Market briefing---Lane (medium)
Verizon---Carmen (fast)
>> welcome to “world financial report”. i’m lane bajardi in new york. verizon was the worst performer today in the s&p 500. it also led telecommunications shares lower after it cut its 2003 profit forecast. carmen roberts is here with more on the story.
>> lane, the three-year telecom spending slump continues at verizon, the biggest u.s. local telephone company saying profit is being hurt by its new labor agreement and sluggish demand for local phone service. the c.e.o. told a conference call businesses are hoarding cash, waiting for an economic rebound. verizon says it’s not cutting costs fast enough to keep up with the pace of this slump in local telephone business, a slump that may cause sales to be flat to up to 2% this year. so verizon is cutting its full year profit forecast by as much as 20 cents a share. and below the consensus forecast of analysts surveyed by thomson financial. with that verizon’s stock fell 4.5%, the biggest decline in six months, dragging down s.b.c. communications and bellsouth which are fighting the slide in communications spending. an analyst for freed mans billings ramsey says verizon is being hurt by falling revenue from the corporate customers.
>> their core business, the local business customers, enterprise customers, is seeing a slowdown, and it wasn’t anticipated that it would be as severe in the second half as it is.
>> and analyst drake john stone with davenport and company says that verizon is facing competition as sprint enters the local phone business. competition between sprint, m.c.i.. a tornado and verizon is pushing the bottom line down.
>> are ricin’s recovery depends on a rebound in the u.s. economy. in the meantime verizon wireless is providing much of the company’s top line growth. the number one u.s. mobile phone company increased its estimate for new wireless customers this year to more than 4.5 million, up from 4 million. while verizon waits on telecom spending to pick up, it’s banking on wireless, rolling out high speed internet or d.s.l. and cutting capital spending. davenport’s drake john stone who does not own verizons and has neutral rating on the stock says he sees no magic cure for verizon even after business spending recovers.
>> do analysts expect the lawsuit nextel has filed today against verizon to impact the company.
>> you are talking about the suit in which nextel claims verizon’s push to talk commercial claims it’s better than nextel’s, you can expect to hear a lot of fighting between the two companies over this walkie talkie type service, but she doesn’t think it will be substantial enough to impact the bottom line.
>> carmen roberts. we have breaking news here on who is going to be heading the nyse in the future. peter fisher, the u.s. treasuries undersecretary for domestic finance, one of the names that’s been out there, but he is now talking, saying that he has not talked to anybody about a job after he leaves the department next month, and he is declining to discuss speculation that he might be recruited to run the big board. “i haven’t talked to anybody and i’ll work on that the day after i leave the treasury,” he said. he told reporters in washington that he spent 18 years in public service. what the next part of his life is going to be about for the next ten years is going to be to try the private sector, try to make a little money, in his words. fisher, 47 years old, one name being floated as a possible successor to former chief executive officer richard grasso who resigned last week, this as state officials from california, new york and connecticut are set to meet with the stock exchange’s corporate governance committee tomorrow. this follows a demand from the california state teachers retirement system that the exchange separate its regulatory functions from its commercial operations. and ahead of calpers, the california public employees retirement system, says the exchange should at least consider the idea, along with other structural changes.
>> we need to form a much smaller and accountable nyse board, made up of 50% from the investor community. and once that is done, the new york stock exchange needs to adopt a permanent corporate governance structure that will serve as a model for the world’s financial markets, and include independent nominating committees and transparency. transparency and compensation, and transparency in financial statements.
>> the nyse’s nooe interim chairman john reed, joins the exchange next week. three major wall street firms today posted solid gains in earnings for the august quarter. morgan stanley and lehman brothers net income more than doubled on increased bond trading and stock sales. goldman sachs profits were up 30%. morgan stanley, net income was $108% higher than for the same period last year, largely thanks to a 26% boost in government bond trading volume. for number three goldman, increased revenue from stock trading and an investment gain in japan helped net income rise for a fifth quarter in a row. lehman brothers, number four in the u.s., a 147% gain in net income. that pop was fueled by sales and trading of junk bonds and mortgage backed securities. checking the three stocks how they closed the day, lehman was up 69 cents while goldman was down $3.60. morgan stanley with a gain of $1.18. scholastic says it’s first quarter loss narrowed to $25 million as sales rose more than expected. the company reported a net loss of 63 cents a share. analysts had expected a loss of 67 cents a share. sales rose 55% to $475 million. scholastic benefitted from the release of the fifth harry potter novel. the book broke u.s. publishing records with 5 million copies sold in the first 24 hours. in the regular session scholastic corp up 19 cents, 2/3 of a percent. in extended trading after the news came out, we see scholastic stock up 6% or $1.87. stocks overall rose for the first day in three amid speculation the dollar’s drop against currencies in asia and europe would boost demand for products from multi national companies such as pfizer. let’s run down the numbers with the dow up 40 points at 9,576. the s&p closing at 1,029. nasdaq better by 27 points, once again above 1900. new york stock exchange volume 13 billion shares, 2,041 stocks rising, 1,207 declining. on the being we see 1.8 billion shares changed hands. the wilshire 5000 wa gain of 2/3 percent, broadest measure of the market. take a look at fixed income. the 10-year note up 3/32 on the day yielding 4.2%. five-year note yielding 3.11% as the benchmark 10-year staged a late day rally in new york trading. that move was dollar related as traders bet the bank of japan will sell yen to slow the currency’s appreciation and use the proceeds to buy u.s. debt. not much action on the short end. checking the dollar as it begins trading in the pacific rim, you see no action against the yen here, and very little against the european currencies. now let’s take a look at how commodities fared in today’s session. starting with crude oil, little changed after ministers from opec said they will leave press conference levels unchanged when they meet tomorrow. price of crude oil in new york fell six cents to $27.13 per barrel. gold futures fell for the first day in five in new york, declining $1.30 to $387 an ounce. gold fell on speculation commodities funds will cut purchases of the metal after prices yesterday reached a seven-year closing high. lowe’s is increasing its quarterly and annual profit forecast as stores in the northeast lead sales gains. now, the company says profit for its fiscal third quarter ending in october will be 52 or 53 cents a share. that would be a penny more than the consensus forecast. the company is also seeing better than forecast sales growth at stores open at least a year. lows is the number two home improvement chain after home depot. lows shares have gained 41% so far this year.
>> regulatory filings are giving us a glimpse into the strategy of billionaire warren buffett. according to those filings berkshire hath reduced their holdings in first, iron mountain. they reported holding half a billion in hca, the largest u.s. hospital chain that had not been previously reported. berkshire owned a stake in level3 communications as well. he lost a battle with the s.e.c. to keep holdings confidential to avoid copycat investors out there. technology stocks may have led the gain in the s&p 500 but the nasdaq continues to outperform the broader markets this year. naught,
