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Lou Dobbs Moneyline
Dow Rises 113.47 to 10,126.94; Nasdaq Climbs 62.48 to 1,961.43; U.S. Crew Returns to U.S. Soil
Aired April 12, 2001 - 18:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JAN HOPKINS, CNN ANCHOR: The Nasdaq closes out its best week in nearly a year. This is MONEYLINE for April 12th, 2001.
Investors go out of the short holiday week with a bang. The Nasdaq on a tear, the Dow taking a triple-digit jump. But it was a mixed bag for retailers hit by profit warnings. Is the great American spending machine stuck in low gear?
And homecoming for 24 Americans now back on U.S. soil: the crisis has passed, but has damage been done to U.S.-Chinese relations?
ANNOUNCER: This is MONEYLINE. Reporting tonight from New York, Jan Hopkins.
HOPKINS: Welcome to MONEYLINE. I'm Jan Hopkins, in for Willow Bay.
It was a stellar way to go into the long Easter weekend, investors pushing aside a raft of disappointing economic news and plowing into stocks again. The Nasdaq jumped more than 3 percent today, 14 percent on the week. It's the best week since last summer. We'll have an in-depth look at the markets.
But first: the very latest on the 24 Americans back in the United States. The crew members arrived in Hawaii earlier today to a spirited welcome. Mike Boettcher joins us from Hickam Air Force base in Honolulu with the latest -- Mike.
MIKE BOETTCHER, CNN NATIONAL CORRESPONDENT: Well, Jan, the 24 crewmen and crew-women are now being debriefed by a team of military officials who will ask them questions for the next two days. There are 12 teams, and they will speak to the crew of that Navy plane individually and in small groups, trying to find out how the crash occurred, what the Chinese asked them when they were in custody, and questions like that to try to get this nailed down. Also, what kind of equipment they were able to destroy.
Now, that plane arrived at about 6:30 this morning in Honolulu, at Hickam Air Force base. There was a small crowd, couple of hundred people out there, kept deliberately low-key, because they want to have a more elaborate welcoming ceremony in Whidbey Island Naval Air Station later in the week, on Saturday. But they looked well coming off the plane, very healthy. They shook hands with top Navy brass and military brass from Honolulu. Local politicians were there, and there were homemade signs and military brass band. The pilot of the aircraft, Lieutenant Shane Osborn addressed the gathered crowd soon after he stepped off the plane.
(BEGIN VIDEO CLIP)
LIEUTENANT SHANE OSBORN, MISSION COMMANDER: I'd like to thank the support for these past 12 days. It definitely helps. Now that we're back, we obviously have some business we need to take care of. We need to be debriefed and briefed on the situation so we can get home to our families for Easter.
With that note, I'd like to start that process now so we can get home. And on behalf of combat reconnaissance crew one, I'd like to thank you once again, and God bless America.
(APPLAUSE)
(END VIDEO CLIP)
BOETTCHER: They certainly went on to that job of debriefing rather quickly, and these will be a couple hard days. They'll spend 12 to 14 hours, but they want to get home. As I said, there will be a larger ceremony. They will leave here 7:30 a.m. Saturday morning, fly to Whidbey Island Naval Air Station, arrive there around 4:00. And there, they will meet their families in person for the first time -- Jan.
HOPKINS: Mike Boettcher, reporting from Hawaii.
The crew's return also brought a warm welcome from President Bush. Major Garrett is standing by at the White House -- Major.
MAJOR GARRETT, CNN WHITE HOUSE CORRESPONDENT: Jan, the crew is released brought a degree of freedom to President Bush that he did not have during the strenuous negotiations to win their release, freedom to say that this standoff has taken a toll on U.S.-China relationship.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The kind of incident we've just been through does not advance a constructive relationship between our two countries. Both the United States and China must make a determined choice to have productive relations, to have a productive relationship that will contribute to a more secure, more prosperous and more peaceful world.
(END VIDEO CLIP)
GARRETT: During his remarks, the president said there are areas of disagreement about weapon proliferation trade, and he also added a line himself about human rights and religious freedom. There's word from the White House, Jan, that the White House wants to make it abundantly clear to the Chinese that the relationship is different now that the standoff is over.
HOPKINS: But given all of that, what's the mood in the White House, and particularly of the president?
GARRETT: The president can only be described as jubilant. And let me give you just a little example of how happy the president was today. He had come over from the East room, walking back to the west wing, and instead of going the route that takes him away from the press corps, he happened to walk into the press briefing room. There were no reporters there, we were all scattered getting ready for other presidential events, and he hopped up behind the podium -- there were no lights on, no cameras running -- and he said: "I'm ready for your questions, ready for your questions."
There was about four reporters, or rather, producers, stunned in there to see the president. One of the aides said: "Come on, Mr. President. You know that event is outside." He said, oh yeah, OK, I'll be out there in a minute. Very happy president, he's on his way now to spend an elongated Easter weekend at his ranch in Texas, and he's going to watch the ceremony -- Whidbey Island Naval Air base over the weekend on television -- Jan.
HOPKINS: Thanks very much. Major Garrett at the White House.
Our next guest has had an active role in Chinese-U.S. relations: former U.S. ambassador to Beijing James Sasser. He joins us from Washington with some perspective.
The president's mood good, I guess he deserves it at this point. It turned out pretty well, considering, didn't it?
JAMES SASSER, FORMER AMBASSADOR TO CHINA: I think it did. We got our crew home. The airplane is still in China. But I think, by and large, the administration handled this well, and we've had, I think, a successful conclusion so far.
HOPKINS: But the president said that it takes a toll on U.S./Chinese relations. So there are still problems ahead, including what about the plane?
SASSER: Well, I think we certainly want the airplane home. But at this juncture, I don't think that's very important, or not that important.
In other words, the Chinese have certainly been all the way through the airplane, and much of the sensitive intelligence apparatus, we're told, was destroyed before the plane landed. The aircraft itself is really a 1950s vintage, at least 1950s design vintage. So, it's not that valuable.
But we'd like to have it back. I think it's symbolic.
HOPKINS: What about some of the issues that lie ahead? Trade with China, business with China. Are these issues going to be strained now because of this whole incident? SASSER: No, I don't think so. The Chinese will want to continue on with trade as usual, with business as usual. They very much want to expand their economic contacts with the United States and with United States' business. And U.S. businesspeople also, they want to continue to try to penetrate this large Chinese market of 1.3 billion people.
So, I don't see any commercial disruption, unless the administration should decide in two or three weeks to sell Taiwan the Aegis class destroyers. If that occurs, then there could be some disruption from the Chinese end.
HOPKINS: Thanks very much, James Sasser, former ambassador to China, joining us from Washington.
SASSER: My pleasure.
HOPKINS: And ahead on MONEYLINE: the bulls running again on Wall Street, but how long will the rally last? In depth on a retail rout, have American shopaholics maxed out?
And a cease-fire in a bitter trans-Atlantic war over bananas.
(COMMERCIAL BREAK)
HOPKINS: On Wall Street today, another shining session for high- tech stocks: the Nasdaq extends its rally to a fourth day. The index jumped 62 or more than 3 percent to close at 1,961. That's nearly 1.9 billion shares changing hands.
That capped off a short but sweet week for the Nasdaq, soaring 14 percent, its best week since the beginning of June. Taking a look at the Dow today: it rose 113 points ending just below 10,127. More than a billion shares traded on the Big Board. The Dow enjoyed a solid advance this week as well, though the gains were paltry compared to the Nasdaq.
The blue chips gained nearly 3.5 percent. Greg Clarkin joins us now from the New York Stock Exchange with a look at the day's big movers -- Greg.
GREG CLARKIN, CNN CORRESPONDENT: Jan, it was a mostly upbeat group of traders that left here today, and after all they saw a nice gain for the Dow this week, but the real story is with the tech stocks, and after a week of big gains the question now is, can those gains stick?
(BEGIN VIDEOTAPE)
CLARKIN (voice-over): It was hardly 1999, but just a bit of swagger returned to tech stocks this week. Nasdaq rallying for fourth straight day, something it hasn't done since last summer. Fueled by confident bargain hunters, the Nasdaq jumped more than 3 percent. The composite gaining 14 percent for the week as tech stocks quietly made big gains. MARC KLEE, AMERICAN FUND ADVISORS: I've been relatively bullish the last few weeks, thinking the valuation would win out and that would be in line for some kind of a run here. And I don't know if people appreciate that the last six trading days, the average technology stock is up anywhere from 25 to 30 percent.
CLARKIN: Today's tech winners included fiber-optic stocks: Nortel and JDS Uniphase gained. Juniper jumped. And chip stocks such as PMC Sierra and Micron moved up. The Dow shook off a profit warning from Wal-Mart and rallied 100 points or more than 3 percent.
Blue chip winners included: United Technologies, Caterpillar, Merck, and Microsoft. Analysts have been watching carefully for any signs of shift in sentiment, and some were encouraged by the feeling that stocks were again looking attractive.
GREG NIE, FIRST UNION SECURITIES: Over the last couple of days there's the first hint, if you will, that you're seeing a little bit of (UNINTELLIGIBLE) shift, money coming out of bonds to go back to the stock market, and that would be welcome for a spring rally.
CLARKIN: But mixed in with that optimism is a fair amount of cautiousness.
MARY BURNES, EDWARD JONES: I'm still concerned about the marketplace. You know, PEs are down, but we still have that worry about the earnings part of that equation and we have two weeks of earnings announcements that have yet to be seen.
(END VIDEOTAPE)
CLARKIN: And three tech heavyweights: Sun Microsystems, Intel, and Microsoft, are all expected to be out with earnings next week, and more importantly, analysts will be looking for comments on what those companies see for the second quarter -- Jan.
HOPKINS: So, next week a big week for earnings; right Greg?
CLARKIN: Exactly. Next week and the following week we'll see a lot of earnings reports.
HOPKINS: Thanks. Greg Clarkin at the New York Stock Exchange.
One stock that helped lead the blue chip advance today: General Electric. The company today reported profits rose 16 percent last quarter, in line with Wall Street expectations.
Strength and capital services and power systems helped there. Revenue was essentially flat. Investors sent GE shares higher; they were up 1 1/2 to end at $44.70. Still, GE stock has a way to go before staging a full recovery. It's down 26 percent from its 52-week high. More now on the market outlook. As we said, it was a banner week for stocks particularly tech stocks, the Nasdaq best week since last June.
But it's key to remember, back then the Nasdaq was hovering around 4,000. Now it's less than half that. Showing that one week rallies are no guarantee of a sustainable rebound, joining us from Philadelphia, a market watcher who was correct in being cautious back then and is still cautious now. Wharton Finance Professor Jeremy Siegel.
Professor Siegel, you're not ready to say you've seen the bottom?
JEREMY SIEGEL, WHARTON BUSINESS SCHOOL: Well, I'll tell you, certainly, the markets ended with an upbeat note this week, but I don't think the economic news that we saw today was very upbeat at all. I think if this reality is to continue and I hope it does, we'll have to see a turnaround in the economic news.
HOPKINS: Now, you were very correct and basically calling the top for the Nasdaq. And how far do you think it has to fall before it looks cheap?
SIEGEL: Well, I think certainly, it's very much cheaper than it was last year. You know, I've been saying it was falling down below retail level, it's probably at wholesale level. I think a lot of people want to pick something up at liquidation level. Some of those stocks might have reached that. But the earnings deterioration over the last 12 weeks has been greater than in the price decline. So the PE ratio on some of the stocks has gone up and not down.
HOPKINS: So, you think that the key to watch is the economy?
SIEGEL: Absolutely. There's got to be a follow through. Otherwise we'll have the type of false rally that we had in January. A lot of hope, the Fed was coddling, but when that economic news came in so poorly, stocks started down again. We need a turnaround in that economic news before I think we have a sustained rally in the market.
HOPKINS: Your research has shown that in the long run it's good to invest in stocks. But your research also shows there are some periods where stocks are not the place to be. Is this one of those periods and what would you say to investors who are saying, maybe it's time to go back in?
SIEGEL: I think this is a great time to go in for long-term investors. This year is going to be a rocky year, I don't see a V shape that will send stocks flying by year-end. But certainly, on a long-term valuation basis, I think that stocks are a buy, and I see them still being the best portfolio choice for the long run.
HOPKINS: So how long? How long do you have to hold them before they're good investments?
SIEGEL: Certainly, I think from this position, not as long as you would have had to have held them from last year. Certainly, year to year, you could take losses and we have seen that. But I would say looking ahead, three, four, five years, you'll do better in these stocks than you are 3, 4, 5 percent bank accounts, because interest rates are down, and you really can't get much of a yield anywhere else.
HOPKINS: Thanks very much. Jeremy Siegel will join us later in the program.
Coming up, we'll check the after hours trading action. And, we'll look at what brought an end to a bitter trade dispute. Plus: another addition to the dot-com deathwatch, a Web delivery service fails to pay off, Kozmo.com reaches the end of the line.
(COMMERCIAL BREAK)
HOPKINS: Taking a look at tonight's corporate headlines: Delta Airlines says it is not close to an agreement with its pilots, warning that "there is little reason" to believe an agreement will be reached before pilots can strike on April 29. If that is the case, the focus will shift to the White House, where President Bush can block the strike for another 60 days, as he did for Northwest earlier this year.
Delta stock fell nearly a dollar in trading today. "The New York Times" says it's cutting jobs in all business units due in part to a deteriorating ad market. CEO Russ Lewis says "once the economic cloud dissipates, we expect to emerge stronger than ever."
In the Web world, the former number one Internet consulting firm marchFIRST is filing for chapter 11 bankruptcy. The company's stock was halted after the bell. It closed at 31 cents a share in the regular session.
Yahoo! shares gained on news of cost cuts there. The firm is starting its first major round of layoffs, cutting 12 percent of its work force. Yahoo! announcing the moves last night, along with its quarterly results. Earlier today, on CNNFN, CEO Tim Koogle said the cost cuts will pay off.
(BEGIN VIDEO CLIP)
TIM KOOGLE, CEO, YAHOO!: We reached the conclusion, which is that good, tough decision for the benefit of the company, to actually lower our cost base, so that we actually use this period when the economy is slow to strengthen our team, strengthen our focus, build a base under the company. So that, in fact, coming out of the economic slowdown, we get this company growing.
(END VIDEO CLIP)
HOPKINS: Investors took heart from those words, sending Yahoo! shares up more than $1 to just under $17.
In tonight's "MONEYLINE movers", Research in Motion gaining more than 6 late yesterday. The wireless device maker reported better- than-expected fourth-quarter results. Subscribers for its Blackberry pagers climbed 43 percent.
Ibis Technology sinking nearly 5 1/2. The semiconductor wafer maker reducing revenue expectations, warning a major customer is scaling back orders. And radio frequency technology company, RF Micro Devices, gaining almost 4. The company reporting a jump in orders from its biggest customer, Nokia. That stock soaring 90 percent this week. In our "Tech Watch": Kozmo.com, the one-hour Web delivery wonder, is shutting down, effective immediately. It's the end of a long struggle for Kozmo. The company withdrew its IPO last August, and all in all, burnt through $250 million in cash, including $60 million from Amazon and $25 million from Starbucks. Kozmo began its brief but well-known life in 1998, and at its peak, the firm employed more than 3,000 people and boasted 400,000 members.
But while naysayers say that Kozmo never stood a chance, CEO Gerry Burdo says the company did manage to briefly turn a profit in Boston, New York and San Francisco.
Coming up: Cincinnati imposes a nighttime curfew meant to curb protests. We'll get the latest from the troubled city, next.
(COMMERCIAL BREAK)
HOPKINS: The streets of Cincinnati will soon be under curfew, that after the mayor declared a state of emergency intended to stop the racial unrest that followed the police shooting on Saturday of an unarmed African-American teenager.
We go to CNN's Brian Palmer in Cincinnati for the latest -- Brian.
BRIAN PALMER, CNN CORRESPONDENT: Good evening, Jan. Inside the church we're standing in front of, there is a meeting that was called by the NCAAP. Its national leader Kweisi Mfume just finished speaking. He and other community leaders were hearing from neighborhood youth, from local youth, about their experiences with the police.
On the outside, as you can see, there's an impromptu protest going on over that curfew that's about to descend over the city of Cincinnati in about an hour. City leaders and police officials say it's necessary to diffuse the tension in the city, they want to clear the streets. Protesters say it's simply a continuation of heavy handed policies directed against African-Americans here in the Cincinnati community -- Jan.
HOPKINS: So, what are the issues here?
PALMER: Well, there are number of issues. I think the main issue is the shooting of Timothy Thomas. People saying that's basically just the straw that broke the camel's back on sort of long experience with racial profiling, which people allege Cincinnati police practice, and a lack of understanding between the city officials and people in the African-American community -- Jan.
HOPKINS: Now, there are a lot of companies that are headquartered in Cincinnati, including Procter & Gamble. What kind of reaction have companies had to what's going on in the city?
PALMER: Jan, the news of the curfew is fairly fresh. Before the curfew was announced, it seemed to be business as usual in Cincinnati. In the Over-the-Rhine section of the city, businesses were shut down for the most part, particularly at night, at dusk. Now, the city announced that all businesses will -- they'll be allowed to conduct their business, but each business, I think, is making very, very different decision based on the very, very quickly changing situation, Jan.
HOPKINS: Well, I also read that some business leaders met with the mayor to try to come up with programs to hire more teenagers this summer to kind of diffuse the situation?
PALMER: Well, Jan, these are wonderful ideas and they're very long-term situations, but I think what people are dealing with now is how to diffuse tension at this very moment, and summer jobs and greater opportunities for African-American youth are definitely -- people want to talk about that, but I think what other people want to do is talk to how to diffuse the situation as it stands right now -- Jan.
HOPKINS: Brian Palmer in Cincinnati. The curfew there starts at 8:00 p.m. eastern.
Coming up in the next half-hour of MONEYLINE: more on another winning day for Wall Street. As the Nasdaq posts its fourth straight gain, have tech stocks turned the corner?
And with the navy crew back on U.S. soil, will the spy plane standoff have any lasting impact on trade relations between the United States and China?
Plus, a cease-fire on another trade front: Washington and Europe call off the dogs in a war over bananas.
(COMMERCIAL BREAK)
HOPKINS: In tonight's headlines, for the first time in seven months, the Nasdaq manages to close in the plus column for four straight sessions.
And retailers take a hit in March, the industry blaming the slowing economy and bad weather for the poor results.
Plus, 24 crew members held in China for 11 days make their way back home. The effects of the standoff could linger. We'll assess the damage to U.S.-China relations.
But first, a stunning winning streak for the Nasdaq. For the fourth day in a row the index finished the day in positive territory, pushed higher by strength in chips, Internet, and software stocks. The Nasdaq climbing 62 points on the day, that's' more than a 3 percent gain. It finished at 1,961. The index is up 14 percent on the week. Some of the biggest gainers on the Nasdaq include Juniper, JDS Uniphase, Cienna, Applied Materials, and Research In Motion.
The Dow had a solid session as well, the Blue Chips gaining 113 points, over a percent, to finish just below 10,127. For the week, the Dow gained just under 3.5 percent. The broader market also higher for the day, the S&P 500 closed up 17 points at 1,183. For more on this strong week, we head now to the New York Stock exchange and Greg Clarkin -- Greg.
CLARKIN: Jan, you know, traders found a lot to be optimistic about today. For one, the Dow was able to shake off a profit warning from Wal-Mart, and even weakness in IBM in the middle of a tech rally didn't seem to faze investors. Market breadth was another reason to be upbeat. Advancers easily beat decliners on both the Dow and the Nasdaq.
So, where do things go from here? Well, next week will bring earnings reports fast and furious. Report cards from Intel, Microsoft and other market heavyweights are expected. And one key to the health of stocks next week will be those conference calls with analysts. They're expected to shed light on whether business is improving or deteriorating. And Wall Street will be listening for comments on everything from inventory buildups to global economic conditions.
The big question many have is -- was this week just a rally in a bear market, or has some confidence really returned to investors? Traders were encouraged that stocks, tech stocks especially, just really seemed to shake off bad news, and they'll want to see that continue really, before jumping back in with both feet. So, at this point, Jan, there's a little bit of confidence seeping in, but still folks have a healthy dose of skepticism as well.
HOPKINS: Well, one other positive is that tax season ends. And so some of this selling may be over. As you said, we still have all these earnings reports to shift through next week.
CLARKIN: Exactly, Jan, and all those reports do carry the potential to be something of a disappointment for investors and that could trigger selling in the stocks that ran up. And again, those conference calls really key. They're going to get a handle on just whether or not the second quarter is just as bad as many folks anticipate, and maybe some hint of just what the second half of the year will hold with some of these companies.
HOPKINS: That's right. Greg Clarkin, at the New York Stock Exchange. Thanks.
Although we finished the session higher, stocks initially sold off in the morning after some surprisingly weak news on the economy.
Lisa Leiter has more on that from Chicago.
(BEGIN VIDEOTAPE)
LISA LEITER, CNN CORRESPONDENT (voice-over): Consumers did more browsing than buying in March. Retail sells fell unexpectedly by 0.2 of a percent. The first drop in four months.
BOB BRUSCA, ECOBEST CONSULTING: This is not really a great picture. I mean it's not a disaster. We didn't have retail sales down half a percent, for example, but we don't have any momentum building.
LEITER: Demand is especially weak in -- for big ticket items like cars and furniture: A sign that consumers may be feeling edgy about the future of the economy.
They're spending accounts for 2 thirds of economic growth. It is expected to be about 3 percent for the first quarter.
STEPHEN SLIFER, LEHMAN BROTHERS: The only thing that has prevented us from going into a recession thus far has been all of us, as consumers. Our spending has been hanging right in there. And were it not for that, we'd be over the edge into recession right now.
LEITER: The worry is whether consumers will continue to spend. The University of Michigan's Consumer Sentiment Index in early April dropped to its lowest level in seven and a half 2 years, much lower than expected. Souring the mood, negative returns on quarterly 401(k) statements and the record number of layoff announcements. Indeed, first-time claims for unemployment benefits in the latest week rose to their highest level in five years.
CARL TANNENBAUM, ABN-AMRO: When you combine that with the news that we lost payroll jobs in the month of March, nothing can kill consumer confidence in spending like a bad employment situation. So, we'll have to keep an eye on both of those and I'm sure the Fed will do the same.
LEITER (on camera): These consumer reports may not be compelling enough to trigger a surprise rate by the Federal Reserve before next month's policy meeting. But economists say they bolster the case for further rate cuts down the road.
Lisa Leiter, CNN Financial News, Chicago.
(END VIDEOTAPE)
HOPKINS: The slowdown in consumer spending is definitely taking a toll on the nations retailers. We will have more on that in our "Sectors Report." But first, Let's check in on after hours action. We'll head to the Instinet and Amanda Lang -- Amanda.
AMANDA LANG, CNN CORRESPONDENT: Hi there, Jan. In what traders call fairly light pre-holiday trading, we did have some after the bell earnings, however, moving stocks. Shares of Rambus, memory chip maker, off more than 6 percent after the bell, down $1.28 to 18.25. The company missed second quarter expectations with a profit of 8 cents. Analysts hoping for 11 cents. And they also said that they see sequential decline in revenue, to the tune of 20 percent, in their licensing revenue next quarter.
Intel, however, is rising after the bell. Handspring, personal computer maker, is seeing a gain of 15 cents to 14.40 after the bell. It posted in-line results, a loss of 6 cents per share. Revenues came in at the high end of forecast and that helped boost the stock, but the company is lowering expectations for revenue in its current quarter. That is its fiscal fourth.
Finally, Doubleclick posting results. The stock off about 9 percent in after hours trading. It's losing a $1.04 to 10.97 despite the fact that Doubleclick beat the street's expectations by a penny, with a loss of 8 cents per share. It is, however, lowering estimates fairly dramatically. In its next quarter it sees a loss of 5 to 7 cents per share. The Street was hoping for a loss of 2 cents. The company saying that it saw a dramatic drop in on-line advertising demand in this quarter -- Jan.
HOPKINS: Thanks. Amanda Lang at Instinet.
And now for a closer look at those results from Doubleclick, we're joined by the company's CEO Kevin Ryan.
So, you're saying that in the future it looks worse than you originally thought?
KEVIN RYAN, CEO, DOUBLECLICK: Well, I think what we said today, overall, is that first quarter was a great quarter for us. We were one of the few companies to make the numbers. Looking forward over the year we're not seeing any signs of an overall advertising pick up, not just on the Internet, but across TV, radio, or anywhere else. It looks very flat going forward for the next couple quarters.
HOPKINS: Flat, but not nonexistent. Is that right? I mean, so people are buying, but they just aren't buying more than a year ago, or a quarter ago.
RYAN: Well, I think in the Internet we will see somewhere in the 6-8 billion dollars worth of advertising that's being purchased. So, that's up from zero five years go. But nevertheless, it's going to be a slowdown from last year.
HOPKINS: Now, because you are in the Internet space, does that hurt you more? I mean is there more of a fall off on Internet advertising?
RYAN: Not a lot more. I think more people will see this year is that advertising across the board is really being cutback because of all the poor results that companies are seeing out there. Will the Internet be hurt a little bit more? Only because some of the dot-com companies are cutting back. That's a separate issue. But fundamentally what you're going to see is that people who are leaders in their space like us are going to take market share and, relatively speaking, continue to do better than everyone else.
HOPKINS: Well, one of your strategies is to actually go after traditional advertisers. But there are a lot of people in that space, right?
RYAN: There are, but we get an increasing percentage of our business from traditional advertisers every single quarter. We also develop a lot of new products. E-mail is a product for us that's growing very, very quickly. We also find that traditional advertisers want to see better research. So we've entered the research business and made an acquisition last quarter. So there's a lot of good things happening.
HOPKINS: Let's take a look, though, at what the stock has done over the last year. We heard from Amanda that the stock is down 9 percent in after-hours trading. This is the graph of what's happened in the last year. A huge loss for the company. You can make it, at this point. Are you confident of that?
RYAN: Well you have to look at it relatively speaking. Compared to any one of our direct competitors, actually, our stock is down much less. And in the last 4 months, we have been pretty flat and all of our competitors are way down. So that's the reason that we are actually now, from a market cap point of view, bigger than all of our direct competitors combined.
That's very reassuring. Plus, the fact that we have over $800 million in cash, which is very, very significant. In the last nine months we have generated cash from operations consistently. So I think we're in great shape. But I think you're right. Your point is that a lot of other companies are probably not going to make it.
HOPKINS: What about privacy? It's been a big issue for your company. And will it continue to be an issue as people are concerned about being tracked, basically, when they're on-line?
RYAN: Well, I think privacy is an important issue. I think one of the things we reiterated today is that it was a great quarter for us on that front. The judge threw out all of the privacy class-action lawsuits at the Federal level against Doubleclick. The FCC came back and dropped its investigation.
So, I think that as people have learned more and looked at it, they realize that Doubleclick is doing a very good job. And so, I think that's why it's become less of a Doubleclick issue over the last six to nine months.
HOPKINS: So, you're prepared for when things turn, but you can't tell when they are going to turn?
RYAN: I think for the next couple of quarters I don't see a significant up turn. Obviously we're going to continue doing what we've been doing, which is improving our bottom line. We did better than we did a year ago, and we're picking up market share. And that's what you have to do in a down market.
HOPKINS: Thanks. Kevin Ryan, CEO of Doubleclick.
Coming up on MONEYLINE: a special sectors look at retailers. Plus, a look at trade relations between China and the U.S. in the wake of that 11-day standoff.
(COMMERCIAL BREAK)
HOPKINS: In tonight's "Sectors Report": retailers under pressure. Some of the nation's biggest retailers today supplied evidence that consumers have grown cautious as the economy has slowed. Checking some of those stocks: Wal-Mart, Federated, Dillards down more than $4; Talbots down $3.70. Susan Lisovicz has our report.
(BEGIN VIDEOTAPE) SUSAN LISOVICZ, CNN CORRESPONDENT (voice-over): March came in like a lion and ended the same way for beleaguered retailers. Damp, cold weather in many parts of the country put a chill on spending, just as many retailers were bringing out spring clothes. But big ticket items, like autos and furniture also suffered. Casualties of a slowing economy that has sharply reigned in consumer spending.
DANA TELSEY, BEAR STEARNS: Feels like, going forward, we'll continue to see, some weak retail sales numbers, as the inventory levels in the stores are a bit too high for the demand levels.
LISOVICZ: Weak demand could be seen in the 6 percent decline at specialty retailers, such as Ann Taylor; the 8 percent drop at Gap and Talbots; the 9 percent decrease at Intimate Brands; most especially, at the middle of the road department store Dillards, where sales plunged 13 percent.
Dillards also said the sluggish sales would reduce its profits for the quarter and join some of the industry's biggest players in issuing profit warnings, including number one retailer Wal-Mart, number two, Sears, and Federated, the parent company of Macy's and Bloomingdales. Pressuring profit margins, significant mark downs on hard to sell inventory. Analysts say, this weekend will be critical as to how they fair in April.
TOM FILANDRO, J.P. MORGAN CHASE: Looking at April as a whole, it's a 4-week selling period for retailers. The bulk of retailers get the 35 to 40 percent of their sales in the week leading up to Easter. So, it's a most important week. Retailers who have too much inventory will take advantage of the likely traffic. Remember, a lot of people are off on Friday and will likely be out in the malls.
LISOVICZ: But analysts say retailers also face tough comparisons to last year, when consumers were confident and the economy was chugging along.
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LISOVICZ: The March sales decline is the first monthly drop since November. Retailers are hoping more pleasant weather and another ease in interest rates will encourage consumers to increase their spending this spring -- Jan.
HOPKINS: So, I guess one bright spot for consumers is, the prices are coming down as they didn't sell all this stuff that they bought.
LISOVICZ: That is always a great thing when you have that extra inventory. But of course, it squeezes the profit margins for retailers, and that's not such a good thing.
HOPKINS: Are there bright spots in terms of some retailers doing better than the others?
LISOVICZ: Well, that would be stretching it, I think. J.C. Penny, which has had a lot of problems, is up 2.7 percent, Kmart up 1 percent; and Target says, it's on track with its guidance for profits.
HOPKINS: Thanks. Susan Lisovicz.
Just ahead, the standoff over, but the U.S. business community still wonders whether political tensions will mean trouble for those who trade with China.
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HOPKINS: Now that the U.S. flight crew has returned to American soil, corporate America can assess whether business dealings with Beijing might be affected by the 11-day standoff. Kitty Pilgrim takes a look at the challenges ahead.
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KITTY PILGRIM, CNN CORRESPONDENT (voice-over): A sigh of relief traveling from the tarmac in Hawaii to thousands of miles in Washington and then to Wall Street. Those who deal with China in trade or strategic issues find themselves assessing the damage.
JAIME FLORCRUZ, COUNCIL ON FOREIGN RELATIONS: It's difficult for two powerful nations who are both passionate of their national pride and dignity to break such a difficult impasse. But I think that this also shows that they are both pragmatic enough to push the emotional issues aside.
PILGRIM: The United States is the chief market for Chinese exports. Some $100 billion worth of Chinese products came into the country last year. And the United States exports 16 billion worth of goods to China. For that reason, pragmatism may overshadow rhetoric in the months to come. Yet, China critics have been using this opportunity to become more vocal against China trade.
ROBERT HORMATS, GOLDMAN SACHS INTERNATIONAL: I think some in the Congress who will use this incident to oppose extension of normal trade relations status for China when it comes up in June or July. But I think the dominant view in the Congress, and I believe among the American people, is that increased trade relations are good for the United States and for China.
PILGRIM: China desperately wants to become a player in international organizations. China is in negotiations to be a member of the World Trade Organization and is hoping to host the Olympics in 2008.
Another flashpoint in U.S.-China relations: military issues. Come the end of the month, the Bush administration will take up whether the sell arms to Taiwan including destroyers with the controversial radar systems. China, for its part, opposes the U.S. plan to build a missile defense system.
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PILGRIM: Many experts take heart that the discussions with China in the course of this conflict did not stray to other topics such as trade and arms sales, and focused deliberately on the release of the American servicemen -- Jan.
HOPKINS: Thanks, Kitty.
Coming up on MONEYLINE: a different kind of trade issue resolved today as the United States and Europe come to terms over a long- running trade war.
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HOPKINS: Tomorrow on MONEYLINE: with the stock market under siege and layoffs mounting, we'll have a special edition, "Getting Defensive," strategies to protect your portfolio, find a job, slash your tax bill. Tomorrow on MONEYLINE.
After nearly a decade of disputes, a truce is finally being called over a trans-Atlantic trade war. The object of contention? Bananas. Peter Viles has our story.
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PETER VILES, CNN CORRESPONDENT (voice-over): The banana war, the first trade dispute between the United States and the European Union, festered for nine years, even though neither side is a major grower of bananas.
PETER MORICI, ECONOMIC STRATEGY INSTITUTE: I know we've been severely criticized for the fact that we don't grow bananas, so why are we getting so upset, but the Europeans don't grow bananas ether.
VILES: It goes back to 1992. The newly-created European Union draws up a banana policy, favoring imports from former European colonies from the Caribbean and Africa, putting Latin American imports grown by Dole and Chiquita at a disadvantage. Chiquita loses half of its 40 percent market share in Europe, and an estimated $200 million a year. Its stock begins a long slide.
1997: U.S. trade rep Mickey Kantor, who began the fight, gives way to Charlene Barshefsky. The U.S. and five Latin Americans challenged the system, and the World Trade Organization rules in their favor. But the EU doesn't budge, so Washington puts sanctions on $200 million worth of European imports, including luxury handbags and bed linen.
January: a new administration and a new trade rep, Robert Zoellick. Chiquita announces a restructuring intended to set the stage for a bankruptcy filing. It also sues the European Commission for $525 million.
Finally this week, a peace accord. Zoellick brokers an compromise that protects African and Caribbean growers for five years, but allows Chiquita better access to European markets, and fazes out quotas by the year 2006.
WILLY HELIN, EU SPOKESMAN: To keep it simply, everybody, from high up in the American administration and high up in the European administration, everyone was literally fed up with bananas, and they thought it was not worth our while keeping squabbling across the Atlantic on such an issue.
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VILES: The cease-fire probably will not save Chiquita from bankruptcy, though. The company said it is pleased with the settlement, but will continue with plans to restructure its debt, a process that will likely lead to what is known as a pre-packaged bankruptcy filing -- Jan.
HOPKINS: Thanks, Peter Vials.
And coming up next: is this rally a sign of good times to come? We'll be talking with Myron Kandel and Jeremy Siegel.
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HOPKINS: Tomorrow, U.S. stock and bond markets are closed, but MONEYLINE will keep you "Ahead of the Curve" with our "Getting Defensive" special. Tune in tomorrow when we give you tips on making the most of your money, from cutting down your tax bills to surviving this market downturn. Get your questions ready, because we will also take your calls.
A holiday rally on Wall Street, the Dow and Nasdaq ending sharply higher. This pre-Easter rally seems to be a trend.
Joining us now is our financial editor Myron Kandel and from Philadelphia, again, Jeremy Siegel. Mike, you first.
MYRON KANDEL, CNN FINANCIAL EDITOR: Well, four sessions on Thursday, preceding Good Friday, counting today and the previous three years, the Dow has gained an average of 100 points. So, that's really a great record. And the Nasdaq has had this tremendous rally, more than 19 percent in six trading sessions.
And I think that -- that precedes another move in the market. And you know, for anybody to contradict Jeremy Siegel takes a pretty bold person, especially since he made that great call about the market being overvalued a year ago. But I think this market has some legs, and it will go much higher, Jan.
HOPKINS: So, let's bring in Jeremy Siegel and have him disagree.
SIEGEL: Well, I think perhaps, the worst is over, but whether we are going to make any real progress from here, I have to see the economic clouds lifting and a little bit more optimism on the economic front. And then, I will agree with Myron on the future.
HOPKINS: Well, you know, what's interesting: 20 percent, maybe that's the gain for the year, Jeremy?
SIEGEL: That's it. I mean, it's interesting, when you take a look at the graph of a Nasdaq, you say, is that 20 percent? It's just a little wiggle at the bottom, it does not mean that much when you were down almost 70 percent from last March.
KANDEL: Well, that's right...
HOPKINS: Myron? Final word.
KANDEL: You know, 70 percent down, 20 percent up is not anywhere close. But I do think the Fed, despite what Jeremy feels, I think the Fed this time is really our friend. It's going to get ahead of the curve, and that's going to help the market as well.
HOPKINS: Thanks, Myron Kandel and Jeremy Siegel.
That's MONEYLINE for this Thursday. I'm Jan Hopkins, sitting in for Willow Bay. Good night from New York. "CROSSFIRE" is next.
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