tv Nightly Business Report PBS September 23, 2013 4:30pm-5:01pm PDT
and what the stakes are for your money. we have the state's new frontier, why this traditional industry is finding ways to make money on the internet. all that on today's nightly business report on september 23th. good evening, i'm susie herera. well, we begin tonight with big news in technology, the struggling pioneer, blackberry, may have just received the call it has been waiting for. the one-time tech giant getting a lifeline from a consortium based fairfax holdings, which would involve a deal worth about $4.7 billion. fairfax owns about 10% of the company's shares and after news of the deal halting trading for about an hour, shares of blackberry ended 1% higher on very heavy volume. still shy of the nine dollars a share that fairfax agreed to pay.
not a done deal by any means, they have six weeks to conduct due diligence, while blackberry can shop for a better deal if they can find one. >> joining me now, the senior analyst, peter, welcome. what is your take on this particular deal, it seems to me it is kind of putting a floor on the stock so that the market can't push it any lower, certainly like it did last week. >> that is it is going to do, but also importantly, operationally, it will continue to allow them to sell their services, the managing of the android and iphone devices. for that they really need to assure people they are not going to go away and that they have the money to do that. >> we dangle the possibility there could be something better out there, do you expect that? and who could it possibly be?
>> we don't see it better for the whole company emerging. we think there are better for the services, that i outlined earlier, but that would be one service, and given that you have a potential bid on the table for the whole company. >> do you see any problems with the due diligence period and with those who are going to be doing the financing? >> it is tough to see how the chairman of fairfax would have difficulty with due diligence, he was on the board of blackberry a month ago, he saw what was going on, he knew that business was terrible. it would be tough to see that. we think in terms of how they will structure it. they are trying to put leverage or debt on their services. and they could raise 2.4 or 5 billion. so it means that watson has to add a billion to get the deal
down. >> where did the company go so wrong? 2008, 2009 they were kings of the world, peter. >> absolutely, the big thing was sticking with the operating system that really didn't support apps and they ended up getting crushed. it goes to show you, they ended very quickly or do, they had a shot then, now it is do or die. >> how do you see this company, as you said they could have a chance to reorganize the businesses, they were worried about not having blackberry around, now they won't be in the public eye as much, look at one or two or three years, what do you see for blackberry? >> they will be one of the top hybrid cloud dividers and mobile providers in the world. they will secure blackberrys and
iphones and ipads, they will be allowing you access on your desk top in a secure fashion, and in a way that the nsa can't snoop, you will see a lot of value to that service. >> will they still carry the bland blackber brand blackberry in three to five years or not? >> probably a small number of people, only those just wedded to making small messages, e-mails, texting or phone numbers. anybody requiring apps of any kind won't be carrying a blackberry in the future. >> all right, peter, thank you for joining us, senior analyst over at jaffrays. and there was a very different story at apple, they sold a staggering nine million of their newest iphones over the weekend, nearly doubling the analysts' forecasts, nearly doubling the outcome for the quarter. take a look at investors,
sending shares $23 higher today at 490.64, more on apple's most successful debut yet. >> apple stock moving higher in today's trade, after the company reported selling way more new iphones than analysts had expected. demand for the 5s with its new camera and fingerprint technology exceeding supplies. also, 200 million downloads of the new mobile operating system. gene munster of jaffray says it answers some of the criticisms they have faced. >> there are a lot of questions about the innovation, and i think they have addressed a lot of that regarding the demand. you know, it looks like they have good things to come over the next year and a half. >> with such strong numbers, apple now telling investors to expect the highest number of
their investments for the fourth quarter, this was a big beef for apple. the analysts suggested the company would sell around 5 or 6 million devices. many analysts thought there wouldn't be too much demand for the 5 c, and that constraints would limit sales, they worry that next year's app is off the table. they are focusing on profitability rather than market share seems to be working for now. nightly business report, i'm josh lipton. >> and take a look at how shares of chip maker and rf micro devices and some others did today, banking on strong sales of theñr new iphone. >> and with sales of the new blackberry it was easy to overlook the product launch from
microsoft. the new surface pro 2 was unveiled today, coming with a much longer battery life, powerful energy-saving chips and a full version of the upcoming windows 8.1 operating system, railing for $899. now, there is also a cheaper version called the surface 2 for about half that price. on wall street, the major averages closing lower for the third session in a row. traders worry about fighting washington lawmakers as they try to hammer out a deal on the federal budget and a debt ceiling, all of that amid the looming threat of the government shutdown a week from today. the nasdaq was down nine, despite getting lots of help from apple, and the s&p by eight. as sue just mentioned, the possible government shutdown is a week away, and the big question is are lawmakers any closer to reaching a deal that would keep the government
running or is it looking more like a stalemate? john arwood has more on the budget shutdown. >> i don't think we're closer to a deal than we were before. but i think there is an expectation we'll get a deal in the end. i say that for this reason. we've just had announcements today that two republican leaders in the senate, mitch mcconnell, and john cornyn, say they are not going to join ted cruz from texas in a filibuster, that would extend government funding and de-fund obama care. the plan to take that bill up and then strip out the obama care division, send it back to the house and challenge them, the fact that that bill will not be successfully filibustered is a sign the bill will land back in the house's lap right up around the deadline of september. and democratic leaders in the senate are betting at this stage that the house leaders will put that bill on the floor and will
extend government funding. we'll see if it plays out that way. we won't know for a few days, but that is how they think right now. >> you know, john that was encouraging because it looked like it would really go down to the wire. there was so much animosity between the houses and both sides of the aisle, i would think it would calm down some of the market volatility. either way, we'll go down to the wire. and even if we avoid a shutdown that is far less of a consequence, the more important is the debt ceiling which is in the middle of october. what we have seen is a two-stage republican strategy, one to de-fund obama care in this bill, then they're going to try to delay the law for a year in a debt limit bill. that is also going to be resisted, doggedly by the president and democrats. so they're going to have to find a fallback there, too, that will be harder for the republican
leadership to pull off. and we'll see if we can pull this one off next week, the more limited one. >> very quickly, let's say the bill goes back to the house minus the de-funding of obama care, and then the house has to pick that up. what do they do? pick up with another bill that has a sort of condition on it. and is there a condition that would pass the house republican caucus that doesn't end up doing some kind of harm to obama care? >> yes, there is the potential that the house could pass the bill with a different writer on it, aside from de-funding obama care, some tweak like attacking the income verification provisions which are lacking, attacking the law. the chances are if they're gentlemaned right -- jammed right against the debt limit, they may have to fight on the debt limit. >>there was a lot of
uncertainty over the federal reserve over mixed messages. william dudley said the time line for scaling back the bank's massive stimulus plan is still very much intact, end quote, as long as the economy keep improving. but then richard said it puts the credibility in doubt. he says the white house has terribly mishandled the process for picking the next fed chairman and calls janet yellin wrong on policy but says she would still make a great chair person. still, many believed that it encouraged the risk-taking, how has things changed? first, a look at the international market today.
filing for an initial public offering for up to a 100 million in stock week, we told you it was coming late next year, j.p. morgan will be the sole writer. good news for gas prices, according to the lundberg survey, the price of gas fell about 6 cents over the past two weeks, at 52 cents on average, san francisco, the highest price, averaging four and one cents a gallon, and south carolina, not beautiful enough, has the cheapest gas. and general motors buying a large chunk of its shares, the automaker purchasing nearly half of the preferred shares held by
the united auto workers trust. to purchase the 120 million shares, gm plans to issue a corporate bond issuing. meanwhile, invest services upgrading gm debt rating it out of junk status and moving it into investment grade status. it often pays to be ceo, even if your company is not doing all that well. steven elop is the departing ceo, after just three years in the corner office, a time in which nokia's share price plummeted and the share of phone sales took a nose dive, elop will earn millions when the company folds into microsoft. and investors and regulators outraged on the fuel that fed the fire on the financial meltdown. many believe that sky high pay for investors encouraged the
risk-taking of the economy. just like the financial services industry since the crisis, wall street's pay has been down sized and restructured. mary thompson has more. it is lunch time at harry's cafe and steak in new york city's financial district, and business is brisk. >> i think the mood on wall street is good, still not where it was, i don't know if it ever will be. >> a lot on wall street changed since the financial crisis, including the spending habits of the general manager, who says about those that frequent the restaurant. >> they have one of the best wine collections in new york. so we would see bottles of wine at $5,000 or $8,000 for lunch. that was very common at the peak. today, it is rare. >> wall streeters relatively changes looking at the bubble. >> we don't have the huge bonus potential that was there, virtually unlimited in some
respects. >> one consultant said that wall street remains well paid compared to main street, although there are weaker bank profits, and disclosure and reporting requirements are mandated by dodd frank. how much has the pay fallen? one consultant predicts it will be 39% below 2007's record levels. >> there is less tolerance for under-performance, businesses who don't perform just don't get paid. >> one consultant, allen johnson, says not only are wall streeters making less they're getting less in what they make in bonuses, even salaries making up total pay being issued in performance-based stock, investing is out. >> they haven't addressed one of
their chief concerns coming out of the financial crisis. >> certainly, the pay today is not encouraging excessive risks. >> keeping checks on the pay check paying off for limiting risks. and we begin market focus tonight with a look at citigroup, according to the financial times, the third largest u.s. bank saw significant drop in trading revenue during the third quarter and that could hit its earnings. the report said the city had the biggest exposure of any markets, seeing capital influx recently. the bank had no comment on the report but the stock finished the day 3% lower at $59.40. and j.p. morgan looking to make money, they met with banks in recent weeks about possible fundraising options. the stock one of the worst performing in the s&p 500, dropping to $12.36. and a rough day for shares of pandora, coming under pressure after apple said that
11 million unique users already tried the radio service. one analyst believes that streaming will reduce pandora's current listening hours. the stock fell 10% today to 24.46. and isis pharmaceuticals rising among drug trials, in a mid-stage trial, they were able to reduce the blood disorder in which fats don't break down correctly. investors drove the stock to 38.48. and starting for the first time in 80 years, private hedge funds and private equity firms can solicits funds directly to investment creditors, meaning big changes to the real estate industry as it turns to a favorite tactic of start ups. crowd funding. >> reporter: it is happening
here in washington, d.c.'s 8th street corridor in northeast, a transitional neighborhood that still has a ways to go. areas like this are not actually favorites among the large-scale real estate investors. smaller companies know their potential, now, the crowd-funding real estate will get easier. >> we'll help you build your real estate. >> reporter: ben miller has been involved through a tricky exemption in the law. his company brings small local investors to projects like this soon to be d.c. restaurant and market. it was limited to locals, but starting today he can market to investors anywhere. >> over time you will realize that the public is an incredible partner and asset, when you demogratize real estate investment, not only do you get capital but you also get a souther social power that was not possible before. >> reporter: while investors
paid as little as a thousand for a share in the building, the restriction is set to disappear soon. >> you're going to see ways to re-finance somebody out. you can sell the property. you get distributions from cash flow. you become likeñi a landlord, le playing monopoly. >> reporter: it may be like that, but there are risks, critics argue that investing in real estate becomes as easy as buying a book on amazon, some people may not get what they pay for. >> there is no guarantee that somebody can't raise money and never actually see the construction take place. >> but with the doors swinging over, the developers are flooding in. prodigy is working on a product downtown manhattan. while miller began as a developer, he is now focused on fund rise giving the developers
in 16 cities, the ability to crowd-fund at a click. for nightly business report, in washington. and to read more about crowd-funding in real estate head to our website, nbr.com. coming up, the digital revolution, which companies win and lose as more advertising dollars flow into mobile. but first, how treasuries and commodities performed today. last week's devastating floods in colorado could end up costing investors nearly $2 billion, that is according to eqi cat, a company that
estimates the insurance industry. the company says a high volume of losses may not even be covered by insurance. meanwhile, the unrecovered are down to six, while they surveyed over 2,000 miles of damaged areas. and u.s. airways and american airlines are moving thei planned messengrger date a month back, giving each company time to deal with the anti-trust lawsuit to block the merger, the trial is set to begin november 25th. the government says it will lead to less competition and fewer choices and higher ticket prices. the international air transport association which represents as many as 200 carriers cut its profit forecast for the airline stre this year by nearly a billion to just under 12 billion.
they blame slowing growth and higher fuel prices. but the iata sees blue skies ahead for 2014, predicting a rebound in profit to $4 billion, thanks to rising consumer confidence and lower fuel costs. and if you are seeing more ads when you turn on the tablets and ereaders, there is a good reason for that. at the annual conference in new york city, they added big brands to figure out the best way right now to reach tech-savvy consumers. more on the digital shift. >> reporter: the mood at ad week is up beat, driven by a surge in digital, as advertisers are drawn to the advantages of targeting and measuring ads' impact. the traditional media can't always deliver that detail as the news and magazines and radios suffer declines. >> digital is growing at a rate
of about 15% a euro, where all measured media is growing at 3%. so there is a big shift. within digital, the two components that are going the fastest are mobile, up 100%, and video, about 30%. >> that is thanks to surging internet use, the times growing to 30% with more than half of internet use coming from mobile devices. and now there is more proof that mobile ads really work. the study today finds that people who see mobile ads are 20% more likely to want to make a purchase than those who don't see the ad. the cbo says the transaction formation is all about the data and how to reach consumers. >> you can buy the audiences, target the market. that is what this is all about. our video is about communicating messages and telling stories. >> there is goods news for
digital ads, targeting mobile to google and yahoo! to facebook and twitter, which today unve unveiled a new partnership with cbs. >> it is a win, win, win situation, what can you not like about their ability to send out tweets in realtime on the world's biggest and most exciting social platform. >> twitter ads are designed to work well on mobile devices, and mobile ads, despite their fast growth are still just about 10% of all ad growth. and finally tonight, it is the end of the road for an iconic vehicle. as of december 31st of this year, volkswagen is ending production of the vw bus. the vehicle of choice for generations of surfers and hippies and growing families everywhere. brazil is the last place in the world where the company still
makes the van, but the company said it would be too costly to change production rules for air bags and anti-lock breaks, volkswagen produced more than ten million vans, and many of them, even though they're older than ten years old, are still on the road. >> i always wanted one of them. >> all right, i'm sue herera, susie will be back tomorrow. and i'm dealer mathisen. 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.