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Lou Dobbs Moneyline
A Historic Transfer of Power in the Senate
Aired June 05, 2001 - 19:30 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: Tonight, it's the GOP's last day controlling the Senate after six years in power. Republican National Committee Chairman Jim Gilmore will tell us what the Republicans do now.
OPEC leaves oil production as is, even after Iraq halted exports. We'll go live to Vienna.
On Wall Street, the biggest rally in weeks. Stocks advance for a fourth straight session.
And on the eve of the NBA finals, we'll talk with the man who rebuilt the legendary franchise, now contesting for the crown, Pat Croce of the 76ers.
ANNOUNCER: From the heart of New York City, this is LOU DOBBS MONEYLINE. Here now, Lou Dobbs.
DOBBS: Good evening. Our top story tonight: an historic transfer of power in Washington. Only minutes ago, the Senate adjourned for the day, ending Republican control of the chamber after more than six years. And Senator Jim Jeffords of Vermont officially defected from the GOP, he is now an independent.
It's an unprecedented power shift, the Democrats wresting control of the Senate by means other than election. Tom Daschle becomes the new Senate majority leader. And while he met with Senate Republicans late this afternoon, the transition is likely to be protracted and acrimonious. We begin tonight with Jonathan Karl on Capitol Hill -- Jonathan.
JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Well, Lou, they've already drilled the holes on the Democratic side of the aisle to make room for Jim Jeffords' desk to be moved early tomorrow morning, so that when the Senate reopens, you will see 51 desks on the Democratic side, 49 desks on the Republican side, officially making the Democrats the majority party.
Now, Republican Trent Lott, on his last day of Republican rule, was promising that he will mount a vigorous and vocal opposition to the Democrats in his newfound position as the minority leader.
(BEGIN VIDEO CLIP) SEN. TRENT LOTT (R-MS), MINORITY LEADER: We should have a war of ideas, and we should have a full campaign for the Senate in 2002. And I think that's what the people would expect of us. In fact, I think they would expect nothing less.
(END VIDEO CLIP)
KARL: As for Tom Daschle, he's aware he presides over a small and tenuous majority, and as a result, he struck a more conciliatory tone today.
(BEGIN VIDEO CLIP)
THOMAS DASCHLE (D-SD), MAJORITY LEADER: We have a lot of work to do. And we're going to do it in as bipartisanship a way as I possibly can. I think it's important for us, for both parties, to be invested in the legislative process, to reach out, to try to get some work done.
(END VIDEO CLIP)
KARL: Meanwhile, in those negotiations you referred to, Lou, between Daschle and the Republicans over just how this Senate will be organized under Democratic leadership, Republicans want some kind of assurance that presidential nomination, especially judicial nominations, can get a vote of the full Senate even if they are rejected by these newly Democratically-controlled committees.
They are also, by the way, holding out a possibility that the Senate could again shift before the next election, if another Democrat is either -- if a Democrat switches party or is forced from the Senate, so they want a clause in this organization that says: "If the Republicans gain control over the next year-and-a-half, then the Senate revert back to Republican control under the same rules that the Democrats will have."
Now also, one other note here, Lou, and that is that speaker of the House, Dennis Hastert, was over just a few minutes ago, and he had his first meeting with new majority leader, Tom Daschle -- Lou.
DOBBS: Jonathan, any sign that those assurances are forthcoming?
KARL: Well, the Republicans left their meeting with Tom Daschle just a short while ago, these five Republicans that have been appointed by Lott to negotiate with Daschle, saying that they feel better than they did before the meeting. They feel there will be some kind of accommodation, some ability to work out with the Democrats.
DOBBS: Jonathan, thank you. Jonathan Karl from Capitol Hill.
Senator Daschle is not the only politician reaching across the aisle. The president this afternoon met with key Democrats and Senator Jim Jeffords. They talked about an issue high on the White House agenda: education reform.
This evening, Mr. Bush will have dinner with another maverick, one who has sparked anxiety within the Republican Party over recent days: Senator John McCain.
Senior White House correspondent John King joins us now with that story -- John.
JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Lou, that bipartisan meeting today including a close look by the president at the man who made all this happen, Senator Jim Jeffords, and that dinner just an hour or so away with Senator McCain tonight, all part of what the White House and the president directly promised today will be more give-and-take with the Congress, a reflection of the new political environment, of course.
Moderate Senator Lincoln Chafee of Rhode Island, a harsh critic of the president's tax cut plan, will be here on Thursday. Tom Daschle, the new majority leader, gets dinner here on Thursday night, one on one with the president. Mr. Bush turned to his left appropriately today during that cabinet room session, referred to Teddy Kennedy, the senator of Massachusetts, as Mr. Chairman, that a reflection of a change in environment here, but Mr. Bush telling reporters he is convinced that he can still advance his agenda.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I look forward to hearing from the members about how best to get this bill complete. I think we have an opportunity -- I know we have an opportunity to show the American people that although the structure of the Senate may have been altered somewhat, we still can get things done in a way that's positive for America.
(END VIDEO CLIP)
KING: Immediately after that meeting, though, more evidence of this new environment, Democrats as well as the new independent Senator Jim Jeffords emerged from the White House. The education bill is on the floor now. It was when the Republicans were in charge, it will be when the Democrats take charge tomorrow morning.
But immediately a sign that the president might not get that bill as fast as he would hope, Senator Kennedy, now the chairman of that key committee, saying he wants much more money, billions more, in the education legislation.
(BEGIN VIDEO CLIP)
SEN. EDWARD KENNEDY (D), MASSACHUSETTS: They are only reaching a third of the children, it's an empty promise. You can't educate children with a tin cup budget, and you can't educate children on the cheap. We have to give this a priority.
(END VIDEO CLIP)
KING: So even when the education debate is over, Democrats say next will be the patients' bill of rights, then the Medicare prescription drug benefit, then raising the minimum wage, so immediately signs the president will have a tough time getting his agenda through the now Democratic Senate. He is already trying to reach out to adapt to this new environment, a very tough one for a young Republican administration -- Lou.
DOBBS: John, it seems that shared power on Capitol Hill has invigorated the president's enthusiasm for bipartisanship, that he talked about from the outset?
KING: Certainly has been so far. Now, there are complaints, though, under the radar, even from many of his conservative allies, that the president keeps talking about bipartisanship, he keeps having these meetings, but that he's not regularly in touch. Many Republicans complaining today, not since February have they been called down here for a real strategy session with the president.
So, the White House promising a new commitment. The Republicans saying, though, as he reaches out to moderate Republicans, as he reaches out to Democrats, they hope he calls the conservatives down here too.
DOBBS: New calls going out. John, thank you very much. John King from the White House.
One senator assuming a key role in this new Democratic power structure is Jeff Bingaman of New Mexico. The senator becomes chairman of the Energy and Natural Resources Committee. In that position, Bingaman will likely thwart a top priority of the Bush administration: to pass a comprehensive energy policy.
Tim O'Brien has our report.
(BEGIN VIDEOTAPE)
TIM O'BRIEN, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): Remember how the Democrats jumped on the president's sweeping new energy program?
REP. BRIAN BAIRD (D), WASHINGTON: George Bush, Dick Cheney and their merry band of oil CEOs are Robin Hoods in reverse.
O'BRIEN: With New Mexico's Jeff Bingaman as the incoming chairman of the Senate Energy Committee, Democrats will now have the chance to redirect priorities.
SEN. JEFF BINGAMAN (D-NM), INCOMING ENERGY CHAIRMAN: My priorities will be to come up with an energy bill that moves the country in the right directions in all of these areas, does increase production, but also puts a heavy emphasis on ways that we can encourage conservation.
O'BRIEN: There will be exploration and drilling for oil on Alaska's north slope, but Bingaman is in a position to keep it from happening in the National Wildlife Refuge, as the president is proposing.
BINGAMAN: It's just this about 5 percent of the coastline, which is the Arctic National Wildlife Refuge, that I believe we should leave as it is.
O'BRIEN: Last week, the Bush administration proposed providing another $150 million to help low-income families pay their electric bills. The Democrats want to up that to $2 billion.
Where the Republicans seek to develop traditional energy sources, like coal, oil and nuclear power, Democrats are promoting wind, solar and geothermal energy sources. The outgoing Republican chairman of the Energy Committee calls it a "return to the failed energy policies of the past."
SEN. FRANK MURKOWSKI (R), ALASKA: It is those who don't learn from the past are doomed to repeat it.
O'BRIEN: The president had hoped to have his energy program through Congress by mid-summer. That may now seem like a dream.
(END VIDEOTAPE)
O'BRIEN: With the newly reconstituted Senate, Democrats and Republicans will first have to work out a plan for dealing with one another on virtually anything, before they can even begin to think about energy, and that may take a while -- Lou.
DOBBS: Tim, any particular areas of agreement between the Republicans and the Democrats on energy, assuming as you suggest in your report, that the president will not get all that he wants?
O'BRIEN: Some he could do by executive order, and there are areas of agreement. The Democrats are -- surely can see that there is a need for exploration and drilling, the question is where, and it's not going to be in any wildlife refuge.
And when there are differences, it's not going to be a Bingaman issue, it's rather going to be a party issue. And just as the Republicans must listen to what the Democrats have to say, so too will Senator Bingaman listen to what his own party has to say.
DOBBS: Tim, thank you. Tim O'Brien, from Washington tonight.
One Republican senator described today as "Black Tuesday," the GOP losing leadership of the Senate chamber.
Joining us now with more on what the GOP does now, Governor Jim Gilmore, he is the chairman of the Republican National Committee. And it is good to have you with us, governor.
GOV. JIM GILMORE, REPUBLICAN NATIONAL COMMITTEE CHAIRMAN: Thank you, Lou.
DOBBS: Is this Black Tuesday?
GILMORE: No, I don't think that it's that bad, to tell you the truth. I think that the president has had a long history now of working across party lines. He succeeded in a tax cut for working men and women all across this country, he succeeded in an energy proposal, he succeeded in his education plan with bipartisan support. And you know, I think at this point the Democrats have an obligation to lead and not just simply to obstruct. And I don't think that's all bad.
Obviously, we would like to have maintained all the chairmanships because the programs were moving ahead for people of the United States. But still, I think this is going to be just fine.
DOBBS: Governor, as you talk about the Democrats responsibility to lead, their responsibilities, Senator Daschle has made it clear that he is going to be a listener and he is going to work carefully. However, he is greeted by Senator Trent Lott, who said in a memo today that Senator Daschle -- quote -- "lacks the moral authority to be the majority leader."
My gosh, that doesn't sound like a warm, fuzzy spirit of bipartisanship to me. Does it you?
GILMORE: Well, I haven't seen a memo like that, but I would say this. I think, probably, Trent Lott was probably discussing the fact that Jim Jeffords actually just took the whole thing into his own hands and made a switch and it took the chairmanships away, as opposed to the Democrats winning it in the democracy from the people. But nevertheless, the numbers are there. I think that when the next elections come around, the Republicans will be back in charge. But none of this matters, frankly.
What really matters here is the program that the president's putting forward for the best interest of working men and women and people all across this country. And I think that the Republicans are going to prevail on the strength of their ideas and their program, Lou.
DOBBS: Well, as you suggest, the president has made significant progress in achieving the tax cut and on the education proposal. However, it looks like it's going to be heavy sledding, to say the least, from here. Are you fearful of any other defections at this point from the party?
GILMORE: No, no. I'm not concerned about that. The Republican Party is a very broad-based party. There's room for all voices. We do have, of course, a consistent policy in the Republican Party to try to help people out through tax cuts and quality of education. What does concern me, Lou, is Tom Daschle suggesting that maybe the tax cut ought to be rolled back. That would be really bad for America and bad for people. And I certainly hope he doesn't try to go in that kind of direction.
DOBBS: It would also be...
GILMORE: The Democrats always seem to want to boost government spending, and that's not good for the country.
DOBBS: OK. Governor, thanks very much for being with us. Governor Jim Gilmore, chairman of the Republican National Committee.
GILMORE: Welcome back. DOBBS: Thank you very much, Governor.
Coming up, a powerful rally cuts across Wall Street. Investors are smiling tonight. We'll take a look at whether the worst is over, for particularly those technology stocks.
And we're going live to Vienna where OPEC ministers gathered. Richard Quest is there -- Richard.
RICHARD QUEST, CNN CORRESPONDENT: As the price of oil rises, what's OPEC doing to keep things under control? From Vienna, I'll have the details -- Lou.
DOBBS: Later, the man who engineered a dramatic NBA makeover: Pat Croce of the 76ers on the eve of the NBA finals.
And...
(BEGIN VIDEO CLIP)
MICHAEL BLOOMBERG (R), NEW YORK CITY MAYORAL CANDIDATE: My name's Mike Bloomberg and I'm running for mayor.
(END VIDEO CLIP)
DOBBS: He is the billionaire who started on Wall Street. Now he's out to take City Hall by storm. Those stories just ahead. Stay with us.
(COMMERCIAL BREAK)
DOBBS: A negative report today on the economy. Productivity during the first quarter revised sharply lower. Initially, it was reported down only 1/10 of a percent. The revision puts it down 1.2 percent. That is the biggest decline in eight years, and productivity, of course, is the key to noninflationary growth. It began a revival in the mid-'90s.
Also out today, the report on factory orders, which fell 3 percent in April, the first such decline since the beginning of the year.
On Wall Street today, investors shrugged off all negatives, it seemed. Stocks surged across the board, the biggest rally in more than two weeks, technology leading the advance. Just three blue chip tech stocks, IBM, Microsoft and Intel accounted for more than a third of the Dow's triple-digit gain.
Jan Hopkins reports from the New York Exchange.
(BEGIN VIDEOTAPE)
JAN HOPKINS, CNN CORRESPONDENT (voice-over): The bulls barreled into technology stocks, ignoring bad news on the economy and driving the major indexes to their fourth straight session of gains. The Nasdaq composite index gained 77 points to close at 2,233. That index is up 7 percent since last Thursday.
Biotechnology and semiconductor stocks surged, with chip maker Xilinx leading the pack after forecasting brighter business conditions ahead. Intel rocketed higher as well, along with large-cap leaders, Cisco Systems, Microsoft, Oracle and Sun Microsystems. But the buying blitz wasn't enough to convince most traders that the rally would continue.
MICHAEL DRISCOLL, CREDIT SUISSE FIRST BOSTON: You'd have to be a little bit worried that something called Xilinx is the market bellwether that is leading the tech, biotech, and Dow Industrial averages higher. So it's still met with a lot of skepticism. I think that's evidenced by the lack of volume that we've seen in the last couple of days.
HOPKINS: Volume picked up in the last hour of trading, catapulting the Dow Industrials to their first triple-digit gain in three weeks. The Dow closed 114 points higher, at 11,175. That index has gained 303 points in the past four sessions.
IBM, Alcoa, Johnson & Johnson and AT&T all posted solid gains.
CHARLES BLOOD, BROWN BROTHERS HARRIMAN: I think we're about to move to the next phase, which is the economy bottoming, either this month or next month or in August. And then a lot of this corporate news is going to start to sound better. It's a little too early yet, but we're on the verge of turning the story here.
(END VIDEOTAPE)
HOPKINS: Blood and others believe that discouraging economic reports, such as those out today, will all but guarantee more rate cuts from the federal reserve, including one later this month, and those rate cuts will eventually work. That's the bet here -- Lou.
DOBBS: OK. Well, lots of bets are placed there every day. It will be interesting to see how that one comes out. Jan, thanks. Jan Hopkins from the New York Exchange.
Today's rally clearly led by the big cap technology stocks. The Nasdaq gained an impressive 3.6 percent. The Nasdaq 100, however, gained nearly 5 percent.
Greg Clarkin is at the Nasdaq marketsite -- Greg?
GREG CLARKIN, CNN CORRESPONDENT: And, Lou, let's talk a little bit about Xilinx, if we can. What this company basically said was that the rate of canceled orders and the rate of delayed orders has slowed considerably. So really, nothing monumental there, but investors seized on that as kind of incremental good news, that the business is picking up in the semiconductor industry, and that's what led to the almost 10 percent pop in that stock.
As you can see right here, it open today trading higher, and then kind of gradually gained ahead of steam to finish out with a better than $4 gain on the day. Now, that strength in Xilinx was extrapolated out to mean that maybe the business conditions are improving throughout the semiconductor arena. And we saw the semiconductor index, the Philadelphia Semiconductor Index, up 6.7 percent today. We should point out at one point, the SOX, as it is known, was up better than 8 percent. So semiconductor stocks really on fire today. There's a feeling kind of building now that maybe these tech earnings might not be as bad as expected. Yes, people know business is bad, but at this point it doesn't look like it's worsening in some of these areas -- Lou.
DOBBS: Greg, thanks. Greg Clarkin from the Nasdaq marketsite.
Coming up next, OPEC ministers meeting in Vienna. We'll have a live update for you.
Amazon.com promises profits ahead. We'll be going live to Seattle for the latest on Amazon. And Lucent's Chief Executive Officer Henry Schacht hits the exhibition circuit. He's explaining why he walked away from merger talks. Stay with us.
(COMMERCIAL BREAK)
DOBBS: In Vienna, OPEC today decided to maintain oil production at 24 million barrels a day, but the cartel also called an emergency meeting to deal with the issue of Iraq. Baghdad yesterday halted exports of more than 2 million barrels a day in protest of the U.N. sanctions policy.
Richard Quest joins us now from Vienna -- Richard.
QUEST: Lou, this was meant to be an ordinary, routine meeting of OPEC, until the Iraqi decision to suspend oil production. Suddenly prices went above the OPEC reference range, over $29 a barrel, and OPEC ministers had to decide what to do. What they basically said is that at the moment supplies are -- and I quote -- "more than satisfactory." There's no need to turn on the tap, they're going to wait and see.
They believe that if there are any problems in Europe and in the United States, it's because of refining capacity. They simply can't cope. It's not a problem with OPEC, Lou, they say.
DOBBS: Richard, in point of fact, OPEC has also called another meeting. What is their next step?
QUEST: The next step is to see what it looks like after July the 3rd. If demand is still heavy because of the summer driving season, the tourists on the road, if refineries are still at capacity, and if -- and this is the key point -- the price is over $30 a barrel, then they'll have to turn on the spigot. The political pressure from the U.S. and Europe will be too great.
But what OPEC is terrified of is actually opening production and watching the price collapse. It's happened before.
DOBBS: Richard, thank you. Richard Quest reporting live from Vienna, where, Richard, we do realize it's 1:00 in the morning. Thanks.
There was, of course, some speculation earlier today that OPEC might actually raise production in compensation of Iraq's shortfall and that gave oil prices a boost for a while. The gains, however, were limited. That, after OPEC delayed any decision on the Iraq issue until July 3rd. Light sweet crude ended up 11 cents, closing at $28.24 a barrel, still stable oil prices.
President Bush today made a bid to help the troubled U.S. steel industry, asking the U.S. International Trade Commission to investigate whether cheap steel imports pose a threat to domestic producers.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We're concerned about unfair trade practices that may be affecting the economics of the steel industry, and therefore call upon the International Trade Commission under section 201 to have a full investigation of the industry, the imports coming in from the United States, to make sure that our industry is not being affected by unfair trade practices.
(END VIDEO CLIP)
DOBBS: What is called a section 201 probe would allow a four- year restriction on steel imports to give the domestic steel industry time to restructure. U.S. steel makers tried unsuccessfully to persuade Former President Clinton to launch such an investigation.
Coming up next, a man who wrote the book on Internet speed: Terra Lycos' Bob Davis and what's ahead for the airline industry as business travel budgets are slashed. Also, his name graces thousands of Wall Street desks. Now Mike Bloomberg has another office in mind, the mayor's office. Stay with us.
(COMMERCIAL BREAK)
DOBBS: The man who turned his name into a financial news icon is looking to extend his reach from Wall Street all the way to City Hall. Billionaire Michael Bloomberg has formally announced his plan to run for mayor of New York City. The media baron went public with his plans in an ad campaign launched today, Bloomberg using the 60-second spot to portray himself as the obvious successor to Mayor Rudolph Giuliani.
(BEGIN VIDEO CLIP)
BLOOMBERG: A strong mayor at City Hall has made a big difference. Today, crime is down, New York City is doing better. My name is Mike Bloomberg and I'm running for mayor, to build on what's been accomplished, not tear it down.
(END VIDEO CLIP)
DOBBS: Bloomberg is seeking the Republican nomination. The long-time Democrat switched parties a year ago. He is one of at least six men running for office.
Coming up next here, the head of Lucent says Lucent is now positioned to pull off a turnaround, all alone. Also, Amazon.com reassuring Wall Street today. Amazon says profits are on the way. And later, the NBA finals kick off tomorrow night between the 76ers and the Lakers. Sixers president Pat Croce will join me with his take on his team and the NBA.
(COMMERCIAL BREAK)
DOBBS: In tonight's headlines, good news on Wall Street.
Stock prices surging for the fourth straight session. The Dow up 114 points, the Nasdaq surging almost 4 percent. OPEC ministers choose to hold the line on oil production, they keep output steady at 24 million barrels a day.
President Bush has ordered a probe into cheap steel import. It's meant to help struggling steel producers.
Also today, the chief executive officer of Lucent faced analysts just one week after walking away from merger talks with French telecom firm Alcatel. CEO Henry Schacht told his audience that Lucent will go it alone.
Steve Young reports.
(BEGIN VIDEOTAPE)
STEVE YOUNG, CNN CORRESPONDENT (voice-over): They're still wondering at the giant telecom show in Atlanta about the explanation of why Lucent cozied up to France's Alcatel, then walked away from merger talks a week ago. Lucent CEO told analysts when it became apparent, it wouldn't be a merger of equals, but an Alcatel takeover.
"The basic premise was no longer valid in terms of execution risk."
The stock gained 6 percent on its reaffirmation of Lucent's business outlook, modest quarter by quarter growth in sales and earnings.
STEVE LEVY, LEHMAN BROTHERS: This late in the quarter, to reaffirm their view that they will have a modest sequential increase in revenues, is a positive thing, and it is another indicator that this turnaround is happening.
YOUNG: But the stock's fallen nearly 90 percent in the past year. Lucent says it will go it alone on its 7-point turnaround plan. To raise cash it needs to sell its fiber optics unit, but some Lucent executives are said to believe the sale would now bring just $4 billion instead of the $6 billion they hoped for a short time ago.
HENRY SCHACHT, CHMN. AND CEO, LUCENT: The sale is going forward, we have multiple bidders, the bidding is very active, and we will get good value for money, and we will see what that is when the process is over, but it should move by quickly now in a matter of weeks.
YOUNG: For technical reasons, Lucent must finish the sale and raise the cash to complete the spin-off of its Agere chip unit, now scheduled for September.
(END VIDEOTAPE)
YOUNG: Lucent's CEO said the company will meet an earlier pledge to finish the year with a cost reduction of $2 billion. A Lucent source said that will mean significant additional cuts, many through voluntary buy outs at a company where 16,000 positions already were expected to be eliminated.
DOBBS: Steve, an estimate on how significant a reduction we're talking about?
YOUNG: There's a range tonight of 3 maybe to 5,000, this is a company that started the year at 106,000, so that will be 20,000 people -- 20 percent, since the start of the year. Many of these latest group: middle managers.
DOBBS: But not particularly surprising, as unfortunate as it is, not surprising for a company that has endured the financial stress this company has. Did Schacht make it clear at all why he would expect equal board membership and what was clearly an acquisition of Alcatel, at least to the point where they broke it off?
YOUNG: No, it was puzzling to everybody. It was clear Alcatel would get 58 percent of the company. He didn't elaborate.
DOBBS: Steve, thanks. Steve Young.
Shares of Lucent today nearly gained 50 cents a share and analysts today gathered in Seattle to hear the latest from Amazon.com. What they heard was something similar to what they heard before. The online retailer maintaining it will deliver pro forma profits in the fourth quarter and all of next year. Katharine Barrett has the story from Seattle.
(BEGIN VIDEOTAPE)
KATHARINE BARRETT, CNN CORRESPONDENT (voice-over): The main entrance to Amazon.com's headquarters is still under repair for damage suffered in February's earthquake. Down the hill, on the Seattle waterfront, the world's largest e-commerce company spent the day shoring up its image with investors, analysts and bankers.
JEFFREY FIELER, BEAR STEARNS: I think for investors in general, you know, the credibility is strained just given the overall level of the share prices this point in time. Obviously, a higher share price make for happier analysts and happier investors.
BARRETT: Closed to cameras, Amazon's analysts day presentation was short on glitz, or glib pronouncements, long on graphs, charts and Amazon's unique brand of e-commerce economics. Over the past year, Amazon has focused on nuts and bolts operational improvements, like better inventory management, margin control, what one analyst termed Retail 101.
BILL CURRY, AMAZON SPOKESMAN: For almost six years, we focused on getting big fast. Right now our focus is on getting to profitability, to convert that very large loyal customer base into a profitable business.
BARRETT: Analyst praised Amazon change of emphasis, but some are still skeptical.
UNIDENTIFIED FEMALE: When we look at Amazon, we focus on operational improvements and the need for them. But we also focus on the fact that this company's top line growth is decelerating sharply, really, really sharply, versus where it was a year ago. And it's unclear what they can really do to unchange that.
BARRETT: Amazon did announce some new sales avenues. In the second half of the year, it will introduce an online store selling personal computers and broaden its book selling to institutional buyers.
(END VIDEOTAPE)
BARRETT: Amazon is confident it can achieve pro forma operating profitability by the end of the year, but it gives no guarantees. And this nearly 6-year-old company admits, for all the improvements, it is still a very young company with a lot to learn. Many say, a lot to overcome -- Lou.
DOBBS: Katharine, thank you very much. Katharine Barrett from Seattle.
Coming up next, another Web pioneer: he built a company at Internet speed and produced a book to prove it. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Well, our next guest gave new meaning for the term Internet speed, building Lycos to a Web dynamo that he sold to Spain's Terra Networks for $5 billion. Bob Davis now serves as the combined company's vice chairman. He is out with a new book: "Speed Is Life."
But stock in the company has been hit hard: down 82 percent from its 52-week high. Joining me now from Boston, Bob Davis, vice chairman of Terra Lycos.
Bob, it's great to see you.
BOB DAVIS, VICE CHAIRMAN, TERRA LYCOS: It's good to see you. Of course, not to miss any opportunity for a plug -- my real job these days is as a venture capitalist at Highland Capital in Boston.
DOBBS: Well, we now have the record straight. You have so many interests that it is difficult to serve all of them.
DAVIS: There you go. I'm a board member at Terra Lycos.
DOBBS: At this point with Terra Lycos, what was the percentage return -- the price was $5.2 billion, is that correct?
DAVIS: Yes, it's close, $5.4 billion.
DOBBS: $5.4 billion.
DAVIS: And if you rack it back to -- on the day the transaction closed, it was a little over $300,000 percent return on our initial venture capital money. So it worked out well.
DOBBS: If you do that with all your other deals, in your new life as venture capitalist, I don't think your partners will have any problem picking up the golf games.
DAVIS: We'd be OK, wouldn't we?
DOBBS: This is a sixth anniversary of your beginning Lycos?
DAVIS: Lycos was founded -- it's interesting -- six years ago today. So, here we are to celebrate it. It was interesting. It was a lot of twists and turns along the way. And just a wonderful story throughout the period.
DOBBS: Your book -- and I will say this, very simply, -- I don't normally endorse products. Your book is a terrific read. It allowed me to relive a lot of moments in all that happened in the Web, from '95 through present day.
The advice you're offering within that book, it's sort of, to me -- I guess I found it interesting that you were coming out with advice for business people.
Now, what motivated you to do it?
BOB DAVIS, VICE CHAIRMAN, TERRA LYCOS: I guess I had three things that I might have looked at for a reason to put a book together. One was ego, but of course, being such a humble guy, that couldn't have been it.
DOBBS: Yeah, that had to be dispensed with quickly.
(LAUGHTER)
DAVIS: That's right. It was a great way to do couple of things. One, to raise some money for a great cause that I believe in strongly. All the proceeds from this are going to the National Center for Missing and Exploited Children Center -- that's one. And two, and equally so, I think I learned a lot over the last several years and to the extent that I could pass that advice on to business people of both Internet and traditional businesses I thought that would play pretty nicely.
DOBBS: And the advice I will say, I think it's brilliant, because I agreed with every element of your advice. Let me ask you this, we have about 30 seconds to go, Bob. Give us your sense of where the Internet is headed and if there's a next big thing on the way? DAVIS: I think we get in trouble when we start to look for a next big thing. To me it's more a function of what the Web could do for traditional business, so how does the Web help G.E. and how does the Web help General Motors and Procter & Gamble? And how does it get put to work for all these traditional businesses that have been around for so many years?
In the book I focus so much on talking about the basics in the business, such as profits and brand and building strong management teams. That's what it's really all about, and the Web is just another medium to help companies do things better.
DOBBS: Terrific. Bob, I wish you a lot of luck with the book, and thanks for writing it. It was a lot of fun to read.
DAVIS: Thanks so much for saying so. I appreciate it.
DOBBS: Bob Davis. Coming up next here, an industry trying to recover from the one of the worst quarters in nearly a decade: Airlines. We'll take a look at whether clear skies lie ahead.
(COMMERCIAL BREAK)
DOBBS: In tonight's "Sectors Report": Airlines. Merrill Lynch again trimming earnings estimates for the carriers. It said the economic slowdown continues to weigh on the industry. And as Lisa Leiter now reports from Chicago, cutbacks in business travel is partly to blame.
(BEGIN VIDEOTAPE)
LISA LEITER, CNN CORRESPONDENT (voice-over): Employees at the Chicago office of marketing research firm Claritas spend at least half the week traveling. The abrupt slowdown in the economy did not change that, but it did force them to look for cheaper air fares.
PAUL DUNFEE, REGIONAL VP, CLARITAS: We will look at off time, or off peak flight times, such as later in the evenings, maybe including some Saturday night stay-over where we wouldn't have done that before.
LEITER: Airlines make most of their money on last-minute business fares, priced at about four times that of the average leisure fare. Corporate cost cutting is damaging the industry's revenue, which has been falling since February, and is expected to plunge further in May.
SAM BUTTRICK, UBS WARBURG: May was perhaps the worst month for the airlines in terms of revenue decline in the past decade.
LEITER: Continental blamed the decline in high-priced business travel when it warned its May revenue will drop between 9 and 11 percent from a year ago. Some analysts are expecting a turnaround if the economy recovers later this year, but others are not so sure.
BRIAN HARRIS, SALOMON SMITH BARNEY: I do not anticipate, unlike, I think, the consensus expectations that we are going to see a nice pickup in business demand later in the year. I think these corporate travel policies are going to remain rather sticky.
(END VIDEOTAPE)
LEITER: There are other drags on airline profits. Fuel costs are still relatively high, and labor costs in the first quarter rose about 15 percent from a year ago -- Lou.
DOBBS: Lisa, thank you. Lisa Leiter from Chicago.
Despite that outlook, airline stocks today ended the session higher, but trading well below their 52-week highs.
(COMMERCIAL BREAK)
DOBBS: The National Basketball Association finals begin tomorrow between the Philadelphia 76ers and Los Angeles Lakers. The series brings together some of the game's most electrifying young stars: Shaquille O'Neal, Kobe Bryant, and Allen Iverson. But the NBA faces a stiff challenge to live up to its heyday in the 1990s when Michael Jordan was soaring to the hoop and bringing casual viewers to the game.
Casey Wian reports.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT (voice-over): It's dream matchup, especially for the NBA front office. Los Angeles and Philadelphia, two big media markets and arguably the game's three biggest stars, Allen Iverson, Kobe Bryant and Shaquille O'Neal.
But with many predicting a four-game sweep by the L.A. Lakers, NBC could lose $40 million in ad revenue. The network needs a five- game series to break even, and six or seven to make money. TV executives will be watching closely. The NBA's four year, $2.6 billion contract with NBC and CNN corporate sibling TURNER SPORTS expires after next year, and the league's ratings are down.
DAVID CARTER, THE SPORTS BUSINESS GROUP: The league understands that in order for them to generate the greatest amount of money from broadcast fees, they have to have exciting games and they have to have some real stars.
WIAN: Since Michael Jordan retired in 1998, the league has struggled to find both. An emerging crop of talented young players, and perhaps a rumored Jordan return, should provide the star-power. As for the games, the league adopted rule changes for next year hoping to create faster, higher-scoring contests.
But economic issues remain. The NBA this season became the first sports league with average ticket prices over $50. Attendance, which soared during the early '90s, has dropped slightly.
(on camera): And there are image problems. Beyond the tattoos and gangster image cultivated by many players, several NBA stars' names have surfaced in the racketeering trial of an Atlanta strip club owner, alleged to be a real-life gangster. But Iverson, once viewed as one of the league's biggest image problems, was voted this year's Most Valuable Player, and by playing hurt throughout the playoffs, may prove to be one of the NBA'S most valuable assets.
ALLEN IVERSON, PROFESSIONAL BASKETBALL PLAYER: As long as the fans enjoy everything that went on in the playoffs, then we accomplished a lot as a league.
WIAN: Casey Wian, CNN Financial News, Los Angeles.
(END VIDEOTAPE)
DOBBS: One major contributor to the 76ers stellar season: minority owner Pat Croce. Pat translated his success as an entrepreneur, starting a series of fitness centers, into a starring role as 76ers team president. And you can see him at every Sixer game as the team's public face and most vocal cheerleader. And under his leadership the Sixers have climbed from the NBA'S basement to now the championship series. We are joined now from Los Angeles by Sixer's president Pat Croce.
Pat, good to have you with us. Congratulations.
PAT CROCE, PRESIDENT PHILADELPHIA 76ERS: Thanks, Lou. It's great to be on the show.
DOBBS: How are you feeling tonight?
CROCE: I feel great. Are you kidding me? I'm in Hollywood here!
DOBBS: You should write a book with that title.
CROCE: I feel great -- you're right, you're right.
You know what: It was a dream come true to be playing the Los Angeles Lakers in California in June. Five years ago, who would have ever thought it?
DOBBS: Well, go back seven years as the physical therapist for the team, taping up ankles and wrists, and now part owner and president of an organization. Those who don't know the story, it's a terrific story.
Now you've got the world looking at the L.A. Lakers as if they're unbeatable, 4-0. Everybody is worrying about how much money the networks are going to lose. What are the 76ers going to do about all that?
CROCE: You know what -- I think we're going to come with the best effort you possibly can see on the basketball court. Our team is really tough, Lou We've overcome adversity, setbacks, broken bones over the course of this season, and we've made it all the way to this point. I think it truly is a team concept.
I believe the Lakers are a better team. But when each of our players play to the best of their ability, we can be the winning team: the excitement of Allen Iverson-Kobe Bryant, Shaquille O'Neal-Dikembe Mutombo, Phil Jackson-Larry Brown. This is what the NBA is all about, and it's going to be some exciting basketball.
DOBBS: And the ratings are going to be sky-high?
CROCE: Oh, they're going to be great. You know I'll be watching.
(LAUGHTER)
CROCE: I'll be watching from there. You know what, you talked about the ratings decline, but there are so many avenues where people can look for extra entertainment, with the Internet, with cable systems. So I think all sports are in somewhat of a flux...
DOBBS: That's especially true.
CROCE: ... (UNINTELLIGIBLE) especially Philadelphia, are moving up.
DOBBS: And in your judgment, this series, since you've put it on the table, how many games would you suggest this is going to take?
CROCE: You know what: We don't do anything easy, Lou. So if it goes seven, I would be in heaven. Truly -- hey, that rhymes. That was pretty good.
You know, we took -- we took the Toronto Raptors to seven, we took the Milwaukee Bucks to seven. But we're not going to get -- don't even think about taking that broom out. I'll break that broom over someone's head. I won't think about sweeping. I know the Lakers have swept the three teams in the past. We're going to come and give a great effort, and I think you're going to see some surprises. Remember, this is Philadelphia, home of Rocky. But I like "Rocky II," where he wins.
(LAUGHTER)
DOBBS: Well, we wish you all of the very best of luck, and as all the pundits are saying, the 76ers are going to need it.
CROCE: We do.
DOBBS: But it's going to be a lot -- it's going to be a lot of fun to watch.
Now, also, I want to ask you this: The 76ers now making a lot of money, making you richer?
CROCE: No. No, not yet. Not yet, Lou. We haven't made a dime yet. With this playoff run, we'll get closer to breaking even. But in my five-year tenure, it's tough to make money. Now with the new luxury tax, there's a chance to make money now. That's a tax that's placed on teams that are so far over the cap where they have to share dollar per dollar. And that may keep some equality along the league. And I think that's one way to keep this league viable and financially strong.
DOBBS: Well, your enthusiasm for the game and your team despite the lack of profits is remarkable. I can't wait to see what your enthusiasm registers once you're making a couple of dollars.
CROCE: Well, Lou, forget about it then. I'll be in -- just say a prayer for us. I know you're in New York. That's close to Philadelphia. You can be a Sixers fan.
DOBBS: There you go. Pat, thanks a lot. Pat Croce...
CROCE: Have a great night.
DOBBS: .... wish you all the best. Good luck.
Coming up next, some final thoughts on the day, "Ahead of the Curve." Stay with us.
(COMMERCIAL BREAK)
DOBBS: As we've reported to you, tomorrow morning the Democrats officially take control of the U.S. Senate, marking the first time since 1995 the Democrats have held the majority. Also tomorrow: Hewlett-Packard will hold its semiannual analyst meeting in Cupertino, California.
And we want to follow up on a story we reported to you last night here on MONEYLINE. All 20 of those luxury cars belonging to Sir Elton John sold at a Christie's auction in London. The total tally: $2.7 million, double the presale estimate. The highlight of the night, lot No. 11: a black 1973 Rolls Royce Phantom 6 with a V-8 6.7 liter engine. It went under the hammer for $316,000.
Sir Elton did not attend the auction, but listened by phone from his home in Atlanta.
His response to the sale, quote: "There's obviously a lot of money to be made from second-hand cars," end quote.
Sometimes, as in the case with Elton John, it depends on the driver just how much money there is in a thing, and the drivers in the market today were a handful of tech companies that reported no surprises in their earnings or guidance for the future. Those few stocks enthused investors about the big caps in the Nasdaq and a rally was under way, a $180 billion rally.
Another, and perhaps more rational driver, might be a beautiful summer day all across the land, where despite a decline in productivity for the first time in years and a power shift in Washington that some pundits worried and feared would be calamitous, a summer day that inspired optimism among all but the most cynical, and of course, those who short the market. And those folks who will be working in the Senate tonight, if you will, rearranging the desks on the floor of the good ship the U.S. Senate, whose membership hasn't changed at all, only the likelihood that much will get done. But then the market made it clear today that investors clearly didn't mind that kind of calamitous outcome.
We're interested always in your views and comments and point of views, so please e-mail us here at MONEYLINE. Our address is moneyline@cnn.com. We'd love to hear from you.
That's MONEYLINE for this Tuesday evening. Thanks for being with us. I'm Lou Dobbs. Good night from New York. "CROSSFIRE" is coming up next.
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