tv Nightly Business Report PBS May 22, 2012 7:00pm-7:30pm EDT
>> this is n.b.r. >> tom: good evening. i'm tom hudson. the housing market springs to life as existing home sales and prices move up. >> susie: i'm susie gharib. home suppliers are heating up, too. we meet the people behind pella windows. >> tom: but best buy continues to struggle as consumers use the stores to check out electronic gear before buying elsewhere online. >> susie: that and more tonight on "n.b.r." it looks like america's fragile housing market may be building a
foundation. sales of existing homes rose 3.4% in april, with gains coming in all four regions of the country. but, as suzanne pratt reports, a full recovery in housing is still a long way off. >> reporter: for all those optimists out there, the latest snapshot of the housing market is something to get jazzed about. sales of pre-owned homes rose to an annual rate of 4.62 million units last month. that's the highest level in nearly two years and up 10% from last april. >> some people are starting to come back into the market that were sitting on the sidelines. it's also the spring buying season, so it's typically the time that we start to see numbers rise.
>> reporter: speaking of rising numbers, the median sales price for homes sold in april jumped to $177,400, up more than 10% from last year. and that's the biggest price gain in more than six years. but that tidbit comes with an asterick; it turns out fewer foreclosures are responsible for the big jump in prices. and two million foreclosures are still expected to hit the market this year, which does not bode well for the housing recovery. >> we're muddling along. it's touch and go right now. there are some areas that are doing well, but, overall shadow inventory is a big risk. people don't know what the job market is going to look like, which makes them very insecure in buying a home. >> reporter: don't forget those super low mortgage rates. they should be helping people buy a lot more homes, but they're not. credit and down payment requirements are still high. suzanne pratt, "nightly business report," hoboken, new jersey. >> tom: still ahead: veterans returning to the u.s. workforce. tonight, an iraqi war vet with a full-time job, going to college and working to fulfill a business plan made with a fallen friend. captioning sponsored by wpbt "nightly business report" is brought to you by:
>> tom: well, what looked like a day of higher stock prices didn't turn out that way. susie, a morning stock rally fizzled by the afternoon on new information that greece might give up on the euro currency. >> susie: reportedly, tom, greece's former prime minister papademos said late today that the country is considering preparations for an exit from the euro zone. and papademos also cautioned that dropping the euro would have "catastrophic" economic consequences for greece and the rest of the euro zone. so, by the close, here's how the u.s. markets stacked up. the dow lost 1.5 points, the nasdaq fell eight, and the s&p was up a fraction. well, one stock taking a hit late today: dell. shares fell as much as 12% in after hours trading on disappointing quarterly results dell earned 43 cents in the first quarter, three cents below analyst estimates. revenues also missed estimates:
$14.2 billion, a half billion below expectations. and joining us now to analyze thosee numbers: andrew tonner, technology analyst at the motley fool. so, andrew, investors obviously disappointed with the dell numbers. what does the outlook look like >> they had a rough qufrt, untomorrow. i think it was a rough picture for them going forward as well their guidance was low, and it was what they were looking for, coupled with the rough quartered, and trading after hours. >> susie: so what's going on at dell? we know that michael dell is trying to reshape the company o. one end he's dealing with apple. and on the other end, low cost producers like linovo. is he on the right track? >> dell is in a challenging
position, like you said. trying to break into a difficult industry going forward into the enterprise space, and really receiving a lot of competition from below cost producers like acers, and linovos much the world, and apple moving towards them. they're in an extremely challenging position right now, and they're trying to reshape the company in a big way. i think the results we saw today were indicative it's a rough road going forward. >> susie: do you think he's going in the right direction? i'm talking about michael dell. 5, 10 years from now, what is dell going to look like? >> i think the current situation is forcing his hand here. they could have been a little more proactive in making these moves, but i absolutely think these are the right moves. that said, i think it's a challenging move to execute on. it won't be easy to break into an enterprise space or move into tablet which michael dell
has been adamant he doesn't wanted to give up on. >> susie: so the questions of whether it's wofrgt it to own dell stock? it fell sharply after hours. is it a bargain? is it worth the buy at $13? >> you know, it's a cheap stock. that's what's kept a lot of people circling around it. but with so much uncertainty and question marks about where they're going and how they're going to get to the blueprint that michael dell laid out, i think the stock is probably too risky even at the cheap multiple we see it trading today. >> susie: about about hewlett packard, and it's expected meg whitman is going to announce big job cuts. 25 to 30,000 people cut from the workforce. what's your take on how hp is doing, and what can we expect tomorrow? >> i think we can expect -- it's well publicized what to expect. the big story line with hp is
no job cuts -- those job cuts, 25 to 30 thousand, 8% of the work force. it's in the headwinds it's encountereding, and i think it's a smart move. and some of the recent moves meg whitted man has made are good moves but i don't think address the questions for the company. cost saving, and eliminating job kutds could save $1.2 billion in expenses for hp, and we saw them combine pc and printer division, the two largest divisions. and synergies and cost savings as well. we you like a company that's kourntding a globally financial period to cut down on margins. at the same time, it doesn't really address any of the issues they have going forward. >> susie: i have to cut n. we have to leave it there. any disclos uss to make about hp or dell? >> no, i don't own either. >> susie: okay. andrew conner from motley
fool. thanks a lot. >> tom: bold changes to come. that's what best buy promises after a bumpy quartered for the electronics retailer. best buy beatan lifts, but the numbers do not include all the costs of restructuring business, in closing dozens of stores. excluding the charges, best buy made 72 cents a share. that's 13 cents ahead of estimates. revenues were up two percent up to 11.6 billion dollars thanks to an extra week in the quarter. the analyst at ngb productions with us from the nasdaq. brian, we've seen a shifted going on, and products buying on line. how should best buy respond? >> do what many others have done. close stores. they're not driving the traffic you would expect by havinging hulking shrines of retail in the middle of nowhere. build new things in the stores
and create scarsity. for example, look at gap. they've closed stores. vu to search for a gap store. and i think right now the competitive market is so challenging. put it this way, every fulfillmented center that amazon opens up, that's a dagger through the heart of best buy. you see apple stores opening up. that's a dagger through the heart of best buy. it's challenging. >> tom: so if best buy is to address the demands, what is it, price or service? >> right now they're competing on price. price is the differentiating factor for the consumer. the consumer is willing to trade experience which has always been incredible for best buy, for price. and look at amazon earnings. sales uf 30% driven by units. amazon is going to drop priepss and care less about margins. when you operate amazon and best buy, vu to operate distribution facilities. a lot more cost overhead, and
even though best buy is lowering price, the margins erode. >> tom: what category should best buy focus on to improve business for shareholders? >> best buy -- i think they need to focus to appliances -- seriously. they need to focus on electronics at this point. that's what they're doing. they're building cutouts to drive customers from mobile phones. and you can't drive a business selling mobile phones. it's competitive. they're banking on selling services to the masses. that's not good. >> bby. close to a three and a half year low. could it live up to his name? >> i wouldn't touch it with a 10 foot poll pole. if you're a shareholder, you have a company companies a billion dollars into a stock that's lower because they have no sustainable top line revenue. if i'm on the outside looking
in, their earnings may not grow for five years, and 10 years may not be in business. >> are you short that stock, ryan? >> we have no position. >> thanks, brian. >> susie: another day, another investigation into what went wrong at j.p. morgan chase. this time, it's the commodity futures trading commission looking into that huge trading loss at the big bank. regulators testifying before the senate banking committee also said the blow-up at j.p. morgan shows the need for even tougher rules to protect taxpayers. darren gersh reports.
>> reporter: for regulators, j.p. morgan chase's multibillion-dollar trading loss is both a real-world lesson and a political shield to fend off those who want to weaken oversight. >> it would be wrong for us not to take this example that's a real-life, real-world example of what can happen to use this example and see what the impact would be of all the things we've propose to do. >> reporter: j.p. morgan has lobbied hard to bring down the cost of complying with dodd- frank financial reforms, but gary gensler, a key regulator of the derivatives markets, argues there should be no special breaks for overseas offices of u.s. financial firms like the london trading unit that lost j.p. morgan so much money. >> yes, there are costs on financial institutions. yes, there will be differences overseas. but the bigger cost is if we let the american taxpayer be at risk. >> reporter: gensler also said regulators need to take a tough look at when a bank's risk management turns into a profit play. >> hedges to really be hedges generally lose money generally
about as many days as they make money, because they are hedging something. the position is going up, the position makes money, the hedge loses money. >> reporter: republicans on the senate banking committee argued more rules will simply drive trading overseas. >> the better solution is, require more capital so we can let people do what they want to do. let the people in the marketplace make the decision they will make, and then let them live with the consequences without having the taxpayer at risk. >> reporter: to make sure investors were not put at risk, the securities and exchange commission says it is checking whether j.p. morgan chase's first quarter earnings report was accurate. darren gersh, "nightly business report," washington.
>> tom: a new chapter in space flight got off the launch pad early this morning as the first commercial rocket made its way into space. the unmanned "falcon-9" rocket launched from nasa's cape canaveral. it's carrying 1,200 pounds of supplies headed for the international space station. space exploration technologies, otherwise known as space-x, is the private company behind the launch. co-founder of paypal and tesla motors, elon musk, is the man behind space-x, but nasa also helped fund the project. it's a milestone, as u.s. budget cuts turn much of nasa's work over to the private sector. >> this is the beginning of what could be an industry that will be incredibly exciting to watch. that will be an industry that you can invest in, an industry that makes a difference. an industry that inspires young people.
an industry that... that literally creates endless economic opportunities for our country and for the world. >> susie: but commercializing space comes with a big price tag. today's launch alone has cost more than $1 billion. >> tom: stocks struggled to stay positive throughout much of the session until the last hour of trading. around 3:00 p.m. eastern time, a former greek prime minister said greece leaving the euro currency was being considered. that sent prices plunging. but in the final ten minutes, the s&p 500 index found buyers to end a choppy session up a fraction. volume was up on the big board from yesterday, with 843 million shares trading. it dropped a little on the nasdaq to 1.9 billion. limiting the downside, the financial, utilities and consumer discretionary sectors. none of them managed to gain more than 0.7%. almost two weeks after disclosing its multibillion- dollar loss and a day after
canceling stock buyback plans, j.p. morgan shares were the big winner among financial stocks. perhaps it was some short- covering as volume doubled, with the stock gaining more than 4.5%. it remains well below the price it was trading at before it admitted to a big trading loss earlier this month. while energy stocks held their own, patriot coal continues coming under significant pressure. pcx shares lost a third of their value today as it works to restructure its finances. the coal miner has suffered under falling demand for coal as a result of competition from low natural gas prices. losses have piled up. it's shutting mines and cutting jobs, looking to save cash. clothing company ralph lauren is the latest consumer brand to warn about the impact of europe. despite that, though, the company continued to show double-digit earnings growth last quarter. rl shares were stronger by almost 3% after sinking to five- month lows last week.
the company predicts the pace of its sales growth to slow due to europe, one of its key markets. the firm doubled its quarterly dividend, helping limit the damage from a lower outlook. fellow retailer urban outfitters jumped 7.5% thanks to a stronger than expected quarter. warmer weather helped its first quarter business, and it sold more items without having to discount them. and shoe seller d.s.w. popped almost 10% to a new high. stronger than expected earnings and financial outlook fueled the rally. just a few years ago, netflix was one of the hottest stocks in the market. as more people were signing up for its streaming video service, the stock increased tenfold from 2008 through the middle of last year. but the stock continues to have a tough time. after today's 5.5% fall, it's at its lowest price since last december and down more than 70% in the past year. our e.t.f. market flash finds a split market. the s&p 500 and financial sector
funds were stronger while the nasdaq 100, russell 2000 and emerging market e.t.f.s ended in the red. and that's tonight's "market focus." >> susie: as we mentioned earlier, april showed a pickup in home sales, but whether that will translate to bigger sales of home building supplies remains to be seen. diane eastabrook takes us to pella windows, a family-run business in the heartland surviving and thriving in the housing market's slow recovery. ( birds chirping ) >> reporter: quiet pella, iowa, has a unique view of the nation's housing market.
for 91 years, pella corporation has been building windows and doors for american homes. >> this digit here would tell us where it's going. >> reporter: on the plant floor, president and c.e.o. pat meyer tracks orders. it's a great indicator of how home sales are fairing. >> in the oil patch in texas, our business is much stronger there. in certain segments, the multi- family is busy for us right now. so, it really depends on the segment of the market and geography where the strength is. >> reporter: pella is a family- owned company that survived a depression, a world war and several economic downturns, and during those times the company never laid off a worker... until a few years ago. the collapse of the housing market caused demand for windows and doors in new homes to plummet from its peak in 2006. replacement demand has also contracted. that forced meyer to layoff 20% of pella's 10,000 workers in nearly a dozen plants. that must have been a tough call to make.
>> very. most difficult decision i've ever had to make. it's... people are our most important asset. i mean, i know that's cliché, but, at pella, it's right in our mission and in our vision statement. >> reporter: innovation, even in a recession, is also part of pella's vision. the company has improved energy efficiency in its windows and doors. it's also linking its products to smart technology. >> so, this is sending a signal through the cloud to our device and able to control our windows and doors from a shading standpoint. >> reporter: while innovation is propping up sales, meyer fears foreclosures and falling home values could continue to weigh on pella for awhile. >> in residential, we would call normal maybe a million starts. and we don't see that in our planning horizon, which is one to three years >> reporter: and for this product of america's heartland, that means persevering until the next building boom. diane eastabrook, "nightly business report," pella, iowa. >> tom: as memorial day approaches, this week, we're looking at veterans returning from duty and finding a tough economy back home.
the average age of someone signing up for the army is around 21 years old. tonight, we meet one young veteran who returned home wounded but determined to fulfill his entrepreneurial dream in the years ahead. 25-year-old josh berlongieri plays with his two-year-old son and his wife on a sunny morning in hollywood, florida. after five years in the army, including 15 months in iraq, he has a full-time job and is going to college. but it almost didn't turn out this way. berlongieri was a specialist infantryman in the army. on september 4, 2007, he was in the second truck of a five- vehicle convoy driving along route predator, one of the most dangerous roads in baghdad, when he heard a blast. >> we look up, and the front lead truck is completely disintegrated. blown up, smoke everywhere. people are screaming, and you can see everything going on. >> tom: four soldiers died in the blast, including berlongieri's best friend, specialist david lane. >> i was the second one that got out there, and i pulled david lane out, what i thought was him.
it was only half of him. >> tom: this is berlongieri a few hours after the blast, remembering the fallen soldiers. he and his friend planned to open an auto repair shop after the military. they even had t-shirts printed up while they were in iraq. >> september 4th was a life changer. like, i don't take anything for granted anymore. you don't know how it is until you don't have it. i guess you could say. >> tom: berlongieri was injured in that attack. after surgery and months on crutches, he was given a medical discharge with honor, but he found it tough finding work after the job security of the army. >> you know you're going to have a paycheck, you're going to have a house. you have your full medical. and you get out, and you're like, "okay, i just got all that taken away from me. what i am supposed to do?" it... it's very rough. >> tom: berlongieri went on to get security licenses and now makes more than $12 an hour as a bank security guard. and he's studying criminal justice in college.
>> again! >> again? had i not go in the military, ... i was disciplined, but at the same time i was living paycheck to paycheck, not knowing what was going to happen the next day. we have a very nice saving account. we're young. i'm not even 26. but we've learned, save. not stress, but save. every little bit counts. >> tom: do you ever think back to those plans you were making with david in iraq? >> always. i still want to do that shop later. it will still be called berlane's automotive, and it will have his picture, and it will say in rememorance of him. >> susie: our look at veterans and hiring continues tomorrow on "n.b.r." we visit a program training service members for civilian jobs before the soldiers even leave the military. it's the biggest game in the world and one of the hottest spots for advertising, but general motors is saying "no" to more ads during the super bowl. rick horrow weighs in with tonight's "beyond the scoreboard." >> reporter: despite being the third-biggest super bowl advertiser over the last decade,
general motors announced it would not run commercials in next year's game because spots are getting too expensive. cbs reportedly is selling a 30- second ad in the broadcast for $3.8 million, up 9% from what nbc averaged during the 2012 super bowl. according to kanter media, g.m. spent in the last decade an estimated $82 million on super bowl commercials. pulling out of the super bowl likely is tied to g.m.'s plans to cut $2 billion from its chevrolet brands marketing costs over the next five years. and while g.m. would like the move to be a statement against the rising cost of sports advertising, the story is really irrelevant outside of the company's detroit headquarters. sporting events remain one of the best ways to reach a live tv audience, and the super bowl in particular has set tv viewership records in each of the last three years. and for those reason, cbs undoubtedly will find someone to buy the four spots g.m. had last year, possibly even one of the eight other car manufacturers
that advertised in the game. and so, while g.m. may be saving money for its shareholders, it's unlikely to cost cbs shareholders any business. i'm rick horrow. >> tom: finally, it's only been trading for three days, but already mark zuckerberg is losing big money on his facebook stock. he was all smiles last friday as he kicked off trading in the stock. since that launch, his shares, along with those of every other stockholder, have lost 18% of their value. his net worth has fallen by about $3 billion. but still, susie, he made another investment over the weekend: marrying his college sweetheart, priscilla chan, in a backyard ceremony. >> susie: it was a week of milestones, because she also graduated from medical school around the same time. anyway, thanks for watching, everyone. see you >> see you online. at www.nbr.com and back here tomorrow night.