California suffering from an extreme drought. Now farmers are making tough decisions that could impact the price youll pay for things like beef and lettuce. All that and more tonight on nightly Business Report for thursday, january 16th. Good evening, everyone. A mississiperable day for invesn best. The Worlds LargestElectronics Retailer didnt live up to its name when it comes to its stock. It plunged almost 30 today. Investors dumped the shares after the Company Reported it had poor sales during the Holiday Shopping season, saying it suffered from heavy competition and deep discountsing. Hotselling products were in short supply. Smartphone sales were slow. And with so many people shopping online, fewer people came into its stores. Sales fell nearly 1 instead of rising. Courtney reagan spoke with best buys ceo and has more on whats next for the struggling retailer. Reporter best buy shares gained a staggering 240 in 2013. As wall street began to put stock nuts turn around strategy. But today best buy shed more than 3. 5 billion in market cap value after revealing a bummer of a Holiday Season. Sales at best buys u. S. Stores open at least a year fell 0. 9 compared to the year prior. Wall street had forecast same store sales growth. Analysts remained resolute in his commitment to the longerterm turn around strategy. Its hit a speed bump. And we dont want to minimize it. Because frankly we care people about our monthtomonth performance. But our sense is that it doesnt change the overall story. It doesnt change the longterm perspective. It doesnt change the priorities and the trajectory. Reporter in order to compete in the most promotional Holiday Season in years, best buy joined rivals and cut prices to get shoppers into the stores. On the phone this morning, jolie told me this holiday promotional environment was extreme but it didnt create industry demand. He also said he didnt think anyone expected mobile sales to fall, but it happened. Finding products here a little more pricier than others. Ill go home and look for it on amazon or ebay. I look online, go to the store, then i come back and purchase it online if i cant get a bargain in the store. Electronics category in general has been tough. Target had said that, too. Even though amazon probably did take a little bit of share, im not so sure yet that theyll come out and say they had gangbuster electronics sales. Reporter but electronics are the pillar of their product offering. One analyst saying todays report is a stark reminder of an availabilities in the companys business model. David strausser thinks its just a mark of a tough environment. And suggests buying on the dip. Gaining share is good but marking prices lower and lower compresses margins, cuts into profit, and frustrates investors. For nightly Business Report im courtney reagan. Earnings after the closing bell this evening from dow component intel, even with shrinking sales of personal computers, net income at the worlds top chipmaker last quarter rose 6 to more than 2. 5 billion. And revenue was slightly higher than expected. But intel did miss forecasts on earnings per share by a penny at 51 cents a share. As for the stock, shares fell initially on that report. We have a reporter from the Nasdaq Exchange with more on intel. Good evening. Whats the most important take away you see in intels latest quarterly profit report . Reporter well, tyler, intel is not expecting a big jump in sales this year. I think its one of the big key take aways. Intels revenue guidance for 2014 came in lower than street expectations. There have been ongoing concerns about intel adapting to the shift in the marketplace from pcs to smartphone and tablet demand. Although intels management did mention that there were signs of stabilization in the p. C. Segment and financial growth from a year ago. Its also putting more focus on supplying chips to the growing smartphone and tablet markets. Intel said it plans to sell 40 million chips for tablets in 2014. The big question is will this all result in bigger sales for intel. Sima modi reporting from nasdaq for us tonight. Joining us now to talk more about intel and what to expect from other Tech Companies when they report their earnings next week is kim forrest, senior Equity Analyst at for the pitt capital group. What was your take on intel . You just heard the report. Do you agree . I do. I was surprised to see they beat on earnings. That hasnt happened in awhile. They also had very good margins. And i think most of the penny miss was in the below the operating line, probably in taxes, and maybe a little bit of spending and r and d. But i dont think it was that big of a deal, the earnings miss. And it was a good mix of revenue from pcs, the server group, and even newer chips that are going into tablets. Has intel been nimble enough in adjusting to a new environment . No. And they were punished accordingly. A couple of years ago when it was pretty clear that the consumer pc market was going to crater in favor of more mobile devices, it took them a very long time to come out with products and technologies that were exciting enough to be included in design plans of the makers of tablets and phones. However, i believe they have done really great in trying to catch up. They have some really great technology. And i think that were going to see in 2014 more design wins that intels going to be able to report. Kim, we have a number of other Tech Companies that are reporting over the next couple of days. And a lot of people have been saying that these tech earnings are going to be really good. But the Companies Reporting next week have some of their own problems to deal with. Im going to talk first about microsoft reporting on january 23rd. We know theyre in the ceo search, theyre changing their windows 8 operating system reportedly to windows 9. What can we expect microsoft to tell us next week . Well, i think the big focus next week is going to be on xbox sales. Because that was just in this last quarter. It was a new product for them. And even though the number of people that are interested in owning a console is probably down, i still think that they have a great market share in their core market. And are going to be able to report some pretty good numbers. The ceo search is incredibly important, and an update would be nice, but i dont think that will be forthcoming. And again, pc sales and how its impacting them in the long run, thats always the focus as well. Give me a quick thought on ibm also reporting next week. Hows big blue likely to do . Big blue, i think they are strong in the u. S. Still. But the big question mark over ibm for us is china. China has really been an area of growth for them. And i think everybody who is selling big complex machinery and big complex systems in china, theres a question mark over those numbers at this time as the one regime transitions to another. So its going to be an interesting time for them. All right. Its an interesting week coming up. Thank you so much for getting us ready for it. Thanks a lot, kim. Thanks for having me. Kim forrest with for the pitt capital group. Twoday rally in the market hitting the pause button today with the Financial Sector a model selloff after disappointing Bank Earnings before the bell. Big selloffs throughout the day at best bae. After two days of doubledigit gains. The dow fell 65 points today, the nasdaq ended 3 points higher and the s p 500 retreated from yesterdays alltime high closing down a modest 2 points today. American express was another high profile Financial Company that delivered a disappointing Earnings Report today. After the market close, the credit card giant said it earned 1. 25 a share. That was a penny below analysts estimates. Still, profits of the company more than doubled thanks to higher Consumer Spending over the holidays. Revenues also rose, but they came in a bit below forecast. Goldman sachs reported earnings earlier today beating estimates. But company saw its net income take a tumble. Shares of the newest member of the dow fell 2 today after reporting that profits fell 21 last quarter. Mostly on a decline in bond trading revenue. United health care was another dow component out with earnings. Quarterly profits rose 15 as more people enrolled in its insurance plans. But unh said implementing the new health law and private medicare funding cuts will eat into 2014 profits. The stock was the biggest decliner in the dow today, falling nearly 3 . And some other big Financial Firms reported today with mixed results. Profits at citi group rose 21 as expenses declined and it set aside less money for bad loans. Net income at pnc shot up 46 , mostly by originating more loans especially in commercial real estate. And black rock the Worlds Largest money manager had higher profits on more money coming into its exchangetraded funds. And it was a mixed finish for all three stocks today. Two up, pnc and black rock, one down, citi group by about 4 . Still ahead on nightly Business Report, last year was the driest on record for california. Now farms are being forced to make some tough decisions. And that could mean higher food prices for you. We dont note full extent of what transpired. But what we do know was there was mall wear installed on our point of sale registers. That much weve established. We removed that malware so we could provide a safe and secure shopping environment. This investigation is ongoing. And its going to take some time before we really understand the full extent of whats happened. Well, now we do know at least a little bit more. In a 16page report prepared by the government and sent to target and other retailers, it described the malware hackers used to get ahold of customer data. According to Security Intelligence firm eyesight which helped to document, the code enabling the breach was written in russian. But that does not mean it necessarily originated there or was deployed by russian nationals. The report also said it was a fairly widespread targeting of retailers that use those point of sale systems. But as of now, we dont know whether other retailers were similarly breached. A court ruling today could mean another big financial blow for the bankrupt city of detroit. A federal judge rejected a deal to get the city out of a financially disastrous agreement thought made with two banks back in 2009 in order to pay some pension debts. But paying 165 million to end socalled Interest Rate swap agreements with ubs and bank of americas Merrill Lynch unit was determined to be too high a price for the bankrupt city. Just two weeks to go before Ben Bernankes second term as chairman of the Federal Reserve ends, and in his final scheduled public appearance as head of the fed, bernanke reflected on his eight dramatic years at the central bank and said the fed should give the economy the stimulus it needs during this tough recovery, even fit puts Financial Stability at risk. Were watching this very vigilantly. Weve developed tremendous additional capacity for doing that. But at this point, we dont think that i think i can speak for my colleagues in this we dont think that Financial Stability concerns should at this point detract from the need for Monetary Policy accommodation. Very interesting there. Bernanke also recalled to the Bookings Institution in washington, d. C. What he called those very intense periods during the financial crisis, periods that he likened to trying to keep a car from going over a bridge after a collision. It may be a tough year ahead for your grocery bills. Thats because california where so much of the nations food is grown and cattle are raised just wrapped up the driest year in its history. Jane wells has more on what that drought may mean for your dinner table and your wallet. Weve just had zero rain. Reporter stop me if youve heard this one. It looks like drought in california. This time, though, they say its really bad. We dont just need a normal rainfall. We need above normal to get back to zero. Were so far behind. Reporter 2013 was the driest year on record in the golden state, going back 160 years. In a place where 38 Million People compete with the nations largest farm economy. Justin greer says this time of year theres usually a few inches of grass. Instead, hes paying high prices for hay and shipping cattle at lighter weights, meaning less beef on each animal and officially higher prices. Beef has already been expensive due to droughts in texas. Beef isnt and has never wanted to be the lowcost protein alternative. We want to be the best protein alternative. But with everything theres a breaking point. Reporter whats causing all this dryness . I mean, high fire danger in january is unheard of. There is a very large, very stubborn High Pressure system off the west coast causing this. Its four miles high and 2,000 miles long. Farmer mark borba has so little water available hes letting a third of his land go to dust this year. This is where most of the nations fresh vegetables are grown, things like lettuce. Expect let lettuce and higher prices for it in the short term. Our populations have gone from 16 Million People to 38 Million People, and weve not built a New Reservoir to capture the abundance of our snow pack and rainfall. If you cant predict where youre headed, you better kind of gather up your acorns and find out how to survive. Reporter governor jerry brown has yet to officially declare a state of drought, which would allow some water to be reallocated. He may be holding out for rain. None is forecast. For nightly Business Report, jane wells, los angeles. News that chinese officials are investigating new skins sent shares of that budy nose diving. Shares were halted a few times because of Excessive Movement after chinese officials said they would investigate accusations that the u. S. Based company is of rating an illegal pyramid scheme in china. The Stock Plunged more than 26 to 84. 80. Via coy viacom declared the giant will return that cash to shareholders on april 1st. Despite that, shares of both stock classes were down slightly today. Class a shares closed at 85. 14. B shares closed at 84. 94. United continental will furlough about 685 of its junior flight ated ants as part of a plan to cut costs. The fur lows are a new addition to the a moneysaving plan united announced last year which aimed to save 2 billion annually because the original cuts failed to attract enough workers for voluntary fur lows and job sharing. Despite that shares there were up 1. 5 today to 47. 21. Cec entertainment, this is the parent of chucky cheese, will be bought by apollo global. The fund will pay about 1. 3 billion for the restaurant chain. Both stocks up after the buyout news broke. Apollo rose slightly and kec popped 13 to 54. 7 56r78g9 her she is and 3d systems have a sweet deal in the works. Theyre coming together to develop a 3d printer that cranks out chocolate. Theres no news as to when this magical device will be on the market or how much it will cost, but just the idea of it sent shares of hersehy up. I helped present the morning Star Mutual Fund manager of the year awards. You can read about the winners at morning star. Com. As part of the proceedings i sat down with scott burns, morning stars global head of fund research, and asked him how the fund business, which of course touches tens of millions of americans, is changing in 2014. Theres a couple interesting trend that are happening right now. In the u. S. Theres clearly a shift happening from active management to passive management. So were seeing the growth of things, etfs. Vanguard is quickly becoming the Worlds Largest asset manager and replacing names like fed fidelity. Multiassets groups are becoming very large. 2014 will be a real banner year for some of of newer up type strategies. So passive investing which is basically another way of saying index funds and dts is one trend. Alternatives what are we talk about here when we say alternatives . Is this a case of mutual funds wanting to be hedge fund . It is that to a certain extent. And a lot of it is strategies that were formally only available in hedge fund moving into the mutual funder or etf vehicles. Alternative if you ask five people you might get five different answers. Our answer is, alternative to equity and fixed income most simply. So we think are the things that are off the style box. Like what . A Commodity Fund would be alternative. A fund that is market neutral. So to be on the starbucks you have to have market exposure. Other funds we dont consider alternatives very popular, multiasset solutions where youre all over the starbucks but not off it. So alternatives are really interesting growing. So if someone comes to me and says, i think you need an alternative fund in your portfolio, tyler or george or whoever, and its going to be managed futures, whats the smart question for me to ask in that case . Because if this is a trend, its going to come into peoples living rooms this year it is. And i think the first question is alternative to what. Thats a question we do a lot of work on. If something is going to go in, what is going to come out. So if were going to add managed futures what is the risk were looking to reduce, the turn were looking to reduce up alternatives while a very nice umbrella theres a lot of diversity inside alternatives. Alternative to what. Then also what is this return that im getting. Are they as a class necessarily riskier than stock or bond funds . No. And i think thats the interesting kind of misclassi