tv Nightly Business Report PBS May 9, 2017 4:59pm-5:29pm PDT
>> announcer: this is "nightly business report" wit happiest stock on earth? stock price rises, revenue misses. the focus is on disney's suddenly pressured cable network, espn. big mistake? warren buffett thinks investing in bonds is. but if you own them, what should you won't be? and second act. a group of entrepreneurs are getting older but they're not slowing down, tonight on "nightly business report" for tuesday, may 9th. good evening, everyone, and welcome. the nasdaq closes at a record for the 30th time this year. but we begin tonight with disney. a tale as old as time helped the entertainment powerhouse report
a rise in earnings. the success of its latest adaptation of "beauty and the beast," along with strength in its theme park business, helped disney earn more money in shares than expected. the dow component reported earnings of $1.50 a share, better than expectations. revenue was a tad light at $13 billion. but up nearly 3% from a year ago. that along with disappointing operating income at its cable network business which includes espn, sent shares initially lower late in the day. julia boorstin spoke with disney's ceo about the quarter. >> reporter: the one key takeaway for disney, for all the concerned investors, disney says it has it under control. bob iger says disney is planning for the digital future, to eventually have new digital revenue compensate for declines in the traditional tv business. >> what we're seeing is some significant growth of espn subs
and other disney channel subs, meaning disney-owned channels, on those platforms. but so far it's not enough to make up for some of the losses on the traditional ones. we believe ultimately we'll see that. but these platforms are brand-new. >> reporter: iger says the strength of espn's brand and consumer demand for sports makes the service appealing to new platforms such as hulu's new tv bundle, saying the platforms are just as valuable per subscriber as traditional tv is. as for reports swirling that iger is running for president, he says he's focusing on his job at disney for the next few years. robin didrich joins us, a media analyst at edward jones. robert, what do you think of what mr. iger just said there? let's talk about espn. basically what i heard him say is it is a business, a channel that is in transition, but that eventually they expect the
revenue to even out. >> we would agree with that. espn has been for the last couple of years the biggest challenge for disney and across the whole media space, what's happening in cable and how consumers are finding their favorite programs, how they're consuming more on mobile devices. that's certainly changing the whole landscape for all these companies. so that's a challenge near term. we think it's potentially creating an opportunity longer term for disney because we don't think they have some of the best content out there, whether it's espn sports, disney family channel. that will drive their ability to transition what we think is going to be a new environment for media going forward. >> give me your thoughts, robin, on how the "beauty and the beast" remake did, and "rogue one," and whether or not it met the expectations that you had for that side of the business. >> sure.
the studio business has been so phenomenally strong for the last couple of years. that's really been a worry, i think, for investors. how are they going to continue to meet those expectations, which are so high. and they've continued to rise to the challenge and it's been impressive. "beauty and the beast" is the latest example of that, coming in at over a billion dollars in box office, now being released around the world for further growth in that title alone. as we look out here for 2017, there's still a very robust franchise slate coming ahead of us. so we're looking for these very seasoned films, rather "guardiansgalaxy," the second installment, a strong slate to look forward to. we continue to think the studio is a bright spot here at disney. >> it's $111 a share right now.
quickly, what's your rating on it? >> we have a "buy" rating on the stock. we think it's undervalued, we look for it to grow 10%. that will drive the valuation for years to come. >> robin, thanks. >> thank you. on wall street, the nasdaq notched yet another all-time high. but the enthusiasm did not filter over into the other major indexes which fell after the north korean ambassador to the uk said his country will proceed with its sixth nuclear test. here are the final numbers for you. the dow jones industrials lost 36 points to 20,975. the nasdaq added nearly 18. the s&p 500 fell two. there are a near record number of job openings in the united states. 5.7 million of them, to be exact. employers are hiring and workers are feeling more confident about leaving their job for another one. the bad news is that not all companies are able to find the
skilled workers they need. a federal reserve official today said that she supports winding down the central bank's bond holdings. kansas city fed president esther george wants the balance sheet to shrink this year and thinks reductions should be put on auto pilot. as we've been reporting, investors will be watching for information on how and when the federal reserve unwinds its bond holdings, because the effect could be similar to an interest rate hike. winding down the fed's bond portfolio would eliminate a major source of demand for long term treasury and other securities. an asset class warren buffett says as a terrible investment choice over stocks. here is what he told becky quick about bonds in an interview we aired for you yesterday. >> anybody that prefers bonds today to stocks is making a big mistake. i've been saying that year after year after year. >> dan heckman, senior fixed income strategist at u.s. bank wealth management, is here to
discuss what you should do. a lot of people idolize warren buffett, dan. they think he knows a great deal, and certainly he does. and they might well think, well, gosh, maybe i should sell all my bonds. should they? >> no. we don't believe they should. obviously we have tremendous respect for mr. buffett, he's the greatest investors in equities of all time. we don't think it's an all or none type of answer for a lot of individual investors. there's not a whole lot of warren buffetts running around there. some people can't stomach the volatility that stocks bring. we think equities like bonds are appropriate in this environment. even warren buffett, tyler, has mentioned the extreme valuation in equity prices. i believe even within his berkshire hathaway operation he's built up a huge cash hoard. >> so if you need a decent return, not stellar but a decent return, and you want to stay
within the bond universe, what would you recommend? >> well, we think a number of areas are attractive. if you are concerned about the fed raising rates, which we do think will happen this year, at least once, probably twice, then floating rates, securities, whether they be government or corporate oriented, are very attractive. many of them are priced against libor, so they'll move if rates move up in the short end of the yield curve. inflation protected securities are appropriate. even in spite of tax reform, we think if you're a high income tax bracket investor, we beli. e >> i'll believe in tax reform when i see it, but be that as it may. people talk about bond as a way to hedge against rising interest
rates. can you get them in mutual funds or etfs? >> you can get them in both of those varieties , also as individual corporate bonds. a lot of banks, for example, actually issue floating rate debt. so whether they're exchange traded funds or bond funds, there's a variety of floating rates. some are bank loans, some are corporate bonds, investment grade, noninvestment grade. we think there's a lot of variety for investors in that area. >> thank you, dan. still ahead, another video, another black eye for the airlines. but the stocks keep on rising. so why the disconnect?
take a look at this. this is not what you want to see at the airport. fights broke out at a florida airport last night following the cancellation of multiple spirit airlines flights. videos posted online showed deputies trying to break up the skirmishes. spirit blamed unlawful labor practices by spirit pilots. the union denies the allegation. there are reports that 300 spirit flights have been cancelled in the last week. meantime, american airlines reported record traffic last month. it raised its second quarter forecast for a key metric, total revenue per available seat mile. lower fuel prices is one of the driving forces behind the upbeat outlook. that lifted shares of american and its rivals across the
sector. major gains there. despite all the negative publicity surrounding the airlines, the sector's etf is up 8% over the past month, easily outperforming the broader market. but an interesting thing is happening in the airline sector. stocks are rising. on-time performance is improving. at the same time, frustration is rising, as those videos emerge of passengers being dragged off of planes and airline ceos being dragged in front of congress. phil lebeau is in denver with more on the state of the airlines. good to see you as always, phil. can you explain the disconnect? >> reporter: yes. the bottom line has not changed for the airlines. the planes are still full. the profits are rolling in. you've got lower jet fuel prices. all of those meaning we'll probably have pretty strong numbers posted for the airline for the second quarter and the remainder of the year as well. those high profile incidents and the threats of congress to have more regulations for the
airlines, getting a lot of attention but so far not hitting the bottom line. investors say, great, keep the profits rolling. >> bottom line is one thing, frustration is the other. we've seen executives brut up to capitol hill. what is the likelihood of changes from the inside out or the outside in? >> reporter: from the inside, airlines are redoubling their efforts to make sure they're reemphasizing customer service. from the outside, as much as you'll hear talk in washington about let's have more rules for the airlines, that's unlikely. you're looking at a republican administration and a republican controlled congress. they're not likely to be pushing for more regulation of any business. so i think that despite all of the bluster that we heard on capitol hill about get your act together or else we will, we won't see more regulations for the airlines. >> what can we expect closer to
summer? this is only the spring travel season and we've already had two high profile incidents. what about summer? >> reporter: i think we'll have more. i hope we don't have more, but all it takes is for one person to snap when they're on a packed plane or can't get their bag in the overhead compartment and everybody takes out their cellphones. sue, i've been on flights where i see somebody get a little mouthy with the flight attendant, immediately everybody takes out their cellphones. i would not be surprised if you see more of that this summer. all it takes is one person and one incident, and the way things are spreading on social media and the fact that the airlines are in the target right now, i would not be surprised if we see more of these incidents. >> which means you're going to be very busy, phil. thank you so much. >> reporter: yes, i will. you bet. we want to hear your travel story. go to "nightly business report's" facebook page and give us your opinion on the state of travel in the u.s. >> i'm going to take my seat and be quiet. yesterday we told you apple
was close, and today the stock did it. apple closed at a record high. the company is now worth more than $800 billion. the first publicly traded company ever to hit that mark. >> there were some reports last week that apple was having a bit of trouble with a key feature in its next iphone, the fingerprint reader. but there may be other problems with those sensors. new research found the way smartphones read fingerprints could make them vulnerable to hackers. andrea day has our story. >> a fake hand with these master prints on it, i could unlock 30, 40% of phones. >> reporter: how unique are your fingerprints? a team from nyu's school of engineering developed a master print that mimicked fingerprints and could hack into your device. >> at first i didn't believe it. >> reporter: at first they didn't test it with real phones,
only computer simulations, but say it raises questions. >> in order to unlock your phone, all i need is a master print, and you can just bring me phones and i'll unlock them. >> reporter: the entire fingerprint would be tough to match. but he says most devices use small partial prints, making the sensors easier to fool. >> that uniqueness tends to go down. >> reporter: he says most smartphones store multiple prints and give you a few tries. that could open the door to hackers. >> i don't have to get in through one window, but 30 windows, any one of them is left open, and i'm in. to a security person, that's a problem. >> reporter: how this could work on a real device is still unclear. >> you may have to create a synthetic sort of fingerprint, a glove or a synthetic hand which has these master prints on them. >> reporter: apple posted the following online. "every fingerprint is unique so it's rare that even a small
section of two separate fingerprints are alike enough to register as a match. the probability of this happening is one in 50,000 for one enrolled finger." in its latest android software, google requires less than 2,000ths of a percent failure rate. the professor says he still uses a fingerprint to unlock his device and has no plans to change that. he says you may want to consider using your print for banking and other financial transactions. i'm andrea day for "nightly business report." valeant posted its first profit in a year and a half. that's where we begin. investors were focused on the company's strongest than expected earnings which were helped by a tax benefit. valeant also said it was raising its profit guidance for 2017. and look at those shares, up 24%
to $12.05. sanofi wants to put a cap on drug price hikes. the french pharmaceutical company said under its new policy it plans to keep any increases this year under the rate of health care inflation which is expected to hit about 5.5%, much higher than broad inflation. sanofi's shares rose almost 1% to $49.11. fewer stores in operation helped office depot keep costs in check, resulting in earnings that rose. the office supply chain said it experienced lower in-store traffic, and that hurt same-store sales. shares were up. higher distribution fees and strength in its international networks helped the media company grow its revenue. profit also came in lower than expected with the company citing its investments in solar power. shares were off about 2% to
$26.66. seaworld reported lower attendance in the latest quarter, blaming a shift in easter and spring break schedules. the amusement park operator also said the drop in visitors caused overall sales to fall. but the company did post a narrower loss. seaworld shares rose 3% to $18.11. also after the bell, yelp posted a loss better than wall street was expecting but the company was disappointed with its revenue guidance. they said weakness would likely continue throughout the year. shares initially plunged after hours following the news. they also ended the regular session down 2% to $34.70. the ceo of ups says there are growth opportunities abroad, in particular in the middle east. and today, the company said it will take on a big project in dubai, handling all of the logistics for the world expo 2020. >> it's going to give us name value in places in dubai, the
uae, the middle east, and really all throughout the world. and we really see this as a catalyst for growth, because when businesses from all these countries come by, when they see our capabilities here, they're going to realize we can take care of their logistics needs. >> 180 countries are expected to participate in the expo which will attract millions of visitors. and ups isn't the only package delivery company inking some partnerships. fedex is extending its sponsorship of the pga tour for another ten years, at a time when the sport has hit a bit of a rough patch. dominic chu reports from florida. >> reporter: one of america's biggest companies is making a big bet on the popularity of golf. shipping and transportation giant fedex just announced a
deal to continue sponsoring the pga fedexcup playoffs for another ten years. fedex thinks any money is money well spent. >> it's a great deal for our employees. it's a great deal for our shareholders. and it's a great deal for our customers. it allianigns very much with ou social responsibility platform. we love what this platform brings to us. >> reporter: the sponsorship deal is the biggest ever for the pga tour and it comes at a time when the future of golf is in question. last year saw the bankruptcy of retailer golfsmith and nike to exit the golf equipment industry. but this season has gotten off to a roaring start and a host of events that have produced the most dramatic story line in years. >> never have you seen the average age of a winner be as young as this was we have 88 players in 23 countries.
week in and week out, we've gone between ten and 15 players that have a shot to win midday on sunday. you have new personalities emerging, that makes for great storytelling. there are a lot more players to come. >> reporter: competition is getting fierc on tour. and a slew of young players are bringing excitement to the game. it used to all be about tiger woods. today the top golfers in the world are busy focusing on their own shot at greatness. >> the competition on the pga tour and throughout the world is so deep and strong that, you know, it drives me to continue to work hard, to continue to try to stay at that number one spot. but it's very tough to do that, because there are so many good players out here on the pga tour. >> reporter: according to golf data tech, 2016 marked the first time we saw growth in the number of rounds played by americans in back to back years since before the financial crisis. and perhaps a big sponsorship between a big company like fedex and the pga tour could go a long way towards fueling more popularity. for "nightly business report,"
i'm dominic chu, florida. coming up, encore. >> reporter: i'm kate rogers in philadelphia. tonight on "nightly business report" we'll tell you why more baby boomers are opting out of retirement for a second act in . an update now on a health insurance story we told you about last month. bluecross blueshield will offer plans in knoxville next year again. the company said it made the decision to reenter the market even though it's not convinced the markets are stable. it will also likely need to offer high rates. last month we reported that humana was the only exchange
insurer in eastern tennessee and that it was dropping out of the exchanges in 2018. the mood of small business owners edged a little bit lower in april, the third straight month of declines according to the national federation of independent business. owners were discouraged with washington in action on taxes, health care and other issues. despite the decline, though, optimism overall remains at historically elevated levels. retirement isn't what it used to be. a growing number of baby boomers are choosing entrepreneurship over leisure time, whether they need to or want to. kate rogers is in philadelphia tonight. >> reporter: ryan kravitz has seen his career come full circle. he fixed typewriters in the 1970s and continued until computers came on the scene. much to his delight and surprise, typewriters are back in vogue and kravitz is in business for himself at age 67.
>> i feel really good. i get up every day. i don't want to sit around. what can i do, go to the golf course? no, not me. i want to do things. >> reporter: he launched his business in 2015, fixing and selling machines that date back to the 1920s. kravitz worked for years in marketing and direct mail, and said his experience in the workforce has helped him with his latest venture. >> i'm much more aware because i've had so many more experiences in being in business and doing things with people. >> reporter: while millennial entrepreneurs like mark zuckerberg grab the headlines, experts say the rise in boomer entrepreneurship is a byproduct of the financial crisis that decimated the retirement savings of many, and the desire to remain active. >> most older people approaching the traditional retirement age are actually looking to stay
active beyond 65. they miss the social aspect of work. they miss the purpose of work. and work is an important emotional contribution to people's sense of identity. i don't think that that disappears just because you hit a particular chronological age. >> reporter: 63-year-old darryl jennings launched his business in 2013 and today has seven employees and two co-owners, making hue mid-ifying cabinets for guitars. there are challenges in being an older entrepreneur. >> the biggest challenge is the fact that you're not going to make money for quite a while. if you start a business, it always takes more money than you think it will. it takes more time than you think it will. >> reporter: but he has only one regret. >> i wish i had done it sooner. >> reporter: for "nightly business report," i'm kate rogers, philadelphia. and to read more about baby
boomer entrepreneurs, head to our website, nbr.com. >> remember using typewriters? >> yes, physically. the sound is always there. i kind of miss it. that does it for us on "nightly business report" tonight. i'm sue herera. thanks for joining us. >> and i'm tyler mathisen. thanks from me as well. have a great evening, everybody. hope to see you back here tomo.