Return to Transcripts main page

CNN Live At Daybreak

Business in Review: Looking at 2001

Aired January 14, 2002 - 05:42   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.
CAROL COSTELLO, CNN ANCHOR: Forty-two minutes past the hour, good morning to you. Time to take a look at this morning's business headlines. After a tough time this week, investors are hoping to start Monday on a positive note. The Dow dropped a total of 272 points, while the NASDAQ lost two percent last week. The downturn came after fed Chairman Alan Greenspan said the economy "is stabilizing, but still faces significant risks."

In the meantime, some charitable organizations are still being hurt following the September 11th attacks. In Chicago, the United Way is cutting 20 percent of its workforce -- that's 28 jobs -- because of the economic downturn and declining donations. The earnings season heats up this week, too, and investors are hoping corporate America will dish out some positive predictions for the months ahead; especially on the heels of one of the worst profit quarters in years.

CNN's Maggie Lake has this preview.

(BEGIN VIDEOTAPE)

MAGGIE LAKE, CNN CORRESPONDENT (voice-over): The final quarter of 2001 capped off a dismal year for U.S. corporate profits. Hit by the recession, a severe drop-off in business spending, and the September 11th terrorist attacks, fourth quarter profits are expected to fall an average of 22 percent from a year ago.

That terrible finish ranks 2001 as one of the worst years for profits since World War II. But analysts are now focusing on the future, and say it's bound to get better.

BRIAN BELSKI, U.S. BANCORP PIPER JAFFRAY: I think it's clearly more of a turnaround market, as more and more companies transition from negative to positive earnings and kind of clean up their income statements and balance sheets.

LAKE: While analysts are more optimistic, they're cautious about predicting a robust rebound.

BERNADETTE MURPHY, KIMELMAN & BAIRD: I think that it's probably going to be a process, where investors become aware that we're sort of like back to old times in the markets. The rule of thumb was affirmed for extended periods of time; the returns on equities was 10 percent, including dividends. And I think we're going back to that. TOBIAS LEVKOVICH, SALOMON SMITH BARNEY: Yeah, we kind of got maybe spoiled by 20-25 percent kind of annual returns from '95 through '99. We've kind of paid the piper for the last two years, but we're not going back to that kind of trend.

LAKE: But it seems old habits are hard to break. Analysts on average expect earnings to increase a hefty 16 percent for 2002.

(on camera): But Wall Street as a history of over-ambitious predictions. Thompson Financial, which tracks results, says analysts usually overestimate earnings by about 12 percent. That could mean investors are setting themselves up for further disappointment, even as results start to improve.

Maggie Lake, CNN Financial News, New York.

(END VIDEOTAPE)

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