Market briefing---Lane (medium)
Eastman Kodak---Bob (fast)
>> welcome back to “world financial report”. i’m blaj. recapping the day on wall street here is how the dow did. dow jones industrial average down by 81 points at 9,343, a loss of 8 lrb 10 percent. s&p 500 lower by 6/10 of a percent, six points to 1,003. the nasdaq composite down on the day by nearly 1.5%, 26 points at 1,817. on the big board most actives were lucent up nine cents, eastman kodak dropping to what may be an 18-year low, down $4.84 at $22.15. more on that coming up. but bive is group was up there too, as well.
>> our top story, the head of the new york stock exchange’s compensation committee is resigning. h. carl mccall tendered his resignation to interim chairman john reed. mccall’s resignation is effective this coming monday, september 29th, following a corporate governance meeting. in his letter to reed he called for seven corporate governance reforms. they include greater representation of the investing public on the nyse board, annual election and evaluation of directors, expanding the governance committee to include investors, particularly representatives of the state treasuriers and pension funds that the yesterday. he calls reconstituting the nominating committee as a board committee consisting of independent directors. like-wise he recommends the human resources and compensation committee consist of independent directors. lastly he recommends splitting the regulatory and commercial functions of the exchange. mccall’s resignation follows john reed’s appointment as interim chairman this past sunday. reed, who plans to hold the position only until a replacement is found, said this week he favors cutting the nyse board to 10 to 12 members from the current number of 27. check on u.s. treasuries now. the 10 and five-year notes on the move during the day, 10-year notes up 14/32, 4.08%. five-year note up nearly a quarter point. three and two-year notes on the day, we see the three year up 1/32, not much movement there. however, keeping an eye on currency trading now, in the asia pacific region, you see what’s happening with the yen right now. we are keeping an eye. the yen has weakened because of these earthquakes that have hit japan. there has been a magnitude 8.0 in northern japan and a magnitude six now reported by kyoto in south hokkaido. a tsunami warning, this is affecting the yen because this can have economic effects should there be a great deal of destruction and death, which we don’t have a great deal of information about just yet. we will be going to tokyo for the latest information to find out what is happening there. in the meantime shares of eastman kodak plummeted today after the company cut its dividend for the first time in history. standard & poor’s cut its rating on kodak’s $3 billion in debt to the lowest investment grade because of concerns about the company’s earnings and business profile. bob bowden is here with more on the kodak story. bob.
>> thank you, lane. the fundamental problem for the company is the erosion of its traditional film business as consumers switch to digital photography. while that’s been happening for several years, chief executive daniel carp is giving up on the strategy to boost consumer film sales and will stop making major investments in that business. instead kodak will devote the cash to expand into new businesses like ink jet printers and digital imaging for hospitals. kodak cut its dividend 72% from 50 cents a share from $1.80 a share after three consecutive years of falling sales. the new dividend yield is about 2.1%, which c.e.o. carp says puts kodak in the middle of the pack of the s&p 500 companies.
>> we brought the dividend down. i think our payout is about on average with the s&p 500, and we are going to redirect a good cash flow out of our business as the historic business tails off toward our investments in the future, with an objective of growing the company to about $16 billion by 2006.
>> carp discussed his new strategy with investors today, saying he’ll spend as much as $3 billion on acquisitions over the next three years. the company forecast that will boost sales five to 6% each year. but many investors remain skeptical. david winters is chief investment officer at franklyn mutual advisors.
>> we are kind of like mokts to the flame for bad news, brian. we’ll take a look and see, maybe there is something to do here. it’s not clear with kodak if they can successfully compete in a digital world. you know, are they a buggy whip manufacturer? i don’t know.
>> last year kodak’s stock was up 19%. that was the biggest percentage gain among the dow industrials companies for 2002, as the high dividend yield last year lured investors. the dow overall fell 17% in 2002. but so far this year, kodak shares have dropped 36%, the worst performance of the dow, and almost double the decline of the next worst performer, s.b.c. communications. kodak’s troubles could mean its days as a member of the dow jones industrial average are numbered. alex bud ni, vice president of equity derivatives research at lehman brothers holding said what happened today is a step in the direction of getting evicted from the dow. kodak shares were the biggest drag on the dow jones industrial averages today, down 18% on this one thursday session, hitting an 18 year low, and they were, as you pointed out, lane, the second most actively traded stock on the new york stock exchange.
>> we have more headlines coming in from the new york stock exchange concerning reaction to what h. carl mccall has done in resigning. gerald lavin, former time warner chief executive has declined to comment on mccall’s decision to exit. hank paulsen of goldman and sacks of the nyse board says the nyse shouldn’t disintegrate, in reaction to carl mccall’s exit from the board. we will keep calling around trying to get more reaction from h. carl mccall’s decision 0 leave the board and we’ll bring you that reaction as it comes in. most the upbeat economic news may have failed to inspire much buying. what does today’s data mean for the recovery? we’ll look at wells capital management with gary slaus berg.
