tv Nightly Business Report PBS February 10, 2016 7:00pm-7:31pm PST
this is "nightly business report" with tyler mathisen and sue herera. >> sink or soar. cisco's strong results show that old tech companies still have what it takes. new tech firm twitter struggles to retain users. growing risks. federal reserve chair janet yellen says the economy faces new challenges but she's not ready to change course just yet. hack attack at the irs. the two words taxpayers don't want to hear as they prepare to file. all that and more. tonight on "nightly business .eport" for wednesday february good evening, everyone. welcome. slowdown? what slowdown? after issuing a downbeat prediction for the most recent quarter cisco reported profits well above what wall street was expecting and it didn't stop
there. cisco's outlook for the current quarter was upbeat as well. the dow component increased its dividend and added $15 billion to its buyback. earned 53 cents a share, 3 cents better than estimates. revenue for the quarter around $12 billion, a slight decline from a year ago. as for the stock, shares took off initially after that report was released. and the results come at a tough time for the tech sector. as josh lipton explains, cisco's report was closely watched as a proxy for business spending. >> reporter: tech has tanked with the nasdaq now down more than 10% so far this year, a big part of the concern, the global economic slowdown means companies are spending less on technology. that's why tech investors were so interested to hear from cisco which is seen as a barometer of corporate i.t. spending. >> it generated $49 billion in revenue in its last fiscal year, so the bottom line is, it was
very big, it remains big, and its earnings report is important for folks that want an updated view as to how the global economy and technology spending are playing out for this kind of company. >> reporter: we've already heard from two big tech names that set a challenging global economy and soft i.t. spending was impacting their business. ibm's cfo martin schroeder called the macroenvironment mixed, and intel ceo's said macro weakness weighed on the chip makers' results. the problem for many tech companies, though, is that global tech spending is expected to grow at only a moderate pace. business and government purchases of tech goods and services will only grow about 2% this year according to forester, that's better than the 3% drop suffered last year, but still represents a modest pace of expansion. analysts say a rising u.s. dollar and weaker economic
growth in china and europe will pressure spending in 2016. so where does that leave tech investors? there's a good chance that the bad news is already priced in as s&p's kessler notes, many of these stocks have already sold off. as a result, s&p recommends investors buy cisco, ibm, and intel. for "nightly business report," i'm josh lipton in san francisco. from old tech to new, twitter which wants to attract more users didn't. the social media company's average monthly active users stalled in the fourth quarter, disappointing those who were looking for fresh signs of growth. twitter earned 16 cents a share and that was better than expected. revenue just about in line, $7 10 million. it was up strongly from a year ago. the stock was volatile after hours initially falling sharply only to rebound soon after. julia boorstin has more now on twitter's results.
>> reporter: twitter's quarterly report disappointing investors and sending the stock plummeting because of one key fact. its users numbers actually declined from the third to fourth quarter which ended with 305 million monthly active users. the number excludes its sms fast followers which use the service on more old-fashioned feature phones. though the company met revenue expectations and beat earnings projections, it was the fact it's been unable to grow that twitter user base that weighed on the stock. and the fact that it's q-1 revenue guidance disappointed expectations didn't help any. twitter saying in its letter to shareholders user trends are improving, but that failed to reinsure investors. back over to you. >> thanks very much, julia. rather confusing day on wall street trying to make sense of testimony from federal reserve chair janet yellen. we'll have more on what she said a bit later in our program. the dow index gained 187 points mid-morning then the gains faded
by. the close the dow jones industrial average fell nearly 100 points to 15,914. the nasdaq gained 14. the s&p 500 finished basically flat. the worst performing stock on the blue chip dow index today was wall street disney company. it reported record earnings as we told you last night, but falling profit at its media unit dragged down shares. separately, time warner shares were also lower. much lower after reporting a bigger than expected drop in quarterly revenue. and disappointing results at some of its cable networks. shares of both closed at multi-year lows. tim nolan joins us to talk more about the ailing media sector, senior media analyst. thank you for being here this ev evening. >> thank you. >> what about the market's response? disney's report was pretty good. is the market overreacting to some of the concerns out there about the media stock stocks? >> i think it's something of an overreaction for some of these
names. i think the justification is that the cord cutting fears are really weighing now. you know, disney and time warner both talked about subscriber declines for the basic tv bundle in the quarter just reported. really everything else in both of their reports was fine. time warner actually met -- actually exceeded guidance and they raised guidance for next year, but it was that one single point i think for both of these companies that was the concern, and it's a legitimate concern because this has been the primary profit driver of these kpe companies for a long, long time. >> it's not just obviously, tim, time warner or disney that was taken out to the wood shed. it was discovery, it was viacom most especially. talk to me about those two. >> well, interestingly on viacom, you know, yesterday when they reported, they actually reduced their guidance for affiliate fee growth for the remar remiainder of 2016, it was a hih
single digit growth figure, it's now a mid to low single digit growth figure. there are actually some reasons behind that which may make sense. foreign exchange. and they include otts sales to netflix and the like in that g figu figure. so that may rebound actually next year. time warner, though, talked about 5% growth figure at turner in the quarter which is maybe just a little bit light, but they've got double digit, they've got low teens growth in affiliate fees, into 2016 and 2017. so i think there is some legitimate anxiety, but, you know, there is still growth. certainly maybe not as high as it was, but time warner has some nice built-in growth. don't forget, we're talking about the traditional bundle that has been under pressure, but there are some alternative options. disney talked about skinny bundles like sling tv. time warner talked about hbo now. the ott service which has 800,000 subscribers. so there are some nice offsets there. it's companies like viacom that don't have those options available to them that are
really suffering more. >> tim, thank you very much for your insights. to politics now, carly fiorina suspending her presidential campaign after a seventh-place finish in last night's new hampshire primary. chris christie will also drop out as well. after he finished sixth. the big winners, of course, were donald trump and bernie sanders as voters showed their support for anti-establishment candidates. >> tonight we serve notice to the political and economic establishment of this country that the american people will not continue to accept a corrupt campaign finance system that is undermining american democracy and we will not accept a rigged economy. >> we are going to make america great again, but we're going to do it the old-fashioned way. we're going to beat china, japan. we're going to beat mexico at
trade. we're going to beat all of these countries that are taking so much of our money away from us on a daily basis. it's not going to happen anymore. >> john harwood covering the story for us. john, welcome. you know, the other day i asked you when will we get down to the final four? i guess we're down to the final six right now. trump seemingly the front-runner for the nomination. does he have the organization in some of these next states to pull it off? >> no, but i don't think he's going to need the organization, tyler. we've seen the power of his message is significant. the attraction he has, especially to working class voters in the republican party. he's pretty powerful. now, we go to south carolina where we'll test whether the ideological conservatism of ted cruz and the establishment credibility of jeb bush, you know, brother of former president who's still got pretty
good numbers down there, and marco rubio is going to try rebound. john kasich got a lift out of new hampshire. whether they can compete and slow him down. he's got a big lead, and his prospects are pretty good at this point, tyler. >> let's switch to bernie sanders, john. given the win that he just had, is hillary clinton in trouble? >> she's in trouble, but not nearly as serious trouble as the rest of the republican field opposing trump is. hillary clinton remains a solid favorite for the democratic nomination. the path for bernie sanders gets a lot steeper as he gets to states where there are more african-american and latino voters who are favorable to hillary clinton, but he's definitely lit a fire of enthusiasm. he will have a chance. he'll have some money to test whether he can expand that base of support. the -- you have to say by history the odds are not good, but can't count him out. >> he's attracting some money. he's got a lot of the youth vote. let's talk about money in this campaign. it has not translated into advanta advantage. the two best-financed candidates, bush and clinton, are not doing great.
>> exactly right. and donald trump hasn't spent very much money. it shows that his ability to get press coverage and favorable press coverage, his celebrity, as well as his message, have overpowered the influence of money in the race and the enthusiasm behind bernie sanders has overpowered hillary clinton's money, although sanders has had enough to get his own message out. you know, we've seen for some time, tyler, the importance of television advertising has been diminishing in the race has social media and other avenues of information have proliferated, made it easier for campaigns to reach voters in other ways. this may be the campaign that kind of breaks the idea that a big bank account is what gets you elected. >> all right. john, thank you very much, john harwood reporting tonight from washington. still ahead, does federal reserve chair janet yellen see things in the economy that others don't? what she told lawmakers when testifying on capitol hill today.
the federal government reported a budget surplus of more than $55 billion in january. the treasury department says that's an improvement from a year ago and it was helped out by a timing quirk. $42 billion in benefit checks were sent out in december because the regular payment period fell on a weekend. fed chair janet yellen told congress today that growth prospects in the u.s. economy have fallen in recent weeks. she walked a careful line in the first of two days of semiannual testimony on capitol hill. she highlighted the strength of the labor market, but said financial and market conditions including overseas could restrain u.s. growth. hampton pearson reports. >> thank you. >> reporter: federal res
chair janet yellen told lawmakers continued global economic woes and market volatility might force the federal reserve to slow the pace of future rate hike but not right away. >> i want to make clear that monetary policy is not on the preset course, and so our evaluation of the likely impact of those developments on the economic outlook are in our ability to meet both our employment and inflation objectives. those are the factors that will govern the future stance of monetary policy. >> reporter: the fed's semiannual report to congress raises concerns about china's economic slowdown and weaker currency, the further decline in oil prices and the strong dollar hurting u.s. exports. but the fed chair told lawmakers strong hiring, rising wages, and more consumer spending could help the u.s. economy weather the storm. >> ongoing employment gains and
faster wage growth should support the growth of real incomes and, therefore, consumer spending. and global economic growth should pick up over time supported by highly accommodative monetary policies abroad. >> reporter: but yellen did admit monetary policymakers have at least studied negative interest rates which central banks in japan and europe have recently used as a policy tool. >> so at this point, it's unclear whether or not the fed does have legal authority to implement negative rates. >> i am not aware of any -- anything that would prevent us from doing it, but i'm saying that we have not fully investigated the legal issues that would -- that still needs to be done. >> reporter: day one of the fed chair's congressional testimony ended with no major surprises but also a concession that monetary policymakers are,
indeed, closely watching global economic developments. for "nightly business report," i'm hampton pearson in washington. the national retail fed expects sales to grow a little bit more than 3% this year. that's higher than the ten-year average and excludes automobiles, gas stations, and restaurants. the industry group cites a strengthening job market and steady consumer confidence and says more spending will shift away from the mall. consumer spending accounts for about 7 0% of all economic activity. the supreme court blocked the white house's clean power plan. the justices put on hold rules that would curb carbon dioxide emissionses from coal-fired power plants. the court decisions means the regulations will not go into effect until an appeals court makes its ruling. the white house says it disagrees with the decision. also in washington, the internal revenue service says identity thieves hacked into their system. their goal was to steal your tax refund.
eamon javers has more on the last thing any taxpayer wanting to see during tax season. >> reporter: this is one of those ones where the irs said they were able to nip it in the bud, stop this attack as it was happening but really reminds you of just what a huge target the irs is for hackers around the world. so much financial information, so much person on the servers at the irs, hackers really want to get in there and the irs knows they're under attack every single l day. here's what happened as far as we know in this latest incident which they revealed last night. they said thieves used previously stolen data to generate what are called e-file p.i.n.s, personal identifying numbers to try to get in there and create and file returns. now, what they said was this involved 464,000 social security numbers and said the attack was halted and so, therefore, no data was lost. now, this was similar to, but a little bit less serious to an attack that happened last summer involving the get transcript future of the irs in which
people were trying to hack in and get returns and then use the da data on the returns to get bogus refunds. the irs commissioner was on capitol hill today and he explained the difference. take a listen. >> i would note that both the get transcript difficulty and the more recent attack in the last couple weeks both were sophisticated forms of identity theft. the criminals already had all of the personal information of the tact taxpayer that they needed. none of those attacks breached our system, itself. they were not cyber breaches in the sense that our data was accessed. >> reporter: they were able to stop this before major damage was done. >> you explain what happened here, but what now happens to those i think you said 400,000-plus people whose information is out there now? >> reporter: yeah, that's right. the irs said those were people where the hackers had stolen their information somewhere else
and then were using it at the irs to try to generate bogus returns. what the irs said they're going to do is write letters to all these people telling them, hey, you better pay attention, your information has been stolen, it is out there on the black market, you might want to take cyber security steps to protect yourself. >> as butch said to sundance, sundance to butch, who are these guys? >> reporter: that's one of the really good questions here. a lot of people think a lot of this is coming from russia and eastern europe. they can use computers, drone those computers can be in anywhere in the world. >> eamon javers in washington. humana sees its quarterly profit drop by a third. the company attributed the steep loss to the cost of its medical insurance plans under the affordable care act. a bright spot, the insurer said its 2016 earnings will be above forecast. last july humana agreed to be acquired by rival aetna.
shares of humana up 1% to 16107. owens corning saw its shares increase after the company increased its quarterly dividend by 6%. the glass and roofing products maker also issued an upbeat outlook for 2016 saying it sees continued growth in its three main business segments. shares rose over 2.5% to $43 even. fitbit which makes health and finance products you wear on your wrist saw shares bulk up after two prominent stakes in the company were revealed. salesforce ceo had taken a 5% stake in the company, at another filing disclosed vanguard group now owns a big 9% share. fitbit rose nearly 3% to 1468. staples says it's received approval from european regulators to buy rival office depot. as long as those companies dismantle all of office depot's european operations in an effort
to ease competition concerns. the merger is valued at more than $6 billion. the deal still needs approval from the u.s. and from canada. u.s. regulators have challenged that deal over concerns about competition. staples was up a penny to $8.41. office depot popped more than 2% to $ 5.03. amazon is buying up shares. the new program would replace the $2 billion buyback the company issued in 2010. shares of the e-commerce giant rose initially in extended trading after closing up more than a percent today to 49048. despite issuing a worse than expected loss for its latest quarter the automaker tesla motors saw its shares jump in after-hours trading. strong deliveries and guidance for the year. the reasons for the stock move. tesla said it expects to deliver between 80,000 and 90,000 new model "s" and model "x" vehicles in 2016. the announcement came with news at the company posted a much
worse than expected loss in its latest quarter. shares were down more than 3% today to 14367 but had a strong showing after the bell on that guidance. a sharp drop in interest rates prompted more homeowners to refinance their mortgages last week. the mortgage bankers association reports that total application volume increased more than 9%. behind most of those gains, refinancings. not new purchases. purchase apps are still 25% higher than they were a year ago. and a new trend is taking hold in housing. generations of families are living under one roof. think downton abbey. americans moved away from the model in the last century, of course, but now they're suddenly moving back which opened up new doors, new designs and new opportunities for the home builders. d we have this all in the family story. >> reporter: jennifer michaels never intended to live with her mother, lucy abbott. but when michaels sold her house faster than she expected, she
and her kids needed somewhere to stay. so they went to grandma's. much to all their surprise, they didn't hate it. >> we decided it just was like the perfect fit. and we never left. >> i enjoyed the life that the kids bring to you when they're around you all the time, but we did have our challenges. >> reporter: the challenge was not a bigger space, but separate spaces. >> i'm time traveler. >> reporter: lucy likes the video games. >> i'm a gamer and i'm up until 2:00 or 3:00 in the morning. and the kids need their sleep. oh, dear. >> reporter: so mother and daughter decided to buy a next gen home by builder lanar, a leader in this trend. the home has two entrances, separate kitchens, and living areas. >> i literally have gone three days without seeing her. >> reporter: 14% of all u.s. households that's 16.5 million already live multigenerationally. >> one of the reasons we've seen
so much immigration in the last 25 years and other cultures around the world tend to live multigenerationally. that's caused the numbers to increase substantially. >> reporter: the recession also played a part, young adults were hit hardest in the job market and some were unable to move out. they're also delaying marriage which keeps them home longer. on the other end of the spectrum, baby boomers are retiring and downsizing. 20,000 potential home buyers were surveyed and found nearly half would like to accommodate their elderly parents in their next home and almost as many want to live with their adult children. >> not at all about the finances. in fact, the house that we were all living in, we're renting it out so we didn't even sell it to buy this house. it's more of a connection between the generations. >> grandparents like me are more active. you know, we do more things. we're healthier. we live longer. so the relationships with grown-up children can mature.
>> reporter: and so with the right floor plan -- >> the light bulb went on. >> reporter: -- families that don't play together can still stay together. for "nightly business report" in washington. >> grandma the gamer. got to love that. all right. coming up, deep in the heart of texas is the priciest ranch ever sold to a sports mogul. the owner of the nfl's los angeles rams is now also the owner of a massive texas ranch and it's not his first land-buying rodeo. jane wells has more on the billionaire behind what's quite possibly the most expensive ranch ever sold in the u.s. >> reporter: it's good to be rich, but with the stock market seesawing and the outlook murky,
where does a multibillionaire put his money? real estate. >> it's great to be here today. >> reporter: that's exactly what this developer has done. just a couple weeks ago he announced approval to move his football team, the rams, back to los angeles where he is financing a $2 billion state of the art stadium on land he purchased in inglewood. now he has bought an even bigger piece of property. in farkts tct the largest singlh in the united states. the waggoner ranch in texas covers six counties, 800 square miles, 535,000 acres. it's bigger than los angeles and new york city combined. the asking price was $750 million. actual purchase price unknown. now the ranch has cattle, oil, horses, farmland, and it's been owned by one family since 1849. now, the waggoner heirs say they picked him because he promised to preserve what's considered an american treasure, in other words, no football stadium or team here. he is married to one of sam walton's daughters and together
forbes estimates they're worth over $12 billion. now with the waggoner ranch under his belt he owns 1.4 million acres of american ranchland making him one of the top five private landowners in the country behind people like john malone and ted turner. for "nightly business report," i'm jane wells. >> that's breathtaking. six counties. >> six counties. wow. we'll keep track of that story for you. that does it for us tonight on "nightly business report." i'm sue herera. thanks for watching. >> thanks from me as well. i'm tyler mathisen. have a great evening, everybody. we will see you right back here tomorrow night.
sethi: this week on "quest"... sea otters combating climate change... sizemore: to see that change almost overnight was amazing. sethi: ...cars fueled by hydrogen... holloway: i was promised flying cars when i was a kid. this is as close as it's going to get. sethi: ...and scientists trying to build a more resilient forest. pecore: some of the best old-growth stands that we have are in the menominee tribal lands. announcer: major funding for "quest" is provided by the national science foundation. sethi: known as "science on a sphere," giant digital globes just like this one