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CNN Live Today
Sears, K-Mart Announce Merger; Annual Presidential Turkey Pardon
Aired November 17, 2004 - 10:00 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.
DARYN KAGAN, CNN CO-ANCHOR: Boy, do we have a lot to cover though. Not thousand dollar omelets, but we've got a turkey to pardon today.
RICK SANCHEZ, CNN CO-ANCHOR: That's right. That's going to be fun and a lot of other things going on in the news. In fact, here's what's happening now in the news.
KAGAN: Bombs exploded in Buenos Aries a short time ago. Citibank and an Argentine bank were attacked. Details are sketchy right now. We do know at least one person was killed, a security guard at one of the Citibanks.
We have two updates for you now on a nuclear programs abroad. One reports said Iran has obtained weapons grade uranium and has the plans for a nuclear bomb. That is according to an exile opposition group that is considered credible. And the second story, the Russian President Vladimir Putin says his country is developing a new form of nuclear missile system. He says the systems are undergoing tests and they have been successful.
To Iraq now, insurgents have fired mortars on a Mosul police station. That comes despite a relative calm on this, the second day of a U.S.-led crack down in that city. Insurgents launched a series of attacks in Mosul last week during the coalition offensive on Falluja.
A French newspaper "Le Monde" is reporting that Palestinian leader Yasser Arafat probably died from aggravation to linked to cirrhosis of the liver. The report addresses the mystery of his death, which has not been officially disclosed. Cirrhosis is normally associated with heavy drinking, but the paper apparently dismisses that in this case saying Arafat was, quote, "a true water drinker."
SANCHEZ: Hmm.
KAGAN: Just minutes from now, President Bush, gobble, gobble, gobble, will be pardoning the presidential -- you know they're going to do that to us all day. I laugh every time. Yes, it's time for the presidential turkey pardon. The Rose Garden ceremony spares the bird from the traditional holiday feast. And instead, it sends it to a new home, which is a petting zoo in Virginia. Of course, because we bring you the latest and the most important world events, we will be carrying the presidential turkey...
SANCHEZ: I hope that's not the actual turkey. Look at turkey we have up on the screen; is that not a particularly ugly turkey?
KAGAN: Now, Rick.
SANCHEZ: No. That is not a good-looking turkey. I...
KAGAN: Your mother raised you so much better than that.
(LAUGHTER)
SANCHEZ: No. It's true...
KAGAN: Look, see the "A" pass? That's the pass you get when you go to the White House.
SANCHEZ: Oh, my goodness.
KAGAN: So I don't know if that this year's particular turkey. This might be a previous year's turkey.
SANCHEZ: Yes.
KAGAN: But this is in fact, a turkey that's been cleared for a pardon.
SANCHEZ: And its got a pass for like a good tour or a nickel tour?
KAGAN: Well, all he knows is it's a pardon tour. And that's all he needs to know.
As you can see a lot to get to today. Good morning, everyone. I'm Daryn Kagan.
SANCHEZ: And I'm Rick Sanchez. There is a bombshell on the eve of a holiday shopping seasons. Two shopping giants, Sears and KMart are merging. The new company will be known only as Sears's Holdings. The store will keep the names that they have now. The detail of the $11 billion stock deal suggests a KMart purchase of Sears. KMart has bounced back after emerged from bankruptcy a year and a half ago. For people who own stock in the stores, shop in them or maybe know someone who works there, what does this merger actually mean?
CNN Ali Velshi is covering the hour's news conference.
Ali, what can we expect and what can you tells at this point?
ALI VELSHI, CNN FINANCIAL CORRESPONDENT: Oh, Rick, I'm kind of glad that you invited me out here to talk to you guys, because it pulled me out of that meeting that's about halfway through, where Sears and KMart executives are congratulating themselves for what they admit themselves is a deal of no more than one plus one equals two. And the experts I spoke to this morning say yes, pretty much.
Here's a company that has some interesting brands on both sides of the equation. Let's start with KMart. KMart has been taken over, 53 percent of KMart is run by Eddie Lampert, he actually runs the company. But it's a private hedge fund that bought up this company out of bankruptcy. Went and sold 60 stores to Kmart -- to Sears, 18 stores to Home Depot. Closed another 600 stores. And found out that this company was worth more for its real estate than as a going concern.
He said today that's changed now and that no company should be worth more for its real estate than it is as a going concern as a business. Fifty thousand jobs were lost at KMart. Then Eddie Lampert's company started buying up Sears. He now owns about 15 percent of that company. This is basically KMart buying Sears. He says the stores are going to stay separate. Somewhat they call off- line KMart store will be transferred over to Sears.
Now, Sears has a lot of brands that American's like. It's got Lands End. It's got Craftsmen. It's got Kenmore. It's got Die-Hard. And there seems to be the implication, I'm sure this will become clearer through the course of the hour, that some of those brands are going to move themselves over from Sears to KMart or make -- or KMart shoppers will have access to those brands.
So what you're doing to see probably is no more store openings but a combination of the two companies creates the third largest retailer in the nation. Wal-Mart is by far the biggest. Target is a distant second. And this company combined is less than half the size of Target. So what it looks like they're going to do is try and make these stores more efficient, try to get the KMart stores to move up to the level of Sears stores, in terms of the amount of business they do. And then perhaps launch a better run at Target and the other retailers.
The interesting part here, Rick, is that KMart is clearly a discounter. Sears is clearly a department store. What happens to those stores? For shoppers in those stores, does Sears become a little more down scaled? Does KMart become a little more up scaled? Are they done with the job cuts? Doesn't sound like it because they're plan on saving $500 million a year over the next few years. It's got to come from somewhere. Probably from jobs, probably from selling some more KMart stores, and probably from making the slightly less profitable KMart stores into Sears stores.
Not a huge difference for the consumer it appears right now. The stockholders are enjoying this news. The stocks of both companies are moving higher today. But that's what Eddie Lampert is sort of famous for. So probably a good news story on the stock side; yet to be determined whether this helps you out as a consumer -- Rick.
SANCHEZ: Or if you're an employee, somebody who works there, usually when you get consolidation, it usually means that one person may end up doing the job that you have.
So you know, Ali, we'll certainly be looking into that throughout this newscast. And we'll be checking back with you.
Both retailers have a rich history. In 1886, Richard Sears started selling watches as a second job in North Redwood, Minnesota. He moved his business to Chicago the next year. Sears, Roebuck and Company formed in nine -- pardon me, 1893. Three years later, Sears started a grand tradition with its first large general catalog.
Now, KMart started as Kresge's, a five and dime store that opened in downtown Detroit. That was back in 1899. By 1912, Kresge's had expanded to 85 stores with annual sales of more than $10 million, a lot of money in those days. Kresge's opened the first KMart discount department store. That was in 1962 and that was in Garden City, Michigan.
KAGAN: So Kresge's is where the K comes from for KMart.
SANCHEZ: There you go.
KAGAN: I learned something today. Also want to learn why these two mega merchants might be heading to the corporate altar. To get a little bit more perspective why now? The timing of it. Let's bring in CNN/FN's Gerri Willis to look behind the deal.
Gerri, good morning.
GERRI WILLIS, CNN-FN PERSONAL FINANCE EDITOR: Hey, Daryn. Good to see you. Well, I think this comes too as a surprise to many people out there. Look, KMart just emerged from bankruptcy not too long ago and should have been a hint their stock price was doing quite well, as Ali said so clearly. This is all about a fellow named Eddie Lampert, Ed Lampert very big private investor getting involved here. Owns more than half of KMart.
What some of the experts are saying this morning about why this deal may be on tap is real estate. Remember that old-line -- real -- companies have great real estate holdings. No difference for these companies right here, particularly KMart. It could be a marriage of a company, KMart that has a lot of urban locations. Sears has a lot of mall locations. Putting those two things together may makes a lot of sense -- Daryn.
KAGAN: Meanwhile, people own stock -- because I imagine a lot of people out there own stock in one of these two companies, KMart stock went down on this news. Sears goes up. The shareholders of each company are going to have different options.
WILLIS: Well, that's true. And I think what you need to know here is that pretty much typical behavior of stock, when there's a deal like this announced in the way it was announced. We're not getting a lot of answers yet, I should say, Daryn. There's a conference call going on right now with the companies and analysts. We're waiting to see what they have to say. There will be a lot of questions.
What we do know from the company is that they're saying the merger will help make their properties more profitable through a broader retail presence. And boy, you look at those numbers of stores, and it's absolutely clear the combinations will result in KMart and Sears having 3500 stores. Compare that to Wal-Mart out there with 4800 stores. You can see this really makes them a player, a much bigger player on the retail scene -- Daryn.
KAGAN: Gerri Willis, thank you so much.
WILLIS: Thank you.
KAGAN: Hey, there's a small surprise for analysts on the inflation front. The Labor Department announcing this morning that consumer prices shot up six-tenths of a percent in October. Some economics were expecting a four-tenths of a percent increase. Higher energy costs apparently led to that jump.
SANCHEZ: Let's watch some other confusing numbers that we've been following for you for the last couple of days, if not a week now. And that's that musical chairs game that's going on at the White House with President Bush's cabinet. There is apparently another change today. This is going to be the president's domestic policy advisor, apparently going over to secretary of education. If I do have that right.
Suzanne Malveaux here to confirm. Suzanne, what do we have?
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Rick, you do have that right as a matter of fact. It was just announced that President Bush, again in the Roosevelt Room, is going to make a presentation; 11:05, we are told, this morning he is going to make this announcement about the replacement of his secretary of education, Rod Paige who had resigned earlier.
Senior administration officials telling us that his selection will be Margaret Spellings, as she is a domestic policy advisor who has been working under the Bush administration on issues of education, labor and health. She's also a holdover from the past, his Texas days as governor. She was working on education reform and policy issues back then.
She is considered, as well as Rod Paige, to be one of the critical architects and authors of the No Child Left Behind legislation that received bipartisan support from this administration. A big push backed by the president and of course, by both Democrats and Republicans.
Already there's been some reaction to this announcement that is expected. The National Education Association, which had somewhat of a rocky relationship with Paige, after he called them a terrorist organization for opposing his legislation and apologizing afterwards. They say that Spellings, they believe, is going to breathe fresh life into the relationship that they welcome this change and that they are eager to work with her.
Should also let you know as well, Rick, that the president is also today focusing on his domestic agenda. Earlier today, he had a breakfast meeting with the congressional leadership. Some of the things, the priorities, of course, the president is focused on in this lame-duck session to get this done as quickly as possible, would be of course, the budget. The appropriations to raise the debt ceilings to get those checks so that the government writes out to the appropriate agencies, so they don't actually run out of money essentially. And finally, he is pushing for the intelligence reform legislation as recommended by the 9/11 Commission. Earlier this morning, I spoke with the House speaker Denny Hastert about the president's priorities.
(BEGIN VIDEO CLIP)
REP. DENNIS HASTERT (R-IL), HOUSE SPEAKER: We need to get a debt ceiling done so we can do the business of a country. We're going to work on that, I think within the next couple days. We need to do -- finish our appropriate operation process that got cut short because of the elections. And we're well on the road to get that done.
And then finally, get the 9/11 thing. I think they're all in those No. 1 priorities. And I think those are the three pieces that we'll be working on for the rest of this week.
(END VIDEO CLIP)
MALVEAUX: and Rick, of course, a little bit on a lighter note here. The president is taking care of some other official business. Has nothing do to do with legislation or foreign policy. He is pardoning the White House turkey as we speak -- Rick.
SANCHEZ: Can't believe that. He really has decided to pardon it? I know all of America has been waiting with bated breath to see if...
(LAUGHTER)
MALVEAUX: We'll wait. We'll wait and see what happens. It's going to happen in a couple of minutes.
SANCHEZ: And let me ask you a couple of question about what's going on with the cabinet. Some who have been criticizing the administration, as I'm sure they know. Saying that he's essentially he's staying -- the president, that is, too far inside the White House walls. That all those who are being named to new positions are very much in keeping, thinking wise, with those that have already been there. And that those who were even moderates like Colin Powell, have been taken -- their resignation has been accepted, we'll leave it at that.
Well, what's the White House reaction to this? Are they starting to get a little bit testy about this criticism, if you can call it that?
MALVEAUX: White House officials reacting saying, of course, they welcome a broad range of opinions, ideas from various people. I should note however, though, there is a pattern here that you're seeing. You're seeing with yesterday the announcement of Dr. Rice as the new secretary of state. With the announcement of Gonzalez, as well as the attorney general. And now, with Margaret Spellings, who also, of course, is one that the president knows very well, has worked with over the last four years. That the president is choosing people that he feels comfortable with, that they have a certain credibility. And also, of course that share in a lot of the policy initiatives that the president has put for washed.
Having said that however, the White House says they believe that if he puts those people in place, there still is an opening, there are still several openings for perhaps more ideas to be generated. That they are, at the very least, listening to some of those opposing views.
SANCHEZ: All right, Suzanne Malveaux following things there on important matters that we're following at the White House. And one now we're going to switch over to with my colleague Daryn Kagan.
I guess it's not so important, right? But...
KAGAN: Well, we like to keep people abreast of the news.
SANCHEZ: Here it is, that important -- oh, look, there's sec -- Vice President Cheney is joining the president this year for the turkey pardoning.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Thank you all.
Please be seated. Welcome.
Welcome to a beautiful day here in the Rose Garden.
I'm pleased to welcome Biscuits, the national Thanksgiving turkey.
Biscuits, welcome.
(LAUGHTER)
This is an election year and Biscuits had to earn his spot at the White House.
Over the past week, thousands of voters cast ballots on the White House Web site. It was a close race. You might say it was neck and neck.
(LAUGHTER)
When all the votes were in, Biscuits and his running mate Gravy prevailed over the ticket of Patience and Fortitude.
The vice president and I are here to congratulate Biscuits for a race well run.
It came down to a few battleground states. It was a tough contest and it turned out some 527 organizations got involved, including Barnyard Animals for Truth.
(LAUGHTER)
There was a scurrilous film that came out, "Fahrenheit 375 Degrees At 10 Minutes Per Pound."
(LAUGHTER)
BUSH: Now's the time for healing.
This day took a lot of planning and I want to thank all those who helped.
I appreciate the secretary of agriculture, Ann Veneman. She has served our nation with class and distinction. I'm going to miss having her in my Cabinet and I wish her all the best.
(APPLAUSE)
Congressman, I'm honored you are here. Thanks for coming. I know that you're deeply concerned about the fate of this year's Thanksgiving turkey. You're a man of deep compassion.
I want to thank everyone here with the National Turkey Federation, especially John O'Carroll and Alice Johnson. Welcome.
I want to thank Kevin Foltz (ph) and his family for the fine job they did in raising Biscuits and Gravy on their farm in Mathias, West Virginia. They fed the turkeys American corn and American soybeans. From the looks of it, they had a pretty healthy appetite.
I'm also grateful to Kevin's children Colby (ph), Collin (ph) and Cory (ph), who helped to coach the turkeys to face the cameras on their big day here.
We also got some special guests from the Immaculate Conception School. I'm glad you took this field trip to the White House. I'm grateful to your school and the parish for sharing some of your blessings during the holidays.
This is the 40th year Immaculate Conception has provided food baskets to families in the Shaw neighborhood to make sure they have plenty to eat for their Thanksgiving dinner. For the sake of our feathered guests, I'm not going to elaborate on the contents of those baskets.
(LAUGHTER)
The Thanksgiving tradition dates back to our nation's earliest days. We are a nation founded by men and women who deeply felt their dependence on God and always gave him thanks and praise. As we prepare for Thanksgiving of 2004, we have much to be thankful for: our families, our friends, our beautiful country and the freedom granted to each one of us by the Almighty.
BUSH: During this holiday season, we think especially of our men and women of the armed forces, many of whom are spending Thanksgiving far from home.
Last Thanksgiving, I had the privilege of meeting with our military serving in Baghdad area of Iraq. Those men and well, like all who wear nation's uniform, have volunteered to serve. Through their courage and skill and sacrifice, they are keeping our country safe and free.
America's proud of our military. We're proud of our military families. And we give them our thanks every day of the year.
The national Thanksgiving turkey will soon be on stage for all to see, but he's not going to end up on the table. I'm granting him a presidential pardon.
Not only will I grant the pardon to Biscuits, I'll also grant one to Gravy as well.
I wish them well as they begin their new life at Frying Pan Park in the great state of Virginia.
Laura and I and the vice president wish every American a happy Thanksgiving.
May God bless you all and may God continue to bless our country.
(APPLAUSE)
KAGAN: President Bush getting to know Biscuits. Biscuits is going to get a pardon here, along -- I think he's calling up the family that raised this turkey. So Biscuits and also Biscuit's cohort, Gravy will get a pardon today.
SANCHEZ: Yes. This thing started back in 1947 with President Truman. He pardoned the very first turkey. And this turkey -- you and I were talking about a minute ago; he spends three months around people. I guess they try...
KAGAN: Socialize.
SANCHEZ: ... to socialize them, right? Yes.
KAGAN: So that when he sees a man in a dark blue suit...
SANCHEZ: He won't freak out?
(LAUGHTER)
KAGAN: Yes. It's been known to happen. That's not the picture the White House wants beamed around the world. So you heard President Bush mention this is Biscuits. And instead of ending up on someone's dining room table next week, Biscuits will be going to a petting farm to play out the rest of his days. And he will be going to Frying Pan Park in Herndon, Virginia.
SANCHEZ: Where they have, I imagine, they must have a collection of these guys from the past, right?
KAGAN: You can't -- although, you know, interestingly enough, I was surfing on the net this morning and there are actually blogs, believe it or not, about this very event. And what seems like just a simple fun, happy event at the White House is somewhat controversial, which I guess everything is when you go online. And there are people that say this pardon is hypocritical. You'll find bloggers who say this online because these turkeys are not bred to actually live. They're bred in such a way that it doesn't make them easy to live. So even once they're pardoned, they don't survive very long.
SANCHEZ: Sounds like something you find on a PETA website.
(LAUGHTER)
KAGAN: No, it wasn't that. But there will be others. There's a blog about just about everything these days.
SANCHEZ: Well, America does love its turkeys though, 2.7 billion pounds processed in the United States last year alone. Over 45 million pounds of turkey cooked in the United States at Thanksgiving. So get ready for a lot of turkey themes folks. And a lot of long nights.
KAGAN: And talk about no respect, you know the turkey close to being our national bird. President Franklin actually thought turkey would be a better national symbol than the eagle is.
SANCHEZ: Hmm. I think they were wise to go with the latter.
(LAUGHTER)
KAGAN: Yes. Good choice because well, it's the only breed of poultry that is native to the Western Hemisphere.
SANCHEZ: This is an annual event. And as you can see, it is one the president takes a lot of joy in. And all presidents have. I remember Ronald Reagan standing there next to that turkey. Now, Ronald Reagan's turkey got a little bit antsy, I recall.
KAGAN: Mm, an antsy turkey.
(LAUGHTER)
SANCHEZ: It wasn't quite as well behaved turkey as this turkey was with the president this year. But certainly good enough for the White House. And one that, you know, the president used the world "heal." I think that's particularly important coming off of an election. It may be the time of the year now where much of American, politically and otherwise start to come together.
KAGAN: Yes. And he tried to make some political jokes in there, saying that people had to vote for this turkey online. And that there were some battle ground states and that there was a movie that came out, "Fahrenheit 375 at 10 Minutes Per Pound."
So anyhow, we're going to continue to watch this. If anything and big newsworthy comes out of the presidential pardon of the turkey, we will bring that to you.
SANCHEZ: We do have another story that we're following. We'll be taking you back to the White House one more time for the announcement of yet another cabinet member, switcheroony. And we will have that for you right here. Education secretary announcement is forthcoming. That will be, of course, Margaret Spellings named to her new post. We'll have it for you. Stay with us.
(COMMERCIAL BREAK)
SANCHEZ: Well, here's a kind of economic news item that we're following. This is the holiday shopping season inching a little bit closer, and with it the mass pilgrimage to the shopping mall begins. But an increasing number of cyber, savvy Santa's, that's many of you, plan to venture no further than your home computer. In fact, online sales are expected to be more than double over the next six years.
Joining us now with a close look is CNN personal finance editor Gerri Willis, who is getting more airtime today than the thanksgiving turkey.
(LAUGHTER)
WILLIS: Not quite that much, Rick.
SANCHEZ: Tell us how to do this.
WILLIS: Well, first thing to know is you want to shop with people you already know. Look, anybody can set up a website and sell stuff. But you want to make sure that you're secure that your credit card number is secure. To do that, make sure they've got some kind of privacy policy. And you might want to look for some of the ratings the "Consumer Reports" website has on their page. Check that out.
Here's a warning sign. If the retailer you're using has an address that's a P.O. Box, bad sign. You really want to work with somebody that you know before, maybe you even use in the real world, as opposed to the virtual world.
SANCHEZ: And you also say get secure, what do you mean?
WILLIS: Absolutely. Before you send your private information over the Internet, you definitely want to use a credit card as opposed to a debt card. Because the risk of using a credit card so much lower, you're only on the hook for 50 bucks it is things go wrong. Keep that in mind.
Look for a Reliability Seal on the website you use. That's something the Better Business Bureau uses. And it's just another level of reassurance that things are going right.
SANCHEZ: And I imagine you have to be particular with your password, because it's real easy to give more away than you want to. Right?
WILLIS: Oh, absolutely. You bet. And they're so easy to figure out if you're a hacker or you're a scam artist. If you're using your child's name or their birth date, or your birth date, or Social Security Number, you're really in trouble. Make sure you're using a password that is just a mix of numbers and letters, not identifiable as a word. That's the easiest way to keep yourself safe. Because remember, some of the responsibility for not having your password stolen, for not having your credit card number stolen, is on your shoulders.
SANCHEZ: And you say it's OK to use credit cards?
WILLIS: Absolutely, use the credit cards. You're on hook for so much less money. And here's a great idea, use a virtual credit card. If you have one of the major credit cards out there, go to their website. They'll offer you something called a Virtual Credit Card Number that's a one-time usage. It changes every time you use it online. You're ultimately more safe in even using your regular card. It's definitely something to check out this holiday season.
SANCHEZ: Gerri Willis, thanks so much for bringing that to us. Great information.
WILLIS: You're welcome.
SANCHEZ: We're going to plug it in and use it.
KAGAN: Well, take a number, stand in line and you can get a flu shot.
SANCHEZ: Yes. What's being done on Capitol Hill today to prevent a flu vaccine shortage next time?
But first, the fighting moves north in Iraq. We're going to take you live to Baghdad for an update on what's going on not only there, but in Mosul as well.
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Aired November 17, 2004 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DARYN KAGAN, CNN CO-ANCHOR: Boy, do we have a lot to cover though. Not thousand dollar omelets, but we've got a turkey to pardon today.
RICK SANCHEZ, CNN CO-ANCHOR: That's right. That's going to be fun and a lot of other things going on in the news. In fact, here's what's happening now in the news.
KAGAN: Bombs exploded in Buenos Aries a short time ago. Citibank and an Argentine bank were attacked. Details are sketchy right now. We do know at least one person was killed, a security guard at one of the Citibanks.
We have two updates for you now on a nuclear programs abroad. One reports said Iran has obtained weapons grade uranium and has the plans for a nuclear bomb. That is according to an exile opposition group that is considered credible. And the second story, the Russian President Vladimir Putin says his country is developing a new form of nuclear missile system. He says the systems are undergoing tests and they have been successful.
To Iraq now, insurgents have fired mortars on a Mosul police station. That comes despite a relative calm on this, the second day of a U.S.-led crack down in that city. Insurgents launched a series of attacks in Mosul last week during the coalition offensive on Falluja.
A French newspaper "Le Monde" is reporting that Palestinian leader Yasser Arafat probably died from aggravation to linked to cirrhosis of the liver. The report addresses the mystery of his death, which has not been officially disclosed. Cirrhosis is normally associated with heavy drinking, but the paper apparently dismisses that in this case saying Arafat was, quote, "a true water drinker."
SANCHEZ: Hmm.
KAGAN: Just minutes from now, President Bush, gobble, gobble, gobble, will be pardoning the presidential -- you know they're going to do that to us all day. I laugh every time. Yes, it's time for the presidential turkey pardon. The Rose Garden ceremony spares the bird from the traditional holiday feast. And instead, it sends it to a new home, which is a petting zoo in Virginia. Of course, because we bring you the latest and the most important world events, we will be carrying the presidential turkey...
SANCHEZ: I hope that's not the actual turkey. Look at turkey we have up on the screen; is that not a particularly ugly turkey?
KAGAN: Now, Rick.
SANCHEZ: No. That is not a good-looking turkey. I...
KAGAN: Your mother raised you so much better than that.
(LAUGHTER)
SANCHEZ: No. It's true...
KAGAN: Look, see the "A" pass? That's the pass you get when you go to the White House.
SANCHEZ: Oh, my goodness.
KAGAN: So I don't know if that this year's particular turkey. This might be a previous year's turkey.
SANCHEZ: Yes.
KAGAN: But this is in fact, a turkey that's been cleared for a pardon.
SANCHEZ: And its got a pass for like a good tour or a nickel tour?
KAGAN: Well, all he knows is it's a pardon tour. And that's all he needs to know.
As you can see a lot to get to today. Good morning, everyone. I'm Daryn Kagan.
SANCHEZ: And I'm Rick Sanchez. There is a bombshell on the eve of a holiday shopping seasons. Two shopping giants, Sears and KMart are merging. The new company will be known only as Sears's Holdings. The store will keep the names that they have now. The detail of the $11 billion stock deal suggests a KMart purchase of Sears. KMart has bounced back after emerged from bankruptcy a year and a half ago. For people who own stock in the stores, shop in them or maybe know someone who works there, what does this merger actually mean?
CNN Ali Velshi is covering the hour's news conference.
Ali, what can we expect and what can you tells at this point?
ALI VELSHI, CNN FINANCIAL CORRESPONDENT: Oh, Rick, I'm kind of glad that you invited me out here to talk to you guys, because it pulled me out of that meeting that's about halfway through, where Sears and KMart executives are congratulating themselves for what they admit themselves is a deal of no more than one plus one equals two. And the experts I spoke to this morning say yes, pretty much.
Here's a company that has some interesting brands on both sides of the equation. Let's start with KMart. KMart has been taken over, 53 percent of KMart is run by Eddie Lampert, he actually runs the company. But it's a private hedge fund that bought up this company out of bankruptcy. Went and sold 60 stores to Kmart -- to Sears, 18 stores to Home Depot. Closed another 600 stores. And found out that this company was worth more for its real estate than as a going concern.
He said today that's changed now and that no company should be worth more for its real estate than it is as a going concern as a business. Fifty thousand jobs were lost at KMart. Then Eddie Lampert's company started buying up Sears. He now owns about 15 percent of that company. This is basically KMart buying Sears. He says the stores are going to stay separate. Somewhat they call off- line KMart store will be transferred over to Sears.
Now, Sears has a lot of brands that American's like. It's got Lands End. It's got Craftsmen. It's got Kenmore. It's got Die-Hard. And there seems to be the implication, I'm sure this will become clearer through the course of the hour, that some of those brands are going to move themselves over from Sears to KMart or make -- or KMart shoppers will have access to those brands.
So what you're doing to see probably is no more store openings but a combination of the two companies creates the third largest retailer in the nation. Wal-Mart is by far the biggest. Target is a distant second. And this company combined is less than half the size of Target. So what it looks like they're going to do is try and make these stores more efficient, try to get the KMart stores to move up to the level of Sears stores, in terms of the amount of business they do. And then perhaps launch a better run at Target and the other retailers.
The interesting part here, Rick, is that KMart is clearly a discounter. Sears is clearly a department store. What happens to those stores? For shoppers in those stores, does Sears become a little more down scaled? Does KMart become a little more up scaled? Are they done with the job cuts? Doesn't sound like it because they're plan on saving $500 million a year over the next few years. It's got to come from somewhere. Probably from jobs, probably from selling some more KMart stores, and probably from making the slightly less profitable KMart stores into Sears stores.
Not a huge difference for the consumer it appears right now. The stockholders are enjoying this news. The stocks of both companies are moving higher today. But that's what Eddie Lampert is sort of famous for. So probably a good news story on the stock side; yet to be determined whether this helps you out as a consumer -- Rick.
SANCHEZ: Or if you're an employee, somebody who works there, usually when you get consolidation, it usually means that one person may end up doing the job that you have.
So you know, Ali, we'll certainly be looking into that throughout this newscast. And we'll be checking back with you.
Both retailers have a rich history. In 1886, Richard Sears started selling watches as a second job in North Redwood, Minnesota. He moved his business to Chicago the next year. Sears, Roebuck and Company formed in nine -- pardon me, 1893. Three years later, Sears started a grand tradition with its first large general catalog.
Now, KMart started as Kresge's, a five and dime store that opened in downtown Detroit. That was back in 1899. By 1912, Kresge's had expanded to 85 stores with annual sales of more than $10 million, a lot of money in those days. Kresge's opened the first KMart discount department store. That was in 1962 and that was in Garden City, Michigan.
KAGAN: So Kresge's is where the K comes from for KMart.
SANCHEZ: There you go.
KAGAN: I learned something today. Also want to learn why these two mega merchants might be heading to the corporate altar. To get a little bit more perspective why now? The timing of it. Let's bring in CNN/FN's Gerri Willis to look behind the deal.
Gerri, good morning.
GERRI WILLIS, CNN-FN PERSONAL FINANCE EDITOR: Hey, Daryn. Good to see you. Well, I think this comes too as a surprise to many people out there. Look, KMart just emerged from bankruptcy not too long ago and should have been a hint their stock price was doing quite well, as Ali said so clearly. This is all about a fellow named Eddie Lampert, Ed Lampert very big private investor getting involved here. Owns more than half of KMart.
What some of the experts are saying this morning about why this deal may be on tap is real estate. Remember that old-line -- real -- companies have great real estate holdings. No difference for these companies right here, particularly KMart. It could be a marriage of a company, KMart that has a lot of urban locations. Sears has a lot of mall locations. Putting those two things together may makes a lot of sense -- Daryn.
KAGAN: Meanwhile, people own stock -- because I imagine a lot of people out there own stock in one of these two companies, KMart stock went down on this news. Sears goes up. The shareholders of each company are going to have different options.
WILLIS: Well, that's true. And I think what you need to know here is that pretty much typical behavior of stock, when there's a deal like this announced in the way it was announced. We're not getting a lot of answers yet, I should say, Daryn. There's a conference call going on right now with the companies and analysts. We're waiting to see what they have to say. There will be a lot of questions.
What we do know from the company is that they're saying the merger will help make their properties more profitable through a broader retail presence. And boy, you look at those numbers of stores, and it's absolutely clear the combinations will result in KMart and Sears having 3500 stores. Compare that to Wal-Mart out there with 4800 stores. You can see this really makes them a player, a much bigger player on the retail scene -- Daryn.
KAGAN: Gerri Willis, thank you so much.
WILLIS: Thank you.
KAGAN: Hey, there's a small surprise for analysts on the inflation front. The Labor Department announcing this morning that consumer prices shot up six-tenths of a percent in October. Some economics were expecting a four-tenths of a percent increase. Higher energy costs apparently led to that jump.
SANCHEZ: Let's watch some other confusing numbers that we've been following for you for the last couple of days, if not a week now. And that's that musical chairs game that's going on at the White House with President Bush's cabinet. There is apparently another change today. This is going to be the president's domestic policy advisor, apparently going over to secretary of education. If I do have that right.
Suzanne Malveaux here to confirm. Suzanne, what do we have?
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Rick, you do have that right as a matter of fact. It was just announced that President Bush, again in the Roosevelt Room, is going to make a presentation; 11:05, we are told, this morning he is going to make this announcement about the replacement of his secretary of education, Rod Paige who had resigned earlier.
Senior administration officials telling us that his selection will be Margaret Spellings, as she is a domestic policy advisor who has been working under the Bush administration on issues of education, labor and health. She's also a holdover from the past, his Texas days as governor. She was working on education reform and policy issues back then.
She is considered, as well as Rod Paige, to be one of the critical architects and authors of the No Child Left Behind legislation that received bipartisan support from this administration. A big push backed by the president and of course, by both Democrats and Republicans.
Already there's been some reaction to this announcement that is expected. The National Education Association, which had somewhat of a rocky relationship with Paige, after he called them a terrorist organization for opposing his legislation and apologizing afterwards. They say that Spellings, they believe, is going to breathe fresh life into the relationship that they welcome this change and that they are eager to work with her.
Should also let you know as well, Rick, that the president is also today focusing on his domestic agenda. Earlier today, he had a breakfast meeting with the congressional leadership. Some of the things, the priorities, of course, the president is focused on in this lame-duck session to get this done as quickly as possible, would be of course, the budget. The appropriations to raise the debt ceilings to get those checks so that the government writes out to the appropriate agencies, so they don't actually run out of money essentially. And finally, he is pushing for the intelligence reform legislation as recommended by the 9/11 Commission. Earlier this morning, I spoke with the House speaker Denny Hastert about the president's priorities.
(BEGIN VIDEO CLIP)
REP. DENNIS HASTERT (R-IL), HOUSE SPEAKER: We need to get a debt ceiling done so we can do the business of a country. We're going to work on that, I think within the next couple days. We need to do -- finish our appropriate operation process that got cut short because of the elections. And we're well on the road to get that done.
And then finally, get the 9/11 thing. I think they're all in those No. 1 priorities. And I think those are the three pieces that we'll be working on for the rest of this week.
(END VIDEO CLIP)
MALVEAUX: and Rick, of course, a little bit on a lighter note here. The president is taking care of some other official business. Has nothing do to do with legislation or foreign policy. He is pardoning the White House turkey as we speak -- Rick.
SANCHEZ: Can't believe that. He really has decided to pardon it? I know all of America has been waiting with bated breath to see if...
(LAUGHTER)
MALVEAUX: We'll wait. We'll wait and see what happens. It's going to happen in a couple of minutes.
SANCHEZ: And let me ask you a couple of question about what's going on with the cabinet. Some who have been criticizing the administration, as I'm sure they know. Saying that he's essentially he's staying -- the president, that is, too far inside the White House walls. That all those who are being named to new positions are very much in keeping, thinking wise, with those that have already been there. And that those who were even moderates like Colin Powell, have been taken -- their resignation has been accepted, we'll leave it at that.
Well, what's the White House reaction to this? Are they starting to get a little bit testy about this criticism, if you can call it that?
MALVEAUX: White House officials reacting saying, of course, they welcome a broad range of opinions, ideas from various people. I should note however, though, there is a pattern here that you're seeing. You're seeing with yesterday the announcement of Dr. Rice as the new secretary of state. With the announcement of Gonzalez, as well as the attorney general. And now, with Margaret Spellings, who also, of course, is one that the president knows very well, has worked with over the last four years. That the president is choosing people that he feels comfortable with, that they have a certain credibility. And also, of course that share in a lot of the policy initiatives that the president has put for washed.
Having said that however, the White House says they believe that if he puts those people in place, there still is an opening, there are still several openings for perhaps more ideas to be generated. That they are, at the very least, listening to some of those opposing views.
SANCHEZ: All right, Suzanne Malveaux following things there on important matters that we're following at the White House. And one now we're going to switch over to with my colleague Daryn Kagan.
I guess it's not so important, right? But...
KAGAN: Well, we like to keep people abreast of the news.
SANCHEZ: Here it is, that important -- oh, look, there's sec -- Vice President Cheney is joining the president this year for the turkey pardoning.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Thank you all.
Please be seated. Welcome.
Welcome to a beautiful day here in the Rose Garden.
I'm pleased to welcome Biscuits, the national Thanksgiving turkey.
Biscuits, welcome.
(LAUGHTER)
This is an election year and Biscuits had to earn his spot at the White House.
Over the past week, thousands of voters cast ballots on the White House Web site. It was a close race. You might say it was neck and neck.
(LAUGHTER)
When all the votes were in, Biscuits and his running mate Gravy prevailed over the ticket of Patience and Fortitude.
The vice president and I are here to congratulate Biscuits for a race well run.
It came down to a few battleground states. It was a tough contest and it turned out some 527 organizations got involved, including Barnyard Animals for Truth.
(LAUGHTER)
There was a scurrilous film that came out, "Fahrenheit 375 Degrees At 10 Minutes Per Pound."
(LAUGHTER)
BUSH: Now's the time for healing.
This day took a lot of planning and I want to thank all those who helped.
I appreciate the secretary of agriculture, Ann Veneman. She has served our nation with class and distinction. I'm going to miss having her in my Cabinet and I wish her all the best.
(APPLAUSE)
Congressman, I'm honored you are here. Thanks for coming. I know that you're deeply concerned about the fate of this year's Thanksgiving turkey. You're a man of deep compassion.
I want to thank everyone here with the National Turkey Federation, especially John O'Carroll and Alice Johnson. Welcome.
I want to thank Kevin Foltz (ph) and his family for the fine job they did in raising Biscuits and Gravy on their farm in Mathias, West Virginia. They fed the turkeys American corn and American soybeans. From the looks of it, they had a pretty healthy appetite.
I'm also grateful to Kevin's children Colby (ph), Collin (ph) and Cory (ph), who helped to coach the turkeys to face the cameras on their big day here.
We also got some special guests from the Immaculate Conception School. I'm glad you took this field trip to the White House. I'm grateful to your school and the parish for sharing some of your blessings during the holidays.
This is the 40th year Immaculate Conception has provided food baskets to families in the Shaw neighborhood to make sure they have plenty to eat for their Thanksgiving dinner. For the sake of our feathered guests, I'm not going to elaborate on the contents of those baskets.
(LAUGHTER)
The Thanksgiving tradition dates back to our nation's earliest days. We are a nation founded by men and women who deeply felt their dependence on God and always gave him thanks and praise. As we prepare for Thanksgiving of 2004, we have much to be thankful for: our families, our friends, our beautiful country and the freedom granted to each one of us by the Almighty.
BUSH: During this holiday season, we think especially of our men and women of the armed forces, many of whom are spending Thanksgiving far from home.
Last Thanksgiving, I had the privilege of meeting with our military serving in Baghdad area of Iraq. Those men and well, like all who wear nation's uniform, have volunteered to serve. Through their courage and skill and sacrifice, they are keeping our country safe and free.
America's proud of our military. We're proud of our military families. And we give them our thanks every day of the year.
The national Thanksgiving turkey will soon be on stage for all to see, but he's not going to end up on the table. I'm granting him a presidential pardon.
Not only will I grant the pardon to Biscuits, I'll also grant one to Gravy as well.
I wish them well as they begin their new life at Frying Pan Park in the great state of Virginia.
Laura and I and the vice president wish every American a happy Thanksgiving.
May God bless you all and may God continue to bless our country.
(APPLAUSE)
KAGAN: President Bush getting to know Biscuits. Biscuits is going to get a pardon here, along -- I think he's calling up the family that raised this turkey. So Biscuits and also Biscuit's cohort, Gravy will get a pardon today.
SANCHEZ: Yes. This thing started back in 1947 with President Truman. He pardoned the very first turkey. And this turkey -- you and I were talking about a minute ago; he spends three months around people. I guess they try...
KAGAN: Socialize.
SANCHEZ: ... to socialize them, right? Yes.
KAGAN: So that when he sees a man in a dark blue suit...
SANCHEZ: He won't freak out?
(LAUGHTER)
KAGAN: Yes. It's been known to happen. That's not the picture the White House wants beamed around the world. So you heard President Bush mention this is Biscuits. And instead of ending up on someone's dining room table next week, Biscuits will be going to a petting farm to play out the rest of his days. And he will be going to Frying Pan Park in Herndon, Virginia.
SANCHEZ: Where they have, I imagine, they must have a collection of these guys from the past, right?
KAGAN: You can't -- although, you know, interestingly enough, I was surfing on the net this morning and there are actually blogs, believe it or not, about this very event. And what seems like just a simple fun, happy event at the White House is somewhat controversial, which I guess everything is when you go online. And there are people that say this pardon is hypocritical. You'll find bloggers who say this online because these turkeys are not bred to actually live. They're bred in such a way that it doesn't make them easy to live. So even once they're pardoned, they don't survive very long.
SANCHEZ: Sounds like something you find on a PETA website.
(LAUGHTER)
KAGAN: No, it wasn't that. But there will be others. There's a blog about just about everything these days.
SANCHEZ: Well, America does love its turkeys though, 2.7 billion pounds processed in the United States last year alone. Over 45 million pounds of turkey cooked in the United States at Thanksgiving. So get ready for a lot of turkey themes folks. And a lot of long nights.
KAGAN: And talk about no respect, you know the turkey close to being our national bird. President Franklin actually thought turkey would be a better national symbol than the eagle is.
SANCHEZ: Hmm. I think they were wise to go with the latter.
(LAUGHTER)
KAGAN: Yes. Good choice because well, it's the only breed of poultry that is native to the Western Hemisphere.
SANCHEZ: This is an annual event. And as you can see, it is one the president takes a lot of joy in. And all presidents have. I remember Ronald Reagan standing there next to that turkey. Now, Ronald Reagan's turkey got a little bit antsy, I recall.
KAGAN: Mm, an antsy turkey.
(LAUGHTER)
SANCHEZ: It wasn't quite as well behaved turkey as this turkey was with the president this year. But certainly good enough for the White House. And one that, you know, the president used the world "heal." I think that's particularly important coming off of an election. It may be the time of the year now where much of American, politically and otherwise start to come together.
KAGAN: Yes. And he tried to make some political jokes in there, saying that people had to vote for this turkey online. And that there were some battle ground states and that there was a movie that came out, "Fahrenheit 375 at 10 Minutes Per Pound."
So anyhow, we're going to continue to watch this. If anything and big newsworthy comes out of the presidential pardon of the turkey, we will bring that to you.
SANCHEZ: We do have another story that we're following. We'll be taking you back to the White House one more time for the announcement of yet another cabinet member, switcheroony. And we will have that for you right here. Education secretary announcement is forthcoming. That will be, of course, Margaret Spellings named to her new post. We'll have it for you. Stay with us.
(COMMERCIAL BREAK)
SANCHEZ: Well, here's a kind of economic news item that we're following. This is the holiday shopping season inching a little bit closer, and with it the mass pilgrimage to the shopping mall begins. But an increasing number of cyber, savvy Santa's, that's many of you, plan to venture no further than your home computer. In fact, online sales are expected to be more than double over the next six years.
Joining us now with a close look is CNN personal finance editor Gerri Willis, who is getting more airtime today than the thanksgiving turkey.
(LAUGHTER)
WILLIS: Not quite that much, Rick.
SANCHEZ: Tell us how to do this.
WILLIS: Well, first thing to know is you want to shop with people you already know. Look, anybody can set up a website and sell stuff. But you want to make sure that you're secure that your credit card number is secure. To do that, make sure they've got some kind of privacy policy. And you might want to look for some of the ratings the "Consumer Reports" website has on their page. Check that out.
Here's a warning sign. If the retailer you're using has an address that's a P.O. Box, bad sign. You really want to work with somebody that you know before, maybe you even use in the real world, as opposed to the virtual world.
SANCHEZ: And you also say get secure, what do you mean?
WILLIS: Absolutely. Before you send your private information over the Internet, you definitely want to use a credit card as opposed to a debt card. Because the risk of using a credit card so much lower, you're only on the hook for 50 bucks it is things go wrong. Keep that in mind.
Look for a Reliability Seal on the website you use. That's something the Better Business Bureau uses. And it's just another level of reassurance that things are going right.
SANCHEZ: And I imagine you have to be particular with your password, because it's real easy to give more away than you want to. Right?
WILLIS: Oh, absolutely. You bet. And they're so easy to figure out if you're a hacker or you're a scam artist. If you're using your child's name or their birth date, or your birth date, or Social Security Number, you're really in trouble. Make sure you're using a password that is just a mix of numbers and letters, not identifiable as a word. That's the easiest way to keep yourself safe. Because remember, some of the responsibility for not having your password stolen, for not having your credit card number stolen, is on your shoulders.
SANCHEZ: And you say it's OK to use credit cards?
WILLIS: Absolutely, use the credit cards. You're on hook for so much less money. And here's a great idea, use a virtual credit card. If you have one of the major credit cards out there, go to their website. They'll offer you something called a Virtual Credit Card Number that's a one-time usage. It changes every time you use it online. You're ultimately more safe in even using your regular card. It's definitely something to check out this holiday season.
SANCHEZ: Gerri Willis, thanks so much for bringing that to us. Great information.
WILLIS: You're welcome.
SANCHEZ: We're going to plug it in and use it.
KAGAN: Well, take a number, stand in line and you can get a flu shot.
SANCHEZ: Yes. What's being done on Capitol Hill today to prevent a flu vaccine shortage next time?
But first, the fighting moves north in Iraq. We're going to take you live to Baghdad for an update on what's going on not only there, but in Mosul as well.
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