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Lou Dobbs Moneyline
Dow Advances 57.43 to 10,458.74; Nasdaq Declines 6.47 to 2,027.79; Cisco Meets Lowered Estimates
Aired August 07, 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, consumer borrowing fell in June for the first time in more than 3 1/2 years.
At a conference today in Washington, scientists attack a team of reproductive specialists, who say they're planning to clone up to 200 babies.
And Cisco Systems after the bell reported net income of $7 million last quarter, down a staggering 99 percent from a year ago.
Let's take a look at what our reporters are working on this evening -- Christine.
CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, investors today received a surprisingly solid report on productivity in the second quarter, but the Dow managed just a modest advance.
GREG CLARKIN, CNN CORRESPONDENT: And no such luck for the Nasdaq. It fell after one firm downgraded the chip sector.
ELIZABETH COHEN, CNN CORRESPONDENT: Lou, the cloning debate heats up in Washington and I'll have that story next.
PETER VILES, CNN CORRESPONDENT: A heavyweight battle shaping up in the network radio industry. Rush Limbaugh is on one side. Howard Stern is on the other.
KITTY PILGRIM, CNN CORRESPONDENT: Europe's biggest economy flirting with recession. I'll look at the trouble in Germany and across the continent -- Lou.
DOBBS: Kitty, thank you. And all of those stories coming right up on MONEYLINE.
We begin with a troubling report on the strength of the economy. Consumer borrowing slumped unexpectedly in the month of June: consumer credit down $1 1/2 billion. It was the first decline since the fall of 1997. That news raises concerns and questions about consumers who have been holding up this economy. It may be that they're losing their desire to spend.
But not all the economic news out today was cautionary, however. Productivity last quarter grew at an annual rate of 2 1/2 percent. That is stronger than most economists had been expecting. It was the best showing in a year, in fact.
And productivity from 1996 through 2000 also came in at 2 1/2 percent. That was revised lower, but only by 3/10 of a percent.
Last week, Dresdner warned productivity would be revised sharply lower, undercutting the entire premise of the late 1990s market rally. We may not hear from Dresdner again on productivity for some time.
That strong report on productivity failed to jump start a broad rally today on Wall Street. Chip Stocks pressured both the Dow and Nasdaq for a third-straight session. But it is hard to draw many conclusions from today's session. Trading again was very tight, as is often the case on a sweltering August day in New York.
Here is Christine Romans at the New York exchange to tell us all about it -- Christine.
ROMANS: Hi, Lou. Overall, they liked that productivity data, and it allowed the broader market to sort of detach itself from the obsession it's had with chip stocks. So the Dow Jones industrial average climbed here today, climbing 57 points, about half a percent, to 10,458. Restaurant stocks, chips, biotechs were weak, but the retailers, drugs and banks were strong.
And looking at P&G, Procter & Gamble, this one actually closing lower on the day, really wobbled most of the session. It reported earnings, operating earnings of 60 cents a share. That beat the Street by a penny. But overall, when you take a look at the restructuring charges there, it was a loss in the quarter, $320 million, its first quarterly loss in about eight years.
Volume there for P&G was pretty brisk, but Lou, take a look at the volume overall for the big board today: 979 million shares. Now, that's better than yesterday, but folks are saying this is typical summer volume.
Well, take a look at what it was five years ago, 394 million; 10 years ago today, 172 million. And way back on today in 1973, less than 15 million shares changing hands. So everyone, Lou, keeps calling it typical light summer trading, but if you look, though, over the past couple of decades, you can see somebody out there is clearly doing some business, Lou.
DOBBS: And how about a year ago, Christine?
ROMANS: A year ago it was right where we're sitting right now, looking pretty -- pretty sketchy and right around these levels. But indeed, 979 million shares is nothing to sneeze at.
DOBBS: Absolutely not. Tech investors today focusing again on chip stocks, yet another Wall Street firm added to the drum beat of renewed skepticism about that sector.
Greg Clarkin at the Nasdaq marketsite with some insight -- Greg.
CLARKIN: And I'll tell you, Lou, who could really blame investors if they're a bit bewildered when it comes to the chip stocks? After all, last week Merrill Lynch upgraded the sector. Today, Credit Suisse First Boston downgraded the sector.
Now, here's what Merrill Lynch last week in a research note titled "The Train Is Back in the Station, Climb Aboard." Merrill Lynch said that they believed that the worst of the downturn is now behind us.
Flash forward to today: CSFB. They say valuations have gotten ahead of fundamentals and they urged investors to take profits.
Now, these mixed signals did weigh on the technology sector and the Nasdaq overall. The composite on the day in extremely light trading losing 6 1/2 points to close at 2,027.
As for how investors voted on chip stocks, well, they drove the Philadelphia Semiconductor Index lower by 2.6 percent.
Now, we have three of the stocks that Merrill upgraded last week, that CSFB downgraded this week behind me. Take a look at Applied Materials: It lost 4 percent. Novellus down almost 5 percent. KLA- Tencor down almost 6 percent.
And Lou, perhaps the best advice on the chip stocks comes from SG Cowen in a research note today. They say, yes, investors should be exposed to chip stocks, but they say you have to learn to move around the land mines in the sector -- Lou.
DOBBS: Well, that's very elegant.
CLARKIN: Just a matter of figuring out where those land mines are.
DOBBS: Greg, thanks. Greg Clarkin at the Nasdaq marketsite.
Topping tonight's "MONEYLINE Movers," BP adding more than a dollar a share. The world's third-largest oil company posting a 5 percent jump in its second-quarter earnings. High gasoline prices and strong refining margins making up for weakness in its chemicals division. BP also confirmed its ambitious three-year production targets.
Barr Laboratories gaining nearly $3 a share today after reporting fourth-quarter profits more than doubled. The drugmaker expecting its fiscal first-quarter results to triple, propelled by last week's federal approval of its generic version of Prozac.
Conseco tumbling $2 1/2 a share today. The insurance and loan group posting a second-quarter loss, warning its full-year results may be lower than had been expected. Shares of Conseco have fallen more than 40 percent from their 52-week high of $20 a share.
Taking a look now at the stocks that are moving in after-hours action, including Cisco: the company reporting after the bell.
Jennifer Westhoven at the Instinet trading desk -- Jennifer.
JENNIFER WESTHOVEN, CNN CORRESPONDENT: Hi, Lou. Well, Cisco is setting a mildly negative tone for tomorrow's trading. Very interesting, because right after the results came out, Cisco shares actually popped up higher. They also moved a lot of the other tech stocks higher. There was some hope there that it was going to be something strong for tomorrow, but traders said they think that that was just some short covering, because all of a sudden, that stock did an about-face as the company came out with disappointing talk about their first-quarter sales.
Well, in addition to moving a lot of the other tech stocks a little bit lower, they also rapped their rival Juniper. So, that stock is also trading lower. And in fact, it's getting knocked a bit worse than Cisco. Juniper is down a little more than 2 percent. Cisco is only down a little bit more than 1 percent.
But we are seeing other big-cap tech stocks trade lower. For instance, Sun Microsystems, Intel and Oracle all slightly lower after that Cisco bit of bad news.
Lou, back to you.
DOBBS: Jennifer, what do you mean that Cisco knocked Juniper, one of its chief rivals?
WESTHOVEN: They said that they believe that they have stolen three to five points of market share away from Juniper during the quarter, and immediately after they said that you just saw Juniper stock move lower.
DOBBS: OK, Jennifer. Thanks a lot, Jennifer Westhoven from Instinet.
Cisco Systems today reported net income of just $7 million last quarter. Cisco is worth about $140 billion. When you take out special items, the company did meet expectations.
Bruce Francis has been analyzing that report and is here with the analysis for us -- Bruce.
BRUCE FRANCIS, CNN CORRESPONDENT: Lou, another humbling quarter for Cisco, and no big signs of a turnaround yet. Indeed, Cisco did report those results that were in-line with expectations. Let's take a look at what they did finally print.
Cisco said that they earned 2 cents a share, right in-line with Wall Street expectations, a whopping drop from last year's 16 cents a share. Big drops there in revenue and net income. Looking forward, though, it's the outlook that matters the most on Cisco, and let's take a look at what they did have to say. They did say that for Q1 you'll see revenue flat to down, 5 percent. First Call had been looking for about flat revenue. So it sounds like Cisco here is making some room for themselves on the down side and lowering expectations ever so slightly.
Also, for fiscal year '02, which is just beginning now, they see they do need better long-term visibility to make any kind of prediction. They'll get into that later in the year.
They do say, though, that 30 to 50 percent long-term growth rate in healthy economy, that is still intact. So, Lou, Silicon Valley's unofficial optimist in chief is still optimist -- optimistic about the long-term growth prospects for this business, but they're not beginning to kick in just yet. You saw some positives, like reducing inventory and beating Juniper there.
DOBBS: Well, you're talking about John Chambers, the optimist in chief in Silicon Valley.
FRANCIS: Right.
DOBBS: We'll be talking with him, as you know, later on the broadcast. But you're talking about 30 to 50 percent growth there. What are you talking about? Because we're looking at a 25 percent decline in this quarter.
FRANCIS: He believes that in a strong -- in a healthy economy, that's what you can do. And that's what Cisco got so famous and made people so rich on for so many years. He still thinks that that's achievable again. Not a lot of belief on Wall Street right now that they can do it.
DOBBS: Yeah, it's kind of tough to take a 20 to 25 billion dollar growth rate and compound it out at 25, 30 percent.
FRANCIS: History is not on their side.
DOBBS: Thanks, Bruce.
Well, more legal trouble for the analyst called the "Queen of the Internet." Morgan Stanley and its Internet analyst, Mary Meeker, today facing another lawsuit over Meeker's research. That suit alleging that Meeker provided biased research on AOL Time Warner, which is the parent, of course, of CNN: this following two suits last week that made similar allegations about Meeker's research on both Amazon.com and eBay. Morgan Stanley saying in a statement that the claims were totally without merit.
Well, Phil Dow sees the markets beginning to show some signs of recovery, but he cautions stocks will not return to the record levels reached last year. Phil Dow, stock market strategist, joins us now from Minneapolis, Minnesota.
Good to have you with us, Phil. PHIL DOW, DEAN RAUSCHER WESSELS: Thank you, Lou.
DOBBS: Give us -- give us the basic driving imperatives for this somewhat optimistic outlook, if you will.
DOW: Well, I think things have been so bad -- we thought in the late winter that things had reached their worst, and then indeed they got worse with the second quarter. If you watch closely the technical condition of the market, you see that the majority of Nasdaq stocks are above their 200-day moving averages. New York Stock Exchange composite, same story.
It's been basically a time of trial for tech and telecom companies. We think basically you see some smarter money coming in later in the day every day of the last week or two. We think some people are making commitments to the longer pull. We think there's a chance, though, that you'll see within the next six months a turn. And that could be a turn in visibility or it could be actual anecdotal evidence from companies that things are getting better.
That's all this market needs to take off, Lou.
DOBBS: All it needs to take off is the reality or the perception, is that what you just said, Phil?
DOW: Either -- either one. Either one would do it.
DOBBS: What if we prefer reality here? How cautious should we be as investors?
DOW: I think in general Warren Buffett didn't get his track record or any of the other great investors by being cautious in times of uncertainty, and we think this is a risk proposition. So if you look at the market leadership companies -- Cisco is an example of one -- they're not going to lose that market leadership position. When the economy turns, they'll be there. So our sense is that as an investor, as a person that's willing to accept risk now is the time to take positions.
DOBBS: Well, Phil, as you -- as you well remember Warren Buffett didn't invest a dime in technology either.
DOW: Right. And he said he wasn't going to do airlines either, and he did it as a mistake. But my guess in the long pull here is that premium companies that can give above-average growth rates will do well. We're in a profits recession. When profits recover, they'll do better.
DOBBS: Good. Well, let's all hope you're exactly right.
Let's take a look at your most recent stock picks, show our viewers how you're doing, put up your track record, if you will, before we move to the -- to the projections. Stock picks -- this is from June 6th. And your picks were Medtronic, Schering-Plough, El Paso, Vintage Petroleum. And as you can see there, Medtronic up better than 3 percent, Schering-Plough off almost 13 percent, El Paso down 15 percent, Vintage Petrol down just almost 17 percent. And over the course of that time, of course, the S&P 500 down over 5 percent to sort of mitigate that.
What's going on there, Phil?
DOW: Well, these are all longer-term recommendations.
DOBBS: Sure.
DOW: The only one with a real change has been is Vintage. Our analysts cooled a little bit on that space. So we recommend people keep that stock for the long pull. It's got a wonderful position in oil properties over the long pull.
Schering to us is a very attractive one in that they've got a dominant position in...
DOBBS: So you're -- you're staying with these stocks then, Phil?
DOW: Yes, we like them.
DOBBS: OK. And why don't you add a couple, if you have them, to the list and so we can have all the fun of watching your track record?
DOW: Absolutely. Well, we'll reiterate Schering. We think that one still has a dominant position in chronic hepatitis C therapy and also in allergy medicine. Secondly, Comcast. We like that name a lot and think it's a win-win proposition whether they get the AT&T broadband business or not.
DOBBS: Right. Are you selling anything?
DOW: Right now we're just very cautious on anything that's economically sensitive, like a cyclical company.
DOBBS: OK, Phil Dow, as always good to have you with us.
DOW: Thank you, Lou.
DOBBS: Thank you.
In tonight's "Tech Watch," Microsoft's appeal to the Supreme Court. Tim O'Brien from Washington joining me now with the latest on that case -- Tim.
TIM O'BRIEN, CNN CORRESPONDENT: Lawyers for Microsoft say that trial Judge Thomas Penfield Jackson was so biased, his entire decision should have been thrown out. The Court of Appeals last June ruled Jackson had improperly granted interviews to the media and had made other comments off the bench that put his objectivity in question.
The Appeals Court seemed to agree when it rejected Judge Jackson's breakup of Microsoft, but it then went on to uphold Jackson's conclusions that Microsoft was an illegal monopoly. It found that part of the decision reasonable, and ruled Microsoft would have to show not just the appearance of bias, but actual bias to have it overturned.
In its appeal to the Supreme Court today, Microsoft lawyers say that part was wrong, and that other courts have held that once an appearance of bias is established, from that point on everything the judge rules should be thrown out.
Will the high court take the case? Lou, we probably won't know until mid-October if this runs its normal course.
DOBBS: OK, Tim, thanks for the update. Tim O'Brien from Washington.
Ahead here on MONEYLINE, a contentious conference in Washington. Scientists attacking other scientists. The issue: cloning humans. We'll take a look at how business schools are hitting the Rolodex. They're trying to drum up work for struggling recent MBA graduates. And fighting to be the king or the queen of all radio. Who's winning the battle to rule the dial? That story is coming right up. Stay with us.
(COMMERCIAL BREAK)
DOBBS: The Vatican today weighed in on the cloning issue with unusually harsh language. A team of scientists working on a project to clone human beings talked before a committee of the National Academy of Sciences, and Cardinal Joseph Ratzinger accused the head of that team of scientists of trying to emulate Hitler. The cardinal was quoted in Italian newspapers as saying that the team's research was fulfilling Hitler's plans for creating a master race.
That team of scientists today met with reporters in Washington to share the results of their research. The heart of the controversy: the team's plans to clone human beings.
What began as an announcement at the National Academy of Sciences quickly turned into a heated debate over the feasibility and the appropriateness of cloning.
CNN's medical correspondent Elizabeth Cohen was there and joins us now -- Elizabeth.
COHEN: Lou, it's really been an incredible, very passionate, very hostile day here at the National Academy of Sciences. A group that wants to clone human beings announced that they have recruited 200 infertile couples who want to have the world's first clones. The way it would work is that scientists would take DNA from either the mother or the father, make an embryo out of it, and then insert that embryo into the woman so that the baby would be a clone of either the mother or the father.
Now, Panos Zavos, who is a former professor at the University of Kentucky, says that this is the only way that some infertile couples can have a child of their own.
(BEGIN VIDEO CLIP) PANAYIOTIS MICHAEL ZAVOS, THE ANDROLOGY INSTITUTE: Because they want a child. Very simple. I think we're talking about a very severe problem that they have, infertility, and they want to complete their life cycles. They want to have children, biological children of their own.
(END VIDEO CLIP)
COHEN: Now many people have wondered does this group and another group that's also trying to clone human beings, do they have the technological know-how to do it. Well, the scientific director of the other group, known as ClonAid, says that they certainly do.
(BEGIN VIDEO CLIP)
BRIGITTE BOISSELIER, CLONAID: The demand is huge. The demand is there, and this will be done. And I hope it's done properly, in a very -- in a very safely way. I'm doing it and I hope that I can publish that very soon and share that with you.
(END VIDEO CLIP)
COHEN: Now these -- now these two groups say that they have ways of screening embryos, and that if an embryo turns out to have genetic abnormalities they simply discard it and wouldn't use it to impregnate the woman. And then, while she's pregnant, every week they would have amniocentesis or ultrasound done to see if there was anything going wrong with the fetus, and if something was wrong, then the woman could always aboard.
Now, Ian Wilmut, who is the scientist who made Dolly the cloned sheep four years ago, said that he thinks that cloning in humans is a terrible idea.
(BEGIN VIDEO CLIP)
IAN WILMUT, ROSLIN INSTITUTE: Screening in ineffective. It is not possible to think of a way of screening out defective -- the most appropriate embryos. And hence, what we should expect would be late abortions either occurring spontaneously or being induced deliberately in the second, perhaps even the third trimester of pregnancy in order to prevent the birth of abnormal children. That would be a choice here for the commission to make.
(END VIDEO CLIP)
COHEN: Wilmut noted that the vast majority of cloned animals have turned out to have horrible deformities -- Lou.
DOBBS: Elizabeth, at this point, does the national academy have a position on cloning human beings?
COHEN: No, they don't really have a position. This was just a time for both sides to air all of their evidence and all of their opinions on this issue.
DOBBS: OK, Elizabeth, thank you very much for bringing us up to date. Elizabeth Cohen from Washington.
Investors have witnessed some grim signals about the slowing economy and a profit recession hitting corporate America and hitting it hard. But however difficult things may seem to be in the United States, the situation may be far worse across the Atlantic.
Kitty Pilgrim reports.
(BEGIN VIDEOTAPE)
PILGRIM (voice-over): Europe's downpour of bad news in recent days may mean slower growth for the United States. One reason: It will mean weaker consumer markets overseas. Plus U.S. companies will have to export fewer goods.
DAVID MARLPASS, BEAR STEARNS: The European slowdown adds to the slowdown in the U.S. It just means that we've got slower world growth going on.
PILGRIM: Germany, the largest economy in Europe, is dangerously close to recession. Manufacturing orders slumped for the second quarter in a row, down 2 1/2 percent in June.
DAVID THWAITES, BNP PARIBAS: Unemployment is now on an up-trend. Output is clearly falling. Yesterday, we had some manufacturing orders figures, showed a very sharp drop of 2 1/2 percent in June.
PILGRIM: German companies announced 16,000 job losses last month: 1,200 more came Tuesday from BASF, Europe's largest chemicals group. It posted a 15 percent decline in second-quarter profit, worse than expected. But worse still: The company says it doesn't expect improvement in the industry before 2002.
European technology is hurting. In the telecom sector, France's Alcatel, Europe's No. 4 phone equipment maker, Marconi, and Ericsson are collectively cutting more than 60,000 jobs. Shipments of personal computers to retail stores fell more than 15 percent in the second quarter. Infineon Technology, Europe's second-largest maker of computer chips, is cutting 15 percent of its work force, saying it's not clear when the market for computer chips and other semiconductors will recover.
European retail sales fell unexpectedly in May, and economists think employment concerns depressed spending. Still, global market watchers hold out hope.
JOYCE CHANG, JPMORGANCHASE: World growth is going to be its weakest since the early 1990s, but in our opinion, global recession is still not in view.
(END VIDEOTAPE)
PILGRIM: The U.S. remains the engine of growth for the world economy, so it will be hard for the rest of the world to recover until the U.S. actually does. And that depends on a lot of policies, on Fed policy, also on tax policy and energy prices. And now, the entire world is counting on it -- Lou.
DOBBS: Thanks, Kitty. Thank you very much.
Coming on up on MONEYLINE, we told you about the ratings battle in the evening news anchor chair last night. Tonight, we focus on radio. Peter Viles with a report on the competition behind the microphones.
(BEGIN VIDEO CLIP)
RUSH LIMBAUGH, RADIO TALK SHOW HOST: Folks, we are in the twilight zone here.
VILES (voice-over): Rush Limbaugh is the king of radio, but that's partly because he doesn't have to go head-to-head against the original shock jock, Howard Stern. And Don Imus is as cantankerous as they get, but he doesn't have to compete against radio's queen of mean, Dr. Laura Schlessinger. That said, Limbaugh is the industry's ratings leader: 15 million or more listeners per week. Dr. Laura is second, Stern is third, followed by Dr. Joy Browne, Jim Bohanon, and Don Imus.
MICHAEL HARRISON, "TALKERS" MAGAZINE: Rush Limbaugh is the king. He is the No. 1 radio personality in America. He has the most listeners of any other talk show host, and he's the biggest star that we've seen in at least 25 years, maybe more, in American radio. But when it comes to younger demographic talk, Howard Stern is king.
VILES: The biggest battle in network radio is at the corporate level, and it is a heavyweight fight. In one corner, the quiet Texan, Lowrey Mays. His Clear Channel has 1,200 stations. His Premiere Radio Network syndicates Limbaugh, Dr. Laura, and the mysterious overnight man Art Bell.
In the other corner, the brash New Yorker and Stern's boss, Mel Karmazin.
HOWARD STERN, RADIO TALK SHOW HOST: He owns CBS, he owns Viacom, he owns Infinity. He owns me.
VILES: Sumner Redstone would disagree with that, but Karmazin's Infinity Broadcasting, a division of Viacom, has 180 stations, manages Westwood One radio networks, has syndication deals with Stern and Imus, plus news from CBS, Fox and CNN.
(END VIDEOTAPE)
VILES: Now, there is a third big player in network radio, ABC, which deserves special mention because it employs the legendary Paul Harvey. And Mr. Harvey is 82 years young has been ill this summer and off the air. So we join his 18 million listeners in wishing him a speedy recovery -- Lou.
Pete, that's fascinating. And one of the things that I have heard -- I can't speak to this as absolute fact -- but I've always been told that the highest-paid talent at ABC, radio or television, is Paul Harvey.
VILES: Paul Harvey. So that Stern and Limbaugh are not the original trend-setters here. Paul Harvey is a terrific value to the ABC news brand on the radio, because stations that want Paul Harvey have to get the ABC News. So he really is the star of ABC News on the radio.
DOBBS: And we do wish him a speedy recovery.
VILES: We sure do.
DOBBS: Thank you, Pete.
Coming up next on MONEYLINE, three days in a row of oppressive heat in the Northeast. Electricity prices are surging. We'll take a look at how business schools are scrambling to find jobs for those newly minted MBAs, who are now faced with a slowing economy. And one of the most powerful executives in the technology business as his company reports sharply lower profits. Cisco president and CEO John Chambers joins me next.
(COMMERCIAL BREAK)
ANNOUNCER: LOU DOBBS MONEYLINE continues. Here again, Lou Dobbs.
DOBBS: Topping tonight's headlines, a big rebound in worker productivity. Productivity in the second quarter rising at an annual rate of 2 1/2 percent. That is the best showing in a year. It comes after a revised gain of just a tenth of a percent in the first quarter.
Stocks sending the day -- ending the day, rather, mixed: The Dow closing up modestly, but the Nasdaq finishing slightly lower.
Today's closing bell, following that, Cisco reported lower earnings for a second-straight quarter.
Taking a look now at what our reporters are working on. First, Christine Romans at the New York exchange -- Christine.
ROMANS: Lou, some quarterly reports out tomorrow that could drive the markets. We'll have a preview.
CLARKIN: And Cisco was among the companies reporting earnings today. We'll take a look at the story behind those numbers.
DOBBS: And we'll be talking with Cisco's CEO, John Chambers. We'll be talking to him about whether there's hope for a turnaround later this year. Also tonight, a report from Chicago on how one business school is reaching out to MBA grads having a tough time finding work.
First, the markets. A mixed close on Wall Street. The Nasdaq closed lower, the third session in a row, but only slightly lower. The Dow gaining following a strong productivity report, as we said. The Dow receiving a lift as well from some -- from some modest gains in drug, retail and financials. But 10 of the Dow 30 did finish lower, though not by much, the Dow still gaining 57 points.
On the Nasdaq, chip and chip-equipment makers taking a hit following a downgrade of the sector by Credit Suisse First Boston. The Nasdaq down six points on the day.
Taking a look at some of the widely held: 3M, one of the biggest gainers on the Dow, up $1.48 a share. Merck and Johnson & Johnson also higher, posting modest gains. Cisco Systems closing down almost 1 1/2 percent, ahead of its earnings report, which came after the bell.
And on the Big Board, market breadth was positive, advancers beating decliners by an almost 9-to-7 margin. On the Nasdaq, decliners beat out advancers by a slight margin.
Now, taking a look at what investors and traders are expecting on Wall Street tomorrow, or should be. Christine Romans again -- Christine.
ROMANS: Hi there, Lou. Well, folks saying today it felt really like a mixed bag overall, and tomorrow they're going to be looking at a couple of key economic reports for some sort of direction as the June wholesale trade number -- this usually doesn't get too much excitement in the stock market -- but it could be something that fixed-income folks are watching.
And we're also going to get a look tomorrow at "The Beige Book." That comes out at 2 o'clock Eastern Time. It's really a regional look, an anecdotal look at the economy. Folks talking about this there as well. There's a 10-year note auction tomorrow. That could keep things a little edgy or maybe a little soft even in the fixed- income market, in the bond market. So we'll be closely watching that as well.
There are earnings to talk about, too. We're almost through this earnings reporting season, but there are some names we'll be watching tomorrow: Aetna, Clorox, Brinker International -- I love this ticker symbol, EAT, E-A-T -- Waste Management and Winn Dixie are among just some of the names that are on-deck. We've also got some oil companies, a couple of retailers as well.
In terms of that Brinker International, it's interesting that Merrill Lynch analyst Peter (UNINTELLIGIBLE) keeps saying, he thinks some of these casual diners are going to benefit from that tax rebate, and he reiterated his buy on EAT today, even though a lot of those restaurants had a pretty poor showing on the Big Board here today.
So we'll be closely watching those. Also, Clear Channel Communications. This one trading down just a little bit in the market right now, in the post-market activity. And we're watching the futures soften a little bit here. The S&P 500 futures are a little bit soft. That would indicate if these kinds of levels hold, Lou, that we could be looking at a little profit-taking for the blue chips when we head into tomorrow's session -- Lou. DOBBS: And of course, these -- these levels seldom if ever hold from this early in the process until tomorrow morning, right?
ROMANS: That's right. We've got a lot of get to, and don't forget, we've got European and Asian trading to look at as well before we get to tomorrow's opening bell. But a lot of folks talking about Cisco-mania, too. They say Cisco and how it starts to look in the pre-market tomorrow could be interesting, of course, overall.
DOBBS: And your taking away Greg Clarkin's entire perspective there. Be careful, Christine.
Greg Clarkin, what do you have to say for yourself?
CLARKIN: Well, back to you, Christine.
(LAUGHTER)
OK. I'll tell you, Lou, in terms of Cisco, you know, tech traders have been waiting for days anticipating this report, you know, really just hoping there will be some hidden nugget of good news in there. And as expected, Cisco meets the estimates, they do come out with some very, very cautious comments, and caution has not been good these days on Wall Street.
We've been talking about the quiet trade, the trading range of the Nasdaq. Take a look at this chart. This basically chronicles the Nasdaq over the last couple of weeks during the height of earnings season for technology companies. And look at the real range-bound activity here.
Now, from the recent high and the recent low, just 128 points separate the highs and lows on the Nasdaq just over the last couple of weeks. So it has really been locked -- locked in a tight, tight range. And at this point, the tech traders we speak to say, you know, the only thing that's going to snap it out of that is getting some strong signals from corporate America, technology companies specifically, that can indicate when a bottom is going to be hit or when a turnaround may occur. And they're just not getting that.
Now in terms of Cisco, I wanted to show you quickly back here on the wall what it is doing after hours. It closed at $19.26 a share on the day. After hours it is losing ground. It's at 18.90. So right now, the conference call and the comments from CEO John Chambers not being digested positively by those folks trading in the stock in extended hours.
Lou, back to you.
DOBBS: Greg, thanks. Greg Clarkin.
In tonight's "Powering America," a heat wave sweeping the Northeast: not only straining supplies, but also sending electricity prices soaring from Washington to Boston. In the mid-Atlantic region, spot electricity prices in the wholesale market jumping to almost $250 per megawatt hour. That is up 200 percent from yesterday. Crude oil prices are also gaining on rising demand and dwindling supply. The weekly report from the American Petroleum Institute showing crude inventories fell by more than 3 million barrels for the week. Today in New York trading, a barrel of light sweet crude gained 16 cents, settling at $27.90 a barrel.
General Motors today unveiled a prototype of a new fuel-cell generator that it's hoping will be used for both cars and homes, at least in the future. GM says it envisions dozens of homes or businesses being powered by one fuel cell generator that would also be used to recharge the batteries for electric vehicles. For now, however, the company doesn't have a price or timetable when all of this will be available.
In tonight's "MONEYLINE Focus," a look at some corporate headlines. Online grocer Peapod taking advantage of the collapse of one of its competitors. Peapod is extending its service into more areas around Washington, D.C., trying to lure customers of HomeRuns.com, which folded less than a month ago. Online auction site eBay buying HomesDirect.com, a company auctioning foreclosed properties. That deal expands its real estate offerings 10-fold. Terms of the deal not disclosed.
Viacom's president, Mel Karmazin, has sold a 7 percent stake in the company, worth roughly $35 million. Karmazin's sale is in stark contrast to Viacom's chief executive, Sumner Redstone. Redstone's 200 middle -- million total shares of the company stock, he has never, ever sold a single share. And I think I misspoke. I said 7 percent of the company shares. It's 7 percent of Mel Karmazin's shares sold for $35 million.
Coming up next here on MONEYLINE, we'll tell you about a growing trend among employers: yanking, delaying, putting off job offers. We'll tell you what some business school graduates are doing about it, or at least trying to. And later, our roundtable will take a look at the market in the wake of the Cisco quarterly performance.
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DOBBS: In our "Sector Report" tonight, the state of the employment market, particularly for college graduates. In the case of MBA students, they started their programs at the height of the economic boom, when employers tried just about everything to lure them to their -- to their places of employment. But the current economic slowdown forcing companies to defer or rescind job offers altogether.
Now one business school is asking its alumni for help.
Lisa Leiter has the story.
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LISA LEITER, CNN CORRESPONDENT (voice-over): Some of Kellogg's Business School graduates not only left Northwestern with a degree, about 50 of them also left with deferral letters. They managed to find jobs, but employers pushed back their start dates to as late as fall 2002. It's an alarming trend facing graduates nationwide.
JOHN CHALLENGER, CHALLENGER, GRAY & CHRISTMAS: This is unprecedented. It's never happened before. Companies have never pulled offers from grads in this kind of way.
LEITER: So Kellogg's dean on Friday sent an e-mail plea for help to alumni, asking them to consider hiring these students, quote, "on a temporary consulting basis," and that, quote, "They need to have an income to pay for rent, food and to begin repaying their loans."
Kellogg alum Tim Urquhart received the e-mail, but said his company may not be able to help.
TIM URQUHART, FIRST ANALYSIS CORPORATION: It's hard to hire someone knowing they're going to leave in six or nine months.
LEITER: Jobs of some sort are available, but they might not require a master's degree.
DIANE SWONK, CHIEF ECONOMIST, BANK ONE: These kids could also do a lot of other things in the interim, and that's important as well. I mean, certainly when I graduated from my masters, not my MBA, but when I got my master's, I was willing to wait tables and do all kinds of things, and those jobs are still out there.
LEITER (on camera): The question is whether companies will honor their job offers for somewhat better positions if business doesn't bounce back a few months down the road.
Lisa Leiter, CNN Financial News, Chicago.
(END VIDEOTAPE)
DOBBS: Coming up next on MONEYLINE, our panel of experts talking about what it may take to kick start the market and give investors reason to move off the sidelines. That's coming up.
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DOBBS: Still to come on MONEYLINE, I'll be talking with John Chambers, the CEO of Cisco Systems, and our panel of worldwide experts will take a look at the prospects for the market and what investors should be focusing on in the days and weeks ahead. You know, the long term. We'll be right back.
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DOBBS: Cisco Systems out with fiscal fourth-quarter results after the bell. The company posting a 99-percent plunge in net income, but meeting lowered expectations at 2 cents a share versus 16 cents a year ago.
Joining me now from San Jose, California, the president and CEO of Cisco Systems John Chambers. John, good to see you.
JOHN CHAMBERS, PRESIDENT & CEO, CISCO: Lou, it's a pleasure again.
DOBBS: I know these -- I know these are tough times for you and just about everyone, and of course, your investors. These results just about in-line with what Wall Street expected. What are the -- what are the best case of what you have going forward?
CHAMBERS: Well, Lou, actually the quarter came in where we expected, and that really indicates you may be coming to a leveling- off point. Our business in the U.S. actually in enterprise grew, (UNINTELLIGIBLE) was just down slightly.
The changes in strategy and implementation we outlined in February, March, April are taking hold. We generated 1.7 billion in cash, 6.4 billion for the year, had 18.5 billion in total cash, (UNINTELLIGIBLE) for 31 days. We gained market share versus most key competitors, and we're positioned well in our customer accounts.
So -- and as the market comes back, we think we've got a very solid base to build upon, and we'll use this opportunity to realign our resources to where we can make a profit.
DOBBS: John, tell me, because it is -- I've followed a number of analysts on the Street concerning Cisco. It looked to me like they were looking for about a 1 percent downside for Cisco in the first quarter of next year. You -- you guys today talking 1 to 5 cents. Would you call that guiding us all lower?
CHAMBERS: No, I would actually say when we said flat to down 5 percent that was a much more positive comment than I made going into this quarter. Also, book to build was above one for last quarter. Book to build was one. And it was very linear this quarter in terms of shipments and pretty linear in terms of orders. So this was a better quarter.
Still got a ways to go versus what we can all be proud about, but a very good step in the right direction I guess is the bottom line here.
DOBBS: Are the layoffs over?
CHAMBERS: Well, you never say never, as all of us have learned hard in this industry. But in terms of the growth opportunities in this market, I tend to be the optimist, and I think that optimism will bear out over time. We made the decision to do this once very aggressively. Unfortunately, I had learned that before with my experience in the computer industry, in mainframes and minicomputers. And so we packaged it all together in the February-March-April time period. Caught a lot of constructive heat for doing that. But now, we've moved past that, and in the last quarter, we focused on our customers, profit contribution, how do we gain market share. And I think we did a pretty good job versus expectations. Now, the key is do we take it to the next step and the step after that.
DOBBS: You were among the very first, John, to start talking about visibility, or lack thereof. Give us -- give us your vision from here. Is it getting easier to see what lies ahead? CHAMBERS: That is part of the good news, Lou, is that the visibility is starting to improve. If you look out the next 2 to 3 months -- and time will tell if we're as good next quarter as we were this last quarter -- it was very linear, we understand where the opportunities were, we understood how to gain the market share, and we understood the size of the market.
So we're -- the last couple of quarters we'd been flying pretty blind and the visibility was terrible. We're starting to see the short-term visibility increase. And what we actually are preparing the market for is a conservative view about this quarter and next. And then we're going to rebudget in the January time period. And what we're really saying is we're cautiously optimistic at that time, but we're going to realign our goals internally and our budgets based upon how the market evolves at that stage.
DOBBS: In your judgment, is the worst over for Cisco and for the technology sector?
CHAMBERS: Well, you never can be sure of that. The caveats on the negative side: Watch consumer spending, because that has a huge effect on my customers, CEOs (UNINTELLIGIBLE) money. Watch this Asia- Pacific-Europe situation get worse and come back and cause a second wave.
On the positive side, the CEOs get it: They're going to spend the money. Our business in the U.S. is close to leveling off and hopefully will this next quarter. Time will tell on that.
So I'm cautiously optimistic for the first time in probably five months.
DOBBS: OK. John Chambers, good to talk with you. And congratulations...
CHAMBERS: Lou, it's a pleasure, as always.
DOBBS: ... on finding some optimism.
CHAMBERS: Well, I hope to come back next quarter with a little bit better news, and we'll take it a step at a time, Lou. Good to see you again.
DOBBS: Got a deal. Thank you.
Let's get some perspective now on the day and what may be in store for the next few days. Joining me now, Christine Romans. Phil Dow rejoins us. Bruce Francis and Jan Hopkins in our studios in New York City.
Jan, let's start with you. What's your take on these markets?
JAN HOPKINS, CNN CORRESPONDENT: Well, I think that what he just said, "cautiously optimistic," is a whole lot better than what we heard a little while ago, which was falling off a cliff. So this could provide the beginnings of a bottom for the market, and that -- that's what I'm hearing.
DOBBS: Well, what I didn't -- what I didn't want to talk to John about -- might as well have -- his stock is off about 60 cents in after-hours trading, and a lot of people not finding reason for optimism here, Bruce.
FRANCIS: And Lou, just because we're approaching a bottom doesn't mean that we're not going to bump along that bottom for a period of time as we search for signs of an upturn.
I didn't hear Chambers saying that yeah, people are really coming back, starting with aggressive plans again. Watch for the export...
DOBBS: You know -- for the what?
FRANCIS: Watch for the export of this tech recession overseas. We've definitely seen the signs of it now, and that second wave can really kill you.
DOBBS: Yeah. As Kitty Pilgrim reported, Germany on the brink of recession. But John Chambers, when you're talking about you didn't hear that optimism, cautious optimism, of all of the CEOs, John Chambers truly a chastened John Chambers...
FRANCIS: Certainly.
DOBBS: ... for the optimism going into the fourth quarter of last year, which fooled a lot of people.
So, Phil Dow, your thoughts?
DOW: Well, we had a good productivity report today. That surprised some skeptics, and I think Chambers' comments are altogether pretty positive. You know, we're not buying Cisco today or don't own Cisco because of this report or what's likely to happen in the next week. It's what he mentioned: capturing and maintaining market share for the eventual recovery.
So today I think it was two wins for the basic news flow.
DOBBS: Are you saying you're ready to buy Cisco?
DOW: I own Cisco. We would recommend Cisco.
DOBBS: Oh, I thought you said you didn't own it.
DOW: No, no. We recommend Cisco.
DOBBS: OK. Well, you're already there. The rest of us have got to catch up, or not.
All right, Christine, the mood there more -- you're going to say slow, lazy, hazy days of summer. You're not going to say that, are you?
ROMANS: No, I'm not. I'm going to say, listen, what I'm hearing from portfolio managers and investment professionals is know what you own and why you own it. And one of reasons that a lot of people are so emotional about Cisco is that a lot of people jumped on that bandwagon when that stock was rocketing higher, and then they got caught. So there's still a lot of emotion around Cisco. But what I'm hearing mostly is just know what you own and why you own it.
DOBBS: OK. And sometimes even that's not a guarantee, as we have watched over the course of the past year and a half.
Phil Dow, thanks a lot for staying with us.
DOW: Thank you, Lou.
DOBBS: Jan, Christine, Bruce, thank you very much.
Up next, we'll take a look at your e-mail and "Ahead of the Curve."
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DOBBS: Keep an eye on shares of Cisco tomorrow. As we've been telling you this evening, Cisco meeting Wall Street's lowered expectations for the fiscal fourth quarter. The stock moved lower tonight in after-hours trading. But as you just heard John -- John Chambers saying, visibility improving. He's looking for a slightly better result in the quarters ahead.
Quarterly results from Aetna, Waste Management, Clorox, Polo, Ralph Lauren, all due out tomorrow. Also, we'll have a look at the Fed's "Beige Book," tell us what's happening with the regional economies.
Time now for a look at some of your thoughts. Milton in California writing to ask us to take a look at what he says could be a major hole in the Labor Department's employment numbers. He writes: "We now have an environment where high-tech jobs are being destroyed, not created, and the Bureau of Labor Statistics still assumes 155,000 are being created per month."
Now Milton is exactly right, and he's talking about the Labor Department's bias adjustment to account for jobs generated by new companies and not included in their so-called "jobs survey." The bureau adds thousands of jobs to the monthly payroll, that bias adjustment. Economists saying the adjustment is necessary to accurately count the total number of jobs created.
Incidentally, that bias adjustment has been revised upwards for the past eight years.
Wadell is critical of the Federal Reserve's chairman, who he'd like to see someone in Alan Greenspan's position, as he writes, who would: "... read today's newspaper and not the paper from last month."
Onto to analysis and analysts. Steve writes to say: "We would like to see more analysts on your show, as long as they keep their full disclosure straight. Keep up the good work." And Rick in Hawaii writes, I think poignantly and profoundly: "Two years ago nobody in the investment community could think of anything that could derail the fantastic economy. Now, nobody can say exactly what is going to turn this economy around. Oh, well, time to go surfing. Aloha from Maui."
And Rick, we say mahola, or thank you, for those thoughts. Send us your comments at MONEYLINE at cnn.com.
That's MONEYLINE for this evening. We thank you for being with us. I'm Lou Dobbs. Good night from New York. "CROSSFIRE" is coming up next.
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