Interview: Nasdaq site
>> the nasdaq ended three days of hoss with a―losses with a small gain ahead of a busy week for tech earnings.
>> the nasdaq composite posting a small gain as the busiest week of earnings reports gets underway this current earnings season. investors looking for a catalyst to see if stocks will continue sliding or going higher. john glassman not seeing followthrough today, seeing further downside ahead for stocks. he says if earnings come in better than expected, then well won’t be an upside surprise to send them higher. he says major indexes will find their lows in the next four to six weeks. the strongest groups in monday’s session, among them semiconductors, the s.o.x. rebounding from a loss last week. texas instruments up after the close and intel reporting on tuesday after the close of regular trading, a big one that will send stocks either higher or lower, according to traders and investors. wanted to look at internet stocks reporting this week. google rising on monday’s session. ebay, the best performer in the nasdaq 100. google reports thursday after the close. ebay, wednesday after the close. ebay, incidentally, intraday, touching its lowest price since january 12 of last year so it illustrates the push and pull of today’s session, bouncing between gains and losses ofch of the day. amazon shares rising, they report tomorrow after the close. a couple of m&a’s deals to tell you about today. in the software group, adobe systems buying macromedia. macromedia, which makes dream weaver and flash media web design software programs and macromedia shares surging and in the video game retail group where they sell video game software and hardware consoles, as well, electronics boutique purchased by gamestop, both of those shares rising on news of that deal.
>> we have headlines crossing on “monday night football,” moving from abc tv to espn, replacing that on the “sunday night football” on nbc. nbc announcing a deal with the national football league to televise 17 regular season games and super bowls xxxxiii and xxxxvi. espn, which had telecast sunday might football gives way to nbc. more news coming up on that as it becomes available but lots of changes in the rights business for nbc. budgetf america came in with first-quarter earnings and profits soared 75%, thanks to the takeover of fleetboston.
>> we did see that company top analysts’ forecasts, excluding one-time yms, topping the consensus by 22 cents. even though profit growth may slow 5% this quarter, c.f.o. markoten―oken expects the business loan demand to continue to grow.
>> the level of dialogue between our commercial customers and our associates continues to be very active and we’re optimistic they’ll continue borrowing.
>> on the consumer side of the bank, investors wonder if americans faced with rising oil and higher borrowing costs will spend less. oken says, so far they have not seen changes.
>> at this point, there’s no noticeable change. underlying credit quality continues to be very good. our equity borrowings from consumers was above 20% for the quarter.
>> but, some say bank of america is overdependent on retail banking.
>> the the thing that keeps me on a hold on bank of america is i have trouble growing the top line in the 2005 and 2006 given their relative overdependence on retail banking domestically.
>> there are concerns that bank of america’s growth may be weaker than what the bank itself is forecasting. richard bove saying there were a lot of good things in the quarter but more than half of the earnings increase was due to non-re-occurring events and none of that is sustainable. the pressure point for all of these banks is the federal reserve’s future moves. as alan greenspan raises% interest rates, companies’ profit margins are squeezed. jeff harte says the rate increases are important.
>> if they’re raising rates because the economy is strong, that’s good for business. if they’re raising as a preemptive move on inflation, that’s not as good.
>> 18 analysts following bank of america consider it a buy, eight consider it a hold and one recommends selling the stock.
>> coca-cola has settled a complaint with the securities% -and exchange commission after being accused of urging japanese bottle ters to boost revenue. if you’re a sirius satellite radio subscriber, soon you can tune into the martha stewart channel. allan dodds frank will have that story next.
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Listen Market briefing --- Mike (fast)
Interview: Adobe & Macromedis
NYSE --- Julie (fast)
the company says revenue may be as high as $3.25 billion next quarter. the c.e.o. says the market environment is improving. we have a major deal to tell you about today. adobe systems is buying macromedia for $3.4 billion in stock. the deal bringing the world’s biggest maker of graphic design software together with the maker of flash web design software. each macromedia share will be worth about .69 adobe shares, valuing macromedia at $41.86 a share, a 25% premium from friday’s closing price. adobe’s c.e.o. says the deal helps the company expand into new markets . speaking of the adobe c.e.o., bruce chisholm and macromedia c.e.o. join us from california for a look at the deal. let me ask you first, bruce, if i could, everybody is saying this is essentially putting a slingshot in david―a rock in david’s slingshot to take on the giant, microsoft, as they prepare to move into your territory. is that how you see it?
>> absolutely not. i think people like drama and that’s why they say that. if you look at adobe and our mission, it’s always been about helping people and organizations communicate better and what i mean by better, making sure that information that needs to be compelling or impactful or reliable or relatively secure, people who need to diso do that or organizations that do that use adobe solutions. that’s not a major focus of microsoft. and while they might try to or might plan on doing something there, the reality is, we have been at this for so many years, we don’t see it as that big of an issue.
>> i think it’s safe to say, as well, that for both macromedia and adobe over some number of years, there have been areas where we’ve been cooperative with microsoft and other areas where there’s natural overlap and it’s safe to say those conditions will prevail.
>> stephen, let me ask you, you have been at this for a long time. you’ll end up with about 100% of the software design market for webpages when this deal is concluded of the if it’s concluded. do you expect any antitrust problems?
>> i wouldn’t characterize it that way at all. in the context of microsoft, they have a product called front page, which, for a certain component of the market , is a very competitive product so so i don’t look at it at all as 100% but i see an opportunity to take two complementary agendas, put them together and allow us to compete more competitively in the future.
>> bruce, do you see problems from the justice department?
>> not at all. not only is microsoft front page a competitor in that category, but there’s a number of other hand coding tools and other offerings. if you look at go live, adobe’s web layout source, it’s mostly toward the designer and dream weaver is mostly toward the developer so we don’t think it’s a dealer.
>> your stock many trading -- has been trading at a historical premium but with a liquid balance sheet. is your use of stock a comment on the stock’s valuation, that it might be overvalued?
>> i can’t comment on the value of my stock. i’ll let the financial community determine that. all i could do is talk about the growth opportunities that are ahead of us both as an independent company and in the future as a combined entity. we participate in market segments that have a lot of growth opportunities to them. whether it’s digital photography, with products like photoshop and photoshop elements, whether it’s the creative professional space with products like in design and the creative suite or whether it’s the enormous enterprise market , for us the mission critical document work load. those are big opportunities and we think they represent large potential for adobe and over time, that will be reflected in the stock price.
>> mr. elop, you were trading at multiyear highs, the most expensive p.e. ratio multiples since 2003. what drive the timing, begin that?
>> a couple of things drove the timing. it was our feeling that the best time to consider a combination like this is when you’re doing so through a period of success and strength. the same is true for adobe. both companies over the last couple of years have been doing remarkably well and for combinations like this to be successful, bringing together two strong, successful companies makes it a whole bunch easier. also, as we considered something like this, it wasn’t at all about a particular point in time or spot price or anything like that. it’s very much about the long-term potential and as we considered what the complementary agendas could look like over time, it was clear to us this would be great for shareholders, customers and employees.
>> looking back historically, there have been problems with software mergers in terms of integration. what are you going do to make sure this works? this is much different. i have said numerous times that in order for adobe to do a large acquisition as we are are with macromedia, there would be two conditions, one being that it would need to be very strategic and clearly this one is. the second is, we would need to be convinced that we could integrate the company into adobe and because the cultures are relatively the same, because our visions are common in nature, because people are passionate about innovation and technology, we’re located locally here in the bay area and our business models are very similar, even though we do believe integrations are difficult, we believe this one is certainly doable.
>> thank you very much for joining us, bruce chizen, c.e.o. of adobe systems and stephen elop, c.e.o. of macromedia. u.s. stocks were mixed after last week’s drop in semiconductors. for more, a report from julie hyman at the big board.
>> the same concerns that plagued the market last week were still around this week but some investors could not resist the bargains to be had after we had the declines in the dow and s&p and nasdaq last week. if you talk to investors today, they were still talking about concerns about slowing economic growth and slowing profit growth but on the other hand they were also talking about attractive valuations. i talked to director of value strategies at fifth third bank, managing $10 billion under their value investing arm and he said you have the worst of both worlds, higher interest rates and lower earnings. on the other hand, the lower the markets go, the more attractive and better the values become. that was the push and pull we had today. as for groups that did the best and worst, it was a flip-flop of what we saw last week. some of the groups seen as most economically sensitive suffered last week and came back today. some examples, semiconductors recovering in today’s session. the dow transports, which have gotten a lot of attention this year as they’ve been lagging, doing well today, and basic materials coming back with steelmakers and chemical makers participating in a rally in that group. the groups that did the best last week declined in today’s session. healthcare equipment and services companies did not necessarily participate in a rally last week but they definitely got hit today, down about 1% in anticipation of earnings later this week. we had drug stocks doing poorly today after doing very well last week, one of the few groups that did well and we had food and beverage stocks declining today. one of the reasons the dow underperformed the s&p so much today was mostly because of 3m, coming in with its smallest sales gain in 2 1/2 years’ time and that drop in the stock of 6% is its biggest drop since july of 2002, holding back gains in the dow today. i’m julie hyman, bloomberg news, at the new york stock exchange.
>> let’s go through the numbers that julie referenced -- looking at the other major indexes today, the new york stock exchange composite finished. up as did the russell 2000, the amex down on the day but the wilshire, broadest measure on the market , finishing higher by almost 37 points. looking at the bond market , a losing day for bonds with the 10-year note down 1/4, yield at 4.26% -- more detail it’s bank of america record first-quarter earnings report coming up with deirdre bolton. stay with us.
