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Lou Dobbs Moneyline

Dow Rises 32.66 to Close at 11,248.58; Nasdaq Gains 27.23, Ends at 2,193.67; Political Parties Strongly Disagree on Bush's Energy Policy

Aired May 17, 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.
ANNOUNCER: Live from the heart of New York City: this is LOU DOBBS MONEYLINE for Thursday, May 17, 2001. Here now, Lou Dobbs.

LOU DOBBS, HOST: Good evening. We begin tonight with the president's formal unveiling of his strategy for solving what he views as the worst energy crisis since the 1970s. President Bush's solution: a sweeping plan to increase supply emphasizing exploration, drilling and development. The challenge now for the White House: selling a plan that so far has outraged Democrats and environmentalists. We have complete coverage of today's developments, with senior White House correspondent John King and Tim O'Brien on Capitol Hill.

We begin at the White House -- John.

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: Lou, much as he sold his tax-cut plan, the president hitting the road, now, to sell a very controversial long-term energy plan. First stop: Minnesota; the president in Iowa tonight. His message to the American people: look around, see short-term, immediate energy concerns in the president's view, evidence of a long-term problem.

(BEGIN VIDEOTAPE)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And if we fail to act, this great country could face a darker future. A future that is, unfortunately, being previewed in rising prices at the gas pump and rolling blackouts in the great state of California.

KING (voice-over): Close with an effort to disarm the many critics:

BUSH: The truth is, energy production and environmental protection are not competing priorities.

(APPLAUSE)

BUSH: We've yelled at each other enough. Now it's time to listen to each other and act.

KING: In the middle of the president's speech and his 163-page report: proposal after controversial proposal: an easing of government regulations to encourage new coal and nuclear power plants; new government powers to clear the war for thousands of miles of gas pipelines and electricity transmission lines; new oil and gas exploration in Alaska and other federal lands now off-limits because of environmental concerns.

Outside the vice president's house, one of many protests as administration critics made their case that coal is dirty, nuclear power dangerous, and drilling in pristine wildlife reserves destructive.

DAN BECKER, SIERRA CLUB: The president is trying to misrepresent his plan. He's trying to spread a thin veil of energy efficiency to hide a cesspool of polluter giveaways.

KING: The president's backdrop was a model of energy efficiency, a combined heat and power plant in St. Paul, Minnesota that uses a mix of coal, natural gas, oil and wood chips to provide low-cost heating, cooling and hot water.

But such facilities are rare, and that fit with the president's message: He says the country has no choice but to rely on fossil fuels for now, while investing in technology like this to change the future. To that end, the administration proposes $4 billion in tax credits to purchase energy-efficient vehicles; expanded tax incentives for producing electricity from alternative sources like methane gas; using royalties from Arctic drilling to finance tax credits for wind and solar power projects; and more money to help low-income Americans insulate their homes and deal with high energy costs.

But the president noted that California is a leader in the conservation movement, and said its rolling blackouts are vivid proof that efficiency alone won't work.

(END VIDEOTAPE)

KING: Now this debate now moves to the Congress, where the president has to deal not only with the Democratic critics of his long-term plan -- many Republicans grumbling; they say the president's plan does nothing, not nearly enough, in their view, to deal with the short-term, immediate energy problems -- Lou.

DOBBS: John, thank you very much; John King reporting from the White House.

The energy issue has galvanized Democrats in a way no debate has since the election last fall, and they were out in force all day bashing the Bush plan as an environmental travesty.

Tim O'Brien reports from Capitol Hill.

(BEGIN VIDEOTAPE)

TIM O'BRIEN, CNN CORRESPONDENT (voice-over): The administration wants more coal production? It got it today near the driveway of the vice president's home. A half-dozen members of the activist environmental group Greenpeace dropped a truckload of coal. No arrests, but they did have to help clean it up later. Some of the more controversial proposals, such as opening up Alaska's Arctic Wildlife Refuge to oil and gas exploration will need congressional approval.

The package didn't get much approval from Democrats today.

REP. RICHARD GEPHARDT (D-MO), MINORITY LEADER: It focuses on drilling and production at the expense of our environment and conservation. And it does nothing to help people who need relief right now.

O'BRIEN: Mr. Bush said he was moved by the plight of consumers in California, and that his energy package would help them. But not according to that state's governor.

GOV. GRAY DAVIS (D), CALIFORNIA: And I fault the president for not providing California with any immediate relief. California is the only state in America that's faced blackouts and astronomical electricity prices. And with all due respect, Mr. President, Californians want to know whether you're going to be on their side.

O'BRIEN: The task force report is a slick production. One congressman today lampooned its similarity to an oil company stockholder report. Check the photographs obviously intended to highlight the administration's environmental concerns.

Concerns the president's defenders insist are genuine.

SEN. PETE DOMENICI (R), NEW MEXICO: Let's make sure everybody understands what's in it. There is a major, major conservation effort here in this document.

(END VIDEOTAPE)

O'BRIEN: And what no one seems to dispute is that the document contains enough fuel for a knock-down partisan political fight here on Capitol Hill, one that could consume Washington lawmakers straight right into the heat waves of a Washington summer -- Lou.

DOBBS: And a lot of reportorial coverage, I suspect as well, Tim.

O'BRIEN: Indeed.

DOBBS: Tim O'Brien, from Capitol Hill tonight, thank you.

Among the most controversial of the president's energy proposals: a renewed emphasis on nuclear power. No nuclear power plant has been built in this country in more than 25 years, after disasters such as Chernobyl and Three Mile Island.

Now the industry is promising improved technology, but critics remain. Steve Young has the report.

(BEGIN VIDEOTAPE) STEVE YOUNG, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): America's biggest nuclear power plant operator Exelon buys and sells electricity on its trading floor outside Philadelphia. It hopes to introduce something new to the American scene, power from a so-called peddle bed reactor.

It uses hundreds of thousands of enriched uranium spheres, each about the size of a tennis ball. They're placed into the top and slowly drift down, producing heat to generate power. The reactor is cooled by helium gas instead of water.

(on camera): Exelon says its tennis ball fuel would be too weak at the end of its life cycle and too securely packaged to be of any use to terrorists. The company also says if an accident led to a loss of coolant gas, no problem: the reactor would automatically safely shut down.

EDWARD SPROAT, EXELON: By designing the reactors so they can only reach a certain temperature, you completely eliminate the potential of a meltdown.

YOUNG: You said a meltdown is impossible, so I presume you say this is not safe, or this is safe?

SPROAT: This is safe.

YOUNG (voice-over): But is it foolproof? Though it concedes the design may make a meltdown impossible, the Union of Concerned Scientists, one of the most persistent nuclear energy critics, is worried dangerous radioactivity could escape into the air. That's because, to save money, Exelon wants to enclose the reactor in a barrier building less expensive and less sturdy than current ones.

A second design has been developed by Westinghouse, the company that built about half the world's nuclear reactors, which the company also calls foolproof. It has fewer parts. No pumps, and uses gravity to release cooling water if the core should overheat.

HOWARD BRUSCHI, WESTINGHOUSE: That operator can just freeze, because nature will take over. As long as gravity works, that water will flow from tanks into a place that needs water.

YOUNG: But government inspectors discovered a cooling system in a Michigan plant that was partially dependent on gravity might not have worked for five years, because workers mistakenly plugged up some holes.

DAVID LOCHBAUM, UNION OF CONCERNED SCIENTISTS: The vacuum inside the tank kept the water in there, much like if you have a glass of water you turned upside down over a card, and you removed the card, the water stays inside the glass, because there is a vacuum above the water. Gravity can be defeated.

(END VIDEOTAPE)

YOUNG: Even if the proposed technology is foolproof, it will produce high level nuclear waste that would stay lethal for 10,000 years. And the debate about where to dig a nuclear graveyard for that waste drags on -- Lou.

DOBBS: Steve, thank you very much.

One of the president's predecessors today criticized the Bush proposal in the opinion pages of the "Washington Post." Jimmy Carter accused some in the Bush administration of using what he termed "misinformation" and "scare tactics" to drum up fears of an energy crisis.

President Carter knows a thing or two about energy scare tactics: it was in 1977 he warned, quote: "Within 10 years, we would not be able to import enough oil from any country at any acceptable price," end quote. But back then, a barrel of crude cost close to $35, adjusted for inflation. Today, some 27 years later, oil sells for less than $30 a barrel.

Coming up next: we'll go live to Wall Street, where stocks showed some follow-through after yesterday's powerful rally. Citigroup makes a huge push into Mexico. And I'll be talking with Citigroup vice chairman, former Treasury Secretary Robert Rubin from Mexico City tonight.

And IBM CEO Lou Gerstner, tonight talking for the first time publicly about his likely successor. Stay with us.

(COMMERCIAL BREAK)

DOBBS: A bold move today by Citigroup to reach beyond its borders, southward, Citigroup acquiring Mexico's largest bank, Banacci, paying $12.5 billion in cash and stock. This new deal will combine Citibank's Mexican operations with Banacci's flagship enterprise, Banamex, to become the largest financial group in Latin America.

Joining me now from Mexico City is Robert Rubin, the chairman of Citigroup's executive committee.

Bob, good to have you with us.

ROBERT RUBIN, FORMER TREASURY SECRETARY: Good to be back with you. And it's good to have you back.

DOBBS: Thank you very much, Bob.

Congratulations on this deal. This deal, very large, against a background of some -- that some question as an uncertain climate in Mexico. You, obviously, Sandy Weill, obviously very confident of the Mexican business conditions.

RUBIN: Yeah. I think I'd express our view this way, Lou. Sandy and I, and really, the whole Citigroup team, has a very strong belief in the potential of Mexico and the long-term prospects of Mexico. And Banacci, which is really Banamex, as you said, is the leading bank in Mexico. I think this is very constructive for Mexico. When it's completed, it will give Mexico a very strong banking system, enabling to it withstand the vicissitudes of global economic events.

And for Citigroup, it positions us in an economy in which we believe very strongly, with respect to the long-term potential; and also gives a base from which to reach out to the Hispanic community of the United States, which is a very large community, as you know.

DOBBS: So, a significant and broad play. The bank itself, profitable, it is the most profitable -- is that correct -- in Mexico?

RUBIN: Oh, yeah. Banamex is the most profitable bank in Mexico. It is an extremely well-run operation. If you take a group of indices, and you take a look at Banamex, what you would conclude is -- we certainly include, and I think you would conclude -- is this is a very successful, very well-managed bank. I think it provides us with an enormously strong platform to work, not only in Mexico, but in other parts of Latin America, and as I said, to reach back into the United States.

DOBBS: How long will it take you to close this deal? How much due diligence here? The issue, I'm sure, of credit quality looms large in the due diligence. How long will it take to close the deal, and what will transpire?

RUBIN: We've actually had the opportunity to do a fair bit of due diligence already. Although, obviously, we'll do some more going forward. But based on the work that we've done, and we really have had a chance to do quite a bit of work, we are very comfortable with the credit quality of the balance sheet at Banamex.

I might add, Lou, that this is also a very important event for Mexico. Because, when you -- if you think back on the financial crises of the '90s, most of them began in banking systems, or they were exacerbated by problems with the banking systems. When this is complete, Mexico will have a very strong, very sound banking system.

DOBBS: And you, as the architect of the 1995 -- if you will, and I can recall vividly when you were treasury secretary, how much you hated this term, the "bailout" of Mexico...

RUBIN: The support program. That's correct.

DOBBS: That support program, which turned out to be a very, very good idea, despite a lot of criticism at the time. In terms of Citigroup, it's -- the impact of this acquisition on your earnings and your future strategy?

RUBIN: Well, it will be accretive to earnings from the very beginning, but far more -- that really is almost not relevant, with respect to this arrangement. This is a very important move for Citigroup, for all of the reasons that I just mentioned. And it is our view that using Banamex as our base, as our platform, that we can build very powerfully in the various regards that I mentioned a moment ago. I think this is a very major strategic move for Citigroup.

DOBBS: OK. Bob Rubin, thank you very much for being with us.

RUBIN: You're more than welcome. It's nice to be with you, Lou.

DOBBS: Well, coming up next: I'll be talking with IBM CEO, Lou Gerstner.

And a solid session to report to you on Wall Street after yesterday's mammoth gains.

Also tonight, the top player in the PC business issues its latest number. Just how bad was the quarter for Dell Computer?

(COMMERCIAL BREAK)

DOBBS: On Wall Street today, stocks managed to build on yesterday's explosive gains. The Dow and the Nasdaq both gaining ground in a day of heavy trading. Peter Viles has our report.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): Investors cautiously bought into Wednesday's breakout rally, buoyed by two decent economic reports and the growing belief the Fed will win its war to jump-start the economy.

JOSEPH MCALINDEN, MORGAN STANLEY INVESTMENT MANAGEMENT: When you look down the road, nine months, 12 months, the fundamental parts of the U.S. economy, the old-fashioned economy, are going to be doing a lot better in 2002, is going to be a year of economic expansion.

VILES: The Dow Industrials adding to Wednesday's 342-point gain, rose 32 points to close at 11,248. News behind the rally a surprising drop, in first-time jobless claims. A gain in leading economic indicators, Merrill Lynch, turned bearish on bonds, and predicted the Fed will revive the bull market.

Leading the way: Hewlett-Packard, which rallied after beating diminished earnings estimates. Others Dow winners: Boeing, United Technologies, Johnson & Johnson, and Home Depot. The Nasdaq composite meantime gained 27 points, to close at 2193.

The big question on Wall Street: does this rally have legs? Hedge fund manager Jim Melcher has shifted from bearish to neutral on stocks, not because he thinks fundamentals have improved, but because he respects the power of this rally.

JIM MELCHER, HEDGE FUND MANAGER: It is significant, it shows that people are there they want to buy stock. And it is also showing that a lot of the hedge fund managers are worried about a run here, with individuals piling in, so they're covering some shorts.

(END VIDEOTAPE)

VILES: The gains from this springtime rally are growing quite substantial. The Dow Jones Industrials since bottoming in late March have now rallied 20 percent. And the Nasdaq even better. Since bottoming out in early April, the Nasdaq has now gained 29 percent in just six weeks -- Lou.

DOBBS: Not bad for a bear market, Pete. Peter Viles from Wall Street.

Dell Computer out with results after the bell. And the best we can tell you is that it wasn't any worse than expected. The PC maker met lowered profit targets of 17 cents a share, essentially flat with a year ago.

In after-hours trading, the stock is off about 84 cents.

Bruce Francis has been listening to the conference call, following, of course, the developments through the day, and joins us now -- Bruce.

BRUCE FRANCIS, CNN CORRESPONDENT: Lou, that conference call is still going on. Now, the results were anemic for a company that used to wow shareholders with a 50 percent growth rate on a regular basis but respectable for an industry in a tailspin right now. Still, CEO Michael Dell says the worst isn't over.

(BEGIN VIDEOTAPE)

(voice-over): Michael Dell cheered results that would have been disastrous for his company just a year ago.

MICHAEL DELL, CHMN. & CEO, DELL COMPUTER: Well, we essentially captured over 100 percent of the industry's profits. As you know, most of our competitors lost fairly considerable sums of money, and really there's a big difference in the cost structures here.

FRANCIS: Despite a corporate tech spending slowdown, Dell racked up a 50 percent increase in high end servers. That helped Dell meet targets that the company confirmed earlier this month. Earnings of 17 cents a share in line with estimates. Net income, flat with last year. Revenues increased 10 percent. Dell has been aggressively cutting prices, even offering customers a buy three, get one free promotion on certain computers. Some on Wall Street are concerned that Dell is sacrificing too much.

ROBERT CIHRA, ABM AMRO: For every point of share they're gaining, they're really giving it back in margins. And ultimately, at the end of the day, Dell's ending up with more market share but no more profit.

FRANCIS: And Dell says the pressure continues. Dell predicts second quarter earnings will be 15 to 17 cents a share, as much as three cents lower than First Call's current average. Revenues will fall 3-5 percent and operating margins will be flat to down slightly. That operating margin decrease will come despite layoffs of up to 5,700 or about 13 percent of its employees.

(END VIDEOTAPE)

Dell isn't giving specific guidance for the rest of the year, but he does say that are PC's that were replaced in the late 90's in advance of Y2K scenario, are now ripe for replacement, and that should help results later this year and into next, but no specifics here, Lou.

DOBBS: Assuming buyers agree about that ripeness, I suppose.

FRANCIS: Big assumption.

DOBBS: Bruce, thanks a lot.

Well, also out after the bell, a warning from Palm. The maker of hand-held devices cut its revenue forecast for the fiscal fourth quarter in half. Palm is a company in some trouble. Palm saying distribution delays will hurt its sales for the quarter ending this month. That stock is tumbling in after hours trading, down $1.70, trading now at a new low.

In tonight's "MONEYLINE Movers": Tyco gaining more than $1.5 a share offering $1 billion for Cambridge Protection Industries. That deal combines the world's number one and number three electronic security firms. Tyco would have as a result, 4 million customers.

Goldman Sachs share is off $2. Deutsche Bank cut earnings estimates on the investment bank, saying Goldman shares are overvalued. And Krispy Kreme up about $3 a share, that after a $7 gain yesterday. Today marked the doughnut chain's first day of trading on the Big Board, where employees gave out 40,000 signature glazed donuts to celebrate.

Coming up next here, the man who runs IBM talks about vision and succession.

ANNOUNCER: Coming up on Lou Dobbs's MONEYLINE, Lou talks to CEO of IBM, Lou Gerstner.

(COMMERCIAL BREAK)

DOBBS: Well, tonight, Lou Gerstner, who's led the world's biggest technology company to earnings growth when nearly every other technology company is issuing earnings warnings. A testament to IBM's resilience, another achievement for the man who brought IBM out of the dark days of the early 1990s to today's prominence. We talked about those days of early criticism, and for the first time about his successor, and Gerstner's view of business conditions today.

(BEGIN VIDEOTAPE)

LOUIS GERSTNER, CHAIRMAN & CEO, IBM: I would say the economy has clearly slowed, there is no question about that. But keep in mind the economy has slowed from a rate that was so torrid a year ago, that people were saying, gee, the risk is we are growing too fast. So now we see the deceleration, and everybody starts to really panic.

But in fact, yes, we have slowed but we are growing at a one and a half to two percent GDP growth. We're getting a lot of excesses out of the economy, inflation is still low, so I still think the U.S. economy is in pretty good shape, and we are probably going through a very useful correction.

DOBBS: Nearly every technology company in this country, around the world had a very difficult first quarter, to say the least. IBM continues to drive ahead. You've recently said that you're standing by your guidance in the current quarter. Give us your judgment about the future here for IBM.

GERSTNER: Well, first of all, we have to put the technology decline in perspective. We had a bubble. An extraordinary bubble, called the dot-com bubble and it burst. It was predictable, it happened. And so a lot of what you see in tech sector is just a lot of hot air coming out of the system.

The underlying demand, the demand for information technology, remains strong in the U.S. and around the world. IBM, fortunately, never chased the dot-com phenomenon very hard, and so we missed it. We missed it on the upside and thank goodness we missed it on the downside. We have stayed true to our focus which is that e-business and the Internet is about real business. It is not about simply putting up a Web site. It is about transactions, it is about transforming your enterprise, and those expenditures are still going on in enterprises. And that is why, we feel good about outlook.

DOBBS: In the first quarter we saw productivity decline for the first time in six years, again, causing some analysts to suggest that we have overstated the benefits of technology in terms of ramping up productivity. Your thought?

GERSTNER: My thought is that we have this tendency to take a quarter and create an age, a century. I mean, for 10 years people said there was no productivity from information technology, then we got the productivity coming through in the statistics. We have one quarter where it doesn't show up and people are back saying there's no productivity from information technology.

Look, it's a very, very strong instrument for productivity gain. But you've got to apply it correctly, you've got to use it correctly. And if you look at individual companies, and look at how more productive they've gotten through information technology, you'd never have this argument again. When you get to the macro-level and you're trying to look at country-wide statistics, national statistics you're always going to see these blips quarter to quarter.

DOBBS: If I can recall in '93, when you were taking over, you were being badgered and pummeled to come up with a vision for IBM, and there was great shock -- Lou Gerstner saying there is no need for a vision right now for IBM, yet the company has performed marvelously. You've led the company to unprecedented levels of performance. How'd you do that without a vision?

GERSTNER: Well, Lou, I am really glad you asked that question because I have wanted to answer this question in a forum like this for some time. Some of the pundits and media people seem to not be able to handle a 10-word sentence. Because what I said at that time is: "The last thing IBM needs right now is a vision." So many people dropped out the "right now," and said, Gerstner is saying IBM doesn't need a vision.

Of course we need a vision! Every institution needs a vision. But what I found in IBM was a company frozen. I mean, it was like a huge, huge supertanker frozen in the ice in the Arctic. And for me to say "go there," when we couldn't even get people moving -- people were unable to think about the future, because they had crashed.

DOBBS: All right.

GERSTNER: And so, getting people to feel like there was a hope for IBM, there was a future for IBM, that we were going to change, and we were doing to lead again, was far more important than getting them focused on some long-term objective.

Of course, we built a vision. We built that over the last five years. But the cultural changes were far more important in that first year than the strategic.

DOBBS: Your strategy, your vision for IBM going forward from here?

GERSTNER: Well, our strategy, in a broad sense, is to lead the new technological revolution that's going on, as the world moves from a PC-centric world to a network-centric world.

Every time the computer industry makes one of these shifts, new technology leaders emerge. We were the leader in the host, or centralized, computer phase. Microsoft, Intel and a few others led in the PC space. We intend to lead in the network world space with the technology we build for ourselves and that we sell to others.

The other part of our strategy is to lead in the services end of the business, where customers are saying more and more: "Hey, this stuff is too hard to integrate. You need to put it together, you need to make it work for me, you need to turn technology into a solution, and that is the fastest growing and most important part of the industry today, just helping companies apply the technology.

DOBBS: In terms of running a business, how long will Lou Gerstner be running this business?

GERSTNER: Well, Lou, that is another question I have gotten fairly regularly recently. Let me try to answer it. I have been working on management development at IBM, along with my board, for about five years. We take it very seriously.

Now, there are a lot of companies in this industry that believe in management by potentate. Put a potentate in place, and everybody else marches behind. I have never believed in it, and it's certainly not appropriate for IBM. I mean, we are too big, we are too complex and we are too integrated.

So, IBM needs a world-class team. And for the last 24 months, we have been putting in place a new team of leaders that are going to take IBM to the future, beginning in a very short period of time. They are our future leaders. Now, Sam Palmisano, our president and chief operating officer, he's emerging as the leader of that new team. And when that team is ready, and when the board feels that team is ready, and when I feel that team is ready, I'm ready to go.

I'm very optimistic right now. It is a great team, it's the best team in the industry, and they are very, very talented people.

DOBBS: And you expect that decision to come -- what time period?

GERSTNER: When the board decides it is ready to make it, Lou.

DOBBS: OK. Lou Gerstner, thank you very much for your time and sharing your vision.

GERSTNER: Thank you, Lou, thank you very much.

(END VIDEOTAPE)

DOBBS: Lou Gerstner.

Well, taking a quick look at IBM's stock performance over the year: it has soared 35 percent. It is the second best performer on the Dow this year.

Coming up next here: three of Wall Street's best minds, three of my favorite people, Mario Gabelli, Michael Holland and Harvey Eisen. They're next.

(COMMERCIAL BREAK)

DOBBS: We today learned just how concerned the Fed was last month over the sharp slowdown in the economy, this when the Fed released the minutes of its March policy meeting. Among the insights: the Fed's policy committee voting unanimously to slash interest rates, that on March 20. A few weeks later, the committee talked by telephone to consider slashing rates again, but they held off for fear of disturbing the financial markets.

Then, one week after that, the committee convened once again by phone, and overcame their fears and pulled the trigger on another 1/2 point cut. The stock market has clearly benefited so far, the cuts in interest rates helping things out a bit. Will the recent rally continue? Well, three of my very favorite minds on the markets, Michael Holland is here tonight, Mario Gabelli and Harvey Eisen. Gentlemen, good to have you with us.

May I begin, Mario, with you. Is this -- is this the end of what some were calling a bear market? Are we poised for brighter and better things?

MARIO GABELLI, GABELLI ASSET MANAGEMENT: A monetary policy and fiscal policy are going to work, but those are powerful things coming together, they are going to overcome these bubbles that were created by the Nasdaq collapse and by the capital spending collapse, and I think the economy will do well in the spring of 2002, maybe a lot earlier.

DOBBS: Not until 2002?

GABELLI: It's not that far.

DOBBS: OK, do you agree, Mike?

MICHAEL HOLLAND, HOLLAND & COMPANY: I think it's far, because it's a long time from now.

DOBBS: Seems like about a year.

HOLLAND: About a year. I would think -- unfortunately, Mario is probably going to be right about the economy, that it is going to take a while. We have some stuff here, just after the close today: Dell, Agilent reporting, you know, we continue -- Gap had a bad report just come out, 50 percent decline in revenues.

I think, Lou, we've got a few quarters baked in that are going to be bad. I think the stock market is already saying what Mario is saying, it's going to get better. It always precedes this -- we've got a 14-month bear market, saying it was going to be like this. The market was right. The economy is going to fulfill it.

DOBBS: Harvey, a contrarian view, perhaps?

HARVEY EISEN, BEDFORD OAK ADVISERS: Yeah, a little bit. I mean, I think it's business as usual. History tells you that when the Fed starts cutting, six to nine months later, the economy does better. The economy peaked in the third quarter of last year, (UNINTELLIGIBLE) easier in the fourth quarter of this year. Market discounts that by six to nine months, you are at the bottom.

DOBBS: In this market, give us a sense of your favorite -- well, give us the names of a few of your favorite stocks.

EISEN: Well, I think that the financial stocks are absolutely wonderful today. And I love Citibank, which you talked about earlier, I like some medical companies, a company called Becton Dickinson, which I think is a cheap stock. And I had lunch today with Reader's Digest, which is down 25 percent. I think they are doing innovative things, and I'm very excited about that company.

DOBBS: Interesting. Mike, your top three?

HOLLAND: The top three holdings I have right now, in part because the financials have done so well: J.P. Morgan Chase and Merrill Lynch are both among the top three holdings. The other one is Microsoft. Those stocks have all done well.

So I'm a little concerned about the unanimity with which we believe that financial stacks are going to do well, but it looks as if it's going to happen. I actually believe that if you buy companies that are the biggest and best in their industries, it's almost irrespective -- if Mario is right about 2002, it is going to take a while before some of these marginal companies have figured out if they're even going to be around. The biggest investors trading cheaply, you can buy them. DOBBS: Break away from that unanimity.

GABELLI: No, I'm not in a financial camp, because I'm not -- I don't, like, dislike them, I just -- not there. I like the consumer- led economic recovery, a tax cut, stable oil prices, the inventory cycle behind us and we got some speed bumps with California, things like that, I think you need to be positioned with the consumer, and both advertiser support in media that has not been doing well, and over the next couple weeks they still may have some bad news.

I want to buy Pulitzer. I want to buy companies in which I see an event happening in 2002. And my biggest holding, right now, that I'm buying is Liberty Media. And John Malone is back. And I think he's going to focus again, and he's going to be free of AT&T in the next 45 days.

DOBBS: Next 45 days.

AT&T is going to spin it off by the middle of July. It's a C- corp -- a tracking stock becoming a (UNINTELLIGIBLE).

DOBBS: When we come back, I want to know more about John Malone focusing at Liberty Media.

Stay with us. We'll hear more from these three gentlemen. Thank you.

(COMMERCIAL BREAK)

DOBBS: We are back looking at the markets, and in particular, Mario Gabelli just said he was fascinated by John Malone coming back to focus intently on Liberty Media.

GABELLI: Advertising support at Media is going to do well because the consumer is going to do well. And I think that is the kissing cousin: 2002, you have the election, you have the Olympics, you have a strong economy. Therefore, you want to buy newspapers, broadcasters, cable, and content companies like Cable Networks and so on.

And I think John Malone is at the vortex at whatever is going on, and has a finger in every pie. And I think at $16, Lou, I think it's time to buy it again.

They made a lot of mistakes that were pretty dumb a year ago; not that they have taken any dumb pills or smart pills, but I think you would do well.

DOBBS: Terrific. Mike, at this point, looking at your...

HOLLAND: Speaking of dumb pills?

DOBBS: No! Always, you take those smart pills at least more than the dumb pills. The fact is that this market has been treacherous to say the least. I know you have been somewhat bearish. Give us an idea of where you think we are headed through the rest of the year.

HOLLAND: I go back to the comments my compatriots made about the Federal Reserve. The Fed I think blew it here a year ago, I think they have been in process of repairing damage that they did. I think for the rest of the year, I don't know however we're actually at the bottom here, but it sure feels like it, with a lot of the things I own. And they are up a lot from the bottom, a number of these things.

My guess is, the surprise over the next 12 months, is: we are going to make a lot more money in stocks than we ever suspected, and we might actually lose a little bit more money in bonds. We have lost money in bonds here for the last few weeks, as the Fed has been doing what it has been doing.

DOBBS: Harry, do you agree with that, that the Fed dumbed up a year ago, and...

EISEN: Absolutely. Absolutely. They made a mistake. And then they got worried and they caught up now, but the dye is cast. It is done. The economy is going to bottom, the markets are going to do better. And now, any pullbacks you get, when you get news events on this show that are terrifying, and people say, it's really still a bear market, you say no, it is not. It's bottomed; it's over.

DOBBS: And the market at this juncture you think is presaging economic performance 6 to 12 months out....

HOLLAND: Hewlett-Packard today, announced really lousy earnings, dumbed down earnings, if you will. The stock goes up 4 points.

DOBBS: Terrific. Well, gentlemen, I really appreciate you being with us here tonight to share your insights, Harvey Eisen, Mike Holland...

HOLLAND: Welcome back.

DOBBS: Thank you, sir.

And Mr. Gabelli, thank you.

Up next, we'll look at the stocks that surged on news of Bush's energy plan. MONEYLINE continues.

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DOBBS: Alternative energy is our sector focus tonight. Bush's energy plan includes $10 billion in tax incentives to encourage alternative energy and conservation. That's great news for some companies that develop solar technology and build fuel cells.

Those stocks rallied today, and the blackouts in California have helped most of them to post impressive gains so far this year. Only Ballard Power has lost ground. But before you buy, some words of caution: that sector is still nascent. And although experts say gasoline-free cars will dominate within the next two decades, most companies don't even have tangible products yet, let alone profits. Coming up on MONEYLINE, the networks battle it out for the upcoming season's ad dollars, plus a turnaround story at CBS, courtesy of Les Moonves. He's next, on MONEYLINE.

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DOBBS: A big week for the networks. They are aggressively campaigning for advertising dollars, and they are going all out.

Greg Clarkin joins us know from outside New York's floating monument, the USS Intrepid -- Greg.

GREG CLARKIN, CNN CORRESPONDENT: Well, Lou, FOX executives previewing their fall lineup on board the USS Intrepid here on Manhattan's West Side. Now, all the networks gearing up for what is their biggest financial event of the year.

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CLARKIN, (voice-over): Grinning celebrities, backslapping TV executives -- they're all in New York this week, trying to convince corporate America to pay billions of dollars to advertise on their shows.

It was the start of the up-front: TV's futures market, where advertisers lock in ad rates for the fall lineups.

JESSICA REIF COHEN, MERRILL LYNCH: This is where the broadcast networks not only show their schedule to advertisers, but typically would sell 75 to 80, if not 85 percent, of their advertising inventory. So it's the way everybody plans. The agencies plan on what they're spending, the networks know what they're getting.

CLARKIN: $12.5 billion was spent on broadcast and cable advertising last year. $8 billion of that went to prime time ads on the six broadcast networks.

But a weak economy is expected to drive prime time rates sharply lower, and that gives leverage to media buyers smarting from years of network price hikes.

LOU SCHULTZ, CEO, INITIATIVE MEDIA: There's a feeling of -- it's our turn to really recoup what was lost in the last couple of years, and we're going to be very aggressive about doing that."

CLARKIN: But some network executives refuse to acknowledge a buyers' market exists.

MEL DARMAZIN, PRESIDENT, VIACOM: It's absolutely garbage. The economy grew by 2 percent in the first quarter. On 2 percent growth in the economy, Viacom was able to grow its cash flow 20 percent. So I don't think that there's anything wrong.

CLARKIN: Karmazin has made it clear he's not budging on ad rates for CBS's prime time lineup. He warns: Lock in rates now, or wait to buy later in what's called a scatter market. And if the economy picks up, rates could be higher then. Some call it posturing. Others say top-rated CBS is really the only network with any leverage.

(END VIDEOTAPE)

CLARKIN: Now, as for when these deals could actually be struck -- well, many are predicting it could take weeks, actually even longer, maybe until the end of June. No one is expecting to see a repeat of last year, when there was a three-day feeding frenzy, when all the deals were basically struck -- Lou.

DOBBS: Greg, thank you very much. Greg Clarkin reporting from near the USS Intrepid, here in New York City.

CBS unveiled its own fall line-up Wednesday. The most notable, the network's continued push to attract a younger audience. CBS has already made incredible strides with the hugely popular "Survivor" and "CSI: Crime Scene Investigation."

Joining me now, the man credited with much of the network's recent success, CBS's president and CEO, Leslie Moonves.

Les, good have you with us.

LESLIE MOONVES, PRESIDENT & CEO, CBS TELEVISION NETWORK: Thanks, Lou.

DOBBS: You have to be the most hated man, certainly, down midtown at NBC. You have just taken over that Thursday time slot.

MOONVES: Well, they have dominated Thursday for every year since 1984. This is the first year that we have come back and beaten them, and with "Survivor" and "CSI," we've beat them pretty well.

DOBBS: I noticed in Greg Clarkin's report, a fellow with a yellow tie, talking about holding fast with ad rates, in what is a very competitive up-front. Everybody acknowledging that. You're going to be able to do that, even in this weak advertising market?

MOONVES: Well, it's a more challenged market than it's been in a number of years. But we feel like our position is very strong. You know, as we mentioned, our Thursday night is up, which is the most lucrative night of all the nights for television. We feel like because ABC has gotten much older, NBC's gotten weaker on Thursday, that even in this market, we're going to get a better share of the pie.

And as Mario Gabelli said, advertising-related businesses are going to do better.

DOBBS: I thought your ears might pick up on than.

MOONVES: I liked what he was saying, right.

DOBBS: As Mario points out, advertising supported media also, in the current environment, is struggling. Mel Karmazin, from the very beginning, has said that there are no soft ad markets. There are only advertising salespeople who don't get it done. Any relenting on that view yet?

MOONVES: No, not really. I mean, obviously, it is a tough market, and our salesmen are out there working a little bit harder. And there are certain people who are resisting. Certainly, the ad buyers are going out there and they're playing a little bit more hardball with us. But we're finding certain success in certain segments, and, you know, we are guardedly optimistic we're going to do fine.

DOBBS: And in terms of your commitment in sports programming, principally, the NFL...

MOONVES: Well, we made two mayor investments, in the NFL and the NCAA Final Four, in the March Madness tournament. We're doing fine with both of them. You know, we've made money in each year that we've had the NFL, which we said we would. We're going into the fourth year of our deal with them. And, you know, it is tougher in some segments. I know the NBA is struggling a little bit with their ratings, but the NFL is doing just fine for us.

DOBBS: And the NCAA, particularly the Final Four...

MOONVES: We did great. We did great. We had a very exciting tournament, and we did fine.

DOBBS: Now, you have an option on the NFL games, you intend to drive it forward?

MOONVES: Yes, we do.

DOBBS: All right. Les Moonves, thanks for being with us.

MOONVES: Thanks.

DOBBS: Good to see you.

Well, coming up: one of the oldest and messiest forms of political protest catches up with Bill Clinton in Warsaw.

Also coming up: "Ahead of the Curve." Please stay with us.

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DOBBS: You might keep an eye on shares of Dell Computer tomorrow. After the closing bell today, the PC maker reported earnings in line with Wall Street expectations, lowered expectations. Also, economists are expecting the international trade deficit to have widened in March.

Finally tonight: Bill Clinton under fire in Poland. The weapon, an egg. And that egg thrown today at the former president by an antiglobalization protester in Warsaw. Mr. Clinton's reaction? Quote -- "It's good for young people to be angry about something." End quote. Contrast that with a British politician's response yesterday to the same sort of attack. Deputy Prime Minister John Prescott thrashed a demonstrator who egged him during a campaign stop. Britain goes to the polls next month. Voters have complained that the campaigning isn't interesting.

As Prescott today pointed out, they have got nothing to complain about now.

That is MONEYLINE for this Thursday evening. We thank you for being with us. I'm Lou Dobbs. "CROSSFIRE" is coming up next. And here is Bill Press -- Bill.

BILL PRESS, HOST, "CROSSFIRE": OK, Lou, thank you. This is the worst energy crisis since the '70s, and the solution is more oil drilling, more power plants, less regulation, plus, a little bit of conservation. So says the Bush administration's long-awaited energy report. And now the battle begins. Is this the best overall plan? Or is it just a big gift to the oil companies? Full of energy, next on "CROSSFIRE."

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