class than would have been acceptable in the past. we will be working with those individual companies to discuss the data they have for their drug and whether or not they have enough data to come for approval. it’s likely that any of those drugs that come to f.d.a. will also be discussed at an advisory committee meeting before a final decision is made.

>> in terms of today’s action, is this a signal that the f.d.a. is taking a tougher stance on drug safety?

>> i think it’s a signal that once we have new data about drug safety issues, we evaluate that carefully and reach what we think are the responsible public health decisions. we think we’ve done that here. we’ve tried to take a very confusing set of data and reach what we think is the most responsible public health decision on the drug safety issue.

>> what would it take for pfizer to be able to convince you that bextra should be allowed back on the market ?

>> it’s speculative at this point to say what it might require. clearly, you’re always talking about a benefit versus risk ratio for any drug. so they could either show its unique benefit that the other products in the class don’t have or they could try to prove to us that either the skin risk is less than we currently think it is or that the cardiovascular risk for bextra is lower than other members of the class.

>> dr. jenkins, we did have a headline cross that canadian regulators are asking pfizer to suspend bextra sales. we knew this morning pfizer said it was taking bextra off the market in europe. any increased role you’re having in terms of conversations with overseas regulators as you deal with these issues?

>> we did not specifically discuss our decisions with the regulators in other countries before we reached the decision. we did share with them yesterday what our decision was going to be under a confidentiality agreement we have with certain countries. we did share the information yesterday with canada, but we did not specifically discuss with them the decision before we made that decision. i would say, though, that the canadians and other regulators attended our advisory committee meeting back in february.

>> dr. jenkins, thank you very much for joining us.

>> thank you.

>> dr. john jenkins of the food and drug administration. switching gears, shoppers reined in spending last month as higher prices at the gas pump and poor weather crimped retailers’ march sales. we’ll look at what’s in store for the group.

Interview: Wells Capital Management

>> crude oil may have had its longest decline this week since august. however, the fallout from rising gas prices will likely be felt in the second half of the year. economists we surveyed are lowering their outlook for economic growth. they say rising energy prices and higher interest rates will squeeze consumer spending. our next guest has lowered his forecast. gary schlossberg, senior economist with wells capital management, joining us from san francisco. welcome, gary.

>> thank you.

>> how have you changed your forecast?

>> marginally, actually. i had growth during the balance of the year at 3.5% to 4%, in line with where we’d been in the last few quarters. lowered it to about 3% to 3.5%. tentative at this point because i think the situation is still fluid. certainly with respect to energy costs.

>> and is it energy specifically the reason behind contracting those numbers?

>> that’s the main reason. we think those oil prices, where they are now, are high enough to slow, not derail the recovery, but slow economic growth. of course, there is added upis ide for the oil prices, energy costs, which may cause us to lower both forecasts further.

>> whiure tentative?

>> we’re tentative because at this point we don’t know how high oil prices will rise. we know we’re just moving into the heart of the driving season and gasoline prices, even according to the energy department, will be moving up from current levels so it really depends on how high they move. by our estimate, at the moment, those energy costs―gasoline prices adjusted for inflation, crude oil prices adjusted for inflation, the oil “tax” isn’t inordinately high, high enough to slow growth, but not derail it.

>> how do you think it will play out for consumers? next week the retail sales report is due. how much do you think consumers may slow down?

>> we expect a fairly strong retail sales number for march, up .7% with a rebound in auto sales. at the moment, woo we see respectable growth. there are indications that growth lost a step or two at the end of the first quarter. as we move forward, we expect to see growth moderate with consumer spending growth moving more towards the 3% track. the other issue out there is how sensitive the economy is to higher interest rates. certainly, consumer spending may be more sensitive, indirectly, as interest rates move up, if, in fact, it cools the housing market and home price increases moderate, we lose big gains in household wealth which we think have been a main driver in consumer spending, of late.

>> help explain this for me, if you can. you, many economists and the european union bringing down forecasts. was it close to $60 a barrel? what has changed given that to this point consumers are resilient?

>> right off the bat, it takes a while before the increasing energy costs slows consumer spending materially. we’ve seen evidence of it in the lower income groups. the discounters in retail, at least until march, were lagging the performance of upper-end retailers so there was evidence that energy price increases were tempering consumer spending. but this latest burst, i think, was something of a surprise. we hoped energy prices would level into the $40 to $45 range seen late last year and given the strength in china―which we didn’t expect as we expected chinese economic growth to slow but it hasn’t slowed at all, continuing to put upward pressure on energy costs in the first quarter. we queue knew the market was volatile, sensitive and finally balanced but i didn’t expect the sustained rise we’ve been seeing in part because china is holding up so well.

>> outside of oil and retail sales, what else is key for investors to watch next week?

>> early in the week we have the retail sales report on wednesday. but prior to that, on tuesday, we have foreign trade, that could be a flash point for the dollar. the dollar has held up well of late. we think it reflects underlying confidence in the u.s. economy and willingness of private foreign investors to put money here. but the trade deficit could be a sensitive issue for the market . we get the minutes to the march 22 fomc meeting later that day, some interest in how officials were viewing, how deep seated the concerns were about inflation at that meeting and later in the week, i think, the attention, once we get beyond the retail sales report on wednesday, the attention will shift to the calendar on friday, a very full one with industrial output, april consumer sentiment. we get our first read on april manufacturing activity from the empire state manufacturing index and also export and import prices for march. a very full calendar. of course, we have the treasure auctions on wednesday and thursday, as well.

>> gary, thanks so much. have a wonderful weekend.

>> thank you.

>> gary schlossberg, senior economist with wells capital management. the 2 1/2 year bull market in stocks may end sooner rather than later. bloomberg news reporter sophie hayward will tell us when analysts forecast the market will be bearish.
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Listen Market briefing --- Ellen (fast)
Chart of the day --- Tom (slow)

the major averages -- willis group holdings will pay $50 million to settle new york attorney general eliot spitzer’s investigation into kickbacks to insurers. spitzer’s office says the settlement will be used to reimburse policyholders. willis joins marsh & mclennan and aon in settling allegations they steered business to insurers that paid hidden fees. marsh settled for $850 million in january and aon agreed to pay $190 million. cardinal health hit by a subpoena by new york attorney general eliot spitzer. the company says the subpoena is part of an industry-wide investigation into drug wholesaling and says a number of companies in the industry have also received subpoenas. yesterday, amerisourcebergen said it received a similar subpoena from spitzer’s office related to purchases from other wholesalers referred to as the alternate source market . the two companies together, with mckesson, distribute 90% of u.s. drugs made by manufacturers. in terms of declines today, cardinal health down 2.3%, as was amerisourcebergen. one of the specialists handling trades on the new york stock exchange says it’s being investigated by the big board in connection with forged documents. van der moolen holdings says the probe involves some of its employees and whether they forged approvals required for the execution of an unusual trade. it is the third time van der moolen has been investigated in less than a year and the company has already paid a $58 million settlement. those shares down 7.7% in trading on friday. we’ve also been following shares of shopko stores. the private equity firm agreed to buy the discounter for $750,000. goldner hawn will acquire shopko for $715 million in cash. it the u.s. labor market has changed. jobless data indicates there’s a shortage of college-educated workers and surplus of less educated people in the work force according to wachovia economist, john john silvia. the shift is the subject of the “chart of the day” with tom keene. very interesting information on the work force.

>> it was a quiet week in economics and john silvia of wachovia corporation launched this paper a couple of days ago, one of the best i’ve seen in ages. it’s off a speech he gave at harvard in march. the simple story, it’s not one job economy. you have a high educated class with very low unemployment rate and you have a group of employees with lesser education and the disparity is wide. the chart tells is simply. if you go to the chart, on the bottom is the low unemployment of those with a bachelor’s degree, 2.4%. coming up, some college, 4%. high school, the red line, high school graduates, 4.78% and the great, great painful divide up to those with less than high school. the thing that’s interesting, ellen, about john silvia’s note is the harshness of tone. he says, look, get over it, tough love is required, that’s right out of his paper, education matters and it’s one part the government for the retraining but it’s about these employees, they’ve got to understand that they’ve got to go out and make it a life-long project to be more educated. he says the rules have changed.

>> i spoke the other day to the c.e.o. of symbol technology on long island and when i asked him about whether they’re having a hard time finding workers, he said, for those skilled jobs and he said it’s because of their location, not in the high-tech areas. tell us more about the education issue?

>> he said it’s geographic based and talks about the golden crescent states, the boom economy states, the south and the west, and says forcefully it’s about education and a combination of education, stand up straight, get in the car and move just like people got in a covered wagon 150 years ago and sylvia’s forceful about this. he grew up in new england and says people from new england in another time and place moved to ohio and now that ohio and some of the more industrial states are struggling, you have to pick up and move with education and advancing education to some of these other states doing so well―texas, the deep south and west, as well.

>> how does age play into this? what factor did he find in the breakdown?

>> he didn’t talk a lot about older employees, but he did talk about teenage employees. the teenage participation rate is way down, something i’ve heard from jim glassman at j.p. morgan, as well, in that these kids get this and aren’t working anymore, they’re in school, college kids are staying in school, the college kids that can’t get jobs, are staying in school, the teenage rate is down because they perceive they know that education matters. a college degree has never meant more than it does now than what i’m hearing from sylvia and from other economists on the radio program, it’s plain and simple. that trend is widening as we go into this decade and into the next decade.

>> thanks so much.
>> sure.

>> tom keene is our editor-at-large at bloomberg. we’ll take a break. oil tumbles from record highs this week. up next, we’ll speak with one economist who lowered his growth forecast. gary sloshberg joins us.