tv Nightly Business Report PBS January 29, 2016 1:00am-1:31am PST
this is "nightly business report" with tyler mathisen. big disappointment. the earnings bar was high and amazon didn't clear it. sending shares sharply lower in initial after hours trading. global gloom. caterpillar warns of a tough year ahead. what that says about the world economy and other companies that do business abroad. money 101. what one high school is doing to help its students become better managers of their own money. all that and more tonight on "nightly business report" for thursday, january 28th. the dow rose triple digits on the dizzest day for earnings this season but the big news basically came after the bell with three major reports. headlined by a big miss from
amazon. and its stock is paying the price. the online retail behemoth earned a dollar a share. that translates into its largest quarterly profit in its 19-year history. but investors wanted more, a lot more. expects were $1.56 per share. revenue came in shy of estimates despite rising more than 20% from a year ago. and as for its shares they were punished initially after that report. john ford has more on amazon's results. >> big number to watch in amazon earnings is the top line revenue wall street was looking for, $35.9 billion in revenue, they got $37.7 billion. eps missed also. it's overall growth that's been driving the valuation for amazon. amazon web services did well. that actually beat despite high expectations. but the stock fell after hours on that top-line number. we'll have to see the impact is
on other high-valuation stocks because this is certainly one of the ones that gets a lot of notice. guys back to you. >> john ford reporting. a different story altogether for dow components microsoft and visa which both topped profit expectations. first microsoft, its growth drive anyone part by strong results from its cloud business. the company reported earnings of 78 cents a share, 7 cents better than estimates. revenue came in slightly better than expectations though it was down a bit from a year ago. as for shares they rose initially after those results came out. josh lipton has more on microsoft's quarter. >> the big number in microsoft's report $25 billion. that is what microsoft reported in deferred revenue. it's an indication of future business, a gauge of consumer and commercial demand and it beats the street's forecast of $23 billion. fbr's dan ives says it shows momentum is building for
microsoft in 2016 rather than slowing as it is for other enterprise tech companies. what is driving that good news? microsoft continues to execute on its cloud services meaning office 365 and azure, which is its answer to amazon's cloud business. for "nightly business report," i'm josh lipton in san francisco. and now to fellow dow component visa which also topped expectations on higher payment volumes. the world's largest payments network operator earned 69 cents a share, one penny better than estimates. revenue rose to $3.5 billion in the quarter, up from the year ago period. shares got a lift initially in after-hours trading. mary thompson reports on the one key takeaway in visa's results. >> visa reporting strong fiscal first quarter results. the payments giant reaffirming its outlook for the fiscal year though it warned the strong dollar and subdued dem stick activity across all geographies could prompt a change to that forecast. still the news welcome. rival american express cut its
outlook for this year and next and discover posted weak numbers. visa's adjusted earnings beat wall street's forecast by a penny. its revenue came in line with expectations. visa's results helped by a 12% increase in payments volume growth as more and more consumers across the global are choosing to pay with debit and credit cards instead of cash. the fees that visa generates by processing the $1.3 trillion in transactions? well that helps to deliver strong results for investors. for "nightly business report," i'm mary thompson. on wall street stocks rose as oil prices climbed. jobless claims fell and companies reported those mixed earnings we've been telling you about. by the close of dow jones industrial average gained 125 points to finish at 16,069. nasdaq up 38. and the s&p 500 added 10. oil prices also rose nearly 3% on production cut speculation. even though opec delegates
reportedly said there are no plans for supply talks. caterpillar was the biggest gain over the blue chip index today beating wall street earnings estimates. shares rose more than 4.5%. however, the company whose earnings are often used to measure the health of the global economy reported a sharp drop in revenue and warned of a tough year ahead. but for many investors those results could have been much worse. with the commodities crush literally digging into its bottom line and currency headwinds pushing back on profit margins, caterpillar's fourth-quarter loss and lighter than expected sales figures were hardly a surprise. from the company's point of view it's adapting to changes in the global economy, cutting costs and its outlook hardly rosie, is perhaps not as bad as some had feared. >> 16 is going to be rough and challenging again, i think. given all the things going on around us. but i'm very happy with our performance in '15. >> reporter: the costs of change restructuring, are what
some accountants will tell you to example near. in cap's case ignore those costs and earnings actually beat expectations. it is still spending on things like r&d, digital applications to mine for the kind of data that can help the buyers of cat's heavy machinery save money in the future. that's the kind of positioning analysts will parse carefully. >> i think it was a sigh of relief more than anything going into '63. >> reporter: in china for instance cap sees growth even if it's less growth than before. >> i think there's an overhang of lots of things. from commodities to you name it. but it will work out. they're growing at 6% to 7% a year. >> reporter: the slow-down in china includes drastic decline in construction lower demand for commodities, coal iron ore and oil, and lower prices for caterpillar caterpillar's heavy machinery. cat's total sales peaked at almost $66 billion in 2012. but are expected to fall to $42 billion in 2016. weak sales in brazil aren't
helping either. if cat is seen as a proxy for a global economy we may be in the roughest patch wife seen in at least five years. >> i have no overweight ratings in my sector. so i'm not recommending that investors buy into machinery stocks at this point. and that's a first for me through the course of my career. this is a unique period of time for investors, particularly in cyclical stuff. >> joining us to talk about caterpillar and what lies ahead for it and its industry is joel tiff managing director of research at bemo. a tale of two companies. the late report today about amazon profits were record for the company but it missed estimates. so the stock goes down. today caterpillar goes up because they beat estimates even though revenues were down. and profits were really nothing to write home about. what do you expect going forward for this company, caterpillar? >> i mean we are getting close
to a bottom here. the earnings peaked in 2012. so 2016 is already going to be the fourth down year for cat in their whole 90-year history, they've never had four down years. we're closer to the bottom than to the top. but on some of the earlier comments about estimates better than expected they're 70 cents of pension games in that $4 of 2016 guidance so it's not as rosy as the surface looks like. >> you also think as the company said it's going to be tough. the next year is going to be tough. you would agree with that. but what makes you feel as though the stock is nearer to a bottom than some others on the street? >> well i mean if you look at the mining industry used to be 25% of cat. now it's a very small part of the company. but we've had, you know like i said we peaked in 2012. we're four years into cutting capacity trying to get supply/demand into balance. their power generation business
is another 15%, 20% of the company. that's been down for the last five years. construction equipment has been weak for the last three or four years. and there's a lot of places on the planet. brazil's been very difficult for two years. china's been declining for two or three years. the whole eastern europe and russia has been very difficult for the last couple of years. we've already taken a lot of pain here. >> you've got a target price of 60 on it today was about 58 that suggests a pretty flat year if i'm quoting you correctly. are there other companies in this big equipment industrial area that you like better for stock plays for '16? >> similar to what ann said earlier, that the two that i think are my topk picks are itw and carlisle. those are more diversified industrial companies. they're growing somewhat through restructuring, somewhat through acquisition acquisition, a really had some of the best managem teams. the more cyclical companies,
there's not a lot you can do just waiting for markets to get better. >> kind to have dove tail on what tieyler was saying as a long-term investor would you be moving into this stock at this point? if you have a long-term time horizon? or no not yet. >> it's a little early. one more shoe to drop for investors to feel 2017 is going to be another down year. that's probably going to be in the may, june july time frame. and once that capitulation happens, i think we're a hot closer to a buy than we are to a sell. >> joel thank you very much. very clearly expressed, we appreciate it. the global slow-down extends far beyond china. canada our northern neighbor and largest trading partner, is also feeling the economic chill. the report from vancouver. dirt or steam or not at all
at these prices. cauliflower is taking canada by storm. not for its taste, for its price. this vegetable has become a national talking point, selling for as much as 8 canadian dollars ahead, that's almost $6. add in cucumbers and celery that's triple the price of a year ago and that's one expensive salad. the canadian dollar known as the looney is near 13-year lows thanks to the economy's dependance on resources and measurement in oil prices. as canada scrambles to diversify its growth british columbia's finance minister michael deyoung says it could stay that way for a while. >> i look at other parts of the world, some of the challenges we see emerging out of the middle east. there's a lot of factors and variables that go into this. a lesson of course. don't put all your economic eggs in one basket. >> reporter: now the canadian economy is on the venge of falling back into recession. the low looney may be driving up the cost of groceries but it's
also making canadian real estate more attractive for outsiders. tony sing is a vancouver-based realtor. >> the vancouver real estate market is huge it has been the last little while. i think as the canadian dollar value falls, we've actually known this to increase in the actual achievable sales prices. >> reporter: as chinese market volatility continues, many are looking for a safe place to park their cash. and for many that place is vancouver. >> aside from the low dollar it's just a very safe market environment for us -- for others to invest in. the volatility in the chinese markets today, you see canada is a very safe political and personal safety place to invest capital in. so that's not going to change either. >> reporter: but some say an increase in already white-hot prices is further fueling a bubble. between controlling that bubble and rebalancing canada's
facebook shares soar closing 15% higher today. that strength came from an area where alphabet's google has always dominated with youtube. the new threat that facebook may pose to the bigger search company. >> facebook's result soaring. in part an explosion on video views and the ad possibilities they bring. >> customer viewing of video on facebook continues to be really strong on our platform. 500 million people are watching videos every day. in terms of our business that creates real opportunity for us. because we want the ad format to match the format of what consumers are doing. >> on facebook mark zuckerberg talked about a new way facebook's quantifying demand for video. >> now 100 million hours of video are watching daily on facebook. we've been testing new experiences like suggested videos which enables people to discover more videos they might be interested in. we're also exploring ways to give people a dedicated place on
facebook for when they just want to watch videos. >> analysts saying facebook's strength and video growth potential for facebook to draw eyeballs and ad dollars from the biggest video destination, youtube, as well as from television. >> at the end of the day there's on amount of ad dollars. we're seeing a shift of that largest bucket tv ad dollars coming over and facebook's a beneficiary. >> although google's mobile ad network may be the only one still bigger than facebook facebook has real advantages to help it make gains. >> who has almost no revenue coming from social advertising. you look at the ad landscape, look at how much market share facebook is taking advertisers want to have their messages placed within social media and google doesn't really have an offering for them right now. >> it's not just advertising where facebook and google overlap. both companies are investing in virtual reality. facebook has its oculus headsets and google its cardboard headsets and both have vr app stores. they're both investing in artificial intelligence as they fight to make their consumer experience the best. .
under armour runs past wall street targets and that's where we begin tonight's "market focus." the nation's second-biggest sportswear maker beat estimates for quarterly profit and revenue in the latest quarter helped by strong demands for its steph curry basketball shoe line. that helped drive a 95% increase in foot wear sales in the quarter. under armour shares spiked 22.5% to 8407. chirch that-based ali baba posted a 23-% jump in merchandise volume. the growth was the slowest in more than three hours. ali baba shares fell nearly 4% to 6692. shares of oshkosh were hit today after the maker of military fire and emergency vehicles saw profit plunge 58% in its latest quarter. the company says although sales of its vehicles were higher it wasn't enough to offset a drop in its access equipment segment.
shares of oshkosh fell about 7.5% to 31.23. eli lilly beat forecast helped by strong sales of top-selling insulin drug. revenue was flat hurt by a stronger dollar. the company maintained its full-year outlook. lily said it is upbeat about this year's prospects based on half a dozen fda approvals in 2015 and a number of successful late-stage trials. shares fell 6% to 76.81. harley davidson topped estimates with fourth quarter profit but revenue was a bit low. the motorcycle maker gave a cautiously optimistic outlook for 2016 noting they expect macro economic conditions to continue to beat challenging. harley up about 4% to 38.92. ford's earnings beat expectations and the automaker reiterated its full-year pretax forecast would be equal to or w higher than 2015. ford also said its european business returned to profitability last year with the
asia-pacific region posting its best ever annual profit. the company did warn its 2016 north american profit margins may not reach 2015 levels and that was enough to knock off more than 1% of ford's stock price today. it finished at 11.71. the video game publisher electronic arts profit beat wall street expectations thanks to strong sales of its new "star wars" game. but the company issued a disappointing forecast for the current quarter with both earnings and revenue coming in below estimates. electronic arts shares fell sharply in extended hours after finishes up a fraction at 69.79. strong sales of its blockbuster arthritis drug enbrel helped amgen beat earnings and saw them rise 40%. the world's biggest biotech drugmaker raised its outlook for 2016. shares initially rose in extended hours after falling more than 1% today to 148.35.
the wounded warrior project that supports veterans has come under fire for its lavish spending. according to the charity rating agency charity navigator only 60% of wounded warrior project's money goes towards helping veterans compared to similar charities who spend significantly more. how do you know if your charitable contributions are really going where they are intended to? michael thatcher joins us president and ceo of charity navigator, joins us now. nice to have you here welcome. >> thank you very much, a pleasure to be here. >> wounded warrior pushed back on the various news reports about their spending saying in order to raise significant amounts of cash you have to spend. is that a valid argument? or not? >> i think it's a valid argument if you can also show the effectiveness of your spending. so am i -- as i'm investing in different projects what are the outcomes and results of those projects? and being able to articulate
that is something that's important for donors and they need to know this. >> how do you grade them on that metric? >> today we're rating organizations based on their financial metrics, the accountability and transparency metrics of the organization and we're in the process of bringing on results reporting or impact reporting. today when a donor really needs to be proactive, engaged with the organization and find that out directly from the organization. >> so you basically say there are three things that you should look for, if i'm reading you correctly, when you want to donate to a charity. overall, their overall score, quote-unquote. their financial score. and their accountability and transparency. so you give them 4 stars on accountability and transparency, correct? >> that's correct. their governance is above par. and they do an excellent job in terms of their accountability and their transparency. where they are rated less
highly so a two-star organization from a financial perspective, and much of that is due to the distribution of where the money is going. >> how do they compare with other veterans assistance organizations? >> there are a wide variety of organizations that are actually devoting more of their actual funding towards programs. so there's a wide variety of these -- >> that sounds like they don't score as well? >> that is correct, they don't score as well as some of their peers. peers like? >> i'd rather not give specific names but if you look at -- we have on our website at charitynavigator.org you can see a list of charitable organizations focused on veterans. >> which would be a good comparison tool. >> an excellent comparison tool. >> what we want to give to our viewers, if you want to donate to an organization take a look at these metrics. then maybe take a look at organizations that are similar and see how they compare, right? >> correct. in other words, the best thing to do think about investing in
a charitable organization the same way you would invest in the stock market. you want to look at the different financial ratios. then you make a decision based on your feelings and what you feel is right and are these ratios where i want to spend my money? >> we're not saying this group doesn't do good work, let's be clear here right? >> absolutely. >> we're saying maybe by some measures of financial effectiveness or efficiency they may not measure up as well as others. >> that's correct. >> correct? >> that's correct. >> michael, thank you. >> thank you, michael activer with charity navigator. making the grade. what one high school is doing to help teams make better financial decisions.
tomorrow we'll get the first look at fourth quarter economic growth with the release of the gdp report. san francisco president john william is speaking he's one of the first officials we'll hear from following yesterday's fed decision. the energy markets will be watching the weekly rid count should could move oil prices. that's what to watch for on friday. whether it's paying for college education or living on a budget teenagers need to understand how to manage their money. a real-life lesson a new report today says our nation's high schools are failing to teach. sharon epperson tells us that's not the case in east greenwich, rhode island.
>> reporter: they're only teenagers but today's high school students like these seniors at east greenwich high school in rhode island often have to make tough financial decisions. >> i don't think a credit card would be in my near future. >> i do lay out how much money i need during the week to pay for gas or if i want to go out with friends. >> the price of college today is insanely high. >> reporter: how to manage their money is a lesson many u.s. schools are failing to teach. until 2014 rhode island had no basic standard for teaching financial education. an issue that was a big concern to patricia page who spent years in the private sector before becoming a business teacher. >> we were graduating a whole generation of students that are going to be compelled to make substantive financial decisions even before they left high school walls. they why about ill ei didn't wanted to do so. >> good afternoon. >> reporter: some of page's students took action successfully petitioning the state board of education to
adopt financial literacy standards. >> it's made me a lot more prepared -- >> reporter: charlotte palmer was part of that influential group. >> when you learn from parents it feels the same as putting your money in a piggy bank. when you learn in a classroom it's learning -- seeing in the broader scope what's going to happen to me as i'm growing up. >> reporter: studies show high school graduates who have taken a personal finance course are more likely to pay their bills on time and get high are credit scores as adults. still, many states do not require students to take a personal finance course to graduate. according to the nonprofit council for economic education, just 20 states require students to take an economics course before graduation. that number drops to 17 for personal finance classes. but the impact on those who take these classes is clear. >> it's important to know about the federal reserve because they regulate the economy. >> it's definitely contributed to the successfulness of my small little business.
>> reporter: helping students make smarter financial decisions while they're in high school and for the rest of their lives. for nightly business report i'm sharon epperson in east greenwich, rhode island. >> to read more about the push for financial literacy programs in our schools head to our website nbr.com. and that does it for "nightly business report." i'm sue herera thanks for watching. >> thanks for me as well. i'm tyler mathisen. have a great thursday evening. we'll see you back here tomorrow.
and their buns are something i have yet to find anywhere else. >> 'cause i'm not inviting you to my house for dinner. >> breaded and fried and gooey and lovely. >> in the words of arnold schwarzenegger, i'll be back! >> you've heard of connoisseur, i'm a common-sewer! >> they knew i had to ward off some vampires or something. >> let's talk desserts gentlemen, 'cause i se