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tv   Nightly Business Report  PBS  April 17, 2014 6:30pm-7:01pm PDT

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. this is "nightly business report," with tyler mathisen and susie gharib. dow deluge, what results from dow stocks at general electric, goldman sachs and united health care, say about the industry and economy, industry, finance and health care. and every do something as simple as download a coupon for cherrios? well, you just gave up your right to sue them in court. and stocks the best week in court. a list of under the radar names that could see double digit returns. we have all that and more tonight on "nightly business report" for thursday april 17th. good evening, everyone, and welcome, a triple play for earnings today, three dow components, big ones, general
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electric, goldman sachs, united health care, representing three very distinct and vital parts of the american economy gave us a pretty good idea how the economy shaped up in the first quarter and what may lie ahead. profits in general electric made it the best today. goldman sachs beat closing in the green, but for united health care, its shares were sent slightly lower. but that is only part of the story, mary thompson has more. >> reporter: first quarter profits fell in all three thursday, general electric still managed to win, thanks to strength in its energy and aviation business. it was a good report, you know, back in december when general electric gave its look ahead they were talking about four to 7% organic growth possibly this year. and you know after the first quarter that we had with you know, with relatively slow economic growth, there was
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concern that they wouldn't make that. and they came out at eight, a point ahead. >> reporter: the company is shrinking in things like energy, this year it plans to sell $4 billion in industrial assets, like ge, its profits declined by the results beat wall street's forecast. goldman sachs helped strengthening its investment group and profits from its own investments, all of this off setting what they say was a sluggish quarter in its trading business. >> trading was okay in a difficult environment. not taking anything away from goldman here, i think they did an excellent job given the realities but the realities are not great. >> in the last quarter, the analysts and the health care, they say it should not have been a surprise to the market. >> everybody should have known this was coming on the pike.
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we expected greater competition and greater pricing pressure and cross pressure. >> in the first quarter, profits at the nation's largest health insurer fell 8% from the higher year, higher taxes linked to aca and lower medicare reimbursements. the dow ends down today, the blue chip average was up 2% for this holiday-shortened week, and the s&p was up on the week. markets are closed tomorrow for the good friday holiday. the dow lost 16 points, the nasdaq rose nine and the s&p added two and a half points. our market guests tonight say that guests should buy this dip. he is optimistic about stocks and not worried about the recent selloff. sandy villary is president of his own company, sandy, let the good times roll? >> i think that is exactly
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right. i think the market will be up about 6% this year. but i think stock picking will be the rule of the day. we have to find the diamond in the rough, the gems that perform well and deliver for our shareholders. >> you're saying buy the dips, right now, so many investors are looking at the same information you are. they're worried about the interest rates and all of this volatility. and so they're just playing it safe and you're just jumping in and buying what you say are really beaten down stocks. so what are you seeing that they're not seeing? why are you so optimistic? >> yeah, i think you really do have to look at individual stocks. and that is the key word, while all of this stuff is going on i think it is time to really look, and be laser focused on the individual stories, ge had good numbers, goldman had good numbers, let's focus on individual stocks that is what i'm focusing on. >> and good numbers in terms of beating the forecast, but not in
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terms necessarily of growing the profit. both were lower. but i want to take a look at the first stock pick this week. that is like in kind quality, tell me about this, why you like it. >> these guys distribute recycled auto parts, basically that are like new parts but at about 20% of the cost. so body shops are funded really by insurance companies and insurance companies want to get that car back on the road as quickly as possible for the cheapest price as possible. so we really like it. they really consider themselves a logistics company that happens to be in the auto business. because they get their parts to the customers so quickly. it is down about 17 years year-to-date which kind of creates this opportunity. because this winter was so bad a lot of body shop owners couldn't get into work and therefore, there was a lot of pent-up
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demand and a great opportunity to buy a 22% grower at just about a 20% grower. and sol, the second largest ba bakery in the country, tell us about this. >> so i like this because it is boring, they were founded in 1919 in thomasville, georgia, and went public. the second largest bread baker in the country, they have the largest brand in nature's own. they were doing about $43 million in revenue a decade ago, now doing $1.3 billion. they have the five bread brands including wonder bread, and 26 different breakeries and 26 different warehouse depots, they're selling off nine bakeries, and so while the markets drag in 2013 we'll see recovery back in 2014, these
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guys returned about $750 million in free cash flow over the last five years, i think it will be a big winner. >> let's go to the last one, auto parts, bread, bore me one more time, sandy, come on. >> we can certainly do that. pool, the largest distributor of swimming pool products, not only for swimming pools, but maintenance for the pools, i love companies that dominate a niche, that is what they do. if you believe people just put chemicals in the pool. that will be a good play. not only that there is a deferred maintenance part of this story where there are 2 million pools in the u.s. that are between 15 and 20 years of age. if you don't do maintenance it cracks, and so forth. they reiterated their guidance for 2014, bought back about 4,000 shares in the quarter. one thing is it will work well and grow.
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20%, i like it a lot. >> you know your boring stocks well, give me a little disclosure. >> i own some in all of them. >> money where your mouth is, have a great weekend. now, another issue that investors are watching closely. ukraine and russian president vladimir putin. his question and answer session attracted a lot of attention, he admitted for the first time that russian forces were deployed in crimea before it was annexed. and ukraine will next have a month to pay off their gas debts. and historical claim to eastern ukraine, this as officials from russia and europe and the new kiev government met in geneva on the ukrainian crisis. steve sedgwick has been there during the talks with ended with a joint statement. >> reporter: against the
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backdrop with the increasing violence in the ukraine, there were first talks since the crisis began with the u.s. and eu in attendance, compromise has been made. diplomat issic issues have been. with the pro-russian sympathizesympathizer vacating some of the buildings they were in. i asked what had been given up on by the west. >> the fact is we have made it crystal clear there is a significant difference over crimea. we are not quote, giving up. >> reporter: john kerry speaking to me in the post press conference, what has been a bit in the early stage of diplomacy. steve sedgwick in geneva.
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and still ahead on the program, have you downloaded coupons lately for cheerios? if the answer is yes you just gave up your right to sue the company in court. we'll explain. a federal judge in texas has rejected an issue following general motors, lawyers wanted them to issue a park it now notice. gm argued the cars are safe to drive as long as nothing extra is attached to the ignition key.
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morgan stanley's first quarter earnings surged. the investment firm's profits and revenues came in better than expected. it also posted higher revenue in each of its major businesses including priced fixed results, morgan stanley doubled their dividends to 10 cents per share. well, it was just the opposite story for dupont. the chemical-maker saw its agricultural sales suffer and its operating costs rise because of the harsh winter weather. quarterly earnings matched estimates but revenue came in below analyst estimates. dupont said the rough weather shaved seven cents a share off the quarter profits, shares fell to six dollars, 98. and barbie reporting it had
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to mark down inventory left over from a slow season. shares down to $37.47. pepsico posted earnings as they sold more around the world. with frito lay chips. shares climbed to $85.55, meanwhile, shares of barnett -- barnes & noble, the sale part of his long-term financial and estate planning that he has no plans to sell more stock this year. shares plunged 12% to $16.37. china's weibo made its trading today, shares priced at 16.8 million shares at $17
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apiece. they raised more than $285 million from the offering, the stock popped 19% finishing the day at $24.24. but what exactly does weibo do? we look at the potential risks and rewards of investing in weibo. >> pop quiz? what is microblog in chinese? weibo, it allows users to chat, upload pictures and use video. it has 445 active users as of march, 77% access weibo using their smartphones. they make most of their money through advertising, their annual sales nearly tripled last year but the company still lost money. and weibo cautioned that user growth is slowing.
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>> we slowed down last year but as we begin to focus our purpose, the effort, actually we see tremendous coming back into the gross rate. >> the timing of weibo's ipo is also questionable as the market has recently cooled on social media stocks. experts say that is why bankers were cautious and priced them conservatively. >> this is one of the most under-priced ipo's we've seen in years. >> as more users in china access the internet over their smartphone, weibo will be key to success as a public company. experts say if weibo can attract more users outside of china it could one day rival the social media giants. and walmart to walmart, allowing direct transfers to and
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from walmart stores for a small fee. now the service is aimed at the retailing giant's low income customers many of whom don't have traditional checking or saving accounts. western union and money gram currently handles them. the prices fell today, walmart rose slightly to $77.66. what would you do if you bought a food product and it made you sick, really sick? would you sue the manufacturer? well, not so fast. general mills is trying to limit any future financial awards from litigation. more on a new policy which could spread. >> reporter: click on the general mill's website this week and you could see new boiler plate legal information. that could have implication fos other products, the language says if you use any of the company's sites or services including simply logging onto to
6:46 pm, you could be bound by legal terms, saying that would take any dispute you have with general mills to a binding arbitration, not a united states courthouse. they like this because they're more likely to prevail in arbitration and they don't face the kind of financial damages they could see in court. >> if it does something wrong it is basically strike to shield itself from any responsibility and shield itself from any legal action. and so it is -- just -- it is a little upsetting. >> but general mills says the new boiler plate is simply routine. this is being broadly mischaracteriz mischaracterized, the spokesperson said. it does not preclude a person from pursuing a claim, but merely the forum, and arbitration is an efficient way to resolve such disputes. lawyers i talked to say they may
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be pushing the legal envelope with the terms of the rules but they may have one thing going for them. that is the supreme court which has been friendly to arbitration cases in recent years. we turn now to michael deutsche for information. michael you just heard in our report that general motors' reaction that this boiler plate is routine. and we all have signed similar agreements with credit card companies and cell phone plans. what is general mills doing that is different than those agreements? >> well, they're actually just moving the ball further down the football field because these agreements are becoming more and more common as a result of the industry's preference for them. but the supreme court as referenced in the report by amon, there has over the last four years, they have come down with four decisions that made it easier for companies to grow
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this type of arbitration rather than take it to court. so i think we'll see more and more of it particularly if general mills gets away with it not only in the public realm but the courthouse. >> so what if i happen to go on their website that is one thing but if i happen to consume one of their products and it injures me, has nothing to do with the website. how can they justify removing my right to take them to a court for alleged injury? i don't get it. >> what they're doing is they're actually basing their decision to this this on the recent court decisions i have just referenced. over the last four years there have been four major decisions at the supreme court level where they have said that consumer businesses don't have the right to opt out of the mandatory arbitration agreements that they have agreed to sign, through direct or indirect means. for instance, if you have a credit card, and the credit card
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company sends you a statement. and before you open the credit card it says you need to click through the terms and conditions, you click through and don't agree to it, you suddenly have agreed to arbitration. and general mills has said we believe it can work for a variety of ways we're interacting with consumers. in social media, when they're coming to a website or buying our product, and they're pushing to see if they can get away with it in the courts. >> all right, so do you think it will spread to other companies seeing what general mills is doing, and other car companies, drug companies, will they do the same? >> i think over time it is likely to happen. but certainly there will be two other factors other companies will look to. the first is what is the consumer reaction to what general mills has done, because they're the first company to really step out and say we're going to be very aggressive on what we can do right now. and the second thing is what happens in the courthouses. because there are going to be a variety of lawsuits over this. that is for sure. and once those wind their way
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through the system at the district court levels around the country you're likely to see a variety of different decisions that will be bumped up to the court of appeals, and maybe the supreme court for resolution on this. >> so let me play devil's advocate, counselor and say why shouldn't a company be able to say you used my product, you play by my terms, you got a problem with my product? we'll dispute it. we'll resolve it, but not in front of a court, in front of an arbitrator, why can't they make that a rule of doing business? >> well, it seems like based on the recent developments in the law that may be the case over time. but traditionally it has been part of the negotiation between a consumer and company that we're going to engage in a transaction. and as a result of the transaction we're going to agree to the terms. whereas in this case you're just buying a product you have no idea what the privacy policy is on the website. and you're suddenly bound by the arbitration rules. and so this will really have to
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be resolved by the courts. >> real quickly, what could be the tradeoff for a company like general mills, consumer back lash, they won't buy their cheerios anymore? >> well, certainly you can buy them. a lot of companies are making them. i think the real issue is what is the effect on consumers? because if consumers are in arbitration there are several handicaps, the advantage of going to arbitration is it is usually quick, you get results cheaper, and both sides can live by that much quicker than the courts. but on the other hand you're giving up your right for punitive damages, the company is getting dramatic help for possible problems. >> thank you very much. and coming up, betting the farm. zinga is taking the franchise to mobile devices, they have a lot riding on it.
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we'll be right back. if you're an internet gamer, and addicted to farm games, this is going mobile, farm bill anywhere you could say. here is morgan brennan to tell us why it is such a big deal. >> reporter: just how big a deal is zinga's long-awaited farm bill social game? you might say life size. the social gaming company has decked out the headquarters in honor of the country escape launch. >> we're excited to finally bring farmville to our players. we know with our customer demographics that this is something they have been asking
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for. >> this is the first time zynga has launched a game for the flag ship franchise, making a game for facebook, where they first found fame. >> they found growth and modernization, obviously it is different, we believe a much bigger opportunity in the long run. and we're seeing that with kind of early results. >> 75% of the company's game development pipeline is now mobile first. and zynga which reports earnings next week expects earnings to pass desk top numbers for the first time. experts say this game needs to be a success. >> it is not going to be a good thing for farmville on mobile to be the number two or ten games, they need to be in the upper numbers. >> first offering from the new ceo don matric, he is leveraging farmville because it is the company's most successful franchise, with 400 million
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players globally and millions of bookings over the past five years. but the company faces challenges. it has been difficult to create that success with a new franchise. steep competition from other social gaming companies are causing risk. like privately owned super cell. still, analysts are cautiously optimistic about their move to mobile. and are seeing what it can yield. i'm morgan brennan in san francisco. seems that the ford mustang has become an iconic car? well, it almost has, 50 years ago today ford debuted the original mustang at the world fair, becoming the automaker's most successful launch since the model a. currently in its fifth generation, the 2015 mustang now on exhibit is a limited edition. ford will build 1900 of the
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models before the full production begins later this year. and today marks another anniversary, cnbc silver, the business world was radically different and the internet was still in its very small infancy, the trading was 11%, and the president of nbc at the time, bob wright, introduced it to a new groundbreaking financial channel. >> i'm bob wright, the president of nbc, and i would like to welcome you to the most significant programming effort they have ever undertaken outside of the network. cnbc. we have come a long way, the economy has nearly tripled in size, the price rising nearly 400%, as you can see the styles have matured a little bit along with the programming.
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>> nice hair style. >> there was more hair and less of me, i think. that is an interesting period of time. and i think the internet and access to the new york stock exchange for business reporters. >> and think about how that business has changed over time. amazing stuff. all right that is it for us, "nightly business report," i'm susie gharib, thank you for joining us. and i'm tyler mathisen, have a great night, we'll see you in for a special nightly edition of business report. ♪ senza fine
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next on "great performances"... andrea bocelli reunites with david foster in enchanting portofino to perform love songs on the italian riviera. ♪ tristeza ♪ por favor vai embora there's something for everyone as the great tenor delivers popular songs from around the globe. ♪ champagne ♪ na na na na... so get close to the one you love, and if you'd like to, sing along. ♪ na na na na ♪ na na na... join us for a romantic evening in italy with andrea bocelli -- "love in portofino."


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