Market briefing --- Peter (medium)
Walt Disney --- Greg (slow)
NYSE --- Bob (fast)
Nasdaq --- June (slow)
>> welcome to “world financial report.” i’m peter cook coming to you from our washington bureau. well, michael eisner says his decision to step down as head of the world’s number two media company has nothing to do with mounting pressure from dissident investors. greg miles is here with that story. greg?
>> that’s right, still a lot of unanswered questions when it comes to walt disney company. well, c.e.o. michael eisner’s announcement may not satisfy investors who want him to step down immediately instead of two years from now. the major issue is the company’s lagging share price. disney’s stock has risen only 65% in the past decade. that’s less than half of the 138% gain of the s&p 500 during the same period. fund manager anthony gifford says eisner’s announcement is good news. disney without eisner, he says, is much better than disney with eisner. what is disappointing is he’s not going for another two years. a former company director told bloomberg news that eisner is doing an awful job. disney added he will definitely continue our battle, we have already devised the next moves, which i cannot disclose. dissident investors plan to nominate their own slate of directors at next year’s annual meeting. c.e.o. eisner and walt disney company face other challenges during the next two years.
>> is the growth of disney truly sustainable? remember, 2005 earnings are right now on track to get back to 1997 earnings. so how much growth can this company drive beyond 2005?
>> rising sales at disney’s theme parks and cable tv networks will help boost profits by an estimated 60% this year and slow to 10% growth in 2005, according to analysts’ forecasts. the performance of disney’s movies has been erratic at the box office. eisner’s inability to renew contracts with pixar could hurt disney’s animated film projects, and also, abc tv networks is suffering from lagging audience ratings and advertising sales. disney’s board of directors, led by chairman george mitchell, also must find a new c.e.o. possible successors include newscorp president peter churnin, the chairman of time warner of time warner, and also disney president bob iger, a favert of michael eisner’s.
>> i think the job bob iger has done has been, perhaps, unappreciated. there’s been a lot of focus on abc, but the other assets in the broadcasting and cable that have also been under his leadership have performed far better than is generally anticipated.
>> well, several investors said it’s unlikely that eisner will step down before 2006 because he has the full support of the board of directors. and in a statement out this afternoon, disney’s board says it is grateful for eisner’s remarkable 20 years at disney, but the last 10 years not quite so remarkable as far as the stock perform abc. back to you, peter.
>> all right, greg miles in new york, thanks very much for that. well, in economic news, producer prices unexpectedly fell last month, a sign inflation remains tame. producer prices declined .1% last month. economists were looking for a gain of .2%. the drop reflects cheaper cars, computers, and gasoline. if you take out volatile food and energy prices, the so-called core rate of inflation at the wholesale level also fell .1%, the first drop since february. separately, the trade deficit narrowed in july to $50 billion as exports rose 3% and oil imports fell. it’s still the second largest on record behind the june reading on the deficit. treasuries rose today, a sign that investors are betting the federal reserve will slow interest rate increases. the benchmark 10-year note had its biggest weekly gain in five. fed chairman alan greenspan, of course, said wednesday expectations for inflation have eased. inflation erodes the value of bond interest payments. technology shares led stocks highser after texas instruments’ chief executive said he’s optimistic about demand for chips, plus the decline in oil prices made investors more bullish about earnings and economic growth. let’s get to the numbers. alcoa said earnings will trail analyst estimates, limiting the gain in the dow jones industrial average. the dow average advanced .2% to 10,313. the s&p 500 gained half a percent, closing at 1124, its highest close since july 2. and the nasdaq composite index added about 1.3%, closing at 1894, that’s a level not seen since july 20. although major indexes rose on friday, little biggest move he on the dow fell strongly on the day. bob bowdon has a wrapup from the new york stock exchange.
>> alcoa shares were lower strongly on friday with the worst performing stock in the dow industrials after the company said third quarter profit might only come in between 30 and 35 cents a share. analysts had been looking for 52 cents a share. also, delta airlines down on the day after the company said a deadline that would have given the company more flexibility to purchase or hold ownership in the equipment that it uses has expired, and so we saw on the day delta shares down over 2%. although in checking some of the―by the way, delta down for the third consecutive session. but checking some of the other airline stocks, they were up strongly, particularly air tran, up 5%. a.m.r. up 4.5% on the day, as we saw oil prices come down a bit, and that helped some of the other carriers. moving on, there was a war of the analysts in coca-cola shares. caroline levy of u.b.s., an analyst who downgraded coke, saying third quarter sales could be flat, and that stock could be headed down to $36 a share. meanwhile, mark schwartzberg, a legg mason analyst, upgraded shares of coke to a buy, saying he says the stock is cheap, he says the stock could rally to $52 a share. nevertheless, coke was down about 1% on friday. auto parts stocks were hit after visteon said it will have almost $900 million in third quarter costs to write down tax benefits. the company says the problem comes from planned production cuts by former parent, ford motor. on the day, we saw visteon shares down around 11%. also, pointing out disney shares, up over 1% on the day. this coming after the news from michael eisner that he gave two years’ notice, you might say. he said he’d resign from the company after the company picks a successor as chief executive around september 2006. and continuing to follow chip stocks, they were up strongly today, and this is after thursday when texas instruments was up 10%. national semi up 12% on thursday. today, it followed. on friday’s session, texas instruments and national semi both up between 5% and 6%. micron up over 6%. and a.m.d. shares up 5.26% on the day. that he wants the latest from the new york stock exchange. i’m bob bowdon, bloomberg news.
>> well, the nasdaq closed higher for the third week in four. june grasso has more from the nasdaq market site in times square.
>> tech shares rose after the ruling that oracle can go forward with its hostile bid for peoplesoft. now, bank of america securities analyst robert stimson says he sees a wave of software mergers in the next two to three years now that this court case has been won, and he named some potential takeover targets, three of them b.e.a. systems, siebel systems, and veritas are among the top five performing members of the nasdaq 100 today. semiconductors built on yesterday’s momentum were the philadelphia semiconductor index yesterday rose 5.4%, the largest gain all year. again today, all 18 members of the philadelphia semiconductor index were higher, led by xilinx, maxim, and novellus. today, texas instruments’ c.e.o. rich templeton said he’s optimistic about demand for semiconductors, and that echos remarks by nokia and motorola that there has been an increase in orders for phones that allow users to take photos and surf the net. i want to talk a little bit about airlines. u.s. airways is struggling to avoid a second bankrupt. it has given its pilots union a new plan for $295 million in pay and benefit cuts, just three days after the group rejected a prior offer. the airline has said it may seek bankruptcy protection if it doesn’t win agreement for $800 million in worker givebacks by the end of the month. now, world airways, the carrier of cargo for the military and passengers for tour operators, is part of a team that won a contract from the u.s. air force valued as much as $988 million. republic airways holding was cut to market perform from outperform by raymond james. i’m june grasso, bloomberg news at the nasdaq market site.
>> oil prices fell 4% to $42.81 a barrel, the biggest decline in three months. the expectation is that hurricane ivan will miss oil production platforms in the gulf of mexico, and the price of crude may fall furthered next week as opec meets to discuss boosting production. we spoke with 37 traders and analysts. just over half of them say oil prices will fall next week. 11 of them see oil rising, and seven say prices would be little changed. a week ago, about 40% of them predicted a gain. home depot’s chief executive says the company’s hiring 25,000 workers this year. we’ll hear from him, up next.
