Transcripts For WHUT Worldfocus 20091019 : vimarsana.com

captioning sponsored by wpbt paul: profits jump almost 50% at apple, thanks to record i-phone and mac sales. and that sends apple shares to an all time high in after hours trading. we get the latest from an apple analyst. susie: from one tech bellwether to another, intel ceo paul otellini tells us there s a global recovery taking hold in the pc market. our interview with the chip maker coming up. paul: then, oil prices gush higher, pushing ever so close to $80 a barrel. the jump in oil comes as the dollar hits a 14 month low. our brains have different kinds of mechanisms. some of which are holdovers from prior times and may still be very useful. susie: tonight we kick off your mind and your money a year-long look at how we make money decisions. paul: i m paul kangas. susie: and i m susie gharib. this is nightly business report for monday, october 19. nightly business report is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. susie: good evening, everyone. apple shares skyrocketed in after hours trading tonight to more tha$200 a share. they were up more than 8% thanks to quarterly earnings that came in way above analyst estimates. apple earned $1.82 a share in its fiscal fourth quarter, 40 cents higher than forecasts and were up 46% compared to the same period a year ago. revenues were also better than expected: up 25% to nearly $10 billion. strong sales of apple s i-phones were the big drivers of growth. during the quarter apple unveiled a faster i-phone and cut the cost of its previous generation phones to $99, both contributing to the sales boost. consumers also snapped up mac computers, contributing to a 19% rise in sales. looking ahead, the company said it expects revenues of as much as $11.6 billion in its fiscal first quarter. joining us now with more analysis on those apple numbers yair reiner applied technology analyst at oppenheimer and company. how are you. good, thanks, this was very impressive report. now a lot of apple s earnings came from sales of its iphones. do you think that apple can keep on growing and selling these iphones? indeed, all indications are that there were they could have made more this quarter. they had production issues actually prevented them from shiping to demand well into september. towards the end of the quarter they were able to meet demand. what does what does apple sales tell us about consumer spending and tech spending or is it hard to draw out any kind of broad-based trends because apple is one of a kind? i think there are a lot of things that make apple unique. at least one very interesting trend. traditionally people tend to view apple as a premium product. and as such over the last few quarters we ve seen them outgrowing the rest of the market at a relatively small rate. i think what we are seeing in this quarter, on the pc side especially, their growth rate relative to the st of the market took off. their units an pcs were up 17% year overier, that is an order of five or six times faster than the rest of the market. what that tells us is that the consumer is opening up their purse, not just for low-end products now but also for premium products where they think there is real value. so what do you expect to happen for apple sales during the holiday season? i think they re looking at a great december. they shouldn t be facing any of the supply issues on the iphone that they had in the third calendar quarter. and also when you look at pcs, they are expecting to have a relatively important refresh of their desktop models and low-end notebook products. i think december should be another spending quarter for apple. you have a buy rating on apple stock. tell us where you think the price is going. well, going into the call ahead of price target of $210. we re almost there right now so clearly that is something i have to revisit relatively shortly. why do you have a buy rate on the stock? well, i think that if you look at apple, you know, whether you are looking at the phot book side of the business or the handset side of the business, apple is really defining what consumer electronics are. and as long as it is a trendsetter it is able to charge more than its competitors, make a nice margin and nice return for investors. any disclosures to make about your observe ownership of apple or your firm s involvement with the company? i do not known apple shares and oppenheimer does not do any investment banking with apple. thanks is so much for coming on the program. thank you. susie: my guest tonight: yair reiner of oppenheimer and company. it was all about earnings strong quarterly reports and upgrade on caterpillar helped stoke wall street in the early going today. by noon, the dow was sporting a 109 point gain with the nasdaq up 23 points. optimism about apple s upcoming results and continuing gains in stocks which attracted buyers from low-yielding money market funds, helped the market close near the day s highs. susie: more repercussions today from the big insider trading investigation at hedge fundalleon group. ibm put a top executive on administrative leave. the move came after robert moffat a senior vice president at ibm was arrested for allegedly passing tips to galleon. an intel executive was also implicated in the galleon case. we had the opportunity to sit down with intel ceo paul otellini today. scott gurvey began by asking him about intel s connection to the galleon insider trading case. it was a surprise to us. and to my knowledge, no one at intel knew about it, including the employee. and they have not asked for our cooperation. of course we would give it if they have. an does it require any special changes at this point in the way that you do business? i mean you just have these kind of protections. i don t think so. people are people. and you know, our employees know in the area where he worked they know that there is a zero tolerance policy on this kind of thing. you just don t do it. the sake of your job. and who knows what is true. i don t want to proclaim him guilty but the allegations suggest that he leaked information. whether he made any money off it or not i don t know. the other question goes on with some of the anti-trust issues that intel is facing. there an amd lawsuit that begins, i believe goes to trial maybe next year. there is the eu which is still which is still outstanding. what is your position at this point on those? i mean is it the point where you are trying to make any kind of a settlement or arrangements or change the way you do things or is this going to be something that will be adjudicated. they are on independent path, independent parallel paths. amd case comes to trial in delaware late march, early april. as much as you can i m looking forward to that trial because it is the first time that these allegations will be brought forth in the manner which has clear evidently rules. third party judeician things, the jury, all the things we take for granted in america in terms of justice and getting the story out will happen there. and the things you don t have in terms of the eu proceedings. we certainly didn t see that in europe. in europe the same commission that begins the investigation completes the investigation, judges the investigation, levees the fine, is the same group of people. there is no third party independent review of that. that first happens on appeal which is the quarter first instance. and in europe and that s probably two to three years out. the earnings report surprised everybody. surprised them in a very positive way. is that how much of that is cost-cutting. how much of that is new demand that you are seeing. this quarter s news was all demand. demand and some pipeline refilling on inventory which is seasonal. i don t think it is out of the ode. but it was the largest q3 growth of top line that we ve seen in three decades plus. and so it was very solid quarter. i think more than half of that was probably demand. and the other was building the pipe for what looks to be the seasonal q4 peak. the back to school selling season was very good. and do you see that going forward in the holiday season with the release now of microsoft sindows 7 and things like that? yes, i do. i mean this is a global phenomenon. we saw in q3. actually the whole year has been global phenomenon. it s been consumer driven around the world. that s good. that says that when enterprise starts buying again, perhaps next year, you get an additive effect on top of that. so the consumers will come first. do you think the enterprise will pick up nt year. eventually they have to. the fleets of corporations, the they are aging pretty rapidly. the average notebook is over four years ol, the average desktop over three years ol. that mean these are out of warranty. so the break-fix problem is costing more than buying a new machine at this point. let me ask you while you are here, do you have actually a position on some of these health reform strategies. i mean, r example, when you consider the cost factor of having an employee, an american employee versus an employee in any of the other countries that you operate. we ve had a very proactive program in the u.s. on wellness, employee wellness for three or four years now. and that has allowed to us attenuate the growth for the cost per plea over a three or four year period. what we are looking for in terms of legislation is focused on that long. electronic medical records take productivity up, reduce errors, the home health care, the wellness parts of the program we like. the outcome-based payment systems, we like because they are focused on results. doctors and hospitals that deliver better results, we ll get paid more. that is a good thing. we re to the getting in the middle of the debate of who pays and what is the cost. there is enough people in the middle of that one. whatever system we do get we would just like to be more efficient. and you are, of course, opening some new facilities in the united states so this hadn t deterred you. our next generation of technology will only be open in the united states this time. all 32 nanometer technologies are here and they re in four factories in the u.s. what is coming up that you can tell us about that i haven t asked you about. i can t share those secrets with you. you would have to shoot me. i would have to shoot you. all right then the next time. thank you. you are welcome. paul: now, let s take a look at some stocks in the news tonight. and those are some of the stocks in the news tonight, susie. susie: paul, health care reform efforts continue to work their way through the senate. top democrats harry reid, chris dodd and max baucus worked today to meld three health bills into one. but they re stuck on a key issue whether their final bill will include a public option. as stephanie dhue reports, just what that option will be is still being debated. reporter: labor unions have been strong advocates of health care reform. gerald mcentee, who heads the american federation of state, county and municipal employees says his union won t support a bill that taxes high cost plans and doesn t include a public option. we ve been fighting like hell for it, we don t want to fight again for it, we know how difficult it is to get it, and so we would oppose it and just not take it because called health care reform. reporter: but a so-called public option comes in many flavors. some see it as a government run plan, like medicare, that would operate in all 50 states. for others it could be a non- profit co-op negotiating prices just like private insurers. other ideas being pushed under the public option umbrella would let states opt out or have the option triggered under certain conditions. policy analyst rick weissenstein calls it a symanc nightmare. i think that the public option is 100% in the eye of the beholder, i think it means a lot of different things and i think that s been a problem with this debate from the start because not everyone is talking about the same public option. reporter: details will matter, and those details are far from decided. reporter: families usa wants a public option, but its president ron pollack says doesn t want the issue to hold up health care reform. many groups like ourselves, strongly support a public plan option, but there are a lot of other things in this legislation that are very important to drive cost down and that expand coverage for tens of millions of people and i don t think we want to jeopardize that because we did not get exactly what we wanted. reporter: senate finance committee chairman max baucus says a public option is still on the table. but his key goal is to get sixty votes in the senate and make health care reform a reality. stephanie dhue, nightly business report , washington. paul: tomorrow, with ho-hum holiday sales expected, will we see a holiday hiring blitz? some answers from career-builder president brent rasmussen. susie: a new lifeline for low and middle income home buyers. the obama administration announced plans today to fund what it called several hundred thousand new affordable mortgages. to do this, state and local housing finance agencies will sell bonds directly to the treasury. fannie mae and freddie mac will also give short-term capital to local housing agencies to further jumpstart lending. paul: the u.s. chamber of commerce was the victim of a hoax. pranksters sent reporters a phony e-mail today, claiming that the chamber had reversed its position on climate change. there was even a bogus news conference. some news outlets even reported the fake story. the real chamber spoke out saying it supports climate change legislation, but not the bill passed this summer by the house of representatives. susie: investor sentiment is widely recognized as a factor in moving stock prices. but what affects the way investors actually make their decisions? tonight, we begin a special project called your mind and your money a year-long series produced in association with kiplinger s personal finance. we will look the psychology of investing and why your mind may not always make the right decisions for your money. reporter dan grech kicks off our series looking at how our decisions can be swayed by market ups-and-downs. reporter: we all know these investors, and perhaps you re among them: people who obsessively check their portfolios. people who buy when they should sell, and sell when they should buy. people who follow the pack on wall street, even when it leads them over a cliff. the big question is why? why do we as investors often make the wrong decisions? in this series, well look at the evidence to understand how emotions, psychology, even the wiring in our brain may affect our financial decision-making. welcome to your mind & your money. september 2008, lehman brothers goes bankrupt. stocks tank. the global financial system seems on the verge of collapse. fast forward one year. investor susan abrs sits calmly in her living room. the market has finally begun to recover. but she remembers the pit in her stomach during the crash, aser portfolio dropped nearly 30%. i m not a suicidal person, but yeah, it did affect me. reporter: susan was not alone. countless investors watched a lifetime of savings vanish. panic was in the air. some were probably on their roof. i was not on the roof. i did get nervous. reporter: standard economics assumes that people are cool, calm and collected and make logical decisions to maximize their wealth. princeton psychologist daniel kahneman turned that idea on its head. he found that in matters involving risk people are often anything but rational. his work won him a nobel prize. if you ask, lets say princeton students, how about a gamble, where if it shows tails, you lose ten dollars. if it shows heads you win x dollars. what would x have to be before they le the game, before they re willing to take it. they d want $25. you can do the same thing with their parents and talk $1,000 or $10,000. and you ll get roughly the same ratio. so that s a very fundamental fact about people. that they re loss averse. reporter: that trait, loss aversion, leads people to shy away from good bets. susan abrams says that happened to her. after the low point in march of 09, and then shooting upwards market crash, her emotions said hunker down. she chose to stay out of the market. i still was nervous you know. reporter: mri brain scans haveaken dr. kahnemans insights one step further. dr. jonathan cohen is a brain scientist at princeton university. he and others have found evidence that emotional mechanisms like loss aversion are hard-wired into our brains. our brains have different kinds of mechanisms. some of which are holdovers from prior times and may still be very useful. with those mechanisms that serve different needs, there is a potential for conflict, and that conflict explains our erratic and sometimes seemingly irrational behavior. reporter: so if irrational behavior has its roots in the evolution of the brain, how can we overcome our emotions and make sensible investment decisions? robert frick of kiplingers personal finance says advance planning can help. well, just recognizing that you re hard wired to do things poorly is a huge step, because most people wont admit that to themselves. and then what you need to think of is that when i m in a time of crisis, im going to make bad decisions so ill do my planning before times of crisis. reporter: austin abrams says once she realized how he emotions influenced her investing, she was better able to manage them. i m not as crazy as i was. reporter: in recent years, researchers have begun to unravel the complex connection between our mind and our money. over the course of this series, well search for cutting-edge insights that will make you into a better investor. dan grech, nightly business report , princeton, new jersey. susie: next monday we ll talk with a pioneer in the field of behavioral finance: richard thaler at the university of chicago. for more on behavioral finance check out the your mind and your money section of our website: nightly business report on pbs.org. and finally wall street marked a dark anniversary today with a strong rally, pushing the dow deeper into 10,000 territory. but it was a different story 22 years ago as investors faced black monday . that s the day the dow jones industrial average plunged 22.6% in one session or 508 points. it s still the largest one-day percentage drop in history. and paul, a 22% drop in the dow today translates into a loss of 2,300 points! sus yee, bite your tongue. i will. that s nightly business report for monday, october 19. i m susie gharib goodnight everyone. and good night to you, paul. paul: goodnight, susie. i m paul kangas wishing all of you the best of good buys. nightly business report is made possible :