Market briefing---Mike (fast)
Warren Buffett---Erin (slow)
NYSE---Deb (fast)
>> welcome back to “world financial report.” i’ll mike mckee. let’s get to the rest of the numbers on wall street today. the new york stock exchange composite finishing higher by almost 18 points. earnings now from starbucks, starbucks, which closed at a record high today, saw fourth quarter revenue of 1.08 billion dollars. let me get that right. that beats the estimate of $1.07 billion. they come in at 17 cents a share for earnings and that is in line with the thomson estimate. warren buffett is the world’s second-richest man and investors watch his every move. he made some portfolio changes last quarter and erin brunette has been watching those moves.
>> buffett did make some moves last quarter, the one with the most notice sale of level 3m shares. moves of his exit today sent level three shares down about 7%. but henry asher, who owns shares in berkshire and level three is not concerned.
>> i don’t think anyone ever expected that would be a long-term holding for buffett. it doesn’t have the operating characteristics and the sort of maturity most of his businesses do, so i don’t think it should come as a shock.
>> berkshire also cut holdings in others. buffett increased his stake in h.c.a. to just under 18 million shares. berkshire hathaway investors told us they aren’t reading too much into buffett’s latest decision, but they do note changes from his traditional strategy. one, buffett is deviling into currency trading. he wrote in “fortune” magazine three weeks ago he’s betting against the dollar and investors say this is a significant move.
>> for buffett to say it’s significant enough that berkshire’s shareholders will benefit from betting against the dollar and to publicize that, is a very major step for him.
>> the second change at berkshire is what some investors describe as a transformation from an investment holding company into a bona fide operating company. equity holdings account for only 18% of berkshire’s assets today, down from more than half of assets just six years ago. last quarter, berkshire’s geico and general lee contributed nearly 60% of operating profit. those results and the midas touch of warren buffett have propelled the stock to a near record-high. and tom russo who helps manage $1 billion told us today, -- so, mike, it’s clear investors still believe in buffett. that’s the latest for now. back to you.
>> after the bell news from allstate concerning their earnings. deborah kostroun is at the new york stock exchange with that for us. deb?
>> allstate is of course the second-largest auto and home insurer saying after the close of trading that the california wild fires will cost the company between $29 0 million and $330 million in claims and that loss will equal between 27 cents a share to 30 cents a share after tax according to the company. you can see, however, in the after-hours session coming in just a little bit higher, the company also saying they are not changing their fourth-quarter profit forecasts but once again cutting their earnings by 27 to 30 cents a share and saying that the payouts aren’t large enough to change their full-year earnings forecasts. in today’s session, some of the things that we were tracking today, obviously it was retail. many of the retail names, they have been releasing their earnings this week and obviously the big drag on the market was wal-mart. you kind of take wal-mart of the picture, and we really had -- the market was up. but this chart is the s&p retailing index. it’s actually up 43% year to date. compare that to the s&p 500 year to date, up 20%, and obviously, the s&p 500 since the low on march 11 obviously a little tighter, but the retail has been performing well all year. i was talking with peter henderson of fleet specialists today and he said wal-mart should be a little more of a concern to us mainly because remember that wal-mart is 1.3% of our g.n.p. alone and he says whatever they do in retail is a big thing. so, a lot of concerns. they’re concerned about consumer spending, what does that mean for the rest of the retail world? obviously, a cause for concern. another thing that pete henderson talking about that we really just don’t―we have a noncommittal market right now and we’ve been kind of seeing that this past week, the market not showing a lot of direction, although yesterday we had a 111-point move done on light volume, something we’ve been seeing this past week. one area of the market that did perform quite well, healthcare and some of the drug stocks performing really welt in today’s session. the health care stocks had their biggest gain in about five months. looking at the s&p health index, merck, the biggest gainer in the dow jones industrial average in today’s session, and the big story today, at least for today, coming out that we could see medicare spending actually double over the next 10 years if president bush can push this bill through and so, many of the drugmakers, not only the drugmakers, but many of the pharmacy benefit managers also performing well in today’s session. back to you, mike.
>> deborah kostroun at the new york stock exchange. a sign of how the economy is doing is how many companies are or are not defaulting on their debt payment. we’ll take a closer look at that when we come back.
