Interview: Money & Sports
>> pakistan’s benchmark stock index rising 3% today, making for the biggest fluctuation among world equity markets . the pakistan telecommunications company helped lead gains on news of a meeting between pakistan’s prime minister and local brokerages. there is optimism that the government may raise its limit on how much money investors can borrow in order to finance stock purchases. now the head of research at ivescap securities says “talk of improving liquidity is boosting confidence of investors.” the system in question allows investors to buy shares in seven different companies that borrow cash and defer final payment as long as they pay a daily financing cost. let’s go to the bloomberg terminal right now. what i brought up is a price chart of the karachi stock exchange index. you can see it down almost 30% since the high. that was reached back in mid march. today’s gain is now the largest we have seen in two months. well, less than two years after being bought by nine business men, the atlanta hawks lost one of their own. steve belkin agreed to sell his 30% share to other owners. this move cleared the way for joe johnson to join the team from phoenix. let’s get more of this edition of “money & sports.” a lot of players and money involved in this. tell us how it is playing out. what does it mean?
>> it essentially means like you said, they got rid of one owner who was against the trade and brought in the man they sought to get all along, joe johnson. they introduced him at a press conference in atlanta. brought a lot of attention to the team. not all publicity is good publicity if the hawks. for years they have been basically the doormat of the nba. they tried to bring in a big free agent and spend a lot of money to get the big free agent and one of their owners said i don’t like the trade. in the end they had to oust him, that being steve belkin. mostly talk wgt owners they’re happy they have joe johnson on the stage and introduce him as an atlanta hawk. a bit of an embarrassment.
>> why did belkin ultimately sell?
>> well, he essentially didn’t like the trade, thought they were spending too much money on a guy who in phoenix was third or fourth best on the team. they were giving up draft picks to get him. they didn’t have to. they could have offered him a contract. most likely phoenix would have matched that contract. they upped it and put in first round draft picks to go with it. ownership will essentially absorb that 30% among the owners now. they won’t bring in any new owners. they’ll bring in joe johnson.
>> let’s talk a little about the gambling company sponsoring professional soccer league. what are the details here 4?
>> bet―betandwin.com. this is the name of the league now. they’re sponsoring all the teams. tried to get in with other leagues around the world and promote betandwin.com as an internet gaming site. the entire league will be known as betandwin.com league. it will be on the field, on the jerseys of the team. interesting sponsorship. you have all kinds of sponsorship throughout north america but none by a gaming company.
>> do you think we’d ever see something like this in the u.s.?
>> essentially no. you look at attitude towards gambling and sports in the u.s. and unless it is in las vegas or unless a minor, minor league team i don’t think you will see this. you have seen goldenpalace.com. you have put the ads on the end of boxers and boxer shoes. knowing the attitude towards gambling in the u.s., i doubt you’d see something like this.
>> have a great weekend.
>> mike joins us every week for our edition of “money & sports.” with that a quick break. more “after the bell” after this quick break.
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Listen Market briefing --- Ellen (slow)
Merck --- Su (fast)
NYSE --- Deb (fast)
Nasdaq --- Robert (slow)
>> welcome, from world headquarters in new york city, imellen braitman, this is “after the bell.” before we get you details on merck, we’ll show you the closing numbers for the stock market , the dow up four points, the s&p, less than 1 and nasdaq losing less than 1. the index little changed, the surge in oil prices and ruling on merck in the first trial over the vioxx painkiller, sparking an afternoon selloff. on the week, benchmark indexes fell. first up, news on merck. that jury in angleton, texas, found merck liable for causing the death in 2001 of a 59-year-old man. the jury decided merck must pay more than $250 million to that man’s family. shares of merck down 7.7%, wiping out almost $5 billion in market value. su keenan has the details.
>> the news is significant because it’s first verdicts in the more than 4,000 lawsuits filed over merck’s vioxx painkiller. juries deliberated more than 10 hours before making the decision to award damages, actual and punitive, to the family of robert ernst. the.
>> i just know that it was a road that i had to run and i had to finish and i’m glad it’s finished and i’m glad it ended the way it did.
>> it is likely there will be adjustments made to the $253 million verdict.
>> it will probably be cut back. i’m not sure how the law works in all of that. but drug companies must tell us the good, the bad and the ugly about the drug. they cannot hide behind the profit in an effort to get the money in the bank and not tell us the research.
>> merck withdrew the drug in 2004 after research linked the drug to improved risk of heart attack and stroke. the family for mr. ernst argued that the drug caused his death.
>> i think the evidence did not exist to link mr. ernst’s death with vioxx . it does not exist without a cardiac arrhythmia secondary to atherosclerosis. part of our appeal will be the admission of unreliable scientific evidence on which the jury probably did base their decision.
>> the trial began july 14 of this year. the jury began deliberating yesterday. the stock has fallen about 1/3 since merck withdraw the drug in september of last year. the drug generates $2.5 billion in sales, or that was the amount last year, or 11% of the company’s total.
>> certainly what we saw in trading today with merck weighing on the dow and s&p, major stock indexes ending little changed. deirdre bolton has the market story.
>> the markets did pare earlier gains after the news from merck. energy stocks, still the best gating. the s&p 500 energy index still gained more than 1% on the session.
>> exxon-mobil, conocophillips and chevron all advanced. drilling companies, including devon, burlington resources and apache also saw stocks trade higher. at least one strategist says that even with the group’s recent gains, stocks still have further room to rise.
>> certainly, with oil prices in the mid 60’s, it appears the opportunities for drillers remains very strong. we are overweight in the other energy sector of the russell 1000.
>> threat of higher oil prices did not stop investors from buying coca-cola shares after u.b.s. upgraded the soft drink maker’s stock, citing increasing sales growth driven by marketing and better execution. better-than-expected second-quarter earnings drove autodesk stock higher. the building design software company reported second-quarter profit that almost doubled and said earnings this period may top predictions. autodesk makes software used to create movie effects. some strategists say earnings will continue to propel stocks in the second half of the year.
>> the economy has good momentum to it, likely to sustain economic growth in the 3.5% to 4% range up through 2007 so that means earnings will be heading higher.
>> the earnings outlook at the gap disappointed investors. the largest u.s. clothing chain cut its annual earnings forecast by 10%. the owner of banana republic and old navy stores made wrong fashion calls on denim, according to analysts. gap close down, its fourth consecutive drop, losing over 8% this week.
>> thanks so much. let’s get more on the day’s trading action that ended in a late-day fizzle on the dow. deborah kostroun has this report from the big board.
>> the dow jones industrial average and s&p 500 barely eking out a gain on the day. for the week, it was a different story. the dow and s&p and also the nasdaq, you can say, all saw weekly losses. in friday’s session, we really didn’t have economic reports. so no economic reports to guide us through the day. below-average volume plaguing us all week and usually august indicative of that below-average volume as people get in their last round of vacations before the labor day holiday. the big story developing in the last hour of trading, that was merck. merck falling after that verdict in texas. merck ended up being the biggest drag in the s&p 500. merck’s market capitalization dropped $4.8 billion on the day, most active day for merck stocks since february 18. we did see merck down 7.7. you look at the laggards in the s&p 500, merck led pharmaceuticals lower. also, retail were lower. food and staple retail lower. looking at other pharmaceuticals lower, merck having an impact on other pharmaceuticals on the day. retail, a mixed bag, although it was the biggest―second biggest drag in the s&p 500, gap and foot locker cut their forecasts and those stocks were lower but dillard’s had good news. same-store sales at dillard’s increased 1%, the first gain in five quarters. ann taylor, although profit dropped 76% and revenue rose 7.6%, they affirmed their annual profit forecast so ann taylor ending the day higher. it’s a tough week for retailers as wal-mart said higher gas prices are eating into their earnings. the gainers in the dow jones industrial average, coca-cola raised to a buy at u.b.s. i.b.m., positive comments from prudential on the day, as well. i’m deborah kostroun at the new york stock exchange.
>> as for the nasdaq, the third straight weekly decline. robert gray with details.
>> the nasdaq composite closing at the lows of the session on friday, the second consecutive downgrade, down .5, including the eighth consecutive session of directionally different closes, losses and gains on the day. it was the slowest day volume-wise at the nasdaq this year, slower than the friday before the july 4 weekend. weakness in retail all week long. bebe stores disappointing on forecasts and similar story at hibbett sporting goods. american eagle outfitter also lower and sears holdings, one of the worst performers on the nasdaq 100. vertex pharmaceuticals, developer of medicine for cancer , raised at j.p. morgan. i.d. biomedical raised to strong buy. and new river pharmaceutical, an article in “business week” saying the pharmaceutical maker developing a drug for some say may be the lead remedy for attention deficit hyperactivity disorder. tech stocks on the session -- autodesk shares one of the best performers. rising on their forecasts. marvell technology boosting its forecast and intel shares moving lower as well as apple computer declining on friday. google shares rose a penny a day after announcing the follow-on offering, 50 million additional shares being sold, that announcement coming on thursday. shares moving up, slightly higher. at the nasdaq, robert gray.
