Market briefing---Bob (fast)
Oracle---Carmen (fast)
NYSE---Deb (fast)
Currency market
Credit Suisse First Boston---Bonanca, Jason---Currency Strategist
the rest of the software industry and su keenan has more.
>> oracle exceeded the average estimate of analysts polled by thomson financial by a penny a share. analysts expected 11 cents a share and the company reported earnings of $617 million, or 12 cents a share, a 15% increase from earnings of $535 million, or 10 cents a share a year ago. oracle shares fell 1% ahead of the earnings report and have rebounded, trading above $13 a share, in extended twagged. new software license sales rose 13% to their 849 million, above the range that analysts projected. oracle said customers such as b.t. group and hallmark cards bought their applications software. oracle has been trying to boost its application business with a $7 billion hostile bid for peoplesoft as it loses market share in its database software business. deutsche bank’s brian skiba says that quarter represents the first quarter of actual growth in two years and joins ut other analysts saying that oracle’s stiff competition comes from i.b.m. and microsoft.
>> oracle faces significant pressure from microsoft on the bottom end pricing and increasingly i.b.m. in the database market and in the application market, they have s.a.p., a 600-pound gorilla in the space putting pressure on it. so it’s a mature market and corporate i.t. spending is slow to come back and more importantly, the bigger companies have been slower to pick up spending and small and medium sized have been more aggressive.
>> bloomberg data shows that major investors such as barclays and state street global advisers, oracle’s third largest shareholder, have reduced their holdings partly out of concern over market share. state street’s heather laughlin says oracle’s “cash cow” is database and that’s what the company needs to defend. heather bellini says investors are listening closely for oracle’s outlook.
>> all eyes are on oracle, the last major data point that software has prior to closing the year. so i think everyone will be watching to get a sense for what the guidance is, is it believable, does it signal that the i.t. spending environment is improving and what does it mean for oracle from a market share perspective for its core database business.
>> oracle will be holding its analyst meeting tomorrow. some oracle investors want the company to focus on the database business and abandon the peoplesoft bid which has been mired in antitrust review in europe and the u.s. shares are trading higher in extended hours.
>> thank you, su keenan. moving on, now, after a strong start on the news of saddam hussein’s capture, the markets fizzled and finished around session lows. deborah kostroun is at the new york stock exchange with a wrap-up there.
>> bob, the action was in the first 15 minutes where we saw the markets very strong. we did see a reversal in the dow jones industrial average from its highest point, up 97 points to its low, we saw a reversal of 116 points. and we saw technology lower. also retail, like wal-mart. wal-mart, that was the biggest weight on the dow jones industrial average. also weighing on other retailers. wal-mart saying their december sales tracking at the low end of their range, meaning a 3% growth. as you can see, sharply lower. other retailers, really giving us ideas we may see sluggish growth and that’s bad news for many of the rivals and we did see many of those names lower, as well as sears. the “wall street journal” saying sears resorted to price cutting after it announced disappointing november sales. that also is not good news. i was speaking with kenny polcari and he says the outlook for the rest of the year, we weren’t looking for a major news event and the saddam hussein news did not provide impetus to the market and he says now until the next o―the rest of the year, we could see the markets churning at this level. he mentions that friday is a triple witch day and we could see volume heading into thursday, even friday at the open and friday at the close so something to keep in mind at the end of this week. retail, one of the biggest drags in the s&p 500. on the other end of the spectrum, food, tobacco and traditional names performing well, some of the best performers, up .67%. these names some of the best performers. the reversal we were talking about, we saw that in semiconductors. we saw technology starting the day very strong and by the close really tumbling, down 2.7% in many of the semiconductors. remember, semiconductors among the best performers year to date so we are seeing money moving into the tech and other names that have been the worst performers. back to you.
>> thank you, deborah kostroun. let’s get to the numbers as they finished on this monday afternoon, all three of the major indexes were up early in the session then all reversed course and finished lower. the dow lost over 19 points to 10,022. s&p 500 losing over six to 1068. the nasdaq finishing down over 1.5%, losing almost 31 points to 1918. volume at the nyse, 1.4 billion shares traded and decliners outpacing advancers. moving on to the nasdaq volume, 1.8 billion shares traded and decliners outpacing advancers there. the broadest look at the markets, the wilshire 5000, down .75% on the day, down 79 points. checking bonds, selling action. this is one of the days where bonds and stocks moved in the same direction, in this case, downward. the 10-year and five-year notes losing 5/32 and 2/32 respectively. the dollar fell to a record low against the euro. in new york, investors concerned that low interest rates will deter foreign investors from buying u.s. financial assets and there you see the euro at over $1.23. the currency erased an earlier gain, the dollar, that is, after u.s. troops captured saddam hussein. joining us now to discuss the day’s currency market is jason bonanca, currency strategist at credit suisse first boston. and thanks for being on the program. we appreciate it. wanted to ask you about the dollar and erasing earlier gains that game after the capture of saddam. how concerned are you that the dollar has not held on to recent strength whenever we get one of these pieces of news that propels it temporarily and then it falls back down again.
>> it’s a clear signal that well are forces arguing for dollar decline stronger than the euphoria provoked by the capture of saddam hussein and those forces are likely to continue for months to come and those are fed policy, the prospects of low interest rates in the u.s. for a considerable period, as the federal reserve has put it and in other parts of the world, central banks have moved towards tightening interest rates or hiking them, like the reserve bank of australia, the bank of england. so when you have this mix of the fed being easy on one hand and these other foreign central banks being tighter on the other, you get exactly the recipe you need for a trend of dollar decline.
>> you referenced the “considerable period” language% -that the fed reiterated last week, that is that interest rates will be able to remain low for a considerable period because not too much of a concern of inflation in the near term. is that the key driver to you in terms of the weak dollar, that is, the continued use of that phrase by the fed and continued nonexpectation of higher short-term interest rates?
>> i think it’s more the latter. whether or not they use the words considerable period is a little bit up in the air. it’s hard to figure out how they want to communicate policy to the market. but the fact remains that they continue to tell us that they feel there is no real threat of inflation at this point. they feel that there is still the prospect of a long period of time where employment really won’t get to the place where they will be comfortable that the recovery is firmly entrenched and that will allow them to really hike interest% -rates. the minutes last week released from the october meeting, in fact, mention there were members of the fomc that expect large margins of slack labor, people not working, to exist until 2005. so that is a considerable period and that’s probably enough that the market needs right now to continue to anticipate very low interest rates for a good while to come.
>> our thanks to jason bonanca, currency strategist at credit suisse first boston. when we return, small cap stocks have helped lead stocks higher this year but our next guest sees that trend ending in 2004. he’ll tell us why he favors large cap stocks .
