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Lou Dobbs Moneyline
Dow Falls 22.61 to 10,571.11; Nasdaq Slips 7.92 to 2,140.80; E.U. Regulators Block GE-Honeywell Merger
Aired July 03, 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, a crushing blow to Jack Welch and Honeywell, but an opportunity for George David and United Technologies and the potential for a transatlantic trade war. We'll have a report from the OPEC meeting in Vienna and have the latest forecast on summer gasoline prices. And the man who brought you the thriller in Manila, the rumble in the jungle, joins us to talk about the great brawl of China, Don King.
ANNOUNCER: From the heart of New York City, this is LOU DOBBS' MONEY LINE. Here now, Lou Dobbs.
DOBBS: Good evening. GE-Honeywell, the biggest deal of Jack Welch's career, is officially dead. The European Commission this morning voted to block the takeover, the first time that the E.U. regulators have acted alone in blocking a deal between American companies. And we are right now awaiting an announcement from Honeywell's board, apparently on the fate of CEO Michael Bonsignore. It is a stunning turn of events for a saga that had already set a new benchmark in corporate intrigue.
We begin our coverage tonight with Allan Chernoff.
(BEGIN VIDEOTAPE)
ALLAN CHERNOFF, CNN CORRESPONDENT (voice-over): After weeks of failed negotiations with GE and Honeywell executives, the suspense was all but gone as European competition commissioner Mario Monti announced the decision.
MARIO MONTI, EUROPEAN COMPETITION COMMISSION: This merger, as it was notified, would have severely reduced competition in the aerospace industry and resulted ultimately in higher prices for customers, particularly airlines.
CHERNOFF: Market dominance was the problem the Europeans saw, GE in jet engines, Honeywell in avionics. Combined, the European Commission argued, the businesses could have even more clout if GE's aircraft division, which leases to major airlines, pressured suppliers to favor Honeywell avionics and GE engines. GE's response, "We strongly disagree. The facts just don't support these assertions." Honeywell said it is deeply disappointed.
Announced last October, the mega merger sailed through the U.S. Justice Department's antitrust division with relatively minor modifications. Commissioner Monti denied the European rejection was part of a political agenda.
MONTI: This does not mean that one authority is doing a technical analysis and the other is pursuing a political goal, but simply that we might interpret facts differently. I am determined to strengthen our bilateral cooperation in the future.
CHERNOFF: But if anything, the rejection of GE and Honeywell's plans is raising concerns that Europeans might block future mergers between U.S. corporations.
MICHAEL REGAN, CREDIT SUISSE FIRST BOSTON: I think it is a dangerous precedent set by the Europeans to sort of put their heads in the sand and withdraw a little bit from the nature of global competition on the world stage.
CHERNOFF (on camera): In the aftermath of this affair, the thinking in the business world is that GE walks away remaining one of the most potent companies on the globe. Honeywell, though, emerges bruised. Moody's Investors Service acknowledges that, saying it is now considering lowering the company's bond rating -- Lou?
DOBBS: Yet we saw the stock of GE today decline, something of a surprising development, even though it was light trading. How impaired is GE as a result of this? Jack Welch certainly taking a hit. How about GE?
CHERNOFF: Taking a bit of a hit in his reputation but everybody is saying Jack still certainly has a fantastic career and GE still a very strong company, solid earnings continuing in spite of the economic slowdown, people saying the company is going to keep moving ahead.
DOBBS: Although this would have been a major, as the saying goes, accretive boost to GE as a result.
CHERNOFF: No doubt about it and a lot of disappointment there.
DOBBS: Right. Allan, thank you, as always.
Well, as await word from Honeywell's board on the fate, perhaps, of Michael Bonsignore, the CEO, Peter Viles is here to tell us what is probably next for this company -- Pete?
PETER VILES, CNN CORRESPONDENT: It's been very difficult to predict what is next in any of this drama. But two big questions hanging over this company -- who's going to run it? Will it be Michael Bonsignore or perhaps Larry Bossidy? And just as big a question for investors, is it still for sale? And if it is for sale, is it for sale in one piece, perhaps to United Technologies, or will they try to avoid the Europe Commission and Mario Monti and perhaps sell it off piecemeal? There was a lot of discussion on Wall Street today that perhaps that is the way to go, to break this company up and sell it piece by piece. DOBBS: "The Wall Street journal" reporting particularly that Larry Bossidy, the former head of Allied Signal, who orchestrated that combination coming back, that looks like pretty much a clear signal, a very overt signal, perhaps, that Mr. Bossidy might be already set to move in, correct?
VILES: It certainly does, although you would think a company ready to make an announcement like that would have made it by this time on a holiday evening. So you would assume there is some substantive discussions right now in that boardroom. And as we say, the twists and turns of this story, it's very hard to say what's next.
DOBBS: United Technologies certainly wanted not to be next, but wanted to be first in this combination. They, with the vigor and the effort they put into derailing the GE-Honeywell deal, it seems fair to assume that they have a significant interest in moving ahead with Honeywell.
VILES: Sure. The question there is do they want the whole thing or having seen what happened in Europe, perhaps they think that might be difficult for them and they would come back, perhaps, with a different offer, a lower offer, and Larry Bossidy or Michael Bonsignore or somebody else is going to have to decide is it worth less now than it was in October? So a lot of drama left in this story.
DOBBS: And as you say, on a pre-holiday eve, I don't know if pre-holiday eve would be quite the way to -- it would be a holiday eve, not a pre-holiday eve. It seems unusual that that board is meeting and taking this long. We had expected that phone call, that conference call to be at what time?
VILES: There had been some guidance we would have news from the company by 5:30.
DOBBS: 5:30.
VILES: But if you remember back to October, the way this thing all happened then did not reflect or respect a business timetable at all. Even that was an 11th hour weekend deal. So...
DOBBS: Nothing has gone according to script on this one.
VILES: Not at all.
DOBBS: Pete, thanks very much. Peter Viles.
Well, on Wall Street today, investors were focused more on profit warnings than the GE-Honeywell debacle. Or, perhaps, the real focus, in fact, was the Fourth of July holiday. The markets today drifted lower in a short pre-holiday session. Jennifer Westhoven has the story.
(BEGIN VIDEOTAPE)
JENNIFER WESTHOVEN, CNN CORRESPONDENT (voice-over): A round of profit warnings set a down beat tone for the day. Most of the disappointments came from Internet and software companies, raising worries there's no quick comeback in sight for those sectors. Internet Security Systems sank 40 percent on a warning it will lose even more money this quarter. Other high tech firms had some nasty surprises, as well.
PETER DOYLE, KINETICS NEW PARADIGM FUND: These companies are selling a product that hits a wall, the demand falls off very dramatically and it may not come back ever and I think that the valuations for many of the technology names are very extended and are likely to come down.
WESTHOVEN: The selling overall was modest, though. The Nasdaq slipped 7 to 2,140 for the day. Volume was light with the closing bell ringing three hours early a day before the Independence Day holiday.
A similar story for Dow Jones Industrial Average, closing out the day down 22 at 10,571. DuPont was the Dow's top percentage loser after it said Q2 profits won't meet forecasts. The chemical giant also said demand is weak, not just in the United States, but around the world.
RICHARD CRIPPS, LEGG MASON: After the bear market has bottomed, which we think it did at the beginning of April, typically earnings are very difficult, meaning your comparisons with a year ago are very hard and there's really no momentum in the economy yet to cause earnings to increase.
WESTHOVEN: DuPont fell, as did IBM and US Airways, which fell nearly 12 percent, its second day of losses after it said it won't get a $4.3 billion buyout from UAL. Bucking the trend, casket maker Hillenbrand gained on stronger than expected profits.
(END VIDEOTAPE)
WESTHOVEN: One big question is if the potential weakness of the third quarter profits is already priced into the stock market. In about two weeks, earning period starts and with it a blitz of conference calls and corporate forecasts. And many analysts say the long awaited visibility is coming, but it's not going to be pretty -- Lou?
DOBBS: Well, if it's, the visibility is so difficult, maybe they don't know for certain. Let's be optimists here. Think about it being a bright sunny day. And the earning season does get underway and with already the confession season now behind us, this, it looks like it's going to be an intriguing third quarter. We can say it that way, at least.
WESTHOVEN: There are a lot of analysts, too, including First Call, who say they really think that the estimates for that third quarter for the growth, they are really going to have to come down and come down hard.
DOBBS: OK, Jennifer. We'll see. As always, Jennifer Westhoven, thanks.
In economic news, the second encouraging report on manufacturing -- see -- in as many days, factory orders jumping two and a half percent in May. That was far stronger than expected and the best monthly performance in nearly a year. But there was also some encouragement from auto workers, auto makers, rather, today. Ford sales in June fell sharply, but the company reported that sales of the Explorer hit a record despite all of that bad P.R. and safety concerns. Chrysler posting its first positive month of sales since last fall. And General Motors' results falling short of expectations, but sales of its SUVs and minivans surged.
Ahead here on MONEY LINE, the great brawl of China. It could only come from the mind of Don King. I'll be talking with the legendary boxing promoter about his upcoming bout in Beijing. And, a deal between U.S. companies actually approved by the U.S. government killed by European regulators. We'll talk about the prospects of U.S. retaliation, the potential of a trade war with Europe.
ANNOUNCER: Coming up, Lou speaks with former Defense Secretary William Cohen.
(COMMERCIAL BREAK)
DOBBS: The European decision to block the GE-Honeywell deal captured attention certainly not just on Wall Street. It has also turned heads on Capitol Hill as well. Tim O'Brien reports from Washington.
(BEGIN VIDEOTAPE)
TIM O'BRIEN, CNN CORRESPONDENT (voice-over): Washington reaction to the rejection of the GE-Honeywell deal is mixed depending on where one sits. In Congress sentiment to retaliate.
SEN. ROBERT TORRICELLI (D), NEW JERSEY: If this was to happen to a company based in New Jersey, as Honeywell is with many of its operations and General Electric in our neighbor of Connecticut, I will tell you, we are lying in wait.
O'BRIEN: But the most vociferous opponent of the deal wasn't in Europe, it was in Connecticut by United Technologies, who also has expressed interest in acquiring Honeywell.
EDWARD GRAHAM, INSTITUTE FOR INTERNATIONAL ECONOMICS: To the extent that the European Commission was acting on behalf of competing firms, it was another U.S. firm. So New Jersey might be lying in wait, but at this point Connecticut would be applauding.
O'BRIEN: The United States and Europe disagree on many issues, from nuclear weapons to genetically modified foods. Trade and reconciling anti-trust differences, however, have been areas of cooperation, until now.
GRAHAM: And I think it would be a very serious error at this point to take this one case and to use this as a basis for derailing what has been quite a constructive process.
O'BRIEN: While critics accuse the Europeans of protectionism, others attribute the rejection to a failure to communicate, aggravated by the change in administrations in the U.S. last January.
PAULA STERN, THE STERN GROUP: We really didn't have anyone sitting in the chair at Justice overseeing the harmonization and coordination that is very helpful in avoiding misunderstandings like this one.
O'BRIEN: Late today, administration officials said the GE- Honeywell merger would be have pro-competitive and the E.U.'s rejection reflects a significant point of divergence with the U.S. on antitrust policy.
(END VIDEOTAPE)
O'BRIEN: Still, many international trade experts say any kind of retaliation would likely be counterproductive, placing in jeopardy a relationship that brings the United States some $165 billion in export earnings every year -- Lou?
DOBBS: Tim, thank you, very much. Tim O'Brien from Washington.
And for more now on the potential tension with Europe over trade and regulation, we are joined by former Defense Secretary William Cohen, also the head of The Cohen Group. Good to have you with us, Bill.
WILLIAM COHEN, THE COHEN GROUP, FORMER DEFENSE SECRETARY: Lou, good to be here again.
DOBBS: The, you're no stranger to a certain amount of rhetoric in Washington, D.C., but this seems a little more strident, perhaps a little more voluble than usual.
COHEN: It's a little more voluble because of the prestige and size and influence of GE itself as well as Honeywell and the way in which it was handled, because the United States did approve it and the U.S. is not usually in favor of approving mergers that are going to be anti-competitive and cost more to the consumers. So there's some pretty strong feelings here. I think right now we will see a waiting period to determine whether this was a full Monty, so to speak, or half Nelson being applied by the Europeans. And I would think that as time moves on and we see whether there are other suitors for Honeywell, whether it's United Technologies or others, whether that were to go through or be blocked by the E.U., that would have a major impact if they were then to raise another objection and block a future merger. I think they've got one here. A second one would be pretty catastrophic, I think.
DOBBS: No two strikes, in other words?
COHEN: No two strikes.
DOBBS: All right, let's turn to another development, that is the United Nations making it very clear to Secretary Powell that there would not be smart sanctions against Iraq, clearly a victory for Iraq and the oil for food program. Your reaction?
COHEN: It's clearly a defeat for the United Nations. Here we have Saddam Hussein, who has poked one finger in one eye of the United Nations by saying the inspectors are out. Now he's stuck another finger in the eye by saying take the sanctions off. And the U.N. basically trying to accommodate him.
We have a situation in which Saddam was able to say free me from sanctions before I kill again, and that means he's killing hundreds, if not thousands, of his own people by depriving them of medicines, clothing, other types of humanitarian assistance. So he is doing this and unfortunately it's bringing discredit to the U.N., not credit.
DOBBS: And at this juncture, what can the United States, what can the Bush administration do about it?
COHEN: I think we continue to point out that the U.N. has its credibility on the line. They cannot in the future expect anyone to have any kind of faith and confidence in U.N. resolutions if the U.N. itself is unwilling to enforce them. So I think we have to continue to raise high the roof beam as far as our voice and what the U.N. is doing in this case.
DOBBS: And Robert Hanssen to enter a plea of guilty this Friday. A lot of discussion about that. It appears that definitely a plea bargain arrangement has been arrived at. Do you think it's the right course?
COHEN: Well, if, in fact, he has agreed to fully cooperate and disclose everything that he is alleged to have given up to the Russians, that would be in our overall interests to find out exactly how much has been compromised, where, when and what countermeasures that have been taken and what we have to do to correct it. So under those circumstances, it's probably in the best interests of the United States to arrive at that kind of a plea agreement, if it goes through.
DOBBS: And to avoid the death penalty here for what is the most severe case of treason certainly in modern history?
COHEN: If he, in fact, did what is alleged to have occurred, that he alleged to have committed, he certainly cost the lives of a number of people and putting our lives in jeopardy. This is a very serious case and probably the most serious that we've seen in a long, long time. Nonetheless, it's important to our national security interests to find out exactly how much damage has been done, when it was done and what measures have been taken to actually counter our efforts. That's very important to future security of our country as well.
DOBBS: Bill, thank you very much for being with us.
COHEN: Glad to be here.
DOBBS: Happy Fourth of July. COHEN: Same to you.
DOBBS: Bill Cohen.
Coming up next here, we're back to square one. Microsoft's latest product could take it back on a collision course with those trust busters. And later, a medical breakthrough in the fight to conquers the nation's biggest killer.
(COMMERCIAL BREAK)
DOBBS: Microsoft's anti-trust headaches are far from over despite last week's big victory in the Court of Appeals. While the immediate threat of a breakup is ended, Microsoft faces a tough test just as it rolls out some of its newest products. Steve Young has our report.
(BEGIN VIDEOTAPE)
STEVE YOUNG, CNN CORRESPONDENT (voice-over): The states that filed an antitrust suit are increasingly concerned about Microsoft's forthcoming Windows XP and its .net strategy to dominate the Internet. And they've received powerful ammunition from the Court of Appeals which last week, in effect, reversed itself. Previously it had said the company could bundle anything into Windows, no matter what the impact on competitors, if there is some "plausible consumer benefit." Now, when a new judge is assigned to the case, he'll have to use a tougher test because the Court of Appeals said its own "plausible benefit" standard was inconsistent with antitrust law.
KEVIN ARQUIT, CLIFFORD CHANCE ROGERS & WELLS: Courts do have to be willing to look into software design to resolve antitrust questions. And the court said instead you have to do a balancing test. You have to look what the benefit to Microsoft is of blending the two together versus the loss to consumers that they no longer have the choice they otherwise would have.
HARVEY SAFERSTEIN, MINTZ, LEVIN: It sets the bar quite high for Microsoft to show that when it integrates something it must be able to justify why and how it's doing that, especially if the government, which it has, alleges that that integration is improper.
YOUNG: Microsoft rejoiced in the reversal, at least for now, of Judge Thomas Penfield Jackson's breakup order and his rebuke and removal by the Court of Appeals. But those same conservative judges, seven to nothing, agreed with Judge Jackson that Microsoft had monopoly power and abused it. They said Microsoft broke the law in its dealings with Intel, Apple, Sun, with Internet access providers, PC manufacturers and other software companies. Instead of winning customers on the merits of its products, the judges said in some instances Microsoft used technological tricks to thwart competitors. A breakup remains Microsoft's biggest fear.
(END VIDEOTAPE)
YOUNG: But antitrust lawyers say the Court of Appeals decision could usher in some sort of software watchdog office. The company has called that a bureau of Microsoft which ranks right up there with nightmare number one -- Lou?
DOBBS: Nightmare No. 1 being the breakup?
YOUNG: Right.
DOBBS: I think you'd probably get them to make an even trade on that. At this point we're still left with a basic issue, the court proceedings moving so much more slowly than technology is advancing and the competitive nature of the marketplace.
YOUNG: Which is why the states were saying you should divide the company, because otherwise you would slow down Microsoft with this watchdog thing.
DOBBS: Well, perhaps speeding up the courts wouldn't be a bad idea. What do you think?
YOUNG: This has moved faster than most antitrust cases.
DOBBS: And why aren't we all just warm and fuzzy about that? Steve, thanks very much, Steve Young.
Coming up next, it's the size of a grapefruit, meant to replace an ailing heart. We'll be telling you about a medical breakthrough in Kentucky. Also, the big loser in today's merger, General Electric, as training ground for corporate America.
(COMMERCIAL BREAK)
DOBBS: A medical breakthrough making news tonight. Doctors in Louisville, Kentucky have inserted the first self-contained artificial heart. Officials at Jewish Hospital, where the seven hour procedure took place yesterday, said the patient is awake and responsive today. The artificial heart is the first completely implanted artificial heart that totally replaces the function of the human heart. The grapefruit sized device is made of titanium and plastic. It is powered by an internal battery that is continually recharged by an external battery pack. The heart is manufactured by the medical device company Abiomed, which gained more than $3 a share today.
A disaster in the skies to report today. A Russian passenger plane crashed and burst into flames in Siberia, killing all 143 people on board. That plane went down about 21 miles from the Siberian city of Irkutsk, Russian government officials saying none of the 133 passengers and 10 crew members survived the crash.
Another flight to report today, closing out a tense period in U.S.-China relations. The final pieces of that EP3 spy plane that collided with a Chinese jet fighter several months ago left China. The pieces loaded onto a cargo plane that headed for Hawaii after a stopover in the Philippines. The aircraft will be reassembled in Georgia and will be returned, we're told, to service. U.S. officials had hoped to repair the EP3 in China, but Beijing would not allow it to be flown out of China. Coming up in the next half hour, all of the details from a shortened day on Wall Street. Also, OPEC ministers meeting in Vienna. We'll have the results for you and a live report from Vienna. And a boxing promoter made in America takes his worldwide, world class act to China. Don King on the title bout known as Ragin' In Beijing or simply The Great Brawl of China.
(COMMERCIAL BREAK)
DOBBS: In tonight's MONEYLINE headlines, the European Union officially rejects the GE-Honeywell deal, and Honeywell board, meeting to discuss the future leadership of the company.
Several earnings warnings hitting Wall Street today, despite a shortened session. Those earnings warnings, along with the GE- Honeywell deal, pushing markets lower on the day.
And no surprises from OPEC today as its members agree to maintain current limits on oil production.
The Dow and the Nasdaq finished lower on a shortened trading session ahead of tomorrow's July 4th holiday. Impacting trading, several profit warnings, plus the E.U. rejection of the Honeywell-GE deal. The Dow spent most of the day in the red, weighed down by Dupont, IBM, Philip Morris -- the index losing 22 points. Pressuring the Nasdaq today, those tech warnings, particularly from the software sector, and the index down eight points on the big board, advancing issues, beating out decliners by only a very slim margin.
Pre-holiday winners on the Nasdaq today included Qualcomm. It jumped more than $6 a share. It's expanding a cross-licensing agreement with Nokia. Nokia will pay royalties to Qualcomm for its third generation digital technology. Multex.com stock today cut in half. The investment research Web site warning sales will fall short of targets because of a slowdown in spending on technology and investor products.
And I-Many, falling more than 30 percent today, the company only one of many Internet software companies to issue profit warnings for this quarter. I-Many stock losing more than 2/3 of its value over the past 52 weeks.
And a quick correction: last night we took a look at Erik Gustafson's stock picks. One of the graphs incorrectly titled "Bed, Bath and Beyond." It should have read Best Buy. Best Buy stock has climbed 53 percent since Gustafson first reported it here on MONEYLINE.
Well, my next guest predicts a summer rally on the way, despite today's negative session on Wall Street. Joining me now, Richard McCabe, chief market analyst at Merrill Lynch.
Dick, good to have you with us.
RICHARD MCCABE, MERRILL LYNCH: Thank you, Lou.
DOBBS: Let's get that rally going.
MCCABE: Any day now. Fireworks might start before July 4th is over.
DOBBS: How profound a rally do you see?
MCCABE: Well, I see a pretty good rally this summer. I think what we're looking at is a two-stage spring-summer rally. We had a pretty good bounce off the early March, early April lows during May and into the early part of June. There's been a pullback since the beginning of June, and I think now we're going to get a second step up in July-August.
DOBBS: ... interrupt you. We have received word that the Honeywell board of directors has just elected Larry Bossidy chairman and CEO of Honeywell, the former CEO, Michael Bonsignore, on the heels of that failed GE-Honeywell deal blocked officially today by the E.U. Michael Bonsignore is out. Larry Bossidy returning to the company as CEO and chairman of Honeywell.
Dick -- we'll be bringing you more details as they're available.
Dick, I want to apologize for the interruption, but our viewers needed to know that right away.
MCCABE: Sure.
DOBBS: In terms of a two stage rally, and in terms of what's going to drive this market, what particulars do you see as influencing the market higher?
MCCABE: Well, I think one thing might be the anticipation, as we go through the summer, that the Fed easing -- the six steps toward easing in the past six months will finally work. And if people look ahead, we tend to get the market to anticipate such things. If we get to the fall and we get some good news that the easing has started to have an impact on the economy, the advance may be over. So very often in the market, anticipation is better than the realization of the fact, and that may be the driving force behind a summer bounce.
DOBBS: What do you say to those people, Dick, though, who say, yes, we've had six rate cuts in six months -- actually, it was just under six months -- yes, we have $40 billion in tax cuts moving back into the private sector, but this really isn't a consumer-led slowdown. It's a reduction in business investment, capital spending. It is a, if you will, a CEO slowdown: contracting spending.
MCCABE: That's it. I think it probably represents a situation where the capital good stocks will have a limited rally, particularly the technology aspect of capital goods, where the overspending, the overcapacity, the oversupply actually exists. But I think that the Fed easing could have an impact on the consumer side, and that might be where the recovery picks up, so some of the consumer cyclical stocks might do very well.
DOBBS: So that's where you're looking for the real drive? MCCABE: I think that's it. A lot of the basic industries, like chemicals, a lot of the consumer cyclicals, like lodging and home furnishings and even some of the energy stocks that have come down a lot in the last month or two might be good rebound candidates in the summer.
DOBBS: So give us a sense of it, proportionately, what you think we're going to see, in the way of a move -- higher here in point terms or percentage terms, for both the Nasdaq and the Dow.
MCCABE: Well, I think on the Dow, which has been the strongest of the major averages over the past six months to a year, it's not far below its all-time high, which was about 11,700, that was set back in January of last year. That, I think, could get up to the old high or maybe even slightly surpass it. So my guess is 11,500 to 12,000 for the Dow. The Nasdaq, I think it could get up to around 2,600 to 2,800.
DOBBS: OK. I think everybody would sign up for that.
MCCABE: It would be a nice move.
DOBBS: Absolutely. Dick, thanks very much.
MCCABE: Thank you for having me.
DOBBS: Have a nice 4th.
Coming up on MONEYLINE: OPEC choosing the status quo on oil production. We'll be going live to Vienna for the details.
And it's considered one of the top corporate training grounds. It is General Electric and the parade of executives who've spread their skills across corporate America, is truly impressive.
(COMMERCIAL BREAK)
DOBBS: In tonight's "Powering America," the state of California able to lift a blackout warning after neighboring states stepped up and provided additional power to California. Earlier today, state officials had warned blackouts would be necessary to prevent collapsing the power grid. Soaring temperatures throughout the Southwest prompted heavy air condition demand and strained supplies.
In other power related news, Pacific Gas Electric asked a U.S. bankruptcy court judge to grant the company several addition months to file a reorganization plan. PG&E filed for protection from creditors back in April.
OPEC ministers today agreed to leave oil production unchanged, keeping the previous supply restrictions in place. The reason, an expected resumption of Iraq's export of crude oil, supervised by the United Nations.
For the details we go now to Vienna, where Charles Hodson is standing by live -- Charles? CHARLES HODSON, CNN CORRESPONDENT: Lou, as expected, the ministers more or less just held the line here. Their decision to keep their production steady at 24.2 million barrels a day was exactly what everyone was expected. They even announced, strangely enough, their final decision before even starting their formal session. The reason, according to the meeting's presidents, they all read recent weak oil prices the same way.
(BEGIN VIDEO CLIP)
CHALIB KHELIL, OPEC PRESIDENT: There was a complete consensus on not increasing production at this stage.
(END VIDEO CLIP)
HODSON: But that might change. Iraq is poised, as you mentioned, Lou, to return to pumping the 2.1 million barrels a day that it is allowed to pump to export under the U.N.'s "Food for Oil" program. A month ago, of course, Iraq had withdrawn that right in order to protest the proposals from the United States and Britain to rework the sanctions, the sanctions regime that the United Nations imposes on Baghdad.
But those proposals are now off the table at the Security Council. But OPEC can take Baghdad's move in pretty much in stride, particularly as demand is likely to pick up now. We're heading towards the fall, and of course, the winter, so prices will likely rise again in the months ahead.
But at least one veteran OPEC watcher says the cartel had better not overplay its hand for too long.
(BEGIN VIDEO CLIP)
MEHDI VARZI, DRESDNER KLEINWORT WASSERSTEIN: Fundamentally, they are defending prices at too high a level. They can carry on doing this through micromanagement, but at some stage, they will face a critical test. And in my view, it is not a question of if they are going to face it, it's a question of when they are going to face it.
(END VIDEO CLIP)
HODSON: If the world economy heads further south and if OPEC is seen to being to blame for that, Lou, then test may come pretty soon.
Over to you, Lou.
DOBBS: Charles, thank you very much. Charles Hodson, live from Vienna. Thank you very much, Charles.
In other corporate news, Apple computer says it will end production of its G4 cube. The PC failed to catch on as Apple had anticipated, despite upgrading the unit. Apple says customers tended to buy its power mac G4 unit instead.
The world's largest bowling alley operator filed for Chapter 11 bankruptcy protection. AMF Bowling Worldwide intends to restructure with the help of $75 million in financing it received from lenders. The company says it intends to keep its 500 bowling alleys open.
More now on GE-Honeywell. Just moments ago, Honeywell announcing it had replaced CEO Michael Bonsignore with former Allied Signal CEO Larry Bossidy. Bossidy is one of many top executives to emerge from GE's vast pool of talent. The company skilled so many skilled executives, there's now a global network of GE graduates.
Alan Dodds Frank has the story.
(BEGIN VIDEOTAPE)
ALAN DODDS FRANK, CNN CORRESPONDENT (voice-over): Corporate recruiters see General Electric as the biggest business school in the world. Executives there are taught from the top down by CEO Jack Welch and the GE Management School.
They are so highly prized they have become CEOs at dozens of other huge companies. Larry Bossidy, the once and possibly future CEO of Honeywell, is a General Electric veteran.
And when Jeffrey Immelt was picked to succeed Welch, the other two top contenders immediately landed CEO jobs.
Robert Nardelli runs Home Depot, and James McNerney now runs 3M. The corporate headhunter who placed those three says GE training produces executives with portable skills.
GERRY ROCHE, HEIDRICK & STRUGGLES: Management succession. Management talent is transferable. And GE has proven that. They have proven that by cross-pollinating within their divisions. They have 6 major sectors. Core businesses. They just move one from jet engines to lighting to appliances to GE Capital. Doesn't matter. If you can run something and you know management skills, you can run anything.
FRANK: Companies needing a turnaround look for GE talent.
Gary Wendt left GE Capital to run Conseco. Paolo Fresco has taken charge at Fiat. And David Cote now runs TRW.
NOEL TICHY, UNIVERSITY OF MICHIGAN: One of the hallmarks of GE managers is their toughness at making yes, no decisions. Not setting up committees or bureaucracies, but are able to face realities, make a yes, no decision, and move on about investments, products and people.
FRANK: During his two decades as CEO, Welch says he has spent 51 percent of his time picking, training, and managing people. And he is proud the talent has spread worldwide.
(on camera): That management view is expected to continue under Immelt. But the new GE boss is only 44 years old and corporate recruiters are eying other GE executives eager for a shot at the top job somewhere else.
Alan Dodd Frank, CNN financial news, New York. (END VIDEOTAPE)
DOBBS: Coming up next, sluggish sales and summer clearance sales hitting profits at a leading shoe retailer.
In just a little while, a few rounds with boxing promoter Don King.
(COMMERCIAL BREAK)
DOBBS: In tonight's sectors report: retails. Payless shoe source today warning it will miss profit targets for the entire year. The discount shoe retailer saying an anticipated rebound in June did not happen. Payless also saying slow sales forcing higher-than- planned markdowns on summer shoes.
UBS Warburg saying today it expects overall retail sales for the sector to be weak in June, those figures due out Thursday.
Retail analysts also saying aggressive pricing is likely to come at the expense of gross margins. Payless, the biggest point decliner on the New York Stock Exchange today, dropping more than $7 a share. And the rest of the sector also weak.
Coming up next, the man who brought us several fights of the century is ready to rumble again with "The Great Brawl Of China."
(COMMERCIAL BREAK)
DOBBS: Our next guest has been behind some of the biggest fights of the last three decades. In classic bouts like "The Rumble Of The Jungle, " he promoted fighters like Muhammad Ali and George Foreman. Lifting boxing to international heights, and recent years, has seen the sweet science fall on harder times.
Don King however has not fallen on anything. He keeps moving ahead. He has a new main event to promote: "The Great Brawl Of China," a title bout in Beijing between Evander Holyfield and John Ruiz.
Joining us now, the man himself, Don King.
Don, a pleasure to see you.
DON KING, BOXING PROMOTER: Lou, it's just a pleasure to be on your program. When you talk money, there's no one to talk but Lou Dobbs. I told the Chinese $1,300,000,000 that I want to introduce to them a financial consultant and adviser, a man who knows what to do --- oh, ain't he right? So, they welcome you with great aplomb. And they want you to be there with us.
DOBBS: Well, I appreciate the invitation. We'd love to come and join you.
KING: Yes.
DOBBS: Let me ask you something. This fight, you've come up with some great titles, but the Great Brawl Of China.
KING: This one now we changed. We got it now, the Quiet Man and Raging Warrior. Holyfield has become enraged, because everyone is telling him to retire. And he feels his body is in good condition, so they almost had a fight today at the press conference.
And so we took it from the Hidden Dragon and the Crouching Tiger. So now it's the Quiet Man and the Raging Warrior in Beijing.
DOBBS: Beijing.
KING: It's going to be exciting. A trillion dollar market for business..
DOBBS: A trillion.
KING: A trillion. And this is the beginning.
DOBBS: How much money do you figure you are going to make on this?
KING: I'm not going to make much money. What I'm doing right now, is I'm cultivating the soil. I'm planting the seeds. Mao Tse- tung says, we are the seeds, the party are the seeds and the people are the soil.
So you must plant yourself into the soil and cultivate arts and sciences and (UNINTELLIGIBLE) bringing in the arts and dealing with business.
DOBBS: How does Ruiz and Holyfield feel about being seedcorn?
KING: You know what they are doing? They are making money. They are making good old American money. In the millions. You know what I mean? But it is such a market -- such an opportunity. A 1960 opportunity in the 21st century.
DOBBS: Now, obviously, this is a terrific gamble on your part. Pay-per-view, you're going to do it through King Vision, and -- which means Don King will be bringing it to you.
KING: Isn't it great to be an American.
DOBBS: It absolutely is. Let's wave that flag one more time.
KING: There's no beating 4th of July, through Independence Day. God bless America and God bless you that's watching this program. Oh, Lou Dobbs, I'm so -- I just love you, man.
DOBBS: Well, I love back, Don.
(LAUGHTER)
KING: You're pure Americana. You're what I'm talking about. You stand up and fight!
DOBBS: Well, now, you're -- yeah, I've been known to do that.
(LAUGHTER)
DOBBS: But your fight in Beijing -- how did you come to the idea of going to Beijing with a fight?
KING: Well, you know, the Chinese came and got me, you know, for my activity here, under the struggle, fighting and standing up. You know, resisting oppression, resisting things that are wrong, although they condemn me for everything, I'm to blame for everything. They selected me, and when they did, I met everybody there -- the biggest recognition and reception in the history of my life, I got it in China.
They gave me the Golden Dragon. They gave it to George Herbert Bush, president of the United States. They gave me the tea kettle and the donkey. They gave it to William Jefferson Clinton, president of the United States. And so they gave me an award of the ambassador, and they did it by a government portfolio. So I'm an ambassador of good will for China to bring Chinese and American people together.
DOBBS: You know, for a man who has brought so much goodwill, been recognized for goodwill, there have been more people suing, coming after you for so many years, I don't think -- if I may borrow an expression from your craft -- they haven't laid a glove on you.
KING: You know what? You've got to understand something, Lou. When you get a lot of money, people always come at you. You ain't got no money if you can count it. My money is countable, but I have an extraordinary amount, you know what I mean?
(LAUGHTER)
KING: So you people always want some. You can't stop that. That's the American way. I don't get mad at them. I say, forgive them, Father, they know not what they doing.
DOBBS: Well, you know what you're doing, and the fight just a few days before your 70th birthday -- you were talking about retirement early. I don't see any sign of it.
KING: Well, you know what? I'm excited and I want to take you there because I think truly that we can -- in fact, I've got him here. I want you to meet him because we can make billions and billions of dollars for American entrepreneurs, you've got a great marketplace and you talked about money. You know money. Let's make it happen.
DOBBS: That's a heavy responsibility. I'd be glad to join you, when you talk about that much money.
KING: Let's do it.
DOBBS: Thanks very much. Don King.
KING: August the fourth. Live and living color from Beijing, you will see Holyfield and Ruiz, the quiet man and the raging warrior! DOBBS: And I feel like the quiet man, now.
KING: Pay-per-view on King Vision!
DOBBS: Up next, your e-mails and "Ahead of the Curve."
KING: You hear it here on LOU DOBBS, the best man in the land, talking about M-O-N-E-Y. And we know it! That's why you're back. Lou is back!
(COMMERCIAL BREAK)
DOBBS: All financial markets closed tomorrow in observance of the July 4th holiday. Tune in to MONEYLINE, our special holiday edition of "Hail to the Chiefs," a look at high-profile CEO's faced with the toughest business environment in a decade. No rest for economy watchers later in the week. Expect weekly jobless claims on Thursday, and the all-important unemployment report for June will be released Friday.
Now, a quick update on our top story. Honeywell naming Larry Bossidy as new chairman and CEO -- Peter Viles.
VILES: The key statement, I think, from this release, Lou, is that the new strategy at Honeywell under Larry Bossidy will -- quote -- "enhance share owner value as an independent company." So nothing in this release about Honeywell still being for sale. They did give new earnings guidance, 53 or 55 cents a share and ongoing earnings in this quarter. That's the low end of expectations, but the fact that they came out with new guidance tonight could give some credibility to this company in the markets. They also will take a charge in the neighborhood of $600 million.
DOBBS: And Larry Bossidy, a leader with definite credibility. Thanks.
Now a look at some of your e-mails. We had a big response to our look at stem cell research last night, Roger writing: "As one of those whose life depends on this research, I'm sensitive to the view of the public who think that this research is only about aborted fetuses and not about those of us who have a chance to continue living our lives, when in the past our diagnoses would have been an early death sentence."
Angelo writes: "I am a 27-year-old with a spinal cord injury and a single parent. I wish people would stop the delay of embryonic stem cell research. I don't want to live like this the rest of my life."
And that is why it's important for both political parities to rise above politics and ideology on the issue.
Now a question posed by a viewer last night as we were running out of time: "Who would replace Vice President Dick Cheney if he were to resign?" President Bush would nominate a new vice president. The 25th Amendment to the Constitution makes a provision for that, saying "whenever there is a vacancy in the office of the vice president, the president shall nominate who shall take office upon confirmation by a majority vote of both houses of Congress."
We've also been getting a lot of e-mail concerning the European Union blocking that GE-Honeywell deal. Don in Utah writing: "Why do Europeans have say or control about that merger of two U.S. corporations?"
It's simply because U.S. companies must comply with European regulations in order to do business there. It is a two-way street. European companies must also abide by U.S. law to do business here. Of the nearly 400 cases reviewed by the United States and Europe over the past decade, only one deal blocked by Brussels: the Worldcom- Sprint deal, Washington also blocking that merger as well. And this deal, GE-Honeywell, becoming the first of two U.S. companies to be blocked in its entirety by the Europeans.
Don't forget, if you would like to send us your thoughts, e-mail us here at MONEYLINE at moneyline@cnn.com. And that is MONEYLINE for this Tuesday evening. Thanks for being with us. Have a very happy 4th of July. I'm Lou Dobbs. Good night from New York.
"CROSSFIRE" is next.
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