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Lou Dobbs Moneyline

Dow Rises 36.18 to 11,337.92; Nasdaq Climbs 106.71 to 2,305.59;

Aired May 21, 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.
LOU DOBBS, CNN ANCHOR: Another strong session on Wall Street: The Nasdaq today surges 5 percent, the Dow tonight is just hundreds of points from its all-time high. The dispute between Ford and Firestone splits wide open today. Tonight, we'll talk with Firestone's chief executive officer John Lampe. And when will Amazon.com make it into the realm of profitable businesses? Tonight, CEO Jeff Bezos will tell us.

ANNOUNCER: Live from the heart of New York City, this is LOU DOBBS MONEYLINE for Monday, May 21, 2001 -- Here now, Lou Dobbs.

Good evening. Tonight we begin with a powerful rally on Wall Street. The Dow Jones industrials tonight are at a 16-month high, and the Nasdaq today surged to its highest level in three months. The Nasdaq today gaining nearly 5 percent, posting its fifth winning session in a row. The Nasdaq has staged an extraordinary comeback in less than six weeks, soaring nearly 700 points since April 4. Despite all of the positive developments in the markets, some analysts who seem to be never happy being entirely happy, are concerned there is no clear single reason for the market's strong move higher.

Allan Chernoff has the report.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN CORRESPONDENT (voice-over): An explosive Nasdaq rally, reflecting the confidence investors are regaining in stocks. The move started a half hour after the open, and gained momentum as the day progressed. The composite closing on its high 2,305, up better than 106 points. The Dow zig-zagged through the session, but also ended near its high up 36 points. There was little news to trigger the rally. Instead, traders say, it's the market's momentum that is attracting capital.

NICK ANGILLETTA, SALOMON SMITH BARNEY: People are starting to feel good about this market again. Momentum has changed from being real bearish and negative last month to actually turning positive and people want back in.

CHERNOFF: As opposed to the rallies that failed last year, this one has had staying power. The Nasdaq broke through the 2,250 level that had served as a ceiling on the composite in early May and mid- April. Since bottoming on April 4, the composite is up nearly 41 percent. Though, for the year, the Nasdaq remains in negative territory, down nearly 7 percent. Among the big-cap movers: Sun Microsystems, which announced a $200 million dollar contract with Kodak. Cisco, Oracle, Network Appliance and Siebel Systems all enjoyed double-digit percentage gains. Some money managers, though, wonder if investors are taking too much of a leap of faith.

SCOTT BLEIER, PRIME CHARTER LIMITED: Why should Cisco be up 10 percent today? There is no real turn in their business as of now, but this is investors trying to get ahead of the curve as it were. Whether their business will turn later in the year remains to be seen.

(END VIDEOTAPE)

CHERNOFF: That is a critical question that a growing number of investors may be asking if the Nasdaq composite keeps on climbing: When will business conditions finally turn around? Thus far, there is little evidence that the technology recession is actually ended. Even so, investors are putting their faith in the Fed, hoping that the central bank's interest rate cuts will eventually will do the trick -- Lou.

DOBBS: Allan, thank you very much. Allan Chernoff from the Nasdaq. All told, more than a quarter-trillion dollars in market cap created on Wall Street today. Media stocks as a group were a powerful combination in the market's move. AOL Time Warner, the parent of this network, up more than $2 a share. Disney up over $1.50 a share. We'll have more on that later as well. Viacom, Clear Channel, and News Corp all big winners on the day. Taking a look at some of the day's other advancers: AMD, Nokia, Texas Instruments, IBM, Intel, up all of them more than a $1 a share.

IBM, Intel and Disney today helped push the Dow higher, while Procter & Gamble dragged it down. P&G shares today fallen sharply, that after the company agreed to pay nearly $5 billion in cash for the Clairol division of Bristol-Meyers-Squibb. The stock down more than $2 a share. Bristol-Meyers-Squibb also retreating on the day.

Peter Viles is here now and has a look at why Wall Street's reaction, at least until this point, something less than enthusiastic -- right Pete?

PETER VILES, CNN CORRESPONDENT: And this had already been a very challenging year for Procter & Gamble: massive layoffs, a huge restructuring and now the biggest deal in the company's 164-year history.

(BEGIN VIDEOTAPE)

VILES (voice-over): Procter & Gamble agreed to pay nearly $5 billion in cash to win the auction for Clairol, outbidding Japan's Kao Corporation. The seller, Bristol-Myers-Squibb, wants to pare back to its core business. Clairol ranks second to L'Oreal in the rapidly growing hair coloring business. It also makes Herbal Essence shampoo, the top-selling brand in U.S. supermarkets and drug stores. P&G brands rank second, third and fourth. But the timing is awkward. P&G is in the process of cutting 17,000 jobs, just formed a joint venture with Coca-Cola, and is considering selling off the Jif and Crisco brands.

A.G. LAFLEY, PROCTOR & GAMBLE CEO: The reason that we did the deal now is because the brands were for sale now, and it's very difficult if you want to be a leader worldwide in hair care to walk by great brand equities like Clairol and Herbal Essence. You've got to go for theirs, you've got to go for those kinds of equities.

VILES: Wall Street was not convinced. P&G shares fell, Standard & Poor's said it may cut the company's long-term credit rating.

CAROL WILKE, CREDIT SUISSE FIRST BOSTON: Overall, it's a big thing to take on right now, and in a year that we think going forward still has enough challenges before this, it just -- that's the biggest hurdle, I think, is the timing.

VILES: Another hurdle: Clairol has been losing market share in the hair-coloring business.

JIM GINGRICH, SANFORD C. BERNSTEIN: You're looking at a brand in the coloring business that they need to turn around, it's been losing a couple of share points a year for the past five years. So, you know, what they're paying is a rich price.

(END VIDEOTAPE)

VILES: Still, the hair coloring business is the attractive part of this deal. With help from aging baby boomers, it is growing at twice the pace of the shampoo business -- Lou.

DOBBS: Five billion dollars, a lot of money.

VILES: It sure is.

DOBBS: Pete, thank you very much.

A century old partnership coming to an end today. Bridgestone/Firestone saying it is stopping its sales of tires to Ford Motor. The tiremaker citing a breakdown in trust between the two companies. This comes after 100 people died in accidents involving Ford Explorers using Firestone tires. Late today, reports surfacing that Ford will recall 10-13 million more Firestone tires, that a Dow Jones report. A Ford spokesman would not confirm that recall.

Kitty pilgrim now has more on a corporate partnership definitely in the breach tonight -- Kitty.

KITTY PILGRIM, CNN CORRESPONDENT: Lou, it was a fascinating instance. In fact, the bitterness was unprecedented. This is what happened today at a press conference.

(BEGIN VIDEOTAPE)

PILGRIM (voice-over): Firestone today came out on the offensive. Not only refusing to supply tires to Ford Motor any longer, but casting doubt on the safety of the Ford Explorer, saying "It has been proven to have a higher propensity to roll over and have a loss of control."

JOHN LAMPE, CEO, BRIDGESTONE/FIRESTONE: We believe that they're attempting to divert the attention and the scrutiny away from their vehicle by casting doubt on the quality of Firestone tires.

PILGRIM: Ford responding to the allegation, defending the safety of the Explorer saying it has ranked near the top of its class of sport utility vehicles, and releasing a taped video statement saying Ford will call for an increased scrutiny of Wilderness AT tires on Tuesday.

JOHN RINTAMAKI, FORD GROUP VICE PRESIDENT: We're disappointed that Firestone has decided not to work together for the safety of our shared customers. That's the only issue that matters.

PILGRIM: The two companies have done business since 1906, when Henry Ford ordered 2,000 of Harvey Firestone's tires. The relationship soured last summer when more than 100 deaths were linked to Firestone tires deteriorating on Ford Explorers causing more than 6 1/2 million tires to be recalled. The battle played out in the media, but ultimately Ford's Jacques Nasser went before Congress to testify against Firestone's business practices. Analysts say sales of Explorers have been growing steadily since early' 90s, one of the best-selling SUV's.

SCOTT MERLIS, DRESDNER KLEINWORT WASSTERSTEIN: There are close to four million very happy Explorer owners out there. So, a lot of those buyers over the older Explorer that have not had any problems, will be buying the new one. And that's why the negative publicity is unfortunate, but will be only a minor blip.

(END VIDEOTAPE)

PILGRIM: Now Ford now offers a choice of tires from Firestone Goodyear or Michelin for the Explorer. Analysts say only one percent of 2002 Ford Explorer customers opted for the Firestone tires -- Lou.

DOBBS: Debbie, thank you very much. Well, for more now on the tiremaker's decision, we're joined by John Lampe. He is the chairman and Chief Executive Officer of Bridgestone/Firestone. Good to have you with us.

LAMPE: Good afternoon, Lou.

DOBBS: This decision is the greatest public rupture of a business relationship that I can -- that I can recall or that I know of. What happened today to bring you to this decision?

LAMPE: Well, Lou, first of all let me assure that you this -- we don't consider this to be a happy day. This was a very difficult day. We have been trying to work with Ford since last year to understand the role of the tire, and the role of the -- in the vehicle, and the serious accidents that we have seen. We have worked very closely sharing all the information that Ford requested on tires, but we have been able -- unable to get anything on the vehicle. DOBBS: Your charging -- excuse me John, you're charging, clearly, that it is the problem of the Ford Explorer, it is its design that is the problem here. Is that correct.

LAMPE: Lou, we take full responsibility for our tires, and I have always said that this is -- this is a problem that includes tire and the vehicle, and we must understand both of those parts.

DOBBS: And you don't believe Ford has been forthcoming and forthright in dealing with those issues from the standpoint of the manufacturer of the vehicle itself?

LAMPE: Certainly not with us, Lou. We have tried to get information, tried to work together with Ford on the vehicles side of this -- this problem, and have -- been absolutely unsuccessful in getting that.

DOBBS: Now, you know today that there are reports, principally from the Dow Jones wire, that Ford is going to recall another something in the neighborhood -- at least according to this report -- of 10 million more Firestone tires. Were you aware of this when you made this decision?

LAMPE: Lou, that was not discussed this morning with the meeting that we -- that I had with Ford. Our tires are safe. Our tires performed to world-class standards. We were just endorsed today by another large OEM customer, General Motors. We are very proud of our products.

DOBBS: So, you had no inkling that Ford had taken this decision or was about to take this decision?

LAMPE: I have still not heard or had anything confirmed that they have made that decision, Lou.

DOBBS: Frankly, neither have we, the company refusing to either confirm or deny those reports. At this juncture, what will be the impact on your bottom line, as a result of severing this relationship with Ford?

LAMPE: Ford is a major customer of ours, but they account for less than 5 percent of our total revenues. We have other customers, a very loyal group of dealers and OEM customers, and we expect to be able to gain new business with them to replace the Ford business that we've lost.

DOBBS: Ford clearly putting responsibility, blame, on you. You clearly putting much of the blame, accepting responsibility as you have just said, but putting the blame on Ford as the manufacturer. Consumers out there, those buying products, how will this be resolved in your mind? Are we going to see a clear-cut statement from the National Safety Transportation Board, from a consumers group that is an independent and neutral party here, do you believe?

LAMPE: Yes, I do. The National Highway and Traffic Safety Administration continues their investigation into this issue. And I am confident that in the end, as the old saying goes, the truth will come out.

DOBBS: John Lampe, thank you very much.

LAMPE: Thank you, Lou.

DOBBS: Coming up next here on MONEYLINE: a Yale homecoming for the 43rd president. Mr. Bush back in the city of his birth to take aim at one of his favorite targets: himself. The Senate debating the most sweeping tax cut legislation in a generation. That legislation moving swiftly across Capitol Hill, we'll be going there live.

And he's gone from "TIME's" person of the year to a CEO under siege, Jeff Bezos. He joins me tonight. We'll ask him one of his favorite questions: when will Amazon turn a profit? Stay with us.

(COMMERCIAL BREAK)

DOBBS: The Bush tax cuts are making headway through Congress tonight. Senators are working out the details of a $1.35 trillion tax cut. Tim O'Brien has been following the action from Capitol Hill throughout the day, and joins us with the very latest -- Tim.

TIM O'BRIEN, CNN CORRESPONDENT: Hi, Lou. Senators will be spending most of the evening debating some very hot, controversial and important amendments to their tax bill. Should there be a cut in the capital gains tax? What about the so-called death taxes on estates? How much more should be cut, and how soon?

(BEGIN VIDEOTAPE)

O'BRIEN (voice-over): Although the vote might not come until midnight, we already have a fair idea of what the Senate package will resemble. The big issue is income tax rates. The Senate version will cut the maximum tax rate on next year's income from 39.6 percent to 38.6 percent, a single percentage point, and then, down to a flat 36 percent by 2007. But there's something in the plan for everyone.

SEN. CHARLES GRASSLEY (R-IA), CHAIRMAN, FINANCE COMMITTEE: Everybody's going to get an income tax cut if they pay income taxes, and we immediately, going back to January 1, 2002, implement a new 10 percent bracket.

O'BRIEN: Whatever the Senate comes up with goes to a conference committee to be reconciled with the House version. They cut the maximum rate all the way down to 33 percent. Senate Democrats are fiercely opposed to the House plan, claiming it favors the rich. The 50/50 Senate split assures one thing: compromise.

ANDREW LAPERRIERE, ISI: I think the final product will be between somewhere between 33 and 36. Senator Breaux, who's been a key leader of Senate Democratic moderates said that it can't go below 35 percent.

O'BRIEN: George Bush had campaigned on a pledge to cut taxes substantially and swiftly. Yet most of the cuts the Senate is expected to approve tonight won't take effect for years, long after the next election. There could be fallout with the voters for Republicans and some key Democrats.

STEPHEN MOORE, THE CLUB FOR GROWTH: There are about five or six or seven Senate Democrats who are terrified of the possibility of having to vote against final passage of this tax bill.

O'BRIEN: In fact, there are 14 Senate Democrats who are up for re-election next year. That could embolden Republicans to put on electoral heat for larger cuts.

(END VIDEOTAPE)

O'BRIEN: Lou, there are really two ways of looking at this proposed tax cut. If you count the dollars, it could be the largest tax cut in 20 years. On the other hand, if you count the years it takes to get those dollars, the immediate impact on many taxpayers may be no impact at all.

DOBBS: And it still looks good for signing by the president this week?

O'BRIEN: The plan is to get it to the president's desk by Memorial Day, but it is going take a lot of negotiations to make that happen between now and then.

DOBBS: OK. Thank you very much, Tim O'Brien, reporting from Capitol Hill.

The latest poll on tax cuts offering a somewhat confusing picture on just where those surveyed stand on the plan. A CNN-"USA Today"- Gallup Poll finds that 67 percent think Congress should pass that tax cut; 27 percent do not think so. Yet another poll finding just 17 percent say the tax will help them or their families a lot; 20 percent say it would help a little. Nearly 50 percent say it will make no difference at all, and 11 percent say it will actually hurt.

Tax cuts have competed with energy as the president's top priority over the past several weeks, and the poll results on this issue also show some main street skepticism. 38 percent saying that President Bush is doing enough to solve energy problems, 55 percent say not enough. And 61 percent say that energy companies have too much influence over Mr. Bush, but it doesn't seem to be slamming the president's approval rating. In fact, that approval rating is at 56 percent, that is down only 6 percentage points from 30 days ago, still quite strong.

Not so, however, for California Governor Gray Davis, at least according to one poll out today. That survey showing the Governor Davis' approval rating has fallen to an all-time low, largely because of his handling of the power crisis.

Casey Wian reports from Los Angeles.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): Fewer than half of all Californians now say they approve of the job Gray Davis is doing as governor, mainly because of the state's electricity crisis. According to the independent Public Policy Institute of California, Davis' approval rating has plunged from 63 percent in January to 46 percent this month.

MARK BALDASSARE, PUBLIC POLICY INSTITUTE OF CALIFORNIA: For the first time, we've seen a dramatic drop in optimism about the state, about the economy and in ratings of the governor.

WIAN: It is a development Davis predicted several days ago.

GOV. GRAY DAVIS (D), CALIFORNIA: Well, I'm certain that the voters are going to hold me accountable for solving the problem. I ran as a problem-solver. Believe me, I'm doing everything I can to get the problem solved.

WIAN: The governor also appears to be losing his war of words with the White House, with 60 percent of Californians saying they disapprove of the way Davis has handled the state's electricity crisis, compared with 56 percent for President Bush. Davis has been sharply critical of the Bush administration's efforts to help California, prompting this response from the secretary of Energy.

SPENCER ABRAHAM, ENERGY SECRETARY: We've only been in office four months. We've been working hard on this. Governor Davis has been in office 2 1/2 years. He said he inherited all these problems. If he inherited them, certainly we did as well.

WIAN: In the eyes of the public, the biggest villains are electric utilities. When asked who's most to blame, nearly a third said utilities. About a quarter said former governor Pete Wilson and the legislature that unanimously approved deregulation.

Davis and the current legislature were cited by 10 percent, the same number picked power generators. 8 percent blame the Bush administration and the federal government, the same as California consumers.

(END VIDEOTAPE)

WIAN: When asked what solutions they favor, 43 percent of Californians say they approve of more power plants, a quarter want re- regulation of the industry, and only 18 percent believe conservation is the answer.

DOBBS: Casey, I suppose it is instructive that there was no question about price controls. Is that right?

WIAN: Actually there was a question about price controls. It was less than 10 percent of the people approved either price controls from the federal or state government.

DOBBS: Interesting, as they say. Casey Wian, as always, thank you very much.

Thousands of miles away, President Bush put aside the California controversy for a nostalgic return to his alma mater. Mr. Bush delivered the commencement address at Yale University, where he received his degree back in 1968. He received an honorary degree today: judging by the tone of his speech, he clearly earns one for self deprecation.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: For those of you who received honors awards and distinctions, I say well done.

And to the C students...

(LAUGHTER)

I say, you, too, can be president of the United States.

A Yale degree is worth a lot as I often remind Dick Cheney, who studied here, but left a little early. So now we know. If you graduate from Yale, you become president. If you drop out, you get to be vice president.

(END VIDEO CLIP)

DOBBS: Yale awarded Mr. Bush an Honorary Doctor of Laws degree: both his father and his grandfather received the same degree.

Still ahead: after a weekend of violence in the Middle East, we'll tell you about new moves in Washington to jump-start the drive for peace in the Middle East.

(COMMERCIAL BREAK)

The United States is tonight ratcheting up its Middle East peace efforts, after days of intense violence in the region. Israel today launched a tank raid on a Palestinian-controlled section of Gaza, in response to a mortar attack on a Jewish settlement.

In Washington, Secretary of State Colin Powell endorsed a new report calling for an immediate end to the fighting.

(BEGIN VIDEO CLIP)

COLIN POWELL, SECRETARY OF STATE: It is clear, now more than ever, that there can be no military solution, no military solution to this conflict and that negotiation provides the only path to a just, lasting and comprehensive peace in the Middle East.

(END VIDEO CLIP)

DOBBS: Among the recommendations in today's report, from a committee chaired by former U.S. Senator George Mitchell: a freeze in the growth of Jewish settlements, a crackdown on terrorism by the Palestinian Authority. And Secretary of State Powell today named William Burns, the U.S. Ambassador to Jordan, to serve as special assistant in ending the fighting.

Still ahead: in a market that wants profits, not promises, we'll ask one of the biggest names in e-commerce how he plans to deliver.

(COMMERCIAL BREAK)

DOBBS: Vivendi today making an aggressive push in its fight to dominate online music distribution, buying MP3.com, paying almost $400 million in cash and stock. About $5 a share. That price represents a 60 percent premium from Friday's closing price. It is far below the level that MP3 has traded at.

Shares of MP3 jumping on the news today just under $5 a share.

Bruce Francis has our report.

(BEGIN VIDEOTAPE)

BRUCE FRANCIS, CNN CORRESPONDENT (voice-over): Vivendi Universal says that it's buying MP3.com for the company's know how. Right now, nearly a million songs are filed are available from 150,000 artists on the Web site.

CHRIS DIXON, UBS WARBURG: MP3's proven. So, this is one more arrow in Vivendi's quiver to continue to help the music business grow and develop these new technologies and platforms.

FRANCIS: And there are plenty coming.

Vivendi Universal's purchase of MP3.com comes just as CNN parent AOL Time Warner is preparing an online music service with its Warner music division: EMI, Bertelsmann, and RealNetworks.

Vivendi Universal is planning one of its own with partners Yahoo! and Sony. And of course, Bertelsmann got the ball rolling this fall with its purchase of a minority stake in Napster.

That alliance hoped to pull in other labels, but has stalled as Napster lost several rounds of its copyright infringement case in federal court in San Francisco.

As for MP3.com stock, it boogied on to the Nasdaq in July of 1999, hitting an inter-day high of $105 a share, or a total market cap of almost $7 billion. It leaves limping along to a dirge-like $372 million from Vivendi Universal, hobbled by a weak advertising climate. Analysts say new subscription services couldn't compensate.

JACK RIPSTEEN, J.P. MORGAN CHASE: To date, really those services were very nascent and had not gained any traction. So I think something needed to happen here to catalyze MP3's business.

(END VIDEOTAPE)

FRANCIS: They're boardroom buddies now, but Vivendi Universal and MP3.com were once courtroom antagonists. Vivendi Universal sued MP3.com for copyright infringement. MP3.com agreed to pay its new parent $53 million. Lou, that's money in the bank.

DOBBS: Absolutely. Bruce, thank you very much. Bruce Francis. One dot-com stock that is off more than 80 percent from its all- time high, Amazon. During the Internet heyday -- you remember, a year-and-a-half or so ago -- investors focused on explosive sales growth, justifying sky-high valuations. Now, investors are clamoring for profits, and the pressure is especially intense on Amazon, which says that it will achieve profitability by years-end.

But even that promise is a matter of some considerable debate. The stock traded at just above $8 only in the beginning of last month. It has since rebounded strongly, and joining me now from Seattle is none other than the company's CEO, Jeff Bezos.

Jeff, good to have you with us.

JEFF BEZOS, CEO, AMAZON.COM: It's great to be here, and it's nice have to have you back, Lou.

DOBBS: Well, thank you very much, Jeff. And I know it's a question you are so tired of responding to: profitability -- is it assured for the fourth quarter on an operating basis?

BEZOS: Well, they're absolutely are not any guarantees, and we have always been very clear about that. But it's a goal. It's something we are working on very, very hard. We feel very good about it. It's a pro forma operating profit by Q4, that's a step for us, and we're very, very excited about it. We're going to keep working hard on it.

DOBBS: Now, when you say pro forma, because there is another piece of the controversy surrounding your company and the pro forma reporting. What does pro forma mean to you? Some analysts saying that it means, that's the result after you take out all of the negatives. How you would define it?

BEZOS: Well, the pro forma operating profit is different from, say, gap net profit, for a couple of reasons. One, it takes out a lot of non-cash charges, so, say, stock-based compensation charges...

DOBBS: Acquisitions...

BEZOS: ... and things of that nature. That's right. And second of all, the fact that it's an operating profit instead of a net profit means it doesn't include net interest expense.

DOBBS: Right. So, at this juncture, how do you feel about the business? Your stock has been downgraded by a number of firm, you're not the darling of the industry that you were just a little while ago, in terms of Wall Street. What is your -- your sense of where the company is right now, where you are?

BEZOS: Well, I think we, as a company, we're in a stronger position than we've ever been in. So, you know, the company is not the stock price, and if you look in 1999, when the stock was booming, we had 14 million customers purchase from Amazon.com in that year.

DOBBS: Right. BEZOS: If you look at the year 2000 when the stock was busting, we had 20 million customers purchase from Amazon.com.

(CROSSTALK)

DOBBS: ... too many customers.

BEZOS: The key thing for us really is to stay heads down, focused on building the business. And the stock price in the long term will take care of itself. So, we are focused on selection, focused on low prices, we're focused on convenience. Those are the things that has made Amazon.com what it is.

DOBBS: Is your customer base growing at a level that satisfies you?

BEZOS: Yeah, you know, if you look -- we are seeing higher repeat purchase rates, if you look at most recent quarters, 78 percent of the orders we received were from customers who purchased with us in the past. That's up from about 76 percent.

DOBBS: And you talked about the stock prices, certainly not the company. The company itself, in terms of books, still your best- performing unit -- any temptation at any point to say: "We're going to take this company to profitability in the short term, we are going to set aside some of these ancillary businesses and the strategies that we focused on and go for the gusto in terms of profitability?"

BEZOS: Well, you know, we are very happy with our investment areas. Two of the big investment areas for Amazon.com are international operations and also these new businesses, our electronics, tool and kitchen stores.

The electronic stores now are our second largest store, after books, so it's past music and it's growing very rapidly. We are happy with the customer experience there. We have got great prices. We've got 25,000 different electronics items, which is five times the selection you would find in a typical electronic's store.

So, we are going to stick with those things. We feel good about them, and we think they are very appropriate investments to be making.

DOBBS: Jeff, as you know, a few skeptical analysts on Wall Street. We have got about 10 seconds, do you have one sentence that you would like to leave the analysts who might be watching you tonight with?

BEZOS: Well, I would just like to...

DOBBS: Remember, this is a family program.

(LAUGHTER)

BEZOS: No, first, I'd like to thank most of those analysts for our customers, I will thank them for that. How about that?

DOBBS: All right, Jeff. Thanks very much. Jeff Bezos, Amazon.com.

BEZOS: Thank you.

DOBBS: Thank you.

Coming up next here.

(BEGIN VIDEO CLIP, "PEARL HARBOR")

BEN AFFLECK, ACTOR: Get of the way, get out of the way, get out of the way!

(END VIDEO CLIP)

DOBBS: Even Wall Street betting on a megahit from Disney's "Pearl Harbor." The potential impact, next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Some key commodity prices today on the rise: gasoline prices continue to climb, crude oil prices hovering near $30 a barrel.

But it was another key commodity that turned heads today: gold, soaring to 11-month highs before giving back some of its gains.

Allan Dodds Frank with the story.

(BEGIN VIDEOTAPE)

ALLAN DODDS FRANK, CNN CORRESPONDENT (voice-over): A busy day in the gold trading pit. The precious metal began climbing in New York, then lost more than $10 an ounce before closing off $2. The open had been a continuation of last week's feverish market for gold, when it moved up $18.80 an ounce on heavy volume.

MATTHEW GOSS, IND. GOLD FUTURE TRADER: The interest in gold was triggered by the Fed easing, for the most part. Funds were very short, and there were multiple chart points at 276 in the June gold in futures. When we broke that level, buying came in, the funds covered their shorts and tried to reverse.

FRANK: In the last 12 months, gold is practically flat, despite a wide trading range.

(on camera): Overhanging the gold market, fears that has the price nears $300, producers will increase supplies, and that investors will find a surging stock market more attractive.

(voice-over): Gold analysts still have faith in the metal, but concede it will have difficulty sustaining a large upward move.

JAMES STEEL, REFCO: The more likely scenario is that we see a little bit less lending, possibly some weakening in the dollar, and that could propel gold up a little bit. But I think on any major rallying in gold, we may see more producer selling and we may invite more central banks selling at a higher level. FRANK: Gold mining stocks also have prospered lately. Barrick Gold is up 15 percent so far this year. Placer Dome is up 25 percent. Newmont Mining, up 41 percent. And Homestake Mining up a whopping 90 percent.

Allan Dodds Frank, CNN Financial News, New York.

(END VIDEOTAPE)

DOBBS: In tonight's "MONEYLINE movers": Lowe's up more than $4 a share, after solidly beating Wall Street expectations. CEO Robert Tillman sees what he calls "glimmers of economic hope," and plans to hit the high-end of analysts' targets for this quarter and the full year.

VeriSign up nearly $7 a share. The Commerce Department today approved the company's ownership of the lucrative dot-com suffix, giving VeriSign licensing control over 75 percent of Internet names.

Walt Disney up more than $1.50 a share on a Salomon Smith Barney upgrade. SSB says Disney's highly-touted "Pearl Harbor" film could add anywhere between 2 and 25 cents per share to earnings.

Tonight's "Peal Harbor" premiere will take place on the USS John C. Stennis in Honolulu. A portion of the aircraft carrier's four-and- a-half-acre flight deck will serve as an open-air theater, with seating for 2,000 guests. No word on the cost, but compared to the colossal $135 million production bill, it's likely not to be an issue at least not for Disney. Congress may make it something of an issue, however, for the United States Navy.

Coming up, the man who runs the country's biggest brokerage house. David Komansky of Merrill Lynch is next.

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DOBBS: In tonight's MONEYLINE focus, Merrill Lynch, the country's biggest brokerage. Merrill boasts 15,000 brokers overseeing nearly one and a half trillion dollars in assets. Merrill's market cap, a whopping $57 billion. And the stock, which gained over $2 a share today, is up better than 33 percent over the past 52 weeks.

Now for more on what's ahead from Merrill Lynch, we're joined by the man who will determine that, the firm's chairman and CEO David Komansky.

David, good to have you with us.

DAVID KOMANSKY, CEO, MERRILL LYNCH: Nice to be back, Lou.

DOBBS: This is, despite the results, despite your stock prices, Jeff Bezos said a company is not always a stock price. This is a tough environment for you. Do you see a glimmer of hope here?

KOMANSKY: We always see a glimmer of hope. We think the markets have probably a bottom. We are expecting some extreme volatility. We are less sanguine about the economy -- we really don't see that picking up until the fourth quarter or possibly the first quarter of next year.

DOBBS: Now, why do you see additional volatility here?

KOMANSKY: Well, I think inherently, what you are seeing in the market is the move of a lot of investable cash from the sidelines into the market.

DOBBS: Right.

KOMANSKY: People are trying to get ahead of the curve, as one of your prior guests said. But basically I think that professional money managers don't want to miss that move in the market. And by the same token, I believe that they'll probably be just as quick to go the other way when they get nervous.

DOBBS: In terms of your firm, does the second quarter look better than the first and the third and so forth? Does that look stronger to you?

KOMANSKY: Well, it will be tough to forecast the activity in the firm -- the earnings of the firm, as you well know. But it's a difficult period of time. We'd like to think the worst is behind. The summer is a notoriously slower period for the industry.

But what we really need is earnings visibility out of the economy, and I think that once that happens, the markets and the business will discount the future.

DOBBS: This word, visibility, has certainly taken on an inspired currency in this environment. Is that, in other words, saying that we need to have better analysts and economists looking out? Or is it another way of saying that the conditions are just so murky that no- one can figure it out?

KOMANSKY: I think the latter certainly. We like dealing with cliches. We think it is a good way to confuse people. But what we are really talking about is confidence, is being able to see through the murk and the gloom, as you were saying, and really to get the conflicting corporate earnings of views out of the way.

DOBBS: Right. And I know you love this question: Merrill Lynch, HSBC, are you going at it alone? Is there -- continues to be reports -- you can knock them down forever more right here, David.

KOMANSKY: I'm shocked that you asked me this question.

(LAUGHTER)

As a matter of fact, I think that two years ago, this was the last question who asked me, and it was about Chase then. My answer is still the same. We have a joint venture with HSBC. That's all that it is.

And as far as remaining independent, until we see a reason not to stay independent, we are determined to be independent. And we think that we can create more of the share of the value that way.

DOBBS: All right. That 33-percent run-up is a pretty good way to get there.

KOMANSKY: It wasn't all bad.

DOBBS: There you go. David, as always, great to see. David Komansky from Merrill Lynch.

KOMANSKY: Thank you very much.

DOBBS: Ahead on MONEYLINE, big gains today for biotech investors. I'll talk to best-selling author Tom Clancy. And a lot more. Stay with us.

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DOBBS: Well, biotechs our sectors tonight. Robert Stevenson is upgrading three of the stocks. First human genome sciences analyst Michael King saying rights to the genomics database return to the company in June. That will create huge revenue potential.

And Neurocrine Biosciences made King's cut, thanks to a promising insomnia drug. And lastly Vertex. King says that it's a core holding for any biotech investor. He gives the stock a target of $60. Investors buying the ideas.

All three stocks up better than $5 a share. Overall, the Amex Biotech Index surging more than 6 percent on the day, since its low on March 21. Up an impressive 51 percent.

Up next, the best-selling espionage thriller novelist rips away the veil from some real-life national security issues.

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DOBBS: No writer deals more intensely with the architecture and operations of the military and international security agencies than best-selling author Tom Clancy. We thought it might be interesting, given recent events, including the spy plane dispute with China and espionage allegations against Robert Hanssen, to have Tom Clancy's perspective.

His latest novel, "The Bear and the Dragon," is still in bookstores, and he joins us now not to talk about fiction, but recent developments. Tom, good to have you with us.

TOM CLANCY, AUTHOR: My pleasure, sir.

DOBBS: All that has happened here with China paralleling, to a large degree, in point of fact, some of the themes that you developed in "Bear and Dragon," but the situation with Hanssen at the FBI, the allegations against him, what is your -- what is your view, because you deal extensively with the CIA and the military. What is your view of what has happened with the FBI? CLANCY: Well, one of the things you learn in the insurance business or in regular business is the only people who can steal money from you is the people you trust to handle your money. Only the people you trust can betray you, and that's what happened in the FBI. This guy Hanssen was looking to supplement his income. He picked the wrong country to deal with, because Russians have never been known for paying their agents well.

And if he had quit about six months sooner, he would have walked away. As with the way that he was caught, from the little rumbles that I have heard, is a KGB -- or what the Russians used to call KGB -- a fellow came to us, and there was this -- his arrival present so we'd give him a nice start in America.

DOBBS: Your protagonist, focused in the located, domiciled and the CIA, with an extensive background with the CIA, does the fact that the FBI did not have lie detector checks on its own people, did that surprise you or did you know it at the time?

CLANCY: Well, look, I know a guy who teaches people in government -- in the government employed to beat lie detector tests, and some of them, you know, obviously -- he consults the government and he teaches the government employees how to fool one of those things.

Every human institution is flawed, because human beings are not perfect. The FBI is the government agency I most respect outside of the military, but they make mistakes too, it happens.

DOBBS: And in some ways, the problems that have arisen in the FBI are because, at least to some degree, Congress and the public lost some faith in the CIA, particularly during the '70s, and expanded the charter, at least informally, to the FBI.

CLANCY: Well, the FBI and the CIA have always stepped on each other's toes to some degree or another. Hoover back in the '40s made a play to have the CIA be part of the bureau, and in retrospect that probably would have been a good thing, because -- just my casual observations are that the FBI has a better ethos and a better morale than the agency does.

Those few times I walked through Langley, the CIA headquarters, there are people always kind of hunched together, trying to keep their secrets, whereas at the FBI headquarters, in the Hoover building, they always came out, "Let's go out and bust a bad guy today, you know, let's go and have some fun, and enforce the law, and make people safer." It's a different corporate ethos that the FBI does better than the agency.

DOBBS: And yet, you put your hero at the head of the CIA...

CLANCY: Lou, it's fiction.

DOBBS: I know it's fiction. And so is -- you know, apparently, much of the reasoning for trust and some of the old techniques of making certain that the FBI, in particular, was not riddled with the spies. CIA has had also its fair share of embarrassments.

CLANCY: Nobody is riddled with spies. They have one or two, guys go bad, and then the news media makes a big deal about it. If the news media was as reliable as the FBI, the world would be a much better place, but it's not.

The FBI is a superb organization. Hoover was -- you know, he had his rough points, but he built the world's best police force. And the ethos of that organization remains. There are still the best cops in the world.

DOBBS: And in terms of the military, with all that has happened and their relationships, their view of the national security agencies, the national security intelligence agencies?

CLANCY: Probably, the military -- you know, the military's an end user of intelligence. The stuff comes to them and they're supposed to make use of it, supposed to keep soldiers and sailors and airmen alive. The...

DOBBS: I am sorry to interrupt you. We are going to have to break, I am told, right there, and I apologize for that.

CLANCY: OK.

DOBBS: Tom Clancy, good to have you with us. I appreciate your insight.

CLANCY: You bet.

DOBBS: Thanks. We'll continue in just a moment.

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DOBBS: Several quarterly reports are out tomorrow, including results from Computer Associates, earnings results retailers Target and Saks Fifth Avenue will also report.

And finally tonight, one congressman's crusade against a defenseless currency. Congressman Jim Kolbe of Arizona has a draft bill circulating that contains a blockbuster proposal for penny pinchers: getting rid of the one-cent coin. Kolbe views the penny, and the dollar bill for that matter, as monetary relics, hampering our development as a modern economy.

Congressman Kolbe's plan would be a boon to nickels, of course, and would spur the use of the dollar coin, which does not exactly sound like progress to everyone.

That's MONEYLINE for this Monday evening. We thank you for being with us. "CROSSFIRE" is coming up next.

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