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Lou Dobbs Moneyline
Dow Climbs 50.66 to 10,647.33; Nasdaq Advances 38.58 to 2,031.24; Debate on Patients' Rights Bill Centers on Liability
Aired June 20, 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: Tonight, President Bush vows to sign a patients' bill of rights but not one that opens floodgates to litigation.
California's governor on Capitol Hill facing brutal criticism about his handling of the energy crisis.
Prospects for a trade war: one prominent senator threatens retaliation if Europe does object to GE-Honeywell.
And tonight our guest: Richard Holbrooke on corporate responsibility and AIDS.
And a Wall Street analyst stooped on the unthinkable. He's taken responsibility for his mistakes.
And the head of one company with a stock at a rare, 52-week high.
Good evening.
A very busy day in Washington. We begin tonight with the fight over HMO reform. President Bush today said he wants to sign into law a patients' bill of rights by year's end. But debate today stalled in the Senate over the thorny issue that divides Republicans and Democrats: what legal recourse should patients have in challenging their HMO's decisions. Tim O'Brien reports from Washington.
(BEGIN VIDEOTAPE)
TIM O'BRIEN, CNN CORRESPONDENT (voice-over): There is bipartisan support for a patients' bill of rights. Just what rights should be included has been the sticking point.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The idea is to serve more patients, not to create more lawsuits in America.
O'BRIEN: The president has threatened to veto a plan drafted by Senators Kennedy, Edwards and McCain, but he supports a Republican compromise that has many of the same features: such as greater access to emergency room care, pediatricians and OB-GYNs. Both plans cover experimental treatment, and both give patients the right to sue their HMOs. The plans differ on what victims can sue for and how much they can get. The Democrats' plan allows lawsuits in state and federal court, unlimited damages against health care providers for pain and suffering, and up to $5 million in punitive damages in federal court.
RON POLLACK, FAMILIESUSA: If they have that potential liability, then they're going to get it right the first time.
O'BRIEN: But Republicans, and the business community complain, making lawsuits any easier would drive up costs and deter some employers from even continuing health care coverage.
JIM WOOTTON, U.S. CHAMBER OF COMMERCE: Putting trial lawyers in charge of the system at every step of the way, having them inserted in the various determinations, is going to explode the cost and slow down the care.
O'BRIEN: Republicans are more receptive to a plan that bans lawsuits in state courts and limits punitive damages in federal courts to $500,000, a plan crafted in part by Democrat John Breaux.
SEN. JOHN BREAUX (D), LOUISIANA: If you have to go to court, our bill allows you to go to court and sue for damages. We have some caps in the amount of money that could be recovered, in order to keep the cost down.
(END VIDEOTAPE)
O'BRIEN: This afternoon, the speaker of the house, Dennis Hastert, after consulting with the president, said he too would offer a plan later this week. A patients' bill of rights has wide popular support. And Lou, on Capitol Hill tonight, there is optimism here that a compromise is within reach -- Lou?
DOBBS: Tim, that is obviously good news for everyone. It's interesting, the president saying that he wanted a bill by years end. That will put us in entirely different schedule than what we're hearing from the Senate, would it not?
O'BRIEN: He'd like to get it by year's end. The Senate would like to have it by the end of the summer. There's a lot of negotiation that has to be done before they get any agreement at all.
One of the critical ingredients of any plan to get through will have to be some sort of alternative dispute resolution, some administrative agency before a claimant can go directly to court. That could be a sticking point. But right now, the plans seem to have that.
DOBBS: Tim, thank you. Tim O'brien from Washington.
Also on Capitol Hill today, California's governor faced Republican critics over the statewide energy crisis. Governor Davis lashed out at federal regulators. He charged they have not done enough to rein in alleged price gouging. GOP lawmakers for their part blasted the governor for pointing fingers at everyone but himself. Kate Snow covered the hearings and has this report.
(BEGIN VIDEOTAPE)
KATE SNOW, CNN CORRESPONDENT (voice-over): California Governor Gray Davis came to Congress armed with a message: the Federal Energy Regulatory Commission, or FERC, should order rebates of up to $9 billion for consumers he says were overcharged.
GOV. GRAY DAVIS (D), CALIFORNIA: I believe it is unconscionable if generators are allowed to keep these egregious overcharges. Mr. Chairman, FERC must move quickly to enforce the law. FERC must order these energy companies to give us back our money.
SNOW: Later in the same hearing, the chairman of that commission responded.
CURT HEBERT, FERC CHAIRMAN: There should be no doubt that this commission is actively pursuing refunds and other appropriate remedies for past behavior.
SNOW: Republicans raised questions about the past, asking Davis if he ignored warning signs of an impending energy problem, and accusing the governor of pointing fingers at Texas energy companies.
SEN. FRED THOMPSON (R), TENNESSEE: For Governor Davis the answer is simple: a bunch of Texas cowboys got down in the corral and decided they were going to take advantage of helpless California.
SNOW: Davis defended his record. He said California is building 16 new power plants and conserving energy at record rates. He welcomed Monday's action by FERC, meant to lower prices on Western electricity. That action has quieted calls from Senate Democrats who had been demanding price caps. But Davis, under increasing political pressure at home, told Congress he'd continue to make noise, demanding more federal action.
DAVIS: I suggest too, if it weren't for a good deal of what you might consider political hyperbole, we might not have got the attention of the Federal Energy Regulatory Commission that stiffed us for almost a year.
SNOW: Other Western lawmakers are joining the chorus. With the spotlight fixed on California, senators from Washington and Oregon say their constituents might deserve refunds too.
Kate Snow, CNN, Capitol Hill.
(END VIDEOTAPE)
DOBBS: One senator today threatened the EU over the GE-Honeywell deal. Senator Jay Rockefeller a letter to the European Commission, warning that the United States may retaliate, should regulators block that deal. A spokesman for the EU antitrust enforcer Mario Monti today stressed there is still no final decision.
But Senator Rockefeller and other Capitol Hill legislators suggest that serious damage has already been done to U.S. trade relations with Europe. Fred Katayama reports.
(BEGIN VIDEOTAPE)
FRED KATAYAMA, CNN CORRESPONDENT (voice-over): News that European regulators have formally recommended blocking GE's deal to buy Honeywell sparked cries of protectionism and retaliation on Capitol Hill.
SEN. PHIL GRAMM (R), TEXAS: My concern is that we don't end up having bad policies imposed upon us as Europeans try to protect themselves against competition when they've lost competitive edge based on their policies that they've implemented.
KATAYAMA: And in a letter to an EC vice president, Senate Aviation Subcommittee Chairman Jay Rockefeller warned that a decision to block the deal could have a "chilling effect" on future cooperation in aerospace and aviation.
"If the EC is playing unfairly," he said the subcommittee must "reexamine the open market" the U.S. has maintained for acquisitions.
Just last week, President Bush expressed concern that the merger would not go through. And earlier this week, European Competition Commissioner Mario Monti said the decision would be based on law and economics, not politics. His spokesman said today no final decision has been made.
GE would not comment on the draft recommendation, but a spokesman repeated that it would not make any further acquisitions, adding it would not pursue the deal without the blessing of the EU. Honeywell says it's still committed to the merger. Experts are divided on whether the draft spells out the final outcome.
SIMON HOLMES, SJ BERWIN: Negotiations are indeed continuing between the parties and the commission. The question is, I think there is a deal to be done there, if the parties are prepared to be flexible.
KENT NEWCOMB, AG EDWARDS: It's part of the formal process, I suppose to formally end the agreement.
(END VIDEOTAPE)
KATAYAMA: An American antitrust expert says although it's not final, the draft decision is one big nail in the coffin. While companies like Boeing and McDonnell Douglas were able to satisfy European regulators after facing initial opposition, the odds of this deal going through are low, he says, because the two parties are just so far apart. The commission must decide by July 12.
DOBBS: Fred, thank you.
That GE-Honeywell deal was supposed to be of course the final chapter for Jack Welch quite literally. The legendary GE CEO is racing to finish his autobiography "Straight From The Gut." The Honeywell takeover was supposed to be the triumphant final chapter. That poses a problem for Welch as both author and CEO because a final decision from the EU is still weeks away. The manuscript is imminently due. Warner Books paid Welch $7 billion (sic) for the North American rights. Warner needs to sell 700,000 hard-cover copies to break even. And the book is scheduled to be in bookstores less than two months after the EU will make its final decision -- that's a tight deadline for even a legend.
Coming up next on MONEYLINE, stocks end the day broadly higher. It was a volatile session.
Alan Greenspan tells lawmakers that inflation may be hurting profit margins. But it's certainly not hurting consumers.
Also...
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: We actually hadn't placed an entire virtual casino.
(END VIDEO CLIP)
DOBBS: ... casinos bet the day is coming soon when online gambling is legalized.
(COMMERCIAL BREAK)
DOBBS: The price of oil today dropped sharply. The Energy Information Administration showed a rise in gasoline inventories by 3.7 million barrels in its weekly report. Current inventories are now at higher levels than a year ago. Light sweet crude dropped nearly a dollar to $26.50 a barrel. That is the lowest level in more than two months.
On Wall Street today, stocks ended higher across the board. It was the strongest rally in more than two weeks, but something of a rocky session right up until the close.
Jan Hopkins reports from the New York Exchange.
(BEGIN VIDEOTAPE)
JAN HOPKINS, CNN CORRESPONDENT (voice-over): It was a day of flip-flops, as the market was driven first by the bears, and then by the bulls. Blue chip stocks fell at the open, crept back by lunchtime, only to pull back by mid-afternoon. But as the session wore on, the buyers stepped back in. The late-day rebound put the Dow at 10,647, up 51 points. The Nasdaq crept back over the 2,000 mark, up 2 percent.
RICHARD CRIPPS, LEGG MASON: What we're looking at here in the short term is that the market has become very oversold, has become very negative very quickly. And whenever you have that kind of movement, one way or the other, they're overly bullish or overly negative, you tend to get a counter-trend rally.
HOPKINS: Investors turned to financials, especially brokerages like Bear Stearns, Lehman Brothers and Goldman Sachs. Software and biotech companies also found plenty of favor. Microsoft, Veritas, Genzyme, MedImmune and Millennium Pharmaceuticals all closed higher. But poor growth prospects continued to weigh on telecom companies. Shares of Lucent Technologies and Tellabs flirted with their 52-week lows. Traders say it's hard to get investors to stay committed.
MARK DONAHOE, US BANCORP PIPER JAFFRAY: People are really looking for direction, and I think that second quarter earnings are going to give us some direction, one way or another. And I think the direction I'm talking about, third and fourth quarter type of direction, from these companies going forward after their release here.
HOPKINS: That big decline in oil prices helped fuel the rally, along with growing conviction that the Federal Reserve will cut rates a half point next week, rather than a quarter -- Lou?
DOBBS: A half point instead of a quarter, and yet, at the same time we have economists saying that we haven't had an impact from the first five cuts. What do you make of that, Jan?
HOPKINS: Well, people I talked to say we just have to wait. So that's part of the reason you have this pull between the bulls and bears, those that say not yet, and those that say it's going to happen.
DOBBS: All of this makes good markets and good news. Thanks.
HOPKINS: Thanks.
DOBBS: Jan Hopkins from the New York Exchange.
Regulators have been criticizing technology companies for reporting pro forma earnings, excluding one-time items to give the illusion perhaps of higher profits, or lower losses. A report from Merrill Lynch today, showing how companies have inflated their profits yet another way: through the use of employee stock options.
Companies have used those options to compensate workers without having to count them as expense. Companies also enjoy hefty tax breaks when those options are cashed in. Merrill's Steve Milunovich examined the earnings of 40 companies over the past 3 years. He found that Yahoo! reported profits that were 1,800 percent higher exactly because of those options. But Yahoo! is far from alone. EBay, Brocade, IBM, AOL, the parent of this network, all reporting higher earnings through giving workers options.
Coming up next here: in the toughest market in years, we'll focus on one stock now at a 52-week high. We have some good news. And the CEO of Waste Management is next.
(COMMERCIAL BREAK) DOBBS: A major shakeup tonight at Disney. Peter Schneider stepped down unexpectedly tonight as chairman of Walt Disney Studios. He will start a Broadway theater production and investment company. Schneider joined Disney in 1985. He headed up Disney's feature animation unit when it produced big hits such as "Lion King." He rose to his current post in January of 2000. There is no word tonight on who will replace him.
Now to take a look at tonight's top performers, a segment we bring you regularly here on MONEYLINE. Tonight, a look at a company, Waste Management. And this company is decidedly a bearer of good news.
In November of 1999, Maury Myers was brought in to turn the company around. At that time, Waste Management was dealing with intense SEC scrutiny, juggling lawsuits resulting from accounting irregularities. And in the first quarter of this year, Waste Management's net income grew 125 percent. The stock, tonight, is at a 52-week high, and joining me now from Houston, the chairman and CEO, Maury Myers.
Maury, good to have you with us.
MAURICE MYERS, CHAIRMAN & CEO, WASTE MANAGEMENT: Thanks, Lou. Good to be with you.
DOBBS: This has been an extraordinary period and extraordinary results to this point. Did you think you would be able to move the company this far forward this fast?
MYERS: Well, we've -- we've done a lot of good work, about 57,000 people have done a lot of hard work, and we're pleased with the results so far, but we still have a lot of work to do.
DOBBS: Well, let's take a -- if I may, ask you to join me and take a look at the work that you've done, at as reflected by your stock price, if we could put that up for you, Maury, I hope you can see that. Your 52-week high, charting it back to June of last year, that's -- that's a truly remarkable performance. What was, in your judgment, the basic cause, the catalyst for the turnaround?
MYERS: Well, you know, again, I'd say that it's really too early to call us completely turned around. But it's a lot -- a lot of people working together, working very hard, setting some tough targets and meeting those goals. The first year we really worked on just building the infrastructure of the company and stabilizing the company. We had a lot of trouble with our information technology, and so it's been a year of stabilization, and now we're moving on to improvement initiatives.
DOBBS: And financial reporting stabilization, as well. The SEC -- the SEC deal yesterday with Arthur Andersen, settling those claims on overstatement of a billion dollars in earnings, resulting in the largest civil fine, certainly, for a big 5 firm. Is all of that -- all of that happening under the preceding management. Is all of that behind you? MYERS: Well, we still have a class-action lawsuit resulting from a 1998 -- well, we merged in 1998. In 1999, we had an earnings shortfall. We had another class-action lawsuit that we're dealing with.
But we're getting it behind us and moving on, and that's important, I think, for our shareholders. There's little cloud over the company that we need to get behind us.
DOBBS: And that settlement, which could be a significant one certainly, numbers that range as high as nine digits -- but how soon do you think you'll get that settled?
MYERS: Well, unfortunately, we're not in control of that process. We're working very hard. There are settlement discussions going on, and I'm not a very good predictor of that. I told investors that we'd hopefully have that done by last year, end of last year, but hopefully soon.
DOBBS: And in terms of your results, which has been demonstrated again by your stock price and your earnings, you're going to be able to keep the pace -- will you also in this environment be able to raise prices?
MYERS: I think so. To begin with, our prices are usually a small portion of the company's budget or an individual household's budget, for that matter. And we really look at price increases on a customer-by-customer basis. We think that we provide good value. We're working hard on...
DOBBS: Maury, I'm ready for that price hike.
(LAUGHTER)
OK. Maury, we thank you very much for being with us. We're out of time. I just want to say congratulation to you this -- at this point in your turnaround. And it's nice to talk to a CEO who's got so much good going on.
MYERS: Thanks, Lou.
DOBBS: Maury Myers, Waste Management.
Still ahead here, a fresh crisis for the FBI: charges that a security analyst working for the FBI sold secrets to the Mob. Also, a new SUV flunks a "Consumer Reports" safety test. We'll tell you what the manufacturer says about that.
And he came to talk banking, but we'll tell you how a Senate committee changed Alan Greenspan's agenda.
(COMMERCIAL BREAK)
DOBBS: "Consumer Reports" has flunked a new midsize SUV. "Consumer Reports" says it's rating the 2001 Mitsubishi Montero Limited "not acceptable" -- that after the vehicle tipped up on two wheels during tests, those tests designed to show its ability to maneuver in an emergency. Mitsubishi says it tested the new Montero Limited extensively and the company found it safe.
(BEGIN VIDEO CLIP)
PIERRE GAGNON, PRESIDENT & COO, MITSUBISHI MOTOR SALES OF AMERICA: CU's (sic) conclusions about this vehicle are false. They are based on a widely criticized, unrealistic maneuver that can be used to force vehicles to tip up under extreme conditions. The federal government has concluded that this maneuver is unscientific and cannot be linked to real-world safety matters.
(END VIDEO CLIP)
DOBBS: The "Consumer Reports" rating applies only to the 2001 Montero Limited and not to any other Montero models.
More trouble tonight for the embattled FBI on a day when Attorney General John Ashcroft announced a sweeping review of the agency. James J. Hill, a security analyst with the FBI's Las Vegas office, is now charged with selling classified information. The FBI says Hill received $25,000 for the secret documents from someone described as a New York private investigator. That private investigator then apparently passed the information on to organized crime figures and others under investigation.
This comes as the attorney general announced a review of the FBI by the Justice Department and federal law enforcement chiefs. Attorney General Ashcroft also called for a management study of the agency by a private firm.
We're expecting word shortly on the fate of American Lori Berenson. She's in prison in Peru. She's trying to overturn her life sentence for treason. Her retrial is under way at a civilian court in Lima. A verdict is due at any time now. Prosecutors allege that Berenson had ties to leftist guerrillas. She insists she's innocent. The United States has pushed for the retrial after a secret military court sentenced Berenson to life in prison back in 1996.
We have just received word from Lima, Peru that Berenson has been convicted. We have not received word on the extent of the sentence, which could range from 10 to 15 years to life.
Well, in southern Russia, locusts are swarming tonight across hundreds of thousands of acres of crop land. Kremlin officials say the insects have attacked some 660,000 acres. Moscow has budgeted $300,000 to fight the swarming locusts.
In spite of the vast scale of the problem, it is not expected to affect this year's harvest -- at least so far.
Coming up next, with the next Fed meeting only a week away, Alan Greenspan travels to Capitol Hill. We'll find out what he said to the Senate Banking Committee next. Also, we'll wrap up what was a turbulent day on Wall Street. And a U.S. diplomat has found a new calling in the fight against a deadly disease: Richard Holbrooke's latest job.
(COMMERCIAL BREAK)
DOBBS: In tonight's headlines, stocks rally late in the session, pushing the Nasdaq back above 2,000: a broad, across-the-board rally. The chairman of Walt Disney's film and television studios has resigned unexpectedly. A replacement for Peter Schneider has not yet been named. And a new wrinkle in the troubled merger between General Electric and Honeywell: Senator Jay Rockefeller warns the European Commission that the United States may retaliate if they block the deal.
Looking at Wall Street today, another volatile session, both the Dow and Nasdaq managing to rally: a solid performance from the likes of Philip Morris, Microsoft, Caterpillar, all helping to boost the Dow -- that index up 50 points. Strength in chip stocks, biotechs and Internets helped turn the Nasdaq around. The Nasdaq finished up for a second-straight day. And on the Big Board, advancing issues topped decliners by a 3-to-2 margin.
Also, boosting markets today a strong forecast for the economy from the Conference Board. The index of leading economic indicators up a solid 5/10 of 1 percent in May. That topped expectations. And as for the treasury market, the 10- and 30-year bonds both higher. The yield, 5.66 percent on the 30-year bond.
The strength in the bond market due in part to comments by Alan Greenspan. The Fed chairman appeared before the Senate Banking Committee. Greenspan told lawmakers that while labor costs are rising there's no evidence it's leading to inflation. That suggests the Fed has more leeway in slashing interest rates once again. The policy- makers will make that decision a week from today.
Peter Viles reports from Washington.
(BEGIN VIDEOTAPE)
PETER VILES, CNN CORRESPONDENT (voice-over): He was summoned to Capitol Hill by the new Democratic chairman of the Senate Banking Committee to discuss the nation's banks, but the questions to Alan Greenspan were about layoffs, consumer confidence and inflation.
SEN. JIM BUNNING (D), KENTUCKY: I want to ask you the question I always ask you, Chairman Greenspan, about inflation.
VILES: Greenspan acknowledged labor costs and energy prices are spiking, but he maintained overall inflation is not.
ALAN GREENSPAN, CHAIRMAN, FEDERAL RESERVE BOARD: We've tried to trace the movement of energy costs into prices. We find that almost all does not go into final goods prices but is squeezing profit margins.
VILES: There was this on layoffs.
SEN. CHUCK SCHUMER (D), NEW YORK: How, in general, historically, have layoffs affected consumer confidence?
VILES: Greenspan acknowledged first-time jobless claims, running over 400,000 a week, do show that layoffs are rising, but he said the best measure of consumer confidence, consumer spending, still hasn't buckled.
GREENSPAN: We have not yet seen any real serious deterioration in the actions that people take.
VILES: On the main subject of the hearing, banking, Greenspan and his fellow federal regulators portrayed banks as under some pressure from the weakening economy, but still relatively healthy by historical standards.
JOHN HAWKE JR. COMPTROLLER OF THE CURRENCY: Asset quality for the national banking system is better than it was 10 years ago. The ratio of noncurrent loans -- that is loans that are 90-plus days past due and on nonaccrual status -- to total loans is 1.3 percent compared to 3.3 percent in the first quarter of 1990.
(END VIDEOTAPE)
VILES: Greenspan did do some jaw-boning today on Capitol Hill, pointing out that some banks are now turning down loan applications that they would have accepted not long ago. He said in many cases those loans would be profitable for the banks to make, so it would be in the banks' best interests and in the best interests of the banks' shareholders for them to make those loans -- Lou.
DOBBS: Trying to keep the money flowing.
VILES: He sure is.
DOBBS: All right, Pete, thanks. Peter Viles.
Well, topping tonight's "MONEYLINE Movers" is AOL Time Warner, the parent of this company, this network. AOL gaining nearly $3 a share today. CEO Gerald Levin telling Reuters today that a decline in advertising revenues has stopped and AOL is on track to meet earnings estimates. But Levin came short -- came up short of forecasting a rebound in advertising revenue. The best he would say is that it's "stabilized."
And Lennar rising more than $4 a share today: the homebuilder raising profit targets through 2002 because of strong demand and a backlog of orders.
Tellabs plunging more than $5 a share today, one of the biggest percentage losers on the Nasdaq today as well. As we reported to you last night, it warned sales and earnings will fall far short of estimates.
And eBay rising more than $6 a share. Merrill Lynch's Henry Blodgett raising earnings estimates because of strong Web traffic. EBay's stock is on a roll. It's doubled over the past three months.
Feels like the old days, doesn't it?
Well, more warnings hitting after the closing bell: Chip-maker TransMeta slashing sales projections in the second quarter. TransMeta saying revenues will skid by as much as 45 percent. The company blames a slowdown in shipments to Japan. The stock hammered in after- hours trading, now down more than $4 1/2.
And a late-day warning from Exodus Communications. The Web hosting company cutting revenue forecasts for the second quarter and full year, saying business conditions remain "challenging." Exodus also says it will post a steeper-than-expected loss. Shares of Exodus closed at $2.25. It's 52-week high: $69 a share.
Well, that warning came as no surprise to one Internet analyst by the name of Jeff Camp of Morgan Stanley. Just yesterday, he admitted his positive outlook on Exodus for the past year was wrong. In Camp's report, called "Waiting Too Long to Exhale," he writes: "There are few moments in my career that rival this one in its difficulty and unpleasantness. Elbert Hubbard said, 'The line between failure and success is so fine we scarcely know when we pass it.'" End quote.
Joining me now, Jeff Camp. Good to have you with us.
JEFFREY CAMP, MORGAN STANLEY: Thanks, Lou. Thanks for having me on.
DOBBS: Making a, as you put it, saying very succinctly you were wrong -- we don't often see an analyst do that. What provoked you to do it?
CAMP: Well, you know, I think it's interesting. This was obviously an anguishing change for me, and nobody likes to admit when they're wrong. But you know, as an analyst, I can hope to get everything right, but I'm not going to. And I thought that, you know, if I was going to keep the trust that I have with my clients, if I was going to keep that relationship, I needed to be honest with them and let them know.
DOBBS: Well, when you wrote that, what was the reaction of your bosses? That was the first thing I thought.
CAMP: You know, I have to tell you I have been really pleased with the management at Morgan Stanley. They have just been terrific. You know, when you write something like this...
DOBBS: Should we say, "pleased so far," Jeff?
CAMP: No, I don't think. I've had, you know, extensive conversations in the last couple of days, and you know, it's been terrific. You know, when you write something like that and you know it's going to be public, you get worried. And I've had, you know, numerous calls from my management saying, you know what, that was the right thing to do and we're glad you did it.
DOBBS: What about the sell side?
CAMP: You know, it's been interesting. When you say "the sell side," you mean other analysts?
DOBBS: Right.
CAMP: Well, I haven't really had much interaction with the other analysts. Nobody's come out.
DOBBS: Nobody's picked up the phone and said, "Hey, Jeff"?
CAMP: That I haven't had yet.
(LAUGHTER)
(CROSSTALK)
CAMP: Well, I've had a lot of e-mails. People -- people who...
DOBBS: I'm going to have to be very specific with you.
CAMP: Yeah. People -- well, if we're talking about buyers of the stock, that's been a different story. The retail buyers, I would say, the individual investors, you know, the people that we see every day are angry. And there's no question about it. To be honest, they have a right to be angry and that's where the apology came from.
DOBBS: Well, at this point, do you think other -- you're going to have other apologies on your way soon, or do you feel pretty comfortable about where you are overall?
CAMP: I feel pretty comfortable where I am. I mean, look, I've been an analyst for 10 years. I have actually a background in bear markets. I ran our Asian telecom group for four years during the Asian crisis, so...
DOBBS: That's a definite background.
CAMP: Right. So I've seen this. And you know, I don't get everything right, but when you really get something wrong like this, you have to stand up and say that.
DOBBS: Well, my compliments to you...
CAMP: Well, I appreciate that.
DOBBS: ... and I think certainly most people would say the same thing.
Now, you downgraded to neutral on it.
CAMP: That's right.
DOBBS: Why not just outright sell?
CAMP: Well, you know, one of the issues that we're wrestling with, and I think as the whole investment community, is that there is virtually no visibility in my area. And a downgrade to a sell would be me saying I thought the company was going to be insolvent. DOBBS: Right.
CAMP: And I just don't know that. You know, I would legitimately think that there's a pretty good chance...
DOBBS: We should probably point out, since we're talking about the company, Exodus, it has -- what? -- a billion dollars in cash at this point.
CAMP: That's right. That's correct.
DOBBS: So we shouldn't start anything by just...
CAMP: Exactly, and that's not the message I want to send. What I wanted to send was we have a situation where we don't think the second quarter is going to be met, we think that visibility is poor, and we're going to have to revise down numbers. I couldn't (UNINTELLIGIBLE) tell people to buy it still.
DOBBS: Right. Well, Jeff, thank you very much for joining us, and again, our compliments.
CAMP: Well, I wish there were different circumstances. Thanks for having me.
DOBBS: I think we all do.
(LAUGHTER)
I think we all do. Jeff Camp, Morgan Stanley.
Coming up next here, giants of corporate America find a new way to cut costs: They're targeting retirement plans. We'll tell you about what's happening to 401(k)s.
The battle for orders escalating at the Paris Air Show. Boeing trying to keep pace with Airbus. Also,a top diplomat throws his influence into the worldwide fight against AIDS.
(COMMERCIAL BREAK)
DOBBS: At a time when workers are growing more dependent on 401(k)s for their retirement, many companies are contributing less. Susan Lisovicz looks at one of the newest forms of creative cost cutting that is still hurting.
(BEGIN VIDEOTAPE)
SUSAN LISOVICZ, CNN CORRESPONDENT (voice-over): Wage freezes and layoffs, the obvious consequences of a slowing economy. Experts say there is a less obvious, but just as painful, sign of industry's relentless search to cut costs in a weakening economy. K-Mart, Campbell Soup, Lucent, and Sears Roebuck are among the growing number of big companies that are contributing less to employee 401(k) savings plans. Campbell says the overall reduction is partly a reflection of its leaner work force, while K-Mart's contributions are tied to company performance.
GARY SCHATSKY, OBJECTIVEADVICE.COM: They are looking to increase their profits and one of the easiest places they can look is by cutting back on benefits and the interesting thing about cutting down on 401(k)s is that many employees don't even understand that they are being cut back. They've gotten a pay reduction and they don't even recognize it.
LISOVICZ: This, as workers become more dependent on those retirement programs because so many employers have cut back on traditional pension benefits. Pension benefits, meanwhile, for top executives are in some cases fatter than ever.
JUDITH FISCHER, EXECUTIVE COMPENSATION ADVISORY SERV.: There is extreme competition amongst corporations to recruit and retain executive talent, and these issues of executive supplemental retirement schemes are part of the package that corporations are offering to executives to lure them to the employer of the corporation.
LISOVICZ: The phenomenon allows executives to enjoy what has been called eternal wealth.
(on camera): But it's a far grimmer world for the rank and file. Employees are paying the price of a slowing economy. Not only are they not getting pay raises, in many cases they are getting lower quality benefits. And in the case of 401(k) contributions, sometimes they don't even know it.
Susan Lisovicz, CNN financial news, New York.
(END VIDEOTAPE)
Delta Air Lines pilots have tonight ratified a new tentative contract. The agreement would make the pilots the highest-paid in the industry. The five-year deal calls for pay hikes averaging 11.3 percent in the first year, and 4.5 percent every year after that.
In other corporate news, American Airlines and its 23,000 flight attendants resumed their contract talks today, ahead of a July 1 strike deadline. The two sides remain divided over -- what else -- pay and benefits.
The possible strike comes at a dire time for the airline industry. Donald Carty, who's the CEO of American's parent company, AMR, today said the airline industry could lose half-a-billion dollars in just the second quarter, citing "severe financial pressure."
The trans-Atlantic rivalry at the Paris Air Show is escalating a bit. Boeing rang up its first sale today, Japan Airlines buying three Boeing 777s, a deal valued at $525 million. The tally of orders for Europe's Airbus continues to grow, adding an order from Brazilian airline, TAM, worth more than $700 million. Coca-Cola tonight joining the fight against AIDS in Africa. Coke says it will allow its trucks to deliver condoms and AIDS-prevention literature, in conjunction with a United Nations campaign against the disease. The company will also provide testing kits and care for people living with AIDS. Of the more than 36 million people worldwide infected with AIDS and HIV, two-thirds live in Africa.
Coke's announcement comes just a day after Daimler-Chrysler promised free AIDS drugs to its South African employees and their families. What's more, Microsoft Chairman Bill Gates and his wife Melinda have just donated $100 million to the United Nation's Global AIDS and Health Fund.
And a top American diplomat is taking a lead role in the campaign against the disease. He's the former U.S. ambassador to the United Nations, Richard Holbrooke. He is the new president and CEO of the Global Business Council on HIV and AIDS. And also, the vice-chairman of Perseus, back on Wall Street and doing good working a well.
Dick, it's good to have you back with us.
RICHARD HOLBROOKE, CEO, GLOBAL BUSINESS COUNCIL: Good to be with you again, Lou.
DOBBS: What could we expect from your organization now? The United Nations being very aggressive. The CDC obviously very aggressive. What will be your mission?
HOLBROOKE: Well, the Global Business Council, which I'm going to be running, has been in existence for four years but it only has 20 corporate members. In the last week, Coca-Cola has joined. AIG has joined. AOL Time Warner, a company you maybe familiar with, will be heavily involved. I've been working with Bob Pittman and your other colleagues on that.
But we're going to try to grow this organization from 20 companies to 200. Let me be clear here: governments have a role and Bill Gates's gift is enormously gratifying. But businesses also have a role. And they have a role for three reasons right off the bat.
No. 1, they have to do something about their own employees. Coca-Cola, which is the largest foreign employer in Africa, 100,000 employees, now tells me they have to hire two people for every senior job in the company because of AIDS. So, it's a good business practice to deal with their own workplace.
Secondly, they have the corporate responsibility in the society they move in. So it's very important that business play a major leadership role. And at the urging of Secretary-General Kofi Annan, I've taken this private position in addition to my work on Wall Street.
DOBBS: As you know very well, businesses can often do, much that governments cannot. What will be your first goal? Your first task?
HOLBROOKE: My first task will be to invite as many corporations as are willing to join the Global Business Council -- very grateful for the opportunity to unveil it here today on your program.
Secondly, to work out with those businesses, business guidelines so that they can work on educating their are own workers. You mentioned DaimlerChrysler and Coca-Cola. Anglo-American is starting a new program. (UNINTELLIGIBLE) of Brazil has started one. I need to footnote here that it isn't just Africa. There are countries like India and China and Russia and Ukraine, which are in denial.
Third, I want to encourage companies to take a social and corporate responsibility because it's not only good for business, but here, Lou, we're facing the worst health crisis in 700 years since the black death of the 14th century. And more than that, a disease which is more than a disease. It attacks society. It attacks economies. And I'm very pleased to see companies like Coca-Cola getting heavily involved.
DOBBS: And I'm very pleased to see a man of your capacity leading the charge.
Richard Holbrooke, good to have you with us.
HOLBROOKE: Thanks, Lou.
DOBBS: Coming up on MONEYLINE: the attorney general gives a major boost to tobacco stocks. We'll have the details for you in tonight's Sectors Report.
(COMMERCIAL BREAK)
DOBBS: In tonight's "Sectors Report," tobacco. Major tobacco stocks today rallied. The Justice Department yesterday announcing a strategy shift, saying it would look into a settlement with the industry. Analysts say the industry clearly has the upper hand since President Bush himself criticized that case during his campaign. Some investors never thought the Justice Department would win the case, but talk of a settlement sent stock prices even higher: Philip Morris surging nearly $2, RJR soaring nearly $2 1/2 a share. British American Tobacco up fractionally.
Still to come here, Las Vegas casinos change their mind. Now they're trying to change the law: Internet gambling on your desk top.
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DOBBS: Nevada has passed a law moving it closer to legalized online gambling than any state in the country. But Internet gambling is already a multibillion dollar market, mined exclusively by operators outside the United States. Steve Young has our report.
(BEGIN VIDEOTAPE)
STEVE YOUNG, CNN CORRESPONDENT (voice-over): It's not legal yet but it sure looks likes Internet gambling run by U.S. casinos has arrived. You can play slots for fun or would you prefer card games? JAN JONES, HARRAH'S ENTERTAINMENT: We actually have in place an entire virtual casino where customers who are looking to learn more about Harrah's or even our total rewards members could go in, play the games, of course, it's just for fun and prizes. There's no betting or actual cash involved.
YOUNG: Not yet, but with analyst estimating that Caribbean, English and Australian operators are raking in at least $1.5 billion a year in Internet wagers, projected to rise to 5 billion by 2003, you can bet U.S. casinos want some of the action. Now Nevada's governor signed a bill authorizing state gaming officials to check it out.
Though U.S. officials say Internet gambling violates the federal wire act. But analysts expect Nevada operators to get the green light in 18 to 24 months. Some of the first examples on the Web have been posted for U.S. casinos by a company called Wager Works.
ANDREW PASCAL, CEO WAGERWORKS: We think that if at some point in the future, I should say when at some point in the future it's deemed to be legal, then we can allow people that are of age to actually participate and gamble online.
YOUNG: The industry now seems to believes Internet gambling wouldn't cannibalize casinos, but could boost attendance and benefit other companies too.
MARK FALCONI, BEAR STEARNS: Technology companies that are able to establish the software that are going to prohibit underage gambling that are going to be able to identify where gamblers are actually placing their bet from.
YOUNG: Such as Wager Works, Virt Game, and the slot machine makers, IGT, WMS and Anchor Games.
(END VIDEOTAPE)
Park Place Entertainment, MGM, Mirage, and Harrah's have all invested in technology firms working on secure Internet gambling. But the American Gaming Association, concerned about underage and problem gambling, thinks computer betting is a crap shoot -- Lou.
DOBBS: I can remember years ago, and I mean a decade or more, John Malone saying that he felt gambling would be a big application. And here we go, apparently.
YOUNG: Well, they say this is going to be big on interactive TV as well.
DOBBS: I'm amazed that people would trust the end other end of that line, but anyway, thanks. Steve Young.
Coming up next, your e-mails and "Ahead of the Curve"
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DOBBS: Tomorrow economic reports, the international trade deficit for April, economists expect it to narrow slightly from March. Weekly jobless claims also expected to decline. Also watch for quarterly earnings from Morgan Stanley, Bed, Bath And Beyond, and Research In Motion.
Now for some of your comments. Dave, from San Jose writes about a story we ran on Herb Kelleher of Southwest Airlines. "No matter how good Herb Kelleher is, a traveler must still get to the airport well over an hour early in order to assure a seat on the plane that is not in the back row near the engine. I am willing to pay a little more to an airline that has assigned seating to assure that I will arrive well-rested and not completely frazzled."
Ben from Ross, North Dakota, weighs in on General Electric, Honeywell. "Jack Welch," he says, "a great leader I have studied has no business allowing the president to go to bat for his merger. I believe this is out of character for Mr. Welch. He should cut his losses and ours. Call it off. This merger is a personal crusade that should not be forced on to the public's agenda."
And Marty gives us his take on earnings season, quote, "Just because a company falls short of somebody's expectations, that does not mean the company lost money, right? Maybe they actually made $10 billion instead of 12. For most of us, we don't care. Give us cheaper gas and utilities, and throw away the mystical crystal ball. Let's have a little pep talk for the market." Thank you, Marty. We'd like to hear from you. E-mail us at moneyline@cnn.com.
And that's MONEYLINE for this Wednesday evening. I'm Lou Dobbs. Good night from New York. "CROSSFIRE" is coming up next.
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