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American Morning

Minding Your Business: Troubled Kmart Getting Booted Off Wall Street

Aired December 17, 2002 - 07:47   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.


PAULA ZAHN, CNN ANCHOR: Troubled Kmart is now getting booted off of Wall Street. Andy Serwer is here with the details.
What does that mean? Good morning.

ANDY SERWER, "FORTUNE" MAGAZINE: Good morning to you, Paula.

Well, the company's in trouble. It's getting de-listed.

Let's talk about the stock market first. Yes, Virginia, there is a Santa Claus rally on Wall Street. Stocks soured yesterday. The Dow up 193 points. Nasdaq, the S&P followed suit, all of the other indexes or indices, depending on how you call it.

ZAHN: It is about time.

SERWER: There is a Santa Claus. That means stocks do tend to go up in December and January. Studies show that on average, stocks go up 4.2 percent in those two months. Why? People anticipating the New Year. This year in particular, a Republican president, a Republican- controlled Congress, tax cuts, plus a little excitement over no transit strike in New York yesterday, and that's what sent stocks up.

ZAHN: Really?

SERWER: Yes, oh, absolutely. Things like that...

ZAHN: Well, yes, they were talking, what, about that costing the city potentially $350 million a day had the strike gone on?

SERWER: Yes, that's right.

ZAHN: Let's talk Kmart now.

SERWER: Yes, Kmart...

ZAHN: What does that mean when...

(CROSSTALK)

SERWER: Well, what happens when you're de-listed, it means you can't call your broker up very easily. It's not traded on the Big Board anymore. When a stock falls below $1, Paula, for a month, that means they yank it off the Big Board. Kmart now, you can see it's gone from 27. It's now 58 cents -- below $1 for a month. It joins Enron, it joins WorldCom, it joins US Air -- a whole bunch of them. Now, also out of Kmart, some news, they're going to be closing a lot of stores. We know that. "The New York Times," though, reporting a lot more stores than we thought, maybe 600 stores.

ZAHN: Really?

SERWER: In a lot of states in the Sunbelt, you can see Texas -- there's our map. The red is where they're going to be closing a lot of stores probably.

ZAHN: Oh, so, we know for sure where they're closing?

SERWER: Well, we know they're going to be closing a lot of stores. The story suggests more than they anticipated in those few states, especially you can see the Sunbelt and the Midwest there. Basically, this means that Wal-Mart is eating its lunch in some of those fast-growing parts of the country, which is bad for that store.

ZAHN: Yes, it's pretty depressing to have to look at it there.

SERWER: Yes.

ZAHN: Let's talk McDonalds now.

SERWER: Yes.

ZAHN: Some new products on the horizon?

SERWER: Absolutely. McDonalds is going to be getting into pasta. They are apparently doing a deal to develop 20 to 30 Italian- theme restaurants with a company called Fazolis. Now, this isn't the first foray into non-burger faire for McDonalds. If you've been paying attention, they're into all of these other restaurant chains -- Donatos, Boston Market -- of course, it used to be Boston Chicken -- Mexican good, Pret A Manger and now Italian good.

Basically what this means, Paula, is -- and they've been saying this -- but Americans are finally eating less hamburgers. It really is true. For years, McDonalds denied it, but it is unassailably true that on the margin, people are getting away from burgers and fries.

ZAHN: Oh, yes, and it's so much healthier to eat fettuccini alfredo than a big burger with cheese and...

SERWER: That it's easy on the cheese sauce, that's true, you're right.

ZAHN: But these are not attached to McDonalds, just owned by McDonalds...

SERWER: No, they'll be separate.

ZAHN: ... created by McDonalds.

SERWER: Exactly. Separate stores, it won't be under the Golden Arches, per se. ZAHN: And it's not like you can go in and ask for your fettuccini alfredo and it will come out and then it will be ready...

SERWER: With fries on the side, no, you can't do that.

ZAHN: No, OK. All right, well, that's interesting.

SERWER: Yes, it is.

ZAHN: Spanning the horizons, Andy Serwer, thanks so much.

SERWER: Thank you.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.





Wall Street>


Aired December 17, 2002 - 07:47   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAHN, CNN ANCHOR: Troubled Kmart is now getting booted off of Wall Street. Andy Serwer is here with the details.
What does that mean? Good morning.

ANDY SERWER, "FORTUNE" MAGAZINE: Good morning to you, Paula.

Well, the company's in trouble. It's getting de-listed.

Let's talk about the stock market first. Yes, Virginia, there is a Santa Claus rally on Wall Street. Stocks soured yesterday. The Dow up 193 points. Nasdaq, the S&P followed suit, all of the other indexes or indices, depending on how you call it.

ZAHN: It is about time.

SERWER: There is a Santa Claus. That means stocks do tend to go up in December and January. Studies show that on average, stocks go up 4.2 percent in those two months. Why? People anticipating the New Year. This year in particular, a Republican president, a Republican- controlled Congress, tax cuts, plus a little excitement over no transit strike in New York yesterday, and that's what sent stocks up.

ZAHN: Really?

SERWER: Yes, oh, absolutely. Things like that...

ZAHN: Well, yes, they were talking, what, about that costing the city potentially $350 million a day had the strike gone on?

SERWER: Yes, that's right.

ZAHN: Let's talk Kmart now.

SERWER: Yes, Kmart...

ZAHN: What does that mean when...

(CROSSTALK)

SERWER: Well, what happens when you're de-listed, it means you can't call your broker up very easily. It's not traded on the Big Board anymore. When a stock falls below $1, Paula, for a month, that means they yank it off the Big Board. Kmart now, you can see it's gone from 27. It's now 58 cents -- below $1 for a month. It joins Enron, it joins WorldCom, it joins US Air -- a whole bunch of them. Now, also out of Kmart, some news, they're going to be closing a lot of stores. We know that. "The New York Times," though, reporting a lot more stores than we thought, maybe 600 stores.

ZAHN: Really?

SERWER: In a lot of states in the Sunbelt, you can see Texas -- there's our map. The red is where they're going to be closing a lot of stores probably.

ZAHN: Oh, so, we know for sure where they're closing?

SERWER: Well, we know they're going to be closing a lot of stores. The story suggests more than they anticipated in those few states, especially you can see the Sunbelt and the Midwest there. Basically, this means that Wal-Mart is eating its lunch in some of those fast-growing parts of the country, which is bad for that store.

ZAHN: Yes, it's pretty depressing to have to look at it there.

SERWER: Yes.

ZAHN: Let's talk McDonalds now.

SERWER: Yes.

ZAHN: Some new products on the horizon?

SERWER: Absolutely. McDonalds is going to be getting into pasta. They are apparently doing a deal to develop 20 to 30 Italian- theme restaurants with a company called Fazolis. Now, this isn't the first foray into non-burger faire for McDonalds. If you've been paying attention, they're into all of these other restaurant chains -- Donatos, Boston Market -- of course, it used to be Boston Chicken -- Mexican good, Pret A Manger and now Italian good.

Basically what this means, Paula, is -- and they've been saying this -- but Americans are finally eating less hamburgers. It really is true. For years, McDonalds denied it, but it is unassailably true that on the margin, people are getting away from burgers and fries.

ZAHN: Oh, yes, and it's so much healthier to eat fettuccini alfredo than a big burger with cheese and...

SERWER: That it's easy on the cheese sauce, that's true, you're right.

ZAHN: But these are not attached to McDonalds, just owned by McDonalds...

SERWER: No, they'll be separate.

ZAHN: ... created by McDonalds.

SERWER: Exactly. Separate stores, it won't be under the Golden Arches, per se. ZAHN: And it's not like you can go in and ask for your fettuccini alfredo and it will come out and then it will be ready...

SERWER: With fries on the side, no, you can't do that.

ZAHN: No, OK. All right, well, that's interesting.

SERWER: Yes, it is.

ZAHN: Spanning the horizons, Andy Serwer, thanks so much.

SERWER: Thank you.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.





Wall Street>