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tv   Nightly Business Report  PBS  April 21, 2014 7:00pm-7:31pm PDT

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report with tyler mathisen and susie gar rib brought to you by the with action alerts plus. the multimillion dollar portfolio she manages with jim cramer. you can learn more at wall street's report cord. the report earnings this week but there are three companies to watch that could give more clues about the economy. and new customers are going to have to pay more for netflix customer but will the price hike fix. and blackrock is stacking up
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states at a record pace. are these unproven companies adding more risk to your mutual funds? we have all of that and more tonight on "nightly business report" for this monday, april 21st. >> good evening, everyone. we hope your holidays were good and good is the word for stocks today. the dow and nasdaq and s & p each ending higher for the second week in the row. it's the first time we've seen that this year. the blue stock volume with the year lightest and stocks did trade in the narrowest range of the year as well. the dow when all is said and done, up 40 points and s & p up 27. halliburton helped to push prices higher and profit reports lately have boosted stocks so far this earning season. but it's early. this week, about a third of the s & p 500 companies will report their latest quarterlies and
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dominic chu takes a look at what investors will be looking for. >> reporter: 11 companies will report earnings this week as well as 150 companies in the s&p 500. it's going to be the busiest week of earnings so far this season but some reports will be skr scrutinized more than others. first up is mcdonald's. they will report on tuesday before trading. known as a barometer of spending across the globe. for that reason, investors look behind the earnings and sales numbers. they will be focused on things like growth and comparable sales in east region they operate in. in 2013, those sales open at least a year that grew by .02 of a percent. on wednesday, keep a close eye on apple. not because it's the biggest publicly traded company in america as measured by market value. investors will be checking out
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whether the market for smartphone products remains in tact. it's also a story about growth and innovation. apple has long been seen as a leader of bringing hot new products to market. can it keep up the new product momentum? and then there is gm in particular. it reports on thursday and investors will be looking for general health in the global auto market. car sales in america are showing signs of life but growth in key markets like china will be a huge focus. investors will also be listening closely for any comments regarding the ongoing investigation into its ignition switch recall and what kind of an effect it may or may not have on future sales. of course, every earnings report from every company is important in some way but these are three big ones to pay close attention to in the heavy week of earnings. for nightly business report, i'm dominic chu. just after the "closing bell," earnings from netflix, the world's largest streaming video service, which added
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another 2.25 million new subscribers in the past three months. the company made $53 million in profit last quarter taking in a better than expected 86 cents a share, topping estimates by 3 cents. revenues were right in line with the forecast. that was enough to send shares initially higher after the report. seema mody joins us more on netflix numbers. what is your takeaway? >> susie, investors take a close eye on netflix's subscriber growth, they added 2.25 million new donmestic streaming customes in the first quarter. all eyes are on the reach outside of the u.s., the international subscriber base expanded by more than analysts had been projecting and international growth could potentially continue to be a driver going forward. netflix, in fact, mentioned that it's expanding into new european markets and the international
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segment is on path to achieve profitability this year. something else to keep note of, netflix plans to increase the u.s. prices by a dollar or two for new members only. existing members stay at current pricing. it's 7.99 in the u.s. this will you a low them to acquire new content and deliver a better streaming experience. of course the question tomorrow will be what analysts are saying about how this will impact future demand. >> seema mody, thank you very much. all right. david garrity is going to join us to talk about tech companies when they report later this week. he's a principal with gva research. david, welcome. let's start with netflix. what did you think of the earning report and what do you think of the stock of these prices? >> netflix is 25% off its high. the fact that it's trading up after hours is bringing in line the numbers and showing that the correction in the stock for the time being is halted.
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one question that we have about the $2 increase for new customers is, is this a charge that is going to be passed through to cable providers as the issue of net neutrality becomes an issue in the u.s. >> david, we have a lot of tech earnings coming out this week and big names that everybody always looks at. we have apple and microsoft on wednesday and thursday of this week. you have a buy rating on both of these companies. what do you like about them and if an investor had money, new money to put to work, which one would you choose? >> we'd put new money to work in microsoft versus apple. in the case of microsoft, we have a new ceo in charge of the cloud computing business and the company can accelerate the growth. investors don't know him as of yet and he's been leading the highest growth areas in the company and we think there's a lot of positive news to come from the first conference call that the new ceo is going to give us on thursday. from that standpoint, there's a
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potential that stocks get up to $48 looking out over the next 24 months. apple on the other hand has been a significant invoe vnovator. the new iphone 6 will come out in september. that makes the stock a bit sluggish near term. >> let's talk about facebook. >> in terms of their driving their revenues from rmobile mos likely continues. in december it was 60 and we think it gets to over 56 in march. facebook is cavalier in how they are using their cash and stock to bid up businesses such as what's app and ocuvus vr, businesses that aren't making money as of yet and don't even have revenues. >> david, tell us about amazon. it's reporting on thursday. the stock is down a little bit
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from its peak. what is your feeling about amazon and the stock? >> in terms of amazon, we're looking at a quarter where the company is going to have earnings of 15 cents a share. it's going to be the second quarter in a row where the company has been profitable. some of the concerns have been since we've seen weaker economies overseas outside the u.s., is amazon going to be able to make their year over year revenue growth? if they don't get that, stock obviously is still trading at a fairly high multiple and could be vulnerable to a pull back and we could see a correction off the two-week high. >> david, thank you. appreciate it. general motors is flat today even after documents leased by government safety investigators show the automaker waited years to recall more than 300,000 saturns with steering problems. the correspondence shows that gm received thousands of complaints in the ion model.
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ford is making recession plans. ford will make the chief operating officer its next chief executive when 68-year-old alan malowi retires later this year. ford will make the announcement official as early as may 1. fields has been seen as the successor. >> meanwhile, allen malowi was at the beijing auto show as they invest heavily in the fastest growing car market. eunice has more. >> reporter: china's economy is gearing down. but you wouldn't know it. car makers wowed the crowd all aimed at the country's first time auto buyers. >> the economic development of china. >> reporter: ford has revved up its business here. the latest auto giant has marketed the compact focus to young chinese, turning it into a
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best seller in china. now the company hopes to reinvent the lincoln image, no longer a car for your grandpa but a status symbol for aspiring chinese. >> we're investing in a lincoln and i think i would characterize it as all of the technology that ford brings to bear, plus the elegance and plus it's affordable. it's affordable luxury. that's what people want today. >> reporter: despite the austerity drive, drivers still like the larger cars. >> i think we have good timing in terms of the entry that we're bringing into the market and away from the luxury segment, the suv is growing quickly. >> reporter: with such a crowded market, the u.s. automaker is investing big. $12 billion over the next three years. it says so far recalls in the u.s. are not hurting its solid image in sales in china. >> we haven't seen any impact
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and i haven't heard a lot of discussion around that in my couple days here so far but clearly what we're doing in the u.s. is we're putting the customer in the middle of everything we're doing. we're working very quickly to address and repair the vehicles involved. >> reporter: moving quickly is key for a company where consumers are not loyal to one brand and have too many choices. for nightly business report, i'm eunice in beijing. still ahead, do you want to invest in startups? more and more investors are doing it. leaving investors wondering if they are more riskier than they thought. ♪
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prices at the pump have shot up to a 13-year high and are 13 cents more a gallon than a year ago. gasoline rose 9 cents over the last two weeks reaching a nationwi nationwide average of $3.69 for regular unleaded. with the nation's demand for gas and oil rising, there's another setback for the long proposed keystone pipeline. there are more delays to bringing fuel from the oil fields of canada to refineries along the gulf of mexico. >> reporter: delayed again. a long awaited state department decision on whether to proceed with construction of the keystone pipeline is on hold again. more than 2.5 million comments have been recorded online. the issue giving cause once again for pause as the obama administration extended the review of the environmental impact studies.
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opponents of the studies are saying that the pipeline will increase carbon pollution, using some of the world's dirtiest oil. keystone is critical for the transport that is safer and the 1700 mile pipeline would result in countless jobs. still, others are saying the decision to delay has more to do with politics than the pipeline itself. especially if november's midterm elections are a little more than five months away. >> i think the decision was politically motivated. the state department could go ahead and evaluate without nebraska supreme court issuing a ruling and this is a decision making process that goes post in the november election. >> reporter: mitch mcconnell of kentucky calls keystone the single greatest shovel ready
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project in america but adds that the president simply is not interested. >> according to the state department, this pipeline will add over 40,000 temporary jobs which includes construction jobs throughout the midwest as well as all of the support services, including pipeline construction, food services, hotel, revenues that are going to support these workers. >> reporter: even democrats like senator mary landrieu says it's nothing more than a delay. crude will get to wherever it needs to go and that will happen one way or another. it's a matter of supply and demand and right now there is plenty of both. in breaking news, late today an activist investor teams up with a pharmaceutical company to mount a takeover bid and that's tonight's market focus. the head of pershing bill
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ackerman is looking to buy the company that makes botox. the deal is said to be slightly more than $40 billion. the hedge fund has built up a 10% stake in alergen. the regular session was closed up 6% at $142 a share. shares of sirepta therapeutics with the food and drug administration to get the muscular dystrophy drug approved. late last year the company needed to do a late stage trial of the drug that affects children and after meetings with the agency the company worked out a strategy for what the ceo calls accelerated approval. >> we have an opportunity to provide supplemental data over the course of the next six to eight months that will strengthen a potential new drug application. and so we are very optimistic as
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we sit here today of the prospect for a potential accelerated approval. >> shares closed at $33.98. that's a gain of about 40%. and pfizer has approached its british rival with a $100 billion takeover bid according to press reports but the uk's sunday times said that the offer was rebuffed and no comments from the drug giants. shares of pfizer are up. reports that there are mergers of barrick way down and the deal would have combined the world's two larger gold producers but the talks didn't result in an agreement. there are reportedly still hopes that the deal could be revived. meanwhile, shares of barrick fell down to 20.78.
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hasbro swung to a profit in the first quarter. the toy maker saw costs fall and sales in the girls products category surge. earnings topped estimates but revenue fell short. investors overlooked the revenue myth and shares were up to $55.66. and halliburton post an earning beat on the top and bottom lines. the provider is calling for a 25% jump in earnings for the current quarter, thanks to a recovery in margins in north america and growth overseas. the estimates, by the way, is right in line with expectations. still, shares spiked more than 3% to $62.92. reports say that square, the mobile payment startup may be on the auction block. "the wall street journal" said that the cash strapped company has been in talks with several deep pocketed tech giants about being acquired including google, apple, and ebay's pay pal
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division. but they denied having any talks with google. so there. how do you feel about your mutual fund investing in silicon valley startups? you may not know it but according to a report in today's "wall street journal," your fund could have some share of newbies if your money is managed by blackrock, fidelity and here to talk about the rewards is stacy francis. stacy, first of all, how common is this with mutual fund families and should investors be worried? >> well, you know, it's becoming more common and in fact last year we saw 16 deals closed by the big four that you mentioned. this year to date we're at 13. it's looking like it's going to be a banner year. should you be concerned? yes, you should be concerned. the average per person investing in a mutual fund has it in their
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retirement. they are investing in a mutual fund because they want long-term growth and income, not necessarily jet rocket propelled growth with a lot of risk with it. >> but -- but just to take the other side of the argument here, my assumption is, from what i've heard about these positions, is that they are really relatively small in any individual fund and obviously if they pay off as a facebook as twitter did and i believe some of those funds were investors early stage in there, they can do really well. >> well, you bring up a very good point. typically you cannot go over 15% in something liquid like this, according to the icc. we're looking at most a 15% stake. the only thing i would say, to be very careful of, a lot of these investments are in high-tech startups and it really is -- reminds me of those years, if we all remember, many decades ago, in the 1990s. it's interesting, janice and fidelity were two of the largest
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offenders and it's not necessarily with the market, our biggest concern is that investors don't understand that this is what is being put in their mutual fund. >> if one of your clients said, we're worried about, this how can you find out if your future you'll fund is making these kinds of investments? >> those investors that have investors that work for them that are helping them, you have an easy way out because that is the responsibility of that financial adviser. however, if you're on your own, there's a couple things you need to do. number one, go to see all of the listings of the current holdings of that mutual fund that is public information. that is for you to know. also, when you get your report and get the proxies, i know it's a big, thick document. it's easy to put it in recycling. look for words like adventure capital, pre ip investments. >> can't you call the fund and
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ask if they have any early stage or capital investments? >> yes. definitely call the fund as well. a lot of the mutual companies are getting high marks for consumer education. so give them a call. i will tell you that this is not something that they are really publicizing and trying to put out there on the front pages either as we saw. some of their stocks actually have been gotten some hits and that's because this is not necessarily good news. >> real quickly, just have half a minute. for years, a lot of individual investors are saying, how can i play venture capital? how can i get in ipos? now isn't this a balanced way, a safe way of getting into those, you know, new offerings? >> yes. there are actually mutual funds that you can buy that focus specifically on this part of the market. that is where i would go to get that exposure. better than buying, you know, a few shares of facebook through your discount brokerage. it's better to get a larger
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exposure. again, know what you are buying and there are great, great, great technology-fund oriented stocks out there that focus on stocks. again, know what you're buying. this is not what you want in your long-term investing. >> good advice. thank you so much, stacy. stacy francis of francis financial. coming up, did consumer backlash cause general mills to reverse its legal policy? an update to the story that we told you about last week. that's next. ♪ a big reversal from general mills, the cereal giant. they said that any customer, any customer who visited the company's website or interacted with the company's twitter or facebook pages would automatically give up the right to sue general mills in court if
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ever a dispute arose. the company reversed course and has now gone back to its original policy. nike has come out swinging, refuting reports that it's getting out of the wearable technology business and laying off nearly all of the employees in the 70-person unit. nike admitted into a statement that sales of a fuel band fitness devices have been unsuccessful but we continue to line resources with priorities. we expect to make changes within the team and there will be a small number of layoffs. the statement added, we do not comment on individual employment matters. nike says it will continue to sell the band devices and update its fitness software. the 118th run ning of the boston marathon. this time, everything went off
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as planned and an american won for the men. meb keflezighi. there were more runners in two decades and the most spectators in decades creating both challenges and opportunities. our scott cohn reports from boston. >> reporter: the mission stage erased that feels like any other in a year that no other. at the start of the race, a moment of silence. and along the route, unprecedented security for 36,000 runners and spectators. there was a concerted effort to make security invisible. >> i've ran 46 marathons and if they are sitting at the marathon, i don't want them to look up and see snipers on top of roofs. i don't want them to semen in tactical gear. this is a family event. i want it to remain such. >> reporter: last year's deadly
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bombings taught lessons, the hard way, about protecting targets like sporting events, shopping malls and hotels. ed davis retired as boston police chief last year. now he's a consultant. >> this was not a close event. it was a soft target in that people could move around but clearly backpacks were a threat to us and more of a threat than we had assumed. >> reporter: 2013 taught law enforcement the importance of surveillance cameras. 2013 struck a nerve in boston and around the world and that's actually measureable in dollars and cents. a fund raised more than man newtown, connecticut, aurora, colorado, and new tech university combined. >> in 60 days, 100,000 donors from around the nation contributed $61 million. >> reporter: and this year, the
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security, the visitors, the media are expected to spend a record $175 million which the mayor would trade in a heartbeat. >> today is not about the money. it's about the spirit of this race. >> reporter: this year's marathon is a major strive to restore the spirit the world has come to love. scott cohn, nightly business report, boston. >> they don't say boston strong for nothing. >> no, they don't. >> that's it for us tonight. >> have a great evening, everybody, and we hope to see you back here tonight.
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