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Lou Dobbs Moneyline

Political Uproar Reverberates on Wall Street

Aired May 23, 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: One senator sets off a seismic shift in political power in Washington. Are the Democrats ready to reclaim the U.S. Senate?

The political uproar reverberates on Wall Street today: Stocks tumble across the board.

One of America's best-known and most powerful attorneys opens a new front in the tobacco wars.

Also tonight we'll talk with former Treasury Secretary Larry Summers, now president of Harvard; the CEO of Williams Companies, Keith Bailey; and Dallas Mavericks owner Mark Cuban.

ANNOUNCER: Live from the heart of New York City, this is LOU DOBBS MONEYLINE for Wednesday, May 23rd, 2001. Here now, Lou Dobbs.

LOU DOBBS, CNN ANCHOR: Good evening. Our top story tonight, the balance of power in Washington is about to shift. The Democrats are about to regain control of the U.S. Senate. That's obviously bad news for the Bush administration and the Republican Party. It is also a deeply troubling prospect for many investors.

Stock prices fell sharply on Wall Street, and the man behind the uproar, Senator Jim Jeffords of Vermont. He's expected to announce tomorrow that he's leaving the Republican Party. That would give Democrats the edge in the Senate. It would affect key committee chairmanships and most importantly, the title of Senate majority leader.

Washington colleagues and the White House are flabbergasted by the Jeffords defection and defection. Investors fear that a pro- business agenda may be derailed as a result.

Tonight, we'll head to Capitol Hill for the very latest on Senator Jeffords and the pandemonium he's created, then to the White House, where White House correspondent Major Garrett will report on the impact of the Jeffords decision on the Bush agenda. And we'll be going to Jeffords' home state of Vermont for the reaction there. And of course, we'll be going to Wall Street to see how it affected the markets today.

We begin with Jonathan Karl on Capitol Hill.

(BEGIN VIDEOTAPE)

JONATHAN KARL, CNN CORRESPONDENT (voice-over): Senator Jim Jeffords attracted a full contingent of political paparazzi, but as the cameras flashed Vermont's Republican was mum about whether he'd stay a Republican.

After first saying he'd announce his intentions shortly, Jeffords put off his announcement for a day, saying he'd make it in Vermont Thursday, because, quote, "I want to go home to my people."

Several Senate sources in both parties say Jeffords has told his staff and many of his Senate colleagues that his decision will be to leave the Republican Party to become an independent who votes with the Democrats, putting the Democratic Party in control of the Senate. But Jeffords' decision to delay came after a long list of Republicans -- led by conservatives John Warner and Pete Domenici, and moderates Arlen Specter and Olympia Snowe -- personally appealed to him to give them time to change his mind.

Republicans are in the words of one GOP aide willing to do "whatever it takes" to convince Jeffords to stay. But sources close to Jeffords say his mind is made up, a possibility that excites Democrats.

SEN. JOSEPH LIEBERMAN (D), CONNECTICUT: This is historic. Secondly, it obviously makes Tom Daschle the majority leader, makes Democrats chairmen of committees, if it happens, and gives us the opportunity to set the agenda. And overall, I hope it brings President Bush and the administration closer to the center to negotiate with us and create a bipartisan government.

KARL: Democrat John Edwards said of the expected change in the Senate's leadership, quote, "The president will have to deal with us. He's had to deal with us a little up until now, but he'll have to deal with us a whole lot more."

SEN. TRENT LOTT (R-MS), MAJORITY LEADER: You decide which questions to ask and we decide which questions we'll answer.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Mr. Jeffords.

(END VIDEO CLIP)

KARL: Republicans were eager to talk about the passage of $1.35 trillion tax cut, which Jeffords voted in favor of. But they were reluctant to talk before the cameras about Jeffords. But off camera, Senator Lott said of Jeffords' decision, quote, "It's not final until it's final."

Senator Thad Cochran summed up the Republican view of Jeffords' expected defection, saying, quote: "It seems incomprehensible. There's no way to explain it or justify it. It just doesn't make sense."

(END VIDEOTAPE)

KARL: Jeffords has now left Washington. He's off to Vermont, where he will make that announcement tomorrow morning at 9:30. Shortly before he left, I caught up with him in the Senate subway and asked him how his last meetings with Republicans went here. He said that he told his colleagues that he would -- quote -- "think about things." But I also asked him if there was any chance he would change his mind. And he just said, "I don't think so."

Now what we expect is that he's going to go up there to Vermont tomorrow. He's told his colleagues he will change his registration. He will become an independent, but an independent that will side with the Democrats. And that effectively returns control of the Senate over to Tom Daschle and the Democratic Party -- Lou.

DOBBS: Jon, thank you. Jonathan Karl.

Well, the Jeffords bombshell has put many of the president's initiatives in jeopardy. But the White House today did score one important victory before the senator could make anything official. The Senate passed a $1.35 trillion tax cut, close to what Mr. Bush has been seeking. That would represent the most dramatic tax relief in decades, and the vote was 62 to 38.

But where does that legislation go now? The Senate and the House have to hammer out the differences between the two proposals, and their negotiations will change dramatically if Senator Jeffords does indeed make the jump.

Major Garrett now joins us now from the White House -- Major.

MAJOR GARRETT, CNN CORRESPONDENT: Lou, the White House has been searching all day for a silver lining in the Jeffords episode, and they believe they've found just one. And that is that if in fact Mr. Jeffords follows through and does switch parties tomorrow, that will not materially affect the negotiations between the House and the Senate on this key Bush tax cut.

White House officials and numerous sources on Capitol Hill tell CNN that the effective date of Jeffords' party switch will not affect these negotiations. Treasury Secretary Paul O'Neill is on Capitol Hill right now, working with House and Senate negotiators trying to push that bill through just as fast as he can.

Earlier today, President Bush declined to say anything about the Jeffords situation, but he did underscore the importance of moving that tax cut just as fast as possible.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The sooner the Congress completes its work, the sooner the American people will have their own money in their own pockets to save and invest as they see fit. Our economy cannot afford any further delays.

(END VIDEO CLIP) GARRETT: Now, as many Americans know and as certainly Wall Street knows, most of the tax cut will not affect the economy for years to come, but there's $100 million in economic stimulus. The treasury secretary, Paul O'Neill, is asking Congress to make that in $300 checks that can be sent out right away, $300 checks to those who earn more than $6,000, $600 checks of those who file jointly and earn more than $12,000.

The Congress is working on it right now. The Bush White House wants those checks in the mail just as soon as possible -- Lou.

DOBBS: Major, thank you. Major Garrett from the White House.

Jim Jeffords has long been known as a maverick, and it goes back a long way. He was the sole Republican in the House to vote against the 1981 Reagan tax cuts. So the trouble for the White House isn't about counting votes. It's about who controls the legislation and its path through the Senate.

Tim O'Brien reports.

(BEGIN VIDEOTAPE)

TIM O'BRIEN, CNN CORRESPONDENT (voice-over): A Jeffords vote as an independent on most matters wouldn't be any different than it was as a Republican. But simply with his defection, the Republicans would lose their majority in the Senate, and with that, all committee chairmanships, which would go to the new Democratic majority.

GREG VALLIERE, CHARLES SCHWAB WASHINGTON RESEARCH GROUP: Clearly, there is a shift that business probably won't like, the return to prominence of several committee chairmen -- Ted Kennedy, Fritz Hollings, Robert Byrd -- people who have an agenda that business might not like. But I think the House will stay very conservative and the Bush administration is still quite pro-business.

BILL MILLER, U.S. CHAMBER OF COMMERCE: The power that committee chairmen is mainly in scheduling and in focusing on the themes and pieces of legislation that they want.

O'BRIEN: The ability of committee chairmen to move forward projects they like and shelve those they don't could change the complexion of the legislation the Senate turns out.

PAUL ANDERSON, AMERICAN COUNCIL OF LIFE INSURERS: I think the Jeffords switch is significant for everybody who is in Washington lobbying the government, that represents business.

O'BRIEN: But Anderson says President Bush might be forced to better accommodate a Senate controlled by Democrats, and that may even alleviate some gridlock.

For the GOP to lose control of the Senate, though, could be a setback for the president's energy program, which many Democrats don't like. Many business issues, like pension reform, which has bipartisan support, should still go forward. Health care, a top priority of Democrats, could get a boost.

(END VIDEOTAPE)

O'BRIEN: And regardless of what Jeffords does tomorrow, the Senate will remain closely divided where every vote counts, where the real influence, the real power may be less with those who lead or those who follow than with those who can find a good fence and sit on it -- Lou.

DOBBS: Tim, thanks. Tom O'Brien from Washington.

As Senator Jeffords prepares to announce his decision tomorrow in his home state of Vermont, what are voters there saying and likely to say? Well, Bill Delaney is there and tells us what he's found out, joining us from Rutland, Vermont -- Bill.

BILL DELANEY, CNN CORRESPONDENT: Well, thanks, Lou. You know, for all the big impact of this nationally, don't expect much of a big impact here in Vermont. Vermonters are well-aware an have been for a long time who Senator Jim Jeffords is. He's a moderate to liberal politician, elected as a Republican three times to the Senate by a 3- to-1 margin in the year 2000, the last time he ran. He was in the Congress for many years, Vermonters are comfortable with Jim Jeffords.

Now, as you said, Lou, we are here in Rutland. Just down the road apiece is Shrewsbury, Jim Jeffords' hometown. I did speak to a former head of the Republican Party there this afternoon, an old friend of Jim Jeffords. She did express a degree of disgruntlement that Jim Jeffords may turn out to be the one who turns over the Senate to the Democrats.

But for the most part, that kind of classical Vermont Republicanism is changing. This is a changing state. Lots of "flatlanders," as they call them, have come in here in the past 25 years -- flatlanders being people from places like New York -- and they've brought their moderate to liberal views here to Vermont. Vermonters are comfortable with it -- Lou.

DOBBS: Bill, thank you very much. Bill Delaney reporting from Rutland, Vermont.

If Jeffords does leave the Republican Party, he will join a very select group. Since 1893, only 17 senators have officially switched their party affiliations. The first Republican to join the Democrats did so a century ago. That was Senator Fred Dubois of Idaho. No Republican since then has followed his example. Much more recently, Bob Smith of New Hampshire became the latest Republican senator to go independent. He made that move in 1999, and then reversed his decision last year.

Still to come on MONEYLINE, turmoil in Washington, a selloff on Wall Street. We'll look take a look at a power shift that would mean a lot for key companies.

(COMMERCIAL BREAK) DOBBS: The political upheaval in Washington, unnerving investors on Wall Street today. The Dow Jones Industrials suffering its first triple-digit loss this month, closing down 151 points. The Nasdaq ending a six day winning streak, falling back below 2300, dropping 3 percent.

Greg Clarkin is at the Nasdaq marketsite and Kitty Pilgrim is at the New York Stock Exchange, which is where we begin our report tonight -- Kitty.

KITTY PILGRIM, CNN CORRESPONDENT: Well, Lou, adding to the action in Washington today, earnings woes and profit taking. Thrown together, it made for a rough session on Wall Street.

(BEGIN VIDEOTAPE)

PILGRIM (voice-over): According to some, the sell-off on Wall Street had its roots in Washington. A political report from the ISI group pointed potential market fallout to many sectors under a Democratically controlled Senate.

ANDY LAPERRIERE, ISI GROUP: I think the general feel in the market today was that this was a negative development that may threaten the tax cut. And I think you saw a number of specific sectors that went down today because of the change in the Senate: drugs, HMO's, tobacco and defense and energy as well.

PILGRIM: Drugs sold off on the day, with the feeling that price controls would be more likely now. Energy stocks fell with the thinking that President Bush's energy plan would meet with fresh opposition. Defense stocks such as Lockheed and Loral also sold off with the thinking spending might be less likely to go up.

Add to that mix of pessimism, worries that positive earnings surprises may have run their course. And it was no surprise to some that the market paused after such a solid run-up. Some traders were taking heart in technical indicators.

MARK DONAHOE, U.S. BANCORP PIPER JAFFRAY: What makes me positive about the market overall going forward, even with today's sell-off, is that if you look at the sell-off, it's on a very light volume at this point.

(END VIDEOTAPE)

PILGRIM: Another positive, according to the data tracking firm Lipper, money flows are working in favor of the market. Investors pulled money out of the market in February and March, but then piled back in with some $21 billion into stock mutual funds in April -- Lou.

DOBBS: Kitty, thank you.

Now for the action at the Nasdaq, we turn to Greg Clarkin -- Greg.

GREG CLARKIN, CNN CORRESPONDENT: Hi, Lou. You know, those changes in Washington were just one of the things for investors to grapple with today, they also had profit warnings from high-tech companies and there were downgrades of high-tech companies, the net result of all this? The Nasdaq suffered through its first losing session since last Monday, dropping 3 percent, or 70 points on the day.

Let's begin with semiconductor stocks. Late yesterday, there was a report in industry report showing just a very, very weak April, the weakest in 10 years in terms of orders in sales, that is Philadelphia Semiconductor Index lower by 5 percent.

Take a look at Applied Materials, the big chip equipment company down 6.4 percent on the day. Networking stocks were also weak, down 4.2 percent was the Amex Networking Index. Shares of Ciena lost 3 percent on the day. Morgan Stanley says that stock is run up very sharply very -- in a very short period of time; they are worried about the valuations. They downgraded shares of Ciena today, and that stock lost ground.

Over to the software index, down 3.8 percent on the day. Oracle shares, Merrill Lynch raised some concerns, and they shaved earnings per share estimates a little bit. That drove the stock lower, losing 4.2 percent on the day. Goldman Sachs Hardware Index down 3.2 percent, on the day.

We want to end on an up-note, take a look at shares of Dell. Dell gained 4 percent on the day, Merrill Lynch and Goldman Sachs had some very, very kind things to say about Dell this morning, and that led the stock to really break ranks with the big name technology stocks. It was one of the only ones that gained ground.

Overall though, a very weak session. We did see volume really slow up around 2:00. Folks say you can look for that trend throughout the rest of the week -- Lou

DOBBS: Greg, thank you very much.

Goldman Sachs today had no official comment on a "Wall Street Journal" report that it's firing 12 percent of its investment banking force. But MONEYLINE has learned the cuts have been in progress for six months, and the final tally could be even higher.

And while many brokerages tell employees to pack up immediately, Goldman uses a kinder, gentler method, in fact giving laid-off workers several months in which to search for another job. Goldman is down about $4 a share today, although the stock is up about 20 percent over the past 52 weeks.

Next on MONEYLINE, the biggest tax cut plan in two decades, what are the prospects for it becoming law? We'll ask a former treasury secretary and a former economic adviser for the Clinton administration.

(COMMERCIAL BREAK)

DOBBS: He's been called a man of "extraordinary talent and judgment," and he's been called that not just by anybody. That is Alan Greenspan's description of former Treasury Secretary Larry Summers.

In fact, it was Summers and his predecessor Robert Rubin along with Mr. Greenspan whom "TIME" magazine described as the trio of heroes for containing the Asian economic crisis.

After being the youngest tenured professor at Harvard, he's returning to the university July first to become its 27th president and he joins us now from Washington.

Larry Summers, good to have you with us.

LAWRENCE SUMMERS, FMR. TREASURY SECRETARY: Good be with you. Welcome back, Lou.

DOBBS: Thank you very much. This tax cut, a lot of debate, and a lot of discussion, it's moved through by really a very sizable, even bipartisan margin. Do you think that it is going to be a big part of the cure for what ails us?

SUMMERS: I'm not very optimistic that the tax cut will help. The largest part of the tax cut, by an overwhelming margin, will come some distance down the road, too late to matter with respect to the current slowdown. And the impact of a tax cut like this is felt immediately in long-term interest rates that are higher than they otherwise would be, which operates to discourage investment.

There has been a sea change in economic thinking over the years with respect to how you deal with slowdowns, and people nowadays put the vast part of the emphasis on monetary policy rather than fiscal policy, and I think that is appropriate. So I think we are better off as a country thinking about fiscal policy in a long run context, rather than in a counter cyclical kind of context.

DOBBS: And of course, in terms of monetary policy, Alan Greenspan has been certainly aggressive, five cuts in less than five months. Is that going to have a significant impact, you believe, over the next six months or so in this economy?

SUMMERS: I think we have seen many, many times, that monetary policy does have a real impact, that there are lags, probably typically between 6 and 18 months, between adjustments and interest rates, and what happens to the real economy.

Just how large those impacts will be I think are very difficult to judge. That is why the Fed has a challenging job. But I don't think there is much question that monetary policy has in the past, and will in the future, have a meaningful impact and a significant impact on the economy.

DOBBS: Your own assessment, your judgment of where we are in terms of current business conditions, and where we are likely to head.

SUMMERS: You know, I have a kind of middle of the road view, Lou. I don't see the kind of rapid snapback in the second half of the year that some people are looking for. While there will be an inventory snapback, I think there is too much excess capacity in information technology and telecommunications, which are now such a large part of equipment investment, for there to be rapid snapback overall.

What happens over the medium, and, medium term over the next year, over next 18 months, will depend very much on what happens to the consumer. I, like many economists, have been surprised by the strength of consumption in the face of lost wealth, in the face of some other things that have happened, the increases in uncertainty and all that. And whether that surprise means that soon the consumer is really going to give up, and you will see sharp drop in consumption, or whether that just means there is some inherent momentum there that is unstoppable, is a very difficult read at this point.

On balance, I would expect things to be slow for some time to come, but I think the odds are slightly less than even that the economy will dip into technical recession, and actually experience negative growth.

DOBBS: Larry we have just about 15, 20 seconds. I can't close without asking you about your assessment in terms of Senator Jeffords of Vermont, his apparent decision to defect the Republican Party and change the balance of power in the Senate. Your thoughts tonight?

SUMMERS: It is a big deal politically, but I stick to trying to forecast the economy rather than trying to forecast politics. I knew Senator Jeffords well during my time at Treasury, and he is a very thoughtful man who believes very deeply in some things that I think are very important for our country, like assuring the adequacy of education for everyone, and this must be an enormously consequential choice for him.

DOBBS: OK, Lawrence Summers, as always, good to have you with us, good to talk with you, and congratulations and best wishes come July 1 on assuming your new post as president of Harvard University.

SUMMERS: Good to be with you.

DOBBS: Coming up next here: Fraud charges against a shoe designer who turned chunky into chic. We'll tell you how Steve Madden pleads. Also, one of the law's biggest names going up against the tobacco giants.

(COMMERCIAL BREAK)

DOBBS: Steve Madden, who created a multi-million dollar business from distinctively heeled shoes, today pleaded guilty to federal charges of securities fraud and money laundering. Madden was accused of manipulating 22 Initial Public Offerings, including the 1993 IPO of his own company.

Madden, who stepped down from the company, could now face more than four years in prison and would pay $5 million in restitution. But the stock has mostly recovered from last year's nosedive, closing just above $15 a share. A new legal attack today on big tobacco, with a high-profile attorney leading the assault; former O.J. Simpson attorney Johnny Cochran charging the cigarette industry with racketeering and secretly plotting to aim advertising at children.

Allan Dodds Frank reports.

(BEGIN VIDEOTAPE)

ALLAN DODDS FRANK, CNN CORRESPONDENT (voice-over): Nineteen- year-old Arkeba (ph) Jones has been smoking since she was 12 years old, a half a pack a day or more since she was 16. Now she is a poster child for a class action lawsuit accusing tobacco companies of conspiring to sell cigarettes to children 21 and under. Former O.J. Simpson lawyer Johnnie Cochran and Michael Hausfeld, the lawyer who won a $185 million antidiscrimination settlement from Texaco, are leading the team.

JOHNNIE COCHRAN, PLAINTIFF'S ATTORNEY: We understand the opponents are obviously large and well heeled, but those are the kind of battles we have been engaged in the past and look forward to being engaged in on this instance.

DODDS FRANK: The lawsuit accuses the tobacco industry of targeting the youth market to cultivate replacement smokers, even after the industry's 1998 settlement with the states restricted marketing to young people.

MICHAEL HAUSFELD, PLAINTIFF'S ATTORNEY: We believe that there are many more pieces of evidence that will link clearly the efforts by cigarette companies to target both advertising and marketing to youth.

RICHARD BLUMENTHALL, CONNECTICUT ATTORNEY GENERAL: Unfortunately the master settlement agreement, negotiated by the states, has loopholes and has the kinds of gaps that companies have exploited.

DODDS FRANK: The industry is confident it will beat this suit, which seeks reimbursement of money spent on cigarettes by young people under 22.

WILLIAM OHLEMEYER, PHILIP MORRIS COMPANY: What they have tried to do is create a lawsuit that tries to plead its way around the law.

DODDS FRANK (on camera): The legal team mounting this latest challenge to big tobacco knows its case is a long shot. But if they do get to a jury they'll be asking for damages as much as $5 billion.

Allan Dodds Frank, CNN Financial News, New York.

(END VIDEOTAPE)

DOBBS: Well, taking a look at how those tobacco issues are faring, all but Philip Morris in the red today. So far this year, though, it's a prettier picture: Vector Group more than doubling in price, helped in part by Carl Icahn building a 13 percent stake, Loews up 35 percent, R.J.R. up 20 percent, Philip Morris up 14 percent. Some of the day's biggest movers on Wall Street: Dupont losing ground on the day. Speaking at a Goldman Sachs conference today, executives said the current quarter is "at least as challenging as the first quarter." The company also noted that demand in Europe is dropping. Genome Therapeutics also surging $4 a share, a new report from Ladenburg Thalmann giving the stock a price target of $84, citing strong anti-infective drug research. Still, that is a controversial call. Only last week, another analyst placed a price target of just $10 on the stock. Intuit up more than $2 a share after topping Wall Street profit targets. Into its future prognosis, a bit more grim: full-year revenues will likely hit the bottom of current forecasts. Intuit shares are off more than 50 percent from their 52-week high.

Another stock under pressure today: Ford, off slightly following the week's public battle between the car maker and its tire supplier, Firestone. At the center of the blame game, a hugely popular product: the Ford Explorer. With sales of nearly a half a million vehicles last year. Peter Viles joins us now and talks about how safety concerns may affect the sales of an automotive cash cow -- Pete.

PETER VILES, CNN CORRESPONDENT: Lou, Detroit makes its money selling trucks and sport utility vehicles, not by selling cars, which is one reason that Wall Street is very worried concerned about the fallout from this controversy.

(BEGIN VIDEOTAPE)

JACQUES NASSER, FORD CEO: We feel responsible for every car and truck that we produce. There's a little bit of our heart and soul in every product that we make.

VILES (voice-over): More than a little bit in the Ford Explorer. This is not just another model. It is one of Ford's crown jewels, one of the greatest hits any automaker had in the past decade. Last year, Ford sold 445,000 Explorers, almost as many vehicles as its two main competitors, the Jeep Grand Cherokee and the Chevy Blazer combined.

Through the first four months of this year -- that's eight months into the tire fiasco -- Explorer continues to lead the category. But sales are down 22 percent from last year's levels. Its two competitors have not fallen that sharply. Analysts blame part of the fall off to increased competition, notably from Japanese auto makers.

JEFF SCHUSTER, J.D. POWER & ASSOCIATES: The environment, right now, is ultra-competitive, just the number of vehicles in the middle SUV segment and the smaller SUV's has just grown so much, and has cut the pie so thin, that -- that is really having more at this stage, more of an impact on the Explorer.

VILES: Wall Street is worried about the Explorer brand. Lehman Brothers says the controversy could have a material impact on sales of new Explorers and the residual value of old Explorers. Prudential writes, "We cannot overlook the possibility that the Ford brand and the Explorer name will suffer long term damage.

(END VIDEOTAPE) VILES: The backdrop to all of this is yet another challenge for Ford: The slowing economy and rising gas prices is hurting the entire sport utility category -- Lou.

DOBBS: Pete, thank you very much. Well still ahead here, as Amazon shareholders meet in Seattle, the company shows off its new baby. And just up the road, Bill Gates has brought together some of the country's top management talent. We'll find out what they're saying at the Microsoft CEO Summit. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Amazon.com today unveiled the latest addition to its already expansive Web site, proclaiming "A Store is Born." The on- line retailer opening up shop with babiesrus.com, a unit of Toys "R" Us. Amazon also today holding its annual shareholders meeting in downtown Seattle. CEO Jeff Bezos said Amazon may increase the size of its board which, right now, is only made up of only five members, including Bezos. Some corporate governance experts argue that the board is simply too small and lacks independence. Investors have certainly been through a lot since the last shareholder meeting, the stock in the spring of 2000 hovering around $50 a share. Today it ended at just above $15.

Just miles away from downtown Seattle, Bill Gates, presiding over Microsoft's annual CEO Summit. Katherine Barrett now joins us now from Redmond, Washington in tonight's Technology Watch and tells us what some of those executives are thinking and saying -- Katherine?

KATHERINE BARRETT, CNN CORRESPONDENT: Well, Lou, 150 chief executives are gathered here -- not just high-tech titans, but leaders from a variety of industries, all regions of the country, and in fact, the world. This is Microsoft's fifth CEO summit, Microsoft Chief Executive Steve Ballmer remarked on what a wild year since the last gathering. Of course, this time a year ago, Microsoft itself, was still reeling from the judge's breakup order.

That is, of course, still a matter for the court, but it's also been a year of economic change, and as Ballmer said, an amazing number of adjustments for both capital markets and the labor markets. The summit's theme is using technology to turn those challenges into global competitive advantage. Microsoft executives took pains to reassure people, even after the apparent -- apparent implosion, easy for me to say, of the new economy that continues to be an information economy.

(BEGIN VIDEO CLIP)

STEVE BALLMER, MICROSOFT CEO: The change in the dot-com start-up market, as well as the startup telecom market -- there was a bubble of spend that kind of went away in a particular sector. And if you look outside that sector, you get about -- you know, you don't get sort of rapid declines in IT spending, but you also don't get robust increases.

(END VIDEO CLIP) BARRETT: In today's only direct contact with the press, some of Microsoft's business partners also offered their views of the economy.

(BEGIN VIDEO CLIP)

SANFORD WEILL, CITIGROUP CEO: We're seeing some stability come into the market, and that we are sort of going along, sort of a muddy bottom, and, you know, hopefully it turns out to be the bottom, I think it is a little bit too early to tell.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

MEG WHITMAN, EBAY CEO: The other thing that is true is hiring has become a lot easier than it was in the heat of 1999, where it was extremely difficult to hire, you know, excellent people. And I think some of the best companies will come out of this by consolidating their position and attracting talent.

(END VIDEO CLIP)

BARRETT: Certainly, plenty of talent in this building behind me. The meeting is breaking up. The event is really part networking party, part brainstorming session and part -- an ever so subtle corporate customer focus group for Microsoft -- Lou.

DOBBS: Katherine, thank you. Katherine Barrett reporting from Redmond, Washington. Coming up next here, a steak house looks to bring in the gravy with an offering on Wall Street. And tonight, we'll hear from Keith Bailey, the head of Williams, about ways to ease this country's energy crunch.

(COMMERCIAL BREAK)

DOBBS: Smith & Wollensky staged its Wall Street debut today, but investors didn't have much to celebrate. The famous steakhouse priced at the bottom of its range, falling 9 percent by day's end. Still, recent energy and tech IPO's have jumped through the roof. And after a long hiatus, the IPO market may finally be just showing some signs of recovery.

Fred Katayama has the report.

(BEGIN VIDEOTAPE)

FRED KATAYAMA, CNN CORRESPONDENT (voice-over): Smith & Wollensky failed to sizzle on its debut. But some bulls say the IPO market is showing signs of life. Last week, the optical switch maker Tellium surged nearly 40 percent on its first day, a far cry from the triple- digit dot-com percentage gains in the last few years, but a healthy increase nonetheless.

The average first-day gain has jumped six-fold since March to nearly 28 percent. And for the last two weeks in a row, the number of new filings outpaced that of postponed deals. But many IPO watchers say that's an illusion. The supply of new issues is short overall because underwriters are so busy withdrawing deals. And investors have gotten picky, preferring proven performers.

DAVID MENLOW, IPOFINANCIAL.COM: The problem is, they will not take the deals that have been postponed from last year. Those are deals that are thought upon to be somewhat of a bankrupt business theme in this new IPO market.

KATAYAMA: So far this year, only 38 companies have gone public, less than a quarter of last year's pace.

RICHARD PETERSON, THOMSON FINANCIAL: You can't call it a recovery in the equity market when many of the major players in the IPO marketplace -- CS First Boston, Morgan Stanley, Goldman Sachs -- have done just a handful of deals.

KATAYAMA: For now, energy firms like Reliant Resources are leading the IPO charge. But some experts say an IPO rally will not be sustainable without greater participation from the high-tech sector.

Fred Katayama, CNN financial news, New York.

(END VIDEOTAPE)

DOBBS: Another sector performing very well this year: energy. And one stock benefiting: Williams Companies. It's one of the biggest natural gas companies in the U.S. and a major supplier to power starved California.

That demand producing record earnings and predictions for double digit earnings growth over the next two years. Williams stock has outperformed the broader market, up 15 percent in the past year, not including dividends, up considerably from its low.

Joining me now: Keith Bailey, chairman and CEO of Williams Companies.

Keith, good to have you with us.

KEITH BAILEY, CHAIRMAN, CEO, WILLIAMS COMPANIES: Good to be here.

DOBBS: The market now is, I think we could construct it as difficult, the economy uncertain, but energy is -- is at a premium. Do you see double-digit growth for your company straight out for the next two years?

BAILEY: Well, I think from a business perspective, we have the opportunity to do that. And obviously, the challenge is to convert a good business performance into good market performance. We have been very successful in doing that, and would not see any particular reason we would not be able to do that into the future.

DOBBS: You are an expert at forecasting energy prices, so I'm going to ask to you focus on that a bit for us, because we are seeing a number of different forecasts suggesting what will happen with gasoline prices, natural gas prices, a lot of -- some considerable confusion, in terms of refining capacity so forth. What is your best judgment on what we'll see in terms of natural gas prices in particular over the course of the remaining months of this year?

BAILEY: Well, I think there is a potential in the short term to see natural gas prices weaken, but systemically, there is still on upward trend line, I would not be surprised depending on weather patterns, to see the same sort of pricing environment this coming winter that we just had this past winter.

DOBBS: Approaching $9?

BAILEY: It is possible in some regions, and again, it is very dependent on the weather patterns that emerge, and, timing of those weather patterns because we had a very cold early winter last year, which tends to drive prices more aggressively.

DOBBS: The Bush administration's energy plan, what's your reaction to it? Do you like it?

BAILEY: Well, I thought on the whole it was very balanced, and the thing that, as a company, we were particularly pleased with, was the focus on infrastructure. And you referred that basically in your question, because if you look at our energy infrastructure, what happened during the '90s, all of the surplus productive capacity was essentially absorbed by the economy. And for the economy to continue to grow, we need to increase that infrastructure capacity.

DOBBS: Governor Gray Davis of California has been pointing fingers at a lot of people for his state's power and energy problems. And he has to have been -- I have been told by a number of CEOs been very direct in his conversation with them and using some rather tough language. His state, they owe your company quite a bit of money, as they do other companies. What is the basis of your relationship? Is it cordial or he has been pretty tough on you?

BAILEY: Well, I think I have had a cordial relationship with the governor on a personal basis, we work on education issues together, so we have multiple venues that we can talk about. He certainly has been very direct, I think at times, perhaps to the disadvantage of the state.

DOBBS: Mr. Bailey, we are out of time, always good to see you.

BAILEY: Good seeing you.

DOBBS: Keith Bailey, CEO of Williams Company.

Straight ahead on MONEYLINE, handbags, jewelry, and -- are luxury stocks back in fashion? We're going to find out next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Luxury retail in our sector tonight.

Less than stellar results from Neiman Marcus today. Neiman missed by a penny on a 15 percent decline in profits.

Yesterday, Saks posted a 45 percent profit plunge. And Tiffany says its U.S. sales fell 6 percent.

Checking the luxury issues today: Neiman Marcus and Tiffany's losing more than a dollar; Saks, Gucci, LVMH lower as well.

Still, those stocks held up well considering the consumer confidence has been declining. All but LVMH are in positive territory so far this year, and one more luxury powerhouse may hit the markets this June: Prada is forging ahead with plans for a nearly $2 billion IPO. Prada's empire includes, of course, the elite brands Jill Sander, Helmut Lang, and part of Fendi.

Just ahead, the "maverick" who made his money in high-tech, but made headlines in the business of basketball.

(COMMERCIAL BREAK)

DOBBS: Our next guest made $1 billion building a high-tech business from the ground up, but his real renown came in lifting a hard-luck basketball team from the NBA basement. Mark Cuban used the proceeds from the sale of Broadcast.com to Yahoo! to acquire the Dallas Mavericks. He paid a modest $280 million, and since then, he's transformed the Mavs into one of the leagues most exciting young teams, winning its first playoff series in 13 years. Along the way, he became the team's most vocal fan, racking up a half million dollars in fines, by the way, along the way for criticizing the referees.

Joining us now to talk about the future of basketball and high technology and a number of other things is Mark Cuban. Mark, good to have you with us.

MARK CUBAN, OWNER, DALLAS MAVERICKS: Thanks, Lou. Great to be here.

DOBBS: Now you lose a game, you immediately head for Paris to salve your hurt...

(LAUGHTER)

DOBBS: ... which is a pretty nice way to do it, I must say. But you were really disappointed, even though they hadn't been in the playoffs for years.

CUBAN: Well, yeah, losing is always the most painful part of basketball. You know, having won 53 games and making to it the playoffs for the first time since 1989 was a great, great feeling for me, the team and the city. But you know, once you get far and into the second round of the playoffs, we didn't want to lose. So I needed a break.

DOBBS: Well, you've driven up your season tickets sales, you've driven up some attendance, you've created some real excitement in Dallas around the team. You're having, obviously, a lot of fun with that business. Have you decided what you're going to turn your attention to next?

CUBAN: Well, in the sports arena I think one team is enough. I'm going to have a lot of fun outfitting their new arena with a lot of wireless technology.

But the other industry I'm looking into right now is high definition television. It's an industry where everybody is saying it's way too early to get into, just like they said about the Net back in '95. And so I figured I'd dip my toe in a little bit, and we're exploring some of those opportunities.

DOBBS: Well, a lot of people right now are saying that it's much too early to get really very excited about technology, even though we've seen a pretty good rebound here, saying that we've got excess capacity, saying that we are still need some adjustment in those multiples, particularly among a number of he technology companies.

Give us your judgment. Where are we, in terms of the technology sector itself, and then where, in terms of the market?

CUBAN: Well, there are two elements there. One in terms of the sector, I don't see anybody dying to buy technology. I think -- look at the PCs as an example. We've reached a point of diminishing returns.

It used to be as PCs got faster you had to have the latest and greatest. Now to go from, you know, 800 megahertz to 1.3 gigahertz to 1.7, you know, nobody is clamoring for a new PC. So that I don't think is going to change, and that could have negative consequences.

And in terms of, you know, as companies are laying off people, they're not adding new ports to their network, they're not having to upgrade. You know, I don't know where all the excitement is going to come from.

You know, and parallel to that, you have to look at the stock market as a market of supply and demand of stocks, and you know, we'll still have all the analysts pushing stocks and trying to market them. But this is not a market where I'm buying any stocks at all. You know, I feel a lot more comfortable just putting money into a money market fund and letting all the gamblers battle it out.

DOBBS: You've got -- have you got a sense, Mark, of when you might be -- let's get you into market forecasting.

CUBAN: Yeah.

DOBBS: When do you think you're going to see this market turn around for your comfort level?

CUBAN: Well, when I start hearing companies say, "Wow, business is good," or not saying, "Well, we think it's going to be good in six months or nine months or next year," but hearing them say, "Orders are great." I don't have to be the first one in the market and anticipate and try to guess when that's going to happen. I'll be more than happy to jump on the way and buy into good business. Beyond that, it's just a crap shoot, and I'd rather go to Vegan.

DOBBS: OK. Well, Mark, we're delighted you chose to spend some time here with us before Vegas.

CUBAN: Yup, absolutely.

DOBBS: Mark Cuban, come back soon.

CUBAN: I'd love to. Thanks, Lou.

DOBBS: Thanks. Coming up next, "Ahead of the Curve." Stay with us.

(COMMERCIAL BREAK)

DOBBS: Investors can expect several pieces of information tomorrow: a second look at first-quarter GDP with the preliminary report. Also tomorrow: new home sales and jobless claims will be reported. Also, we'll have quarterly reports from retailers Tommy Hilfiger, American Eagle Outfitters, Barnes & Noble and Borders.

And tomorrow morning, Fed Chairman Alan Greenspan speaks to the Economic Club of New York. He'll be talking about economic development, and of course, he'll be closely watched and closely listened to.

And in Washington, Spencer Abraham addresses the Competitive Enterprise Institute on the California energy crisis and national energy policy.

Well, finally tonight, you may not believe it, but Senator Jim Jeffords actually does know something about creating harmony in Washington. The senator is one of the members of the Singing Senators, a barbershop quartet of Republican crooners.

(MUSIC)

They include Jeffords, former Senator John Ashcroft -- now the attorney general, of course -- and Senator Larry Craig of Idaho, and the one member who might be singing the blues after Jeffords makes the jump, Senator Trent Lott, who would lose top billing as Senate majority leader.

And the music never ends. That's MONEYLINE for this Wednesday. We thank you for joining us. I'm Lou Dobbs. Good night from New York. "CROSSFIRE" coming up next.

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