tv Nightly Business Report PBS August 12, 2013 4:30pm-5:01pm PDT
you get close to iconic landmarks, to local life, to cultural treasures. viking river cruises, exploring the world in comfort. reversal of fortune, blackberry put the smart in the smart phone. but today, it's shareholders feel dumb. the company ponders the dreaded strategic alternatives. how can you tell if a company you own is about to lose it. >> fed watch. a big week for big data. the numbers that are released could impact what the central
bank does next and the markets next move. >> planes, trains and hyperloops. no, it's not a cereal, it's the future of travel. according to one entrepreneuent and it could mean getting from los angeles to san francisco in under 30 minutes. we have that story and more tonight for monday august 12th. >> good evening, everyone. remember when the blackberry was the must have device for executives? everyone wanted one, and if you had one, you couldn't put it down. not any more. blackberry has been passed by other phones, from apple, samsung and more. today the blackberry waived the white flag. it's exploring so-called strategic alternatives, that includes partnering with another firm or taking the company private. or even selling it off to the highest bidder. john fort has the latest on the possible future of blackberry.
>> a humbling moment for a once proud brand. blackberry, the company that first popularized the idea of a phone that could do more than make calls. the company that added alicia keys as a marketing executive in january says it's pursuing strategic alternatives. the momentum in the mobil market bee longs to samsung and apple. the latest data from ibc shows that worldwide, blackberry had 3% market share, down from 5% a year earlier. for every blackberry shipped in q2, more than 27 android foreigns moved. things aren't about to get easier. apple's lineup will take a bow in a month. the market will be even more crowded at the end of the year for new blackberry phones that don't seem to be catching on as many hoped. >> blackberry's got a tough situation on its hands.
it's a lesson that all developers ought to pay close attention to, which is that markets change really fast. and only the paranoid survive. >> the question is whether paranoia will help blackberry at this point. going public could be a good option. trying to go private comes with risks, just ask michael dell. the uncertainty around that kind of transaction could send blackberry's fortunes spiralling. whatever they choose to do, the clock is ticking. the biggest buying season for smart phones starts in about six weeks. for nightly business report, i'm john fort. coming up a little later in the program, what are the barning signs that a company you even is in trouble and falls out of favor on wall street. we'll get answers from a successful business strategist. >> the technology blog, all things digital is reporting what john fort just referenced, namely that apple is expected to unveil a brand new redesigned iphone on september 10th.
there's speculation that the newest iphone will have a larger screen or see a lower cost model for consumers in emerging markets. there's even talk about fingerprint recognition software in those new handsets. apple as usual declined to comment. a few acquisitions to tell you about, beginning with dole food. they agreed to be taken private by its chairman and ceo david murdoch, who already owns 40% of the company. the company is valued at $1.2 billion. that's a lot of bananas. then there's pinnacle foods, owns duncan hines and vlassic pickles. finally, there may be a bidding war to acquire the legendary piano maker, stein way musical
instruments. after an unknown bidder came up with an offer of $477 million topping an earlier buyout bid that was already accepted from the private equity firm. shares of dole, pinnacle foods and stein way all higher on the day. >> those deals did little to inspire investors to buy stocks. on wall street, stocks were little change. the dow lost five points. the nasdaq rose almost 10, getting a lift of shares from apple which rose 3%. and the s&p 500 was down about 2 points. mining companies were some of the biggest gayners today, and that gave a boost to the price of gold. up more than $22 an ounce. a gain of nearly 2%. good news out of washington, sort of, the government reported a nearly $98 billion budget deficit for the month of july. that means uncle sam is now on track to post the lowest annual budget shortfall in four years. the reasons for the shrinking
deficit, slow but steady economic growth, higher taxes, less government spending and the turnaround in the bailed out washington run mortgage giants, fannie mae and freddie mac. this will be a big week for fresh data about the u.s. economy. those reports will be closely watched not only by investors but by the policy makers at the federal reserve, as they decide if and when to begin tapering their economic stimulus program. steve tells us what's on this week's calendar, and which reports are most important to fed chairman ben bernanke and company. >> good evening. a big week for economic data, that will go a long way toward figuring out whether the economy is strong enough for the federal reserve to ease back on the support its giving. we'll get a read on the consumer with july retail sales tomorrow morning, and economists are looking for a modest but still healthy gain. later in the week, wall street looks for relatively tame inflation numbers, both from
producers and consumers. for the number of americans, jobless claims remain low. that's just a bit above the level from before the recession. on friday, we'll learn how much new home building has been hurt by recent higher mortgage rates. economists look for july housing starts to come in with a big gain at an annual rate. ben bernanke will be watching all of this closely, he's indicated the fed can reduce his monthly purchases s of bonds. already the second quarter looks healthier than originally reported after revisions to the data from the government. so better economic data this week through september when the fed meets, could put the fed on course to ease back on the support its giving the economy. for nightly business report, steve liesman. an update on a story nbr brought you a few weeks ago, federal commodities regulators have sent subpoenas as they
investigate allegations that aluminum owners and warehousing firms inflated prices by moving supplies from warehouse to warehouse, keeping it out of the open market. wall street's goldman sachs group were among the companies receiving subpoenas related to the inquiry to the commodities futures trade commission. >> general motors is rethinking its business operations in south korea. reportedly, gm may have already begun shifting manufacturing out of that country because of sharp increases in wage costs and militant unionism. south korea is expanding operations to china to meet demand. it's day ten, and there's no sign of a deal between cbs and time warner cable. the bitter battle of remissi
retransmission fees has resulted in a blackout of cbs programming. the network is feeling the pinch. julia borsten has the latest. >> cbs and time warner may be at the negotiating table, but there's still no sign of a deal. raising questions about the impact of the blackout on cbs. hit the hardest are cbs owned tv stations in new york, los angeles and dallas. where local news broadcasts have suffered significant ratings declines, in los angeles, ratings of the 5:00 p.m. newscast are off by one third. for the 11:00 p.m. newscast, they're down by one quarter. the network's strength the rest of the summer is balancing out local weakness, issuing a statement, saying the net effects of the blackout have been created in an overall ratings hardship. august is traditionally one of the lowest months of the year for ratings. >> cbs says when it comes to
those key national ratings, the blackout isn't having a significant impact. in fact, in the first week of the blackout, cbs's national ratings declined by 0.2%. thanks to more original programming than previous summers. >> cbs is cutting down the number of repeats. they're putting more original shows on. that costs money, but it also will produce higher ratings. >> ratings of the pga championship has improved despite the blackout. saturday's ratings were up 30% over last year. one show which hasn't been impacted by the blackout is the late show with david letterman. letterman had a well timed vacation last week and this week. for nightly business report, i'm julia borsten in los angeles. a small group of companies was hit hard by the crash, the recovery is bringing them back from the brink. investors are taking notice. first, let's take a look at how the international markets faired today.
one industry hard hit by the housing crash, private mortgage insurers, two big ones went under, and the rest were left bleeding cash. the housing recovery is breathing new life into this industry, and some new players are worth watching. diana olick has that story. >> reporter: when housing came crumbling down, the private mortgage insurance industry was left holding the bag, four companies lost a combined $20 billion, and they were the survivors. now, these companies just posted their first quarterly profit in 6 years.
>> delinquencies are down, which has helped, the companies recapitalized the popular companies. fha is reducing its role in the market. the companies are basically reversing their position and all starting to show modest profitability. >> two more have entered the market. and the six wrote nearly $49 billion in business up 27% from the previous quarter according to inside mortgage finance. of the publicly traded firms. united guaranteed a unit of aig, reported positive income with radiant still trying to break out of the negative. a newbie to the market is comes out strong. up from 3.6 billion a year ago. the latest to the group, national mortgage insurance plans to go public and just made a $5 billion deal with fannie mae to ensure pools of loans.
>> the redefault rates on some of those programs have increased, what we would argue is that without those programs, it would have been a lot worse. most of these borrowers would have been delinquent and would have foreclosed. >> while the mortgage insurers didn't get a government bailout during the crash, they did benefit from the housing the government refinance program from under water borrowers and the loan modification program. private mortgage insurers have climbed back to one third of the market. they should see more gains should congress decide what to do with fannie mae and freddie mac. i'm diana olick in washington. a small biotech stock makes a move lower. vical will stop development for its cancer therapy drug. a late stage trial, failed to demonstrate that the treatment
was significantly better than conventional chemotherapy. the company will focus on its infectious disease vaccine. that sent shares plummeting down more than 57% to 1.53. young brands reported a 15% drop in july sales in china. the parent company of kfc and pizza hut posted a steeper decline in those stores after a food safety scare. china is the company's most important market generating more than half its operating profit. shares were up fractionally at the close. but then as you see on that chart, they fell after hours. farm commitment stocks getting a boost from the crop report today. the department of agriculture cut its forecast for the size of the corn harvest here. prices shot up for commodities like corn and wheat. investors seem to be buying into the idea that farmers are more
likely to buy new tractors and combines when commodities prices rise. agco was up more than 1% to 57.45. cisco, this is the food distributor was the worst performing stock in the s&p 500 today. shares came under pressure after reporting quarterly earnings that tumbled eight and a half%. the company gets most of its revenue from supplying food to its restaurants. it's customers are struggling as consumers are not dining out as much. the stock dropped more than 5% to 32.99. the boardroom brawl prompted company directors this weekend to hold a rare sunday meeting by telepho telephone. at issue, what to do now, after activist, investor and penny's largest shareholder ousted the chairman and searched for a new ceo. agoman was at first credited
with bringing in the former apple whiz ron johnson. now, ackman gets the blame for that. he was replaced this spring. now, some board members think it should be ackman's turn to leave or at least shut up. now, late word this afternoon, that jcpenney and ackman are in talks to resolve the dispute. whether it's jcpenney, blackberry or dell. a company that was once the darling of wall street falls from grace. why does that happen and what are the warning signs for investors. we turn to bill george, the former ceo of metronix and professor of management at harvard business school. >> i'm sure this is a situation you've seen a lot, where investors don't spot the signs. that a company was a superstar, a company of stock gets into trouble. what are the warning signs, what slu investors look out for.
and how can they guard against their investments. >> i think the first thing you have to look for is leadership. leadership on the cutting edge of technology and market changes. blackberry's a tragedy in the making. i've seen it coming for a couple years, the management was very parochial. i love canada, but they're all canadians, they were not diverse, they did not spread out to silicon valley, and they didn't partner up. it's a small company. how are they going to compete with apple, google, samsung, these really big folks out there. they had a generic product. everyone called their smart phone a blackberry. they're in a similar situation to nokia. great engineers but very turned inward. not in touch with the market changes and technology changes. these companies that don't have leaders that are reaching out and engaging the changes and being very much on the forefront of change are going to lose out. and they're going to cost investors a lot.
i think you have to look first to the leadership of the company and its board, is it going to be on the cutting edge. it's going to make the moves in advance. don't look at quarterly earnings, they'll really mislead you, the companies are in trouble and the time life support. >> this is something that is not billed indemic in technology, it seems like technology is where an awful lot of these swoons take place. you mentioned nokia, motorola. yahoo was a commanding player in search and on the internet. now it's playing catch up. is there something about technology that makes those kind of companies so much more prone than drug or medical devices where you made your career or med media? >> it's like trying to get on the bullet train in japan, and it's moving so fast, you can't get on. if you get off, it's hard to get off this track. that's what's happened here. google went by yahoo, i hope marreese is a can bring it back.
it's a longshot. nokia had it made, they were number one, and they lost their position. i don't see them coming back at this stage. tyler, you mentioned jcpenney. here's a company that's asleep at the switch, they try to do it too fast and they didn't put things in place. be ahead of the game, figure out where they're consumers are going, it's not just technology, yes, that moves fast, so does retail, and unless you're ahead of the game in fashion, in technology, you're going to lose out. and that's the leadership question. i served on the board the target for years, they were always way ahead of jcpenney, thinking about design, creativity. then an activist comes in, wants you to change it overnight, can't be done. you really have to have the leadership planning out your technology moves. >> we have half a minute left, i want to ask you this, what companies out there, technology or any other field? do you see that investors still are in love with them, but
they're headed for trouble? >> well, i worry a lot about a great company in microsoft. they're so dependent on office and windows. i see a lot of the same ten tensecies ibm had, one of these days, the balloon is not going to be there producing the profits. to their credit, they've been investing heavily in things, but they haven't really -- they've missed so many of the new things coming along, i think you have to create an environment that's open to new ideas and a new identity. we had to do that at medtronic. >> you were very successful there. still ahead, it's faster than an airplane and cheaper than building a free way. it's the hyperloop. we'll tell you what it is, and whether this travel system right out of the jetsons is something we'll be using one day. first, we'll get a check of how commodities, treasuries and currencies performed today.
mexico is doing something it's never done before. proposing that private investors be allowed to put their money into the nation's oil industry. ricky pena nieto is looking to lift a decade old ban. the new proposal is aimed at boosting sluggish production, would include profit sharing with investors which is prohi t prohibited with mexico's constitution. gasoline prices are down about 8 cents a gallon over the past two weeks. that's even though the high demand is hitting its peak. the drop in prices is due to refineries that are
overproducing gas right now, so they're cutting wholesale prices. >> construction of california's bullet train was delayed. it's one of the nation's largest shovel ready public, woulds projects. construction was supposed to begin in 2012, now officials say it could be delayed until 2014. experts say the challenges posed by the $68 billion project were underestimated. here's another super fast transport system in the works. tesla founder, the man behind those all electric sports cars, unveiled today plans for a high speed mass transportation system that he says will be able to move people from los angeles to san francisco in less than 30 minutes. it's called hyperloop. and phil lebeau is covering the story. he joins us with more. that's the kind of thing i would like to ride on. >> that's an interesting proposal, suzie. it's a 57 page proposal.
there aren't a lot of details in terms of what the system would look like, enough that we could get a sense of what elan is proposing. this is an idea he's advanced out there, particularly relevant given the high speed railway discussions going on in california. here's a vision that he has of the future, that's capsules would contain up to 28 seats, theoretically possibly be big enough for people to drive a car on to. how would the hyperloop work? it would be ideal for cities within 900 miles. he used san francisco to l.a. as an example. it would be a double barrel tube built along highways. highway five would be an example for this. the capsules again would carry up to 28 people. the total cost here, if you were to build the hyperloop between l.a. and san francisco, about $6 billion. a.m. other ties that over 20 years. it would equally pay for its
own. if everyone would be charged $20 for a trip between those two cities. >> a lot of interesting things in those two cities. he may build a prototype. he does not have the energy to build this into a company. >> we just did a story about this. this does not ride on rails. how does the capsule go from los angeles to san francisco. >> it basically rides on an air cushion, if you will. the electric conduction gets you up to speed. you slow down if you have to take a sharp turn or as you're coming in. you recapture that energy when you get to the end. you can build this system with these tubes to with stand earthquakes and other possible problems such as a tube getting -- a capsule getting stuck in the tube.
the idea is, you're riding on that air. the g force tyler would be no greater than what you would experience in terms of riding on a roller coaster. it would not be like one of those that would go 800 miles per hour. >> we asked you, would you ride in something that could go as fast as 2,000 to 4,000 miles an hour? here's what some of you said. >> they wouldn't build it if it wasn't going to be safe. >> i love elan, i would go with what he's doing. >> my take is, with every new technology, there's fear and apprehensi apprehension. for travelers, if this train can get you there faster, it's something that's good for everybody. >> you would go on it? >> i'm ready to go. >> i would go, i guess, but it's going to be way down the road. >> i'm a little claustrophobic, so i'm worried about the tube part of it, i like getting some place fast. that's it for us.
nightly business report for tonight. thanks so much for watching. >> and thanks for me as well. have a great evening, everyone, we'll see you back here tomorrow evening. nightly business report has been brought to you by -- >> sailing through the heart of historic cities and landscapes on the river. you get close to iconic landmarks, to local life, to cultural treasures. viking river cruises, exploring the world in comfort.