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Lou Dobbs Moneyline
Dow Falls 114.47 to 10,401.31; Nasdaq Tumbles 32.07 to 2,034.26; Echostar Makes Bid for DirecTV
Aired August 06, 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.
ANNOUNCER: From the heart of New York City, this is LOU DOBBS MONEYLINE. Here now, Lou Dobbs.
LOU DOBBS, CNN ANCHOR: Good evening.
In tonight's headlines, stocks tumble, the worst session in two weeks on Wall Street. Chip stocks driving the market lower as two analysts question Intel's assertion last week that the worst may be over for the computer business.
Echostar makes an unsolicited bid to buy Hughes Electronics, the parent of DirecTV. That move puts Echostar once again in direct competition with News Corp and Rupert Murdoch. I'll be talking with Echostar's chief executive officer, Charlie Ergen.
Let's check in now with some of our reporters to take a look at what they're working on this evening -- Christine.
CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, selling today across Wall Street: nearly $150 billion in value erased.
GREG CLARKIN, CNN CORRESPONDENT: And hardest-hit on the Nasdaq, those chip stocks as top analysts warn: You haven't seen anything yet in the ongoing industry price war.
STEVE YOUNG, CNN CORRESPONDENT: More drama in the fight for DirecTV. Echostar makes an unsolicited offer, going head-to-head with News Corp and Rupert Murdoch.
KITTY PILGRIM, CNN CORRESPONDENT: The battle of the network news superstars. We'll look at the fight for ratings supremacy this summer among the major nightly newscasts -- Lou.
DOBBS: Thank you, Kitty. All of those stories, more coming right up on MONEYLINE.
Our top story tonight, a broad decline on Wall Street. Stock prices tumbled across the board, that after two prominent analysts warned that a price war in the chip business is about to intensify. The Dow Jones industrials down 111 points today. Intel retreated along with IBM and Microsoft, accounting for nearly a quarter of the Dow's decline.
Christine Romans is at the New York exchange and has the story for us -- Christine.
ROMANS: Hi there, Lou. Well, tech worries, layoff fears, profit melees, all conspiring in a very quiet trading session to pull stocks lower. The Dow Jones industrial average losing 111 points on the trading day, closing at 10,401: 819 million shares -- that's light -- trading hands here. Steady erosion all day: The Dow Jones industrial average down about a percent. So was the S&P 500.
Continued economic weakness prompting another top Wall Street strategist to lower his expectation for earnings for S&P 500 companies. This time it was Lehman's Jeff Applegate. He cut expectations for 2001 and for 2002, but he kept his S&P 500 12-month price target at 1,450. Lou, for the record, the S&P 500 closed today at 1,200.
We had losses across the board here, but also in retailers, a group we'll be watching all week, a lot of folks are concerned, Lou, about the July selling season and what it means going into the latter part of the year. But retailers, box makers, chip makers -- you name it -- lots of different groups trading lower here today -- Lou.
DOBBS: A little pressure across the board, Christine.
ROMANS: Yup.
DOBBS: Thank you, Christine.
The Nasdaq today fell for a second-straight day as chip stocks plummeted. It is a troubling setback for a sector that had been driving. Technology stocks higher in recent weeks.
Greg Clarkin is at the Nasdaq marketsite -- Greg.
CLARKIN: And Lou, I'll tell you: It was a talk of price bomb that hit those chip stocks today. Now, the Wall Street firm was Lehman Brothers, the analyst was Dan Niles, and in a research note this morning he said that Intel will be dropping prices on August 26th, when it slashes prices on some high-end chips by up to 50 percent. Now, all this is an effort to regain market share from Advanced Micro Devices.
According to Niles, AMD has increased its market share from 13 to 21 percent against Intel. And Niles goes on to say, "In conclusion, for those of you who thought the price war was aggressive, you haven't seen anything yet."
Now, all that took a big toll on the technology stocks today -- the worries about what this would do to Intel's profits. You can see what the Nasdaq did. It started off lower and got lower as the day went on, losing 32 points: 1 1/2 percent was the loss.
Take a look back here at the computer sector of the Nasdaq. This has software, hardware, chips stocks, just about everything: It was down 2.1 percent on the day. Shares of Intel losing 4.4 percent, a loss of a dollar-forty on the day. And Lou, this was the slowest full day of trading on the Nasdaq, just a touch over 1.1 billion shares traded as that summer vacation mindset really took hold on Wall Street.
DOBBS: And just last week we were talking about slow trading. We are apparently off to something of the same kind this week.
Topping tonight's "MONEYLINE Movers," Radio Shack, which fell nearly $2 1/2 a share. The consumer electronics retailer reporting a 6 percent decline in July sales, citing sluggish direct television and computer purchases.
Genesco, down nearly $6 a share. The footwear maker and retailer warning revenue and earnings for the year will miss expectations, hurt by weak sandal and high-end sales.
Waste Management slipping more than a dollar a share. The world's largest trash hauler proposing a $23 million settlement of a lawsuit brought on by a group of its shareholders. That lawsuit claiming former company officials were involved in accounting violations back in 1999. Despite those allegations, shares of Waste Management have climbed nearly 50 percent so far this year.
Let's take a look now at some of the stocks that are moving in after-hours trading this evening.
Jen Rogers is at the Instinet trading floor -- Jen.
JEN ROGERS, CNN CORRESPONDENT: Hello, Lou. Well, that anemic trading volume that Greg was talking about over on the Nasdaq definitely spilling in to after hours here at Instinet, but we do have a couple of big movers to tell you about. Let's start with Serena Software: our most active issue and also our No. 1 percentage loser, down about 26 percent here.
The software maker coming out, warning for the second quarter, also for the full year on earnings. They also announced layoffs of 12 percent of the company: this on sluggish technology sales. This stock was also down 6 percent in the regular season: a big hit for Serena today.
Mandalay Resort Group -- this is a hotel and resort company; they have five properties in Las Vegas -- coming out warning for the second quarter. They said that July 4th falling in the middle of the week hurt the bottom line, and that coupled with a high utility cost. Right now down a $1.30, a little bit more than 5 percent. The company to post their earnings on August 23rd.
And finally, Conseco, the insurance company -- they came out. They posted higher earnings per share than a year ago. They also beat the consensus estimate. Holding onto the small green arrow here, up 10 cents. They were up higher earlier on, but a little bit cloudy on the outlook going forward, saying that full-year 2001 earnings could miss if there's not a rebound -- Lou.
DOBBS: Jen, thanks. Jen Rogers. Dramatic developments in the battle for the nation's biggest satellite broadcaster, DirecTV. Echostar re-entered the bidding for the GM-Hughes unit, making an unsolicited $32 billion takeover offer. This is more than twice what Echostar is worth. GM reportedly rebuffed a previous Echostar offer three weeks ago. Now the leadership at Echostar is facing another round in the fight with a formidable competitor, Rupert Murdoch and News Corp.
Steve Young reports.
(BEGIN VIDEOTAPE)
YOUNG (voice-over): Most analysts say whether Hughes Electronics tunes to Rupert Murdoch's News Corp or switches to Echostar, Charlie Ergen can't lose. If he somehow muscles aside Murdoch, DirecTV combined with Echostar would give Ergen 16 million subscribers, an entree to all 100 million U.S. TV homes. Ergen's carrot is an 18 percent premium in an all-stock tax-free deal.
Murdoch's basket of goodies is expected to include $5 billion in cash to shore up DirecTV's balance sheet. GM is the biggest shareholder through its stake in Hughes.
Even if Ergen loses, he gains by dragging things out. That's because right now 70 percent of new direct broadcast satellite customers are choosing Ergen's Echostar, which trails the field of two. But some analysts say merging the only remaining domestic direct satellite program distributors would create a monopolist that could shortchange rural America.
JEFF WLODARCZAK, CIBC WORLD MARKETS: Rural cable is rapidly disappearing under the onslaught of satellite. Rural cable operators can't upgrade. So to put all that power under one entity, I'm saying it's absolutely possible it can go through, but there is -- it's a significant regulatory hurdle. You can't ignore it.
YOUNG: Ergen says one strong satellite company would be a better counterbalance to cable monopolists, and he's hired famed antitrust lawyer David Boies to make that argument.
Would Ergen mount an out-and-out hostile bid?
DAVID KESTENBAUM, ABN AMRO: I would never rule anything out by Charlie Ergen. He's a creative guy. And I think he really does want the asset. It's just a matter of I -- we don't believe that General Motors -- I think, you know -- I think they believe News Corp is in a much better position if they can provide the type of cash that General Motors is looking for.
(END VIDEOTAPE)
YOUNG: Most analysts say they don't expect either party would announce a definitive agreement beyond August 15th until after the Labor Day period and a satellite conference in Paris. So until mid- September, the satellite picture could stay hazy -- Lou.
DOBBS: Steve, a lack of visibility there, is that a...
YOUNG: Lack of visibility. DOBBS: Well, now, Rupert Murdoch raising $5 billion and putting his money forward, he's offered no premium here and is known to have some significant financial constraints of his own -- what's the deal there?
YOUNG: Well, that is true. It's also true there's a counter argument that the other two companies would better serve America by providing more local programming.
DOBBS: OK, and we know that's what this is about. All right. Steve, thanks. Steve Young.
Charlie Ergen was recently described by "Business Week" magazine as perhaps "the most audacious media mogul in an industry where boldness is served up with the morning coffee." The Echostar CEO will need to harness all of that audacity to beat out Rupert Murdoch, who's been known to be somewhat audacious himself in the quest to buy DirecTV.
Charlie Ergen is our guest this evening. Charlie, good to have you with us.
CHARLIE ERGEN, CEO, ECHOSTAR: Thank you.
DOBBS: 32 billion coming back after it appeared you had lost interest, that's fairly audacious. What do you rate your chance is?
ERGEN: Well, I wouldn't want to put a -- rate the chances today. I mean, we're hopeful that we put the bid in front of the General Motors board and their shareholders. All the cards are on the table. We've offered an 18 percent premium. We've offered up to $56 billion of synergy in this deal that more than doubles the value of the GMH shares.
DOBBS: Well, $56 million (sic) in synergy usually means cost- cutting and cost savings. Are there really $56 billion laying there?
ERGEN: Well, it's made up in two categories. About -- about 60 percent of that is in cost savings. And obviously, we think we can cut a lot of costs out. The main reason is we're able to share spectrum.
Today, each of our companies spends billions of dollars to do exactly the same thing. We both broadcast, for example, this show and use up valuable capacity to do that. We could broadcast that one time.
DOBBS: But you use it so well in terms of this broadcast.
(LAUGHTER)
ERGEN: And of course, the other savings is we can do new services so that people can get high-definition television no matter where they live in America. We can do broadband two-way Internet access through satellite so that high-speed access can be brought to all Americans, not just those people who live in the big cities. DOBBS: Charlie, I can almost hear Rupert Murdoch saying many of the same things, that he can bring cost savings, he can bring great synergy with a broad package of assets that is News Corp. In terms of money, dollars and cents for shareholders, you're offering an 18 percent premium for the holders of that Hughes tracking stock. Rupert Murdoch is offering zero. Why would their offer in monetary terms be more attractive to GM, in your judgment, than your own?
ERGEN: I don't think that they would. I think that the key is that we've -- we've had our discussions for over two years now. We had some support from former DirecTV management that's no hunger there. The current DirecTV management didn't show the kind of enthusiasm that we had for the deal, so we've gone directly to General Motors.
It's exactly the same problem that News Corp had back in February. You might remember that they also were rebuffed at the DirecTV level. They ultimately had to go get the talks started at GM.
DOBBS: You were rebuffed in part by GM within the last 30 days on the basis of antitrust regulatory concerns. How do you respond to those today versus a month ago?
ERGEN: Well, we don't know the exact reasons why -- why they haven't more seriously considered our previous offers. Obviously, antitrust would be some -- one of the things the pundits talk about and the skeptics think would be a major problem. We don't think so. Here's why.
This is a deal where you're putting together the third- and seventh-largest video providers, pay-TV providers. Together, even after we combine these companies, we're only 18 percent of the pay-TV market versus cable's 77 percent. We're still a fraction of the size of an AT&T/Comcast combination. So...
DOBBS: But you'd be all of direct broadcast, in point of fact, or basically all?
ERGEN: But in direct broadcast we compete against cable. The thing -- the thing that we broadcast, whether it be this show or HBO or ESPN. That's exactly the same channel you get on cable. So we're part of a multi-video channel market that includes cable and satellite.
Now, in rural America, I think there's probably a good case that there you have to have some safeguards, because if we're the only provider where there isn't a cable operator, that's about 5 million homes out there.
DOBBS: Charlie, any indication early on in response from GM?
ERGEN: Not -- of course, I've been on shows all day long and we haven't had a response. We don't really expect a response until after the board meeting tomorrow.
DOBBS: OK. And do you think it will be there after that board meeting?
ERGEN: Well, we hope to get a positive response, to engage in serious discussions. This is a serious offer. It has compelling economics for all the shareholders involved in this. And you know, we've had a good market reaction on the Street today and from the analysts. And I think that we look forward to having serious discussions with the General Motors folks.
DOBBS: Charlie, good to talk with you.
ERGEN: Thank you.
DOBBS: Thanks for being here.
ERGEN: You bet.
DOBBS: Charlie Ergen.
Just days ago, when Intel -- Intel CEO Craig Barrett said the computer business had, quote/unquote, "bottomed out" -- Salomon Smith Barney analyst Jonathan Joseph today disputed that view. He trimmed estimates for Intel as well on expectations that the company will cut prices. Lehman analyst Dan Niles went even further. He predicted that a damaging price war will escalate and escalate dramatically.
Bruce Francis has our report.
(BEGIN VIDEOTAPE)
BRUCE FRANCIS, CNN CORRESPONDENT (voice-over): Faced with tougher competition from Advanced Micro Devices and weak demand, Intel is unleashing what one analyst calls "a price bomb": deep cuts, including a 50 percent reduction in the cost of its fastest PC chips.
Dan Niles cut revenue and profit forecasts for the chipmaker.
DAN NILES, LEHMAN BROTHERS: And I think at the end of the day Intel is like, you know, we're just going to go ahead, you know, just cut prices ferociously and force the market to buy our stuff, which is at better prices than what AMD can offer, because they don't have the same high-end chips right now.
FRANCIS: Intel lowers prices regularly, but the latest cuts are much deeper than normal. The cuts may put even more pressure on Intel's gross margins, which have been dropping steadily since last year.
And they come just as PC makers typically gear up for the back- to-school and holiday shopping seasons for consumers, as well as a historically stronger period for corporate buying as well.
Analysts say that Intel will be relentless on price in this environment.
DREW PECK, SG COWEN & CO.: I don't see any end to this any time in the foreseeable future. This is not a technology-driven business anymore. This is strictly price-driven. You don't have users going out and buying new PCs because they have great new technology. They go out and buy them because they're cheap, and Intel has to acknowledge that. And that's what these price cuts are all about.
FRANCIS: The big PC manufacturers usually welcome big price cuts from Intel because they help them offer lower prices. But the cuts also mean that after warnings for the current quarter from Hewlett Packard and Compaq, Intel is concerned about sales.
Lehman's Dan Niles says he thinks Dell will be the next PC company to warn about weak conditions when it issues its earnings and forecast next week.
(END VIDEOTAPE)
FRANCIS: Intel's price cuts take effect August 26th, just a little more than a week before the company is scheduled to update Wall Street on its progress during the quarter -- Lou.
DOBBS: Bruce, thanks. Bruce Francis.
Still ahead here on MONEYLINE, Tropical Storm Barry losing some of its fury as it makes land. Florida still doused with heavy rains. And history's longest boom delivering big rewards to citizens. We'll take a look at the latest census numbers: They're all good news.
Also, the battle of the network anchors. Not so much good news. A long vacation for Tom Brokaw fueling intense speculation and competition, and changing things.
And turmoil in the Middle East tonight. I'll be talking with a man who once led the Pentagon about how the Bush administration should be handling the region.
(COMMERCIAL BREAK)
DOBBS: Tropical Storm Barry sweeping across the South today, but losing much of its punch as it moved inland. The storm soaked the Florida Panhandle and Alabama with heavy rains, but has since been downgraded to a tropical depression: winds no greater than 30 miles per hour.
No fatalities, fortunately, were reported, but 34,000 homes have lost power. No word yet on the actual property damage as a result of the storm.
A controversial team of doctors planning to attempt to clone a human being. Those doctors will make a formal announcement tomorrow in Washington. They plan to try that procedure in November with 200 infertile couples, using a technique similar to the one that produced Dolly the sheep in 1997. The doctors would take DNA from one of the parents and implant it into an egg that would then come to term in the mother's uterus. Most scientists question whether this technique, especially given current technology, will produce a healthy human being. The cloning procedure is being funded privately by overseas investors. There is no word on the costs, but they are expected to be very high.
Former President Clinton entering a deal to publish his memoirs with publishing house Alfred A. Knopf, owned by the media company Bertelsmann. Sources tell us that this will be a candid telling of the former president's life, focused, of course, on the White House years. Terms were not disclosed in the deal, but reportedly he will receive the largest advance ever for a nonfiction book, more than the 8 million paid to Hillary Rodham Clinton and more than the record 8 1/2 million paid in 1994 to the pope.
Financial success, a story of the 1990s for many Americans. In fact, living standards in this country jumped throughout the decade. That's just one of the encouraging facts coming from the latest census figures.
Peter Viles has the report.
(BEGIN VIDEOTAPE)
PETER VILES, CNN CORRESPONDENT (voice-over): Here's a pep talk for an economy that could use one about now: American consumers enjoyed major gains in their standards of living over the past 10 years. Median household income topped $41,000, up from 30,000 10 years ago. Americans are better-educated: 25 percent have a college degree, up from 20 percent a decade ago. And they're sitting on big real estate gains: The median home now worth more than 120,000, up from 79,000 10 years ago, when many doubted the U.S. economy.
JAMES SUROWIECKI, "THE NEW YORKER": If you remember, at the beginning of the '90s, it was this whole idea that we needed to emulate Japan or Germany, you know, that we needed to follow other models. And I think actually there's been a kind of return of faith in sort of the American model. That I think is a really big cultural shift, and I think that's one that's probably going to be lasting.
VILES: The numbers are an early snapshot of what the census will show: a head start for demographers studying one of the most vibrant periods of American history: 13.3 million immigrants came to the United States in the '90s, a huge increase over the '80s, and given the economy's performance, a pretty good argument in favor of immigration.
RICHARD HOKENSON, CREDIT SUISSE FIRST BOSTON: I think the key point is the willingness, increased willingness of this society, this economy to embrace immigrants as both a source of supply as well as a source of demand, and puts the U.S. in a very enviable position versus Europe and Japan.
VILES: The census also speaks to a great American tradition that is alive and well despite decades of criticism. We're talking about the right to drive to work by yourself. The average daily commute grew longer by nearly two minutes as car-pooling declined in popularity. 97 million Americans drive themselves to work every day. (END VIDEOTAPE)
VILES: There are some huge blind spots in the census, though. For example, there are no questions about computer usage or Internet usage. So you learn that only 40,000 homes use solar energy, if you cared about that topic, but nothing about the tens of millions of computers that are literally changing the fabric of American life -- Lou.
DOBBS: Let's see 97 million Americans driving themselves to work and 40,000 with solar...
VILES: 40,000 with solar energy: not very popular in the 1990s, nor was carpooling, for that matter.
DOBBS: Well, it may be coming back if we see another spike in energy prices.
Pete, thank you very much. And as you said, it's good to have some good news.
Well, this is a period in which we're looking at some renewal of tension in the Middle East. The Israeli-Palestinian conflict. President Khatami not taking the oath of office as scheduled in Iran yesterday, and Kim Jiang visiting Russia.
We're joined now by MONEYLINE contributor, former Defense Secretary Bill Cohen to try to make some sense of all of these developments.
Bill, good to see you.
WILLIAM COHEN, FORMER U.S. SECRETARY OF DEFENSE: Good to see you, Lou.
DOBBS: First, the Middle East situation, focusing on the Israeli-Palestinian ongoing struggle for some stability and sense in the region. What do you make of these latest developments?
COHEN: Well, what we're seeing is a lack certainly of a peace agreement, but also an absence of a peace process. And in the absence of any kind of a process that would lead to an eventual agreement, you're going to see a descent into hell. And what we have here is a version of Sartre's "No Exit," but a much more dangerous version of that "No Exit," where people are locked into an endless struggle with each other. We've got violence, killing each other day by day with ever-escalating levels of that violence.
DOBBS: That violence has been with us now for 53 years, if one takes the mark of 1948 as the incipient point. We know that it was well before that, of course.
What is -- what is the most rational process toward peace? I have never been able to hear anyone suggest to me a solution to the crisis in the Middle East. COHEN: Well, I don't know if anyone has a solution to the crisis, but there has to be a process leading to an eventual solution. And that's what absent today. And I think that the United States has to get much more involved than we have been to date. I think...
DOBBS: Why, why, Bill, if I may interrupt? In terms of solutions, why in the world would not this administration or a previous administration understand that all progress is economic? Significant investment in Jordan and for the Palestinian people, for the Arab states that surround the region, as well as Israel itself. Why would that not become a primary factor for establishing stability?
COHEN: Well, I think it has to be, just as we had the commitment to rebuild much of Western Europe following the war, and Japan.
DOBBS: Right, exactly.
COHEN: You'd have to have a tremendous infusion of capital and also of hope. And right now, what is missing on the part of many in that region, an absence of hope. Not just the Palestinians, but in the greater population.
DOBBS: And an abundance of cynicism it seems, too.
COHEN: But the United States must play a much more active role, and I think that Secretary Powell is determined to become more engaged on behalf of the United States.
DOBBS: President Khatami in Iran, not taking the oath of office. Sanctions renewed against Iran and Libya. Give us your best judgment for what we can expect.
COHEN: Well, you're seeing some local politics being played out, payback time. For example, there is a council, a so-called "guardian council," some 18 members, three seats are open, two of those seats were rejected by the reformist parliament. Now you're seeing the clerics and the Ayatollah Khamenei acting out to say no inauguration -- no two appointees, no inauguration. That'll be resolved by the so- called expeditionary council, "expediency council."
DOBBS: Bill, as always, good to have you with us.
COHEN: Good to be here.
DOBBS: Thank you. Bill Cohen.
Well, still ahead in the next half-hour of this broadcast, the competition over the network news big chairs: the latest on the ratings battle among Tom, Dan -- there's Dan -- and Peter. And the impact of job cuts on Main Street. How one company town is dealing with the pain of huge layoffs.
Also tonight, stocks slump on Wall Street on worries about the chip sector. You'll want to hear what one of the Street's savviest thinkers says the market will do.
(COMMERCIAL BREAK)
DOBBS: Topping tonight's headlines: stocks extending losses for a second straight session, led by negative comments from two brokerages about the chip industry. Record layoff announcements in July; an outplacement firm reporting job cut announcements last month surging to more than 200,000.
Echostar trying to head off a rival deal by Rupert Murdoch's News Corp. The No. 2 satellite broadcaster making an unsolicited bid for Hughes electronics, which owns DirecTV.
Quickly checking in with our reporters and what they're working on. First to Christine Romans at the New York Exchange, who's tracking what's shaping up for tomorrow.
ROMANS: Lou, some key economic numbers due out tomorrow. We'll have a preview and a look at some quarterly reports that could drive the markets.
CLARKIN: And Cisco systems expected to post earning after the close of trading tomorrow. I'll tell you what those Wall Street analysts are expecting.
PILGRIM: Plus, the network news wars. We'll take a look at how the networks are surviving in a declining market.
DOBBS: And we'll have more on the markets, talking with Richard McCabe, chief market strategist at Merrill Lynch. We'll be talking to him about why he's holding out for what he calls an Indian summer rally.
First now, though, more on the markets themselves. Both the Dow and Nasdaq plunged by more than 1 percent. That's largely because analysts are forecasting a computer-chip price war led, of course, by Intel, later in the month. Intel one of the biggest losers today on the Dow, falling about 4 1/2 percent, losing $1.40 a share. Only six Dow components of the 30 managed to finish higher, the Dow ending down 111 points.
The Intel factor also weighing on the Nasdaq where chip, hardware and software stocks all fell. The Nasdaq down by more than 1 1/2 percent on the day.
Taking a look at some of the widely held issues: 3M among the biggest losers, down more than $2 a share, and Cisco Systems closing down more than 2 1/2 percent, ahead of its quarterly report, and that is due out after tomorrow's close of trading.
On the Big Board, negative market breadth: Decliners beating advancers by a margin of better than three to two. On the Nasdaq, decliners also bidding out advancers by a margin of more than three to two.
Now for a look at what traders and investors are expecting tomorrow on Wall Street: Christine Romans at the New York Exchange -- Christine. ROMANS: Hi there, Lou.
Well, the bears tell me that we'll have downside follow-through. They don't like the way the markets closed. That means more red arrows tomorrow. The bulls say, who cares? There was no volume on this decline, so they're not reading very much into it overall. We have plenty to look at in terms of economic fundamental news tomorrow and corporate news as well.
Second quarter productivity comes out; this one will be very key to watch. People are going to be closely watching the revisions and say, well, could this wipe away some of that productivity miracle from the 1990s. We'll watch that. A lot of folks tell me they expect some lively new era discussions tomorrow.
Also some weekly retail numbers -- Redbook and some other private surveys on a weekly basis -- people want to know just how much those tax rebates are helping out retailers, and we had some worries about July sales here today. Meanwhile, a range persisting in the Dow overall. And folks are saying that it is summer trading; you can't read too much into the moves within the range overall.
Earnings tomorrow: Procter and Gamble, it's a Dow component. this one will be important to watch. Also Cisco Systems, Clear Channel Communications, Suiza Foods, Barr Labs and a lot more. But for most part, Lou, we are winding down for the reporting season and folks are looking forward to a period when we will not be hearing so much out of these companies and we can look ahead to the next -- can you imagine -- preannouncement season.
DOBBS: Can't wait. Winding down, in terms of reporting earnings and analysts are suggesting that the volume is too light to bear much analysis?
ROMANS: Absolutely. I mean, it's just such light volume: 819 million shares. One of the quietest days of the year. Pretty much right on par with that day when the stock exchange shut down from a computer glitch.
DOBBS: And we're going to analyze anyway, right?
ROMANS: That's our job.
DOBBS: Thanks.
Investors bracing for Cisco's quarterly results that will come after tomorrow's closing bell. Cisco is the big story tomorrow on the Nasdaq, where Greg Clarkin is standing by -- Greg.
CLARKIN: And Lou, you know Wall Street just loves events, loves things to anticipate and fret over. Well, they have a big one tomorrow: Cisco systems will be reporting their numbers after the close of trading.
Now, here's what's expected: They're expected to post about 2 to 3 cents a share in earnings. That is down from 16 cents a year earlier. The sales, they should come in somewhere around $4.3 billion. That represents a drop of 24 percent from the year-ago period. Cisco expected to give a good gauge of how the tech sector performed in July and also, hopefully, Wall Street is anticipating some kind of guidance from Cisco.
It's peer group, the other networking stocks, has yet to give any guidance. So at this point analysts are looking for any bit of information as to how the networking business is doing. Some folks fear that Cisco may indicate that their Asia business has weakened. That is an area that has held up nicely for Cisco.
Want to show you quickly where Cisco stock is right now -- what level it's trading at right now. It's over here at $19.54 a share. It lost 2 1/2 percent today. And Lou, one year ago today that stock was up around $65 and change, so quite a tumble for Cisco.
DOBBS: About 70 percent, Greg; thanks, Greg Clarkin from the Nasdaq market site.
Well, Richard McCabe expects the markets to move higher as the summer winds down. Despite today's losing session, he stands by his prediction of an Indian summer rally.
Joining me now, Dick McCabe.
Dick, good to have you with us.
RICHARD MCCABE, MERRILL LYNCH: You too, thank you.
DOBBS: Dick, Indian summers -- now, this is summer, without question. Are you suggesting we're going to have a prolonged rally, or one that's just going to start a little later in the summer?
MCCABE: Well, my term might be a bit of an exaggeration. What I thought was we'd see a rally in July. It's apparently -- or obviously been postponed. But I do think we will get at least a late-summer rally. It might even go into September. And I think the backing and filling among the averages in the past month -- up a week, down a week; up a day, down a day -- is really laying a base or a bottom that will support a mid- to late-summer rally.
DOBBS: Well, that's something that we all want to see happen -- except, of course, for the shorts, who don't want it to happen. But I think most of us want to see that stability, and see us build on it.
But in terms of backing and filling, what do you make of a situation like we've had over the last few weeks? The chip stocks are really leading the advance in technology, driving, in point of fact, the Nasdaq higher. And then two analysts come out today and sort of trump Intel itself and say they're going to have a price war, it's going to tear up their earnings, and the market gives everything back.
MCCABE: Well, I think these are kind of aftershocks. We had a lot of bad news a few months ago, and certainly back in the first quarter of this year regarding technology. These are some aftershocks; they do put the stocks down for a day or two. But chip stocks have been stabilizing now for at least three to four months. Some began to stabilize around the beginning of this year, in fact.
And I think what's happening is that, just as a lot of good news kept coming out -- or so-called good news -- in the summer of last year when things seemed to be good, now a lot bad news, dribs and drabs is coming out. But I think it's turning the process.
DOBBS: Don't you find it remarkable, though, that the CEO of Intel, a well-respected executive, Craig Barrett, can say he thinks the computer industry has bottomed out, and a couple days later two analysts trump him. What do you make of that?
MCCABE: Well, I guess perception is in the eye of beholder -- or beauty in the eye of the beholder. It's hard to kind of figure what the situation is there.
But I would point out that the stock market or stock prices, both of the averages and of individual stocks do tend to turn up six or nine months ahead of the actual realized improvement in the fundamentals. So we could see a rally here in the late summer, fall. It may just be anticipating improvement in real terms early next year.
DOBBS: Led by which sectors?
MCCABE: Well, I think we're going to see the steady improvement in the next six to 12 months in a lot of mundane, unglamorous like auto equip, lodging, restaurant chains, leisure time, pollution control. I think that techs will have a great bounce in the next month or two and then go back to test their lows in the fall.
DOBBS: And Dick, as you know almost better than anyone, there's nothing unglamorous about any stock or company that's appreciating.
MCCABE: That goes up. That's correct.
DOBBS: Thanks, Dick; Dick McCabe, Merrill Lynch.
Late word tonight that a federal judge has sentence a California man to nearly four years in prison for faking a press release about the tech firm Emulex: 24-year-old Mark Jakob told the court he was sincerely sorry for the hoax. That big press release in the spring of 2000 sent Emulex shares plummeting. But the judge compared Jakob's act to dropping an automatic bomb in the financial markets. Jakob pleaded guilty last year to two counts of securities fraud and one count of wire fraud.
In tonight's "MONEYLINE Focus": the European Union renewing its attack against the U.S. tobacco industry. The European Union today filed another lawsuit against Philip Morris and R.J. Reynolds in U.S. District Court. But this time the European Union filed the lawsuit on behalf of its 10 member states, which are claiming billions in lost customs duties and taxes all because of alleged cigarette smuggling. The lawsuit coming just a month after a U.S. judge threw out a previous suit by the EU on grounds that the EU was not hurt by those companies.
Coming up next on MONEYLINE: no let-up in layoffs. We'll bring you the latest damage reports. And we'll take a look at a town that's living with layoffs. We'll tell you why all the news is not necessarily bad.
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DOBBS: Conflicting data out today on job cuts. The outplacement firm Challenger, Gray and Christmas saying U.S. businesses in July announced plans to cut nearly 206,000 jobs. That would be the highest monthly total since the firm began counting layoffs back in 1993. It also pushes the number of announced jobs cuts to almost 1 million so far this year. But it also contrasts sharply with last Friday's release of the July employment report, which showed the unemployment rate holding steady at 4 1/2 percent.
Conflicting data aside, dozens of companies have announced thousands of job cuts, including Motorola. Lisa Leiter reports now from Harvard, Illinois, a farm town outside Chicago that pinned its hopes for growth on Motorola.
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LISA LEITER, CNN CORRESPONDENT (voice-over): Harvard, Illinois was known mainly for its annual Milk Days Festival until 1996, when Motorola opened a sprawling cell phone plant here.
PAMELA HAYES, HARVARD CHAMBER OF COMMERCE: We had people stopping in all the time -- you know, of let's, you know, let's open up a bookstore; let's open up a new restaurant. I mean, things were just -- flying ideas like crazy
LEITER: Great expectations for growth led to wider roads, more traffic lights, a water tower, a new hotel and plans for big housing developments, but the boom never came. Most Motorola workers commuted. Oak Grove Crossing planned for 500 homes.
STEVE AAVANG, BROKER, CENTURY 21: They actually anticipated the project being completed by this time -- 500-plus homes. But we're only at about, oh, I'd say, 55 homes right now.
LEITER: So there wasn't much of a bust when Motorola slashed two-thirds of the 5,000 jobs at the plant this year, sending production to Mexico and keeping only distribution workers in Harvard.
(on camera): But the workforce at this 1 1/2 million square foot plant has shrunk to about 1,500 employees, and Motorola is now looking for other companies to lease the vacant manufacturing and office space.
(voice-over): At Nick's Kozy Nook, business has dropped 20 percent over the past few months.
NICK HALIMI, OWNER, NICK'S KOZY NOOK: You see people seven days and you develop a relationship and -- lost customers and friends.
LEITER: Those laid off who do live in Harvard face a tough job market. JENNIFER MAJEWICZ, FORMER MOTOROLA EMPLOYEE: Not many people pay as much as Motorola did. It's very hard.
LEITER: And hard for Harvard, but not devastating. Motorola's cutbacks mean a lost opportunity for some residents, but others see them as a chance to hold onto their small farm town.
Lisa Leiter, CNN Financial News, Harvard, Illinois.
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DOBBS: Still ahead on MONEYLINE: the battle for network news supremacy; ABC, CBS, NBC -- it may be vacation for some big name anchors, but battle is raging. And we'll be telling you about the action film that won the battle of the box office over the weekend.
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DOBBS: Still to come on MONEYLINE: the business of the network newscast; how too many nights off can be a real turnoff. And we'll tell you what a late summer release can do for business at the box office. All of that coming right up on MONEYLINE.
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DOBBS: Well, it's the high-profile battle that defines the networks the news broadcast represent. Who is winning the battle of the evening news anchors? For a long time, NBC and Tom Brokaw have carried the evening half-hour, but that may now apparently is up for grabs.
Kitty Pilgrim has the story.
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(BEGIN VIDEO CLIP)
ANNOUNCER: Substituting tonight: Brian Williams.
RUSS MITCHELL, CBS NEWS: Dan is off tonight; I'm Russ Mitchell.
ANNOUNCER: Sitting in tonight, Elizabeth Vargas.
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PILGRIM (voice-over): Not the regular trio of talent doing the network news, but summer replacements. Tom, Peter and Dan have gone fishing. The Biggest buzz in the business: Tom Brokaw's 10-week vacation; rumors he may be thinking of retiring abound. But heir- apparent Brian Williams has not kept up ratings. NBC colleague Katie Couric is rumored as a possible replacement.
While NBC rides the rumor mill, ABC gloats about the ratings pop they've experienced since Tom took that summer hike.
MICHAEL EISNER, CHAIRMAN & CEO, DISNEY: In our own right, Peter Jennings is extremely strong. But I did run into Tom not long ago, and I thought his vacation was too short.
PILGRIM: NBC news has lost more than 1 million viewers a night since Brokaw went on vacation. Analysts say three-quarters of those viewers have clicked over to ABC, which now makes it the No. 1 news broadcast. CBS still finishes third.
ANTHONY MORA, PRESIDENT & CEO, ANTHONY MORA COMMUNICATIONS: Personality does have lot to do with the news, because he's going on 20 years now and I think it was the week after he left the ratings dropped to the lowest it had been in over 10 years. So his leaving, you know, is pretty disastrous.
LEITER: Other news sources, cable networks and the Internet are also ultimately drawing away viewers. In the last two decades, alternate news sources have cut network news audiences in half.
BRENT MAGID, FRANK MAGID ASSOCIATES: The biggest issue at hand is that of establishing a solid brand. I think that's probably the No. 1 factor that, in many respects, has gone overlooked largely because organizations, historically, haven't really had to focus on brand. The market hasn't been as competitive.
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LEITER: Now, they call it audience fragmentation: The new generation is much less likely to stay brand loyal, and the new viewer is much more used to choice and surfing. So perhaps all the networks should take a surfing vacation -- Lou.
DOBBS: Like their anchors. Kitty thanks; Kitty Pilgrim.
Well, Movie ticket sales set a new record this weekend, the top 12 films grossing about $164 million. That is up 39 percent compared to a year ago. It was the biggest draw ever for a non-holiday weekend.
The weekend's top picture: "Rush Hour 2," released by New Line Cinema, a unit of AOL-Time Warner, of which CNN is also a unit. The action comedy with Jackie Chan and Chris Tucker taking in $67 million at the box office. And, like many other movies this summer, Fox's "Planet of the Apes" lost more than half its audience in its second weekend in the theaters. Walt Disney's "The Princess Diaries" opening in third place.
Just ahead on MONEYLINE, we'll take a look at your e-mail, and "Ahead of the Curve."
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DOBBS: Several companies will report quarterly earnings tomorrow, including Dow component Proctor & Gamble, Cisco Systems will report, as will Clear Channel Communications, British Petroleum and Emulex.
And please join us here tomorrow night when John Chambers, the chairman and CEO of Cisco Systems will be here. We'll be going over Cisco's quarterly results and his views of what lies ahead.
Time now for a look at some of your thoughts.
Ed in Miami writing to say: "Companies claiming lack of visibility are more likely lacking full disclosure. These companies, he says, develop short and mid-term budgets and on an ongoing basis track their performance against those budgets. Companies may not wish to share such information with analysts, but the visibility is certainly not as cloudy as they convey."
With record layoff announcements, many of you are asking us how the jobless rate remains near historic lows. Well, Karl Bunch, who's president of a small technology firm in California may have part of an answer. He writes: "How about people in moire upper-income positions like programmer, systems analyst and sales people that don't bother to make claims? I know a lot of people out of work who are not on employment insurance, mostly because they have been making fat, six- digit incomes for a while."
Sam says he first started investing 30 years ago and he never forgot this anecdote, which he shares: "In a bull market, you don't need analysts, and in a bear market you don't want them."
J.L. in Mexico City wants economists to stop trying to figure what letter best represents the economy's direction. He writes: "Please forget about the `V' and `U' shaped recoveries. think of a smile shaped recovery, probably some time next year."
Well, keep smiling, and send us your comments at MONEYLINE@CNN.com. Don't forget your name and address.
And for tonight that is MONEYLINE. Thanks for being with us. I'm Lou Dobbs. Good night from New York.
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