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tv   Nightly Business Report  PBS  May 2, 2014 1:00am-1:31am PDT

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. this is "nightly business report" with tyler mathisen and susie gharib. brought to you in part by., featuring stephanie link who shares her investment strategy, stock picks and market insights with action alerts plus, the multi-million dollar portfolio she manages with jim cramer, you can learn more at the and wall street turns its gaze toward tomorrow's monthly reports, we'll tell you what the market expects and why. and handing over the keys, as ceo alan mullaly steps down, what is ahead for the new automaker. and how they are dealing with a mountain of debt that already tops a trillion dollars,
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all of that and more on thursday the first of may. good evening, everyone, and welcome, i'm tyler mathisen, susie gharib is on assignment. well, you know it has been five years since the official end of the great recession, and even though the economy, the stock market and the housing market have made tremendous gains more than 10 million americans who want to working still without a job. today, there were no records set owner wall street as a lot of investors seem to be in a holding pattern waiting for tomorrow's april jobs report. possibly the most important metric on the health of the u.s. economy. hampton pearson with more on what may be in friday's non-farm payroll and why some economists are more cautious than others. >> reporter: optimism for a friday jobs report above 200,000 in april comes on the heels of the mixed economic data in the last twori#ñ3ñ3%qs$ó
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>> i think we'll find out that momentum is pretty good here. >> but unemployment claims rose since late february, mixed news for an economy that appears to be gaining momentum and the reason leading economists are cautious about what friday's jobs report will tell us. >> looks to me like the economy will continue to heal, that we're shaking off the0m4qji eff the bad weather we had over the winter. we're getting some mixed signals but i think the direction is continuing to point towards
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expansion of the economy and i expect we'll see solid job growth. >> the consensus calls for a slight drop in the unemployment rate last month. for that trend to continue we'll need job growth at or above 250,000 per month in the days and weeks ahead. for "nightly business report," i'm hampton pearson in washington. and stocks edged mostly lower today, but not by much after a mixed round of earnings and economic data, including the spike in. >> jobless claims we mentioned a moment ago, but after bad weather consumer spending surged in march, the highest rate in four years, also percentage incomes rose a half of a percentage point and manufacturing was higher for the third month in a row. the dow fell 22, the >4eátj up nearly 13, the s&p 500 sort of splitting the difference, lower by a fraction. two of the nation's biggest oil company's earnings reports
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both topped estimates. profits at exxon mobil declined due to declining costs for refining and a drop in reduction, different story at conoco-philips, a boost in production even at operations in libya, shares were higher by a percentage point today. and telecom giant at&t approaching directtv about combining forces in a deal that could really shake up how you watch television, shares of at&t were up a fraction lower, but directtv shares shot up 4%. morgan brennan has more now on the proposed deal and how it could change the entire pay tv landscap landscape. >> reporter: well, neither at&t or directtv is commenting on the possible merger, such a deal could alter the pay tv landscape, if the $400 billion
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purchase wins regulatory approval. it is on the edge of major changes and this deal would only help to accelerate the transform ags. >> i think you're seeing every different product segment, which will probably force a lot of these companies, the incumbents to consolidate. >> directtv is the second largest paid tv operator in the united states, second only to comcast. together they would claim nearly 27 million customers, compared to 37 million that comcast would service. such a deal would enable them to expand their reach, where the footprint remains relatively small. it already has partnerships with directtv in certain markets, directtv would access more internet services where cable tv competitors have an edge. directtv has been a hot company.
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also reportedly approached just recently by dish network. its biggest satellite tv competitor. >> i think comcast time warner cable has set forth a wave of consolidation in paid tv. i think if at&t acquires directtv, probably dish is the next one to go. >> still, one thing is for certain, analysts expect to see more deal-making in the space. and consumers can expect to see more changes in their pay tv options as companies attempt to consolidate. for "nightly business report," i'm morgan brennan in los angel angeles. comcast has mentioned in morgan's story is the parent company of cnbc, and they produce this program. another big telecom has a lot to brag about, t-mobile adding a record number of customers in the first quarter thanks to aggressive marketing and discounting. they added 4 million new
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subscrib subscribers, more than its top three rivals combined. even though the company lost $151 million last quarter because of the discounts, shares of t-mobile surged 8% today. and putting the industry on track, that is way ahead of last year's pace. after all that brutal winter weather dealers saw strong sales of jeeps and pickups last month. for detroit's big three, the big winner was chrysler which had its best winter ever. sales in the general division up a stunning 2%, sales at general motors still rose 7%, but sales at ford were down a fraction on wall street, stocks mirroring the figures with shares at gm a bit higher and ford just a bit lower. and despite that slight selloff, ford motors made big headlines today announcing who will take over for ceo alan m
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mullaly when he steps down exactly two months from today. phil lebeau has more on what lies ahead for ford. >> a big day in the auto industry as ford motor company announced the succession plans for alan mullaly who steps down july first, and will be replaced by ceo mark fields, who says he has no plans to alter ford's business plan in the near future. >> our one ford plant has served us so well over the years and will continue to serve us well. >> field has run the day to day operations at ford since late 2012. but why did ford finally decide he was the person who should replace mullaly? the chairman 1ed it was all about finding the right person inside and outside ford. >> i have to make sure we're
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looking for the best talent. but really i kept coming back to mark because we thought he was a great candidate. he has grown tremendously as an executive. and as i said, really importantly he is part of the culture of ford that i think is so positive. as for outgoing ceo ford alan mullaly, he is focused on his final two months at ford. and beyond that he is not indicating any plans in terms of working for another company and in terms of corporate america, but make no mistake, he will be in demand. >> i have not decided what i will do next, because the most important priority has been this orderly transition. but i really look forward to the future and look forward to serving. but i really like that you know -- that retirement thing sounds a little bit good, too. >> alan mullaly's legacy at ford? the stock price appreciated 92% over the last four years, when you look at the financials in the first two years between 2006 and 2008 ford lost $30 billion
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as he was right-sizing the company and dealing with an auto industry that was imploding. since 2008, ford has made $42 billion. phil lebeau, "nightly business report" hartford, connecticut. >> so will that momentum continue? will ford continue to shine? our next guest thinks so. u.s. auto analyst for csla americas, emanual, good to have you with us, mr. mullaly, stepping aside, an executive who always seems positive. what will the change be like inside of ford? will it be big, or small? >> well, mullaly accomplished a lot, but we believe that mark fields will very much continue in his path. he was the lieutenant of mullaly and was in charge of implementing the plan which has gotten ford where it is.
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so we believe that is the culture and also the business plan. everything is likely to stay in the plan. >> very briefly, he mentioned one ford plan, what is it? >> one plan is essentially making better cars, but also cars that are the same, based on the small amount of platforms and sold across the world on that platform. so it improves the quality and reduces the cost. and reduces the probability. >> what is job one for mark fields? what is going to be his biggest challenge on july first? >> so the biggest challenge for ford, and also the biggest opportunity this year is essentially the launch of the f-150 pickup at the end of this year. this accounts for half of the north american profits and has been the best selling vehicle in the u.s. for the past 32 years. and essentially, mark fields has to make sure that this is done right from an execution point of view. this will be a revolutionary
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pickup mostly libecause it is t first one made entirely of aluminum. we believe it will knock the socks off the competition. hugely important vehicle for ford, hugely important for profitability. and his job should be to make sure to take his time and make sure the launch is executed in a flawless manner. >> is the very favorable rating on the stock largely tied to what you anticipate the profits will be coming out of this new ford f-150? will this be a new profit driver? and i assume you assume it will be. >> correct, what we tell the investor at this point is essentially, this year is likely to be a bumpy ride. because the significant amount of things on ford's plate from an execution point of view, the tremendous amount of investments for the future. also in china, a lot of new plants opening in europe. to close a plant there is a lot on ford's plate. but the point is, we believe
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that these will pay a very handsome dividend next year. we tell investors it will be a bumpy road this year. earnings may get impacted. use any potential weakness for the long-term. we believe that it will be a major, major profit. >> very quickly, can lincoln be turned around? saved? >> i think it will be challenging. the product is significantly better. the branding takes a tremendous amount of time to turn around. so i think it will be geared more towards exports in china, rather than the u.s. >> very interesting, thank you, manual. clsa america. still ahead, the cloud has been a big buzz word on wall street but what is it? and why are cracks starting to form in some cloud company stocks while others see nothing but silver linings?
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coca-cola doing an about face on the shareholder approved executive pay plan because of pressure from warren buffet. the wall street journal says he called it competence and refused to vote on it. this is after criticism from the major coke shareholder. berkshire half away is a big owner, wintergreen is questioning whether the plans were even relayed to coke's board. and susie gharib is on the turf right now in omaha, nebraska and will talk with david winters on tomorrow's program and with warren buffet on monday's
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broadcast. and ebay settling on a suit involving poaching. they are barring the retail giant from recruiting or hiring their workers, ebay will pay nearly $4 million to help compensate potential victims in the state. the outlook for a lot of companies investing in cloud computing has suddenly become a bit cloudy itself. especially after the initial public stock offering for the cloud storage start-up box has now been delayed. dominic chu has more now on the forecast for some of the companies doing business in cloud. >> cloud computing. it is one of the latest hot topics for investors all over the world. these days companies are running their businesses with remote computers, servers and storage. basically if you watch streaming movies or tv shows over netflix
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you're using the cloud. or if you're preparing your taxes on line with h & r block, you're using the cloud. as you can imagine, a host of companies are involved. big names like emc or citrix, they have large divisions working on the next generation of connected computing. big names like ibm or over the last year a number of smaller companies in the industry have gone public and had tremendous gains but have fallen on harder times as this investors moved away from the sizzle. cloud companies, benefit focus and rally software are down big year to date. meanwhile, bigger name companies with cloud exposure are up, like ibm, microsoft and hp. some believe that is a trend that will continue. >> it will get a lot tougher for the smaller guys to be
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competitive in the cloud because there is a big infrastructure, a lot of money spent to build this cloud. and so ultimately it is a bigger advantage to the larger companies that are service provider's to the cloud. >> that is not to say the smaller companies won't do well. after all, if that is what they and provide a nice pay day for investors, but bets are placed on the big companies in the business. >> the two big winners will be google and amazon, google is
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came with windows xp, the one that microsoft says it will no longer service. master card's first quarter profits explodes. the world's largest credit card company topped expectations separately. master card warned that russian president vladimir putin's design to create a credit card system would create problems for its operations in the country. the shares rose. and food giant kellogg posted a bigger revenue as domestic sales fell. cost cutting helped the company beat earnings, but investors focused and the stock fell to
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65.37. and avon settling a probe on whether it paid bribes to gain favors, the company missed estimates, sales dropped in every region as more of the company's sales representatives up and left. shares fell to $13.72 making avon the bigs decliner. and linkedin posting revenues, they saw their revenue from the recruiting business increase by 50% from last year. but its full year revenue guidance was a little bit below the consensus, that sent the stock down initially in after-hours trading. shares were up more than 5% in the regular session to $61.22. there were reports that pfizer may up its offer for britain's astrazeneca and raise the cash portion of the deal. earlier this week we told you that pfizer approached its
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british rival twice about a takeover only to be rebuffed. shares fell to $31.15, astrazeneca went to 32.09. and surging from higher revenues from the group disability and life insurance. revenue came in slightly short of expectations. the insurer upped the outlook but the ceo is still being cautious. >> we had a strong first quarter that enabled us to increase its full-year outlook, the outlook increased by two items, two, the underlyingçó strength of the fit quarter results, and we're still keeping conservative review in terms of the rate that the medical cost growth may be later in the year. >> shares jumped to $32.05. coming up, the student loan
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debt and a drag on the company, and what is the treasury department doing about it. a brand-new stock began trading on the nasdaq today, navian to the nation's student loan management center and asset recovery company. it was created when sally may split in two with the company focusing on consumer beijing and naviant focusing on college loans to about 12 million customers. the treasury department is taking a closer look at the student loan situation and how it impacts the cost of college and affects borers, taxpayers and economic growth.
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sharon epperson here now with more on what the treasury department is thinking and doing. >> well, tyler, the student debt loan in the country has grown to over $1.2 trillion, and nearly 90% of the loans are federal loans. the government is growing increasingly concerned that student debt may threaten to choke off the debt as they save for retirement and limit other forms of borrowing and spending, the u.s. treasury secretary talked to me about why the treasury is examining these issues. >> the student loan debt issues have a lot of connections to the economy. and anything that is of interest to the economy is of interest to the treasury department. so we want to take a very careful look at the amount of student debt that is accumulating and try to understand with specifics what it is due to, and whether or not it is dangerous. >> are you already seeing
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dangerous consequences of student loan debt? >> well, the first thing to think about when you think of student loan debt is that it is really an investment in people's potential. so we want to make sure that that is something that is a possibility for people, that it is a viable possibility and that when people take advantage of it they're given the flexibility in terms of re-payment and interest rates and being able to afford it. >> one of the things that has also come up from the research in the congressional budget is the amount of money that has been made on student loans, $41 billion last year. and that begs the question from many critics why the government is making money on these loans when the affordability is still not there. and there is a potential of default down the road and tremendous debt. >> one thing we want to make sure we do right is that we give students and their families the opportunity to compare so that they can compare different educational options, and compare schools and compare levels of
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debt. and do standardized comparisons across schools, across colleges so that students are well-informed before they go into a debt situation. >> they admit the treasury department does not have all the answers but she is on a mission to make sure they ask the right questions, saying if we can understand the patterns that lead to defaulting we may understand the benefit to borers and taxpayers and economic growth. >> sharon, how can the government prevent people from taking on debt they can't afford to repay? >> well, one of the things she says is that it needs to be a concerted effort of colleges and universities and the governor as well as loan servicers. they need to provide tools to their college score card and seeing how much debt you may take out and what type of job you may have down the road. will that make sense for you to take out that much of a loan? >> so if people take out that
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much debt and do ultimately get into trouble what is the ripple effect? >> well, the ripple isk is what they're concerned about. because if you have debt and are paying it out over a 20-year period or more that can impact your ability to not only buy a home or car loan but even the job you can get. they're looking at the issues very carefully. >> are these loans, a lot of them bundled together and re-sold the way home mortgages were? >> well, one of the things they're looking at is how people are taking out the loans and whether they're adding to loans with private loans and what they can control and 90% of the loans are federal loans, but there are also private loans out there hurting a lot of people. >> interest rates on the loans, there was issue about whether or not the rates would go up. >> well, july, they always revisit. and we'll see that a lot of states will go up. >> all right, sharon, thank you very much. a big, big story. >> one we'll continue to follow
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it on the website, as well. >> we'll refer people to the website, as well, regarding the student loan dilemma. head to our website and that will do it for "nightly business report" tonight. i'm tyler mathisen. thank you for joining us. have a great evening, everybody, we hope to see you right back here tomorrow night.
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man: it's like holy mother of comfort food.ion. woman: throw it down. it's noodle crack. patel: you have to be ready for the heart attack on a platter. crowell: okay, i'm the bacon guy. man: oh, i just did a jig every time i dipped into it. man #2: it just completely blew my mind. woman: it felt like i had a mouthful of raw vegetables and dry dough. sbrocco: oh, please. i want the dessert first! [ laughs ] i told him he had to wait.