tv Nightly Business Report PBS January 23, 2013 6:30pm-7:00pm PST
captioning sponsored by wpbt >> this is n.b.r. >> tom: good evening. i'm tom hudson. apple shares get bruised in extended hours trading after good, but not great quarterly results. >> susie: i'm susie gharib. from the debt fight in washington, to europe's financial struggles, the international monetary fund cuts its global growth outlook. >> tom: struggling to sell $500 handbags, coach wants to be a lifestyle brand, we look at what's troubling the luxury goods maker. >> susie: that and more tonight on "n.b.r."! >> tom: big profits from the biggest public company in the u.s., but not big enough sales for wall street. apple sold almost $600 million a
day of devices during the past three months. after the closing bell apple announced it earned $13.81 per share. that's down slightly from a year ago but well above estimates. despite a record $54.5 billion in revenues, that was just shy of expectations. >> reporter: perhaps no single company's earnings are eagerly anticipated nor as singularly important to investors as apple. it is one of the most widely owned stocks by mutual funds and it's earnings represent 5.6% of the earnings from all the companies in the s&p 500 stock index. apple's fiscal first quarter was the first full quarter the iphone 5 was on sale and the quarter saw the debut of the ipad mini. almost 48 million iphones were sold, a quarterly record. that's 29% more than a year earlier. the newest iphone was rolled out internationally at a fast pace, including china, which is increasingly becoming a
significant source of sales for apple. almost 23 million ipads were sold, up 49% from a year ago. apple said it sold every ipad mini it could make. and fewer mac computers were bought, sales of those fell 21%. >> tom: the company's outlook for revenue this quarter was disappointing, pushing shares down in extended hours trading. brian colello is an analyst with morningstar. he joins us from chicago. >> tom: brian, before we talk about that forecast, what do you make of the fiscal first quarter. some pretty big numbers reported. >> some big numbers, but a little lighter than consensus, around 48 million iphone units, 22 million ipad units, a little less than consensus, and a little disappointing to investors, and certainly when you have the forecast that was light on top of it, it makes for a disappointing quarter. >> tom: i can already hear those apple shareholders saying financial expectations are just impossible for apple to exceed.
they're so high. what do you say to them? >> well, i think investors may have caught up to apple's stunning growth, but perhaps the law of large numbers, i think growth is getting increasingly harder to achieve. i think the easy growth has already happened in the iphone in developed markets like the u.s. the next wave of growth will come from emerging markets, from china and lower-priced phones. so apple may have a harder time getting that sort of growth. >> tom: i think 61% of its business last quarter was done internationally. showing how important the international shares are. what about comply constraints that apple may have experienced. there was lots of talk about that with the apple iphone 5. are those restraints continuing. >> it looks like it weighed on the december quarter, the iphone 4 and there was a lot of demand for the cheaper version. it seemed like on a lot of
different levels, iphone wasn't able to execute. and that was surprising, given tim cook's strengths. that is not an area we think is weak. after steven job's paving. >> tom: and is that what we heard, the late forecast, being a little shy of what we expected. >> i think the forecast was weak. especially with the supply. you would think there would be a little bit of a catchup in the march quarter. but when the iphone launched in december of 2011, you had a strong quarter in china and overseas. and the forecast says that won't repeat. even the good results from the iphone 5 in december 2012 won't really translate to a great 2013. >> tom: you mentioned the launch of apple 5, 515 was the official close. would you be a buyer?
>> i can't comment on that right now, unfortunately, because we're still running through the numbers. >> tom: do you have any position in apple? >> no, we do not. >> tom: brian colello with us. an analyst with morning star. >> reporter: still ahead, today it was all about apple. but, in just one week r.i.m.m. reveals its much-hyped blackberry 10. we'll have a preview. >> susie: technology stocks led the way higher on wall street today, ahead of those apple earnings after the bell. ibm and google helped fuel the tech rally, thanks to their strong results last night. the dow jumped 67 points, the nasdaq added 10, and the s&p was up two points. also powering the rally, news that washington lawmakers passed a short term debt ceiling deal. the u.s. house of representatives gave the okay to a republican plan to suspend the debt limit until may 19. democrats in the senate now say they'll pass it too. darren gersh reports. >> reporter: the debt ceiling suspension came with a couple strings attached.
if senate democrats don't pass a budget-- something they haven't done for four years-- members of congress won't get paid until they do. >> this bill simply says, "congress, do your job." when i grew up in wisconsin, if you had a job and you did the work, then you got paid. if you didn't do the work, you didn't get paid. it's that simple. >> house democrats called the pay ploy a gimmick and said a 90 day reprieve from default simply moves the crisis back. >> for the last two years, we've heard from our republican colleagues economic uncertainty is bad for the economy. guess what? it is. and yet that's exactly what you are doing. another big dose of economic uncertainty. >> reporter: republicans shifted gears on the debt ceiling after a strategy session last week. worried that they have lost the public debate, republicans were clearly trying out a new message today. >> balancing the budget over the
next ten years means we save the future for our kids and our grandkids. it also means that we strengthen programs like social security and medicare and medicaid that can't continue to exist in current form without some kind of controls. >> reporter: there is just one problem. democrats argue the "no budget no pay provision" violates the constitution's 27th amendment which says any changes congress makes in its pay can't take effect until after the next election. >> we should not say to a member, "if you think the budget before you is not good for the country, vote against it and you won't get paid. if you think it's not good for the country, you better vote for it because you have a mortgage payment due. >> reporter: senate democrats said they would pass the debt ceiling extension and they also promised to pass a budget which is sure to be very different than the one house republicans produce this spring. darren gersh, "n.b.r.," washington.
>> tom: in the engine that is the global economy, europe continues to be the break. while the u.s. emerging markets and even japan are expected to see slow but study growth this year, the eurozone will shrink for the second year in a row. in an updated prediction, the i.m.f. forecast the global economy to growth 3.5%. that's down slightly from its earlier prediction back in october, thanks in part to the recession continuing in europe. oliveer blargchard joins us. are the policies addressing the recession not working or does it
just need for time. >> they are working. the adjustment is very tough. i just heard the numbers you gave. the negative numbers -- these countries have very tough adjustments to make. we know they have to become more competitive. they have a large fiscal deficit they have to eliminate. this is tough, and so these countries have neglecnegativegoals this year. the core countries have the same problems, but not to the same extent. nothing great, between 0% and 1%, but one has to make the difference, too. things are working, and working slowly. >> tom: you talk about the peripheral of europe, greece, spain, in particular, and italy. you warn that, quote,"the risks of prolonged stagnation in the euro area as a whole will rise if the momentum for reform is not maintained." so the core still remains at risk, correct?
>> they are at risk. there are a number of policies that have to be put in place. for the most part, they have indicated what they intend to do. they just have to do it. >> tom: are you referring to government spending cuts or or the central bank continuing with the firewall and protection. >> i was thinking about two things. the program that the b.c. b.has put in place, which has not been taken up. but if it needed to be taken up, i think it should. the other is the progress on the banking union, which is a really important thing. they have taken the first steps, jut the first steps. there is quite a way to go. >> tom: let's talk a little about the united states, because you do address the u.s., and obviously congress and the president keep putting off decisions on spending cuts for america's government budget. how does that postponement impact your forecast? >> we have assumed that basically the fiscal confrontation for this year will be about 1.25%.
it could be worse. the scenario under which it is worse, is the case in which the administration comes in. if administration comes, the cuts in spending, there will be and additional half a percent. i think we have a forecast of 2%, and a decreased goal of 1.5%. >> tom: slow but steady growth in the united states is the overall forecast. oolivier blanchard is with us, with the international fund. >> susie: mcdonald's served up better than expected fourth quarter earnings today. the fast food giant earned $1.4 billion, or $1.38 a share. that was a nickel better than expected. as well as a nickel better than the same period last year. still, the company faces some supersized challenges. erika miller reports. >> reporter: it may seem surprising, but europe is actually mcdonald's top market, accounting for nearly half of the company's revenues.
but the region's economic problems are taking a toll on mcdonald's bottom line, as fewer europeans dine out. >> the european economy is something that is going to take a long time to recover. so, i wouldn't look with great expectation to europe. maybe its decent this quarter. but i don't think it's something that's going that's going to be a big driver over the next couple of years. >> reporter: operating income in europe slipped 1% last year, compared to a 2% gain in the u.s. the asia pacific, middle east and african category did the best. but the weak global economy is only part of the problem. the fast food giant is facing tougher competition from traditional fast food rivals. and, in the u.s., more and more people are dining at fast casual chains like chipotle and panera. >> we know consumers are gradually moving away from the greasy food to fast casual. they'll pay a few more dollars and wait a few more minutes to get a healthier, better tasting meal. >> reporter: but there are still plenty of die hard fast-food customers.
to lure them, mcdonalds has been re-emphasizing it's dollar menu and value meals. the chain has also been renovating restaurants, extending store hours, and introducing new menu items. that has helped push up mcdonald's shares the fall. but they are still down about 6% in the past year. still, motley fool owns the stock. >> i think it's an attractive stock in the market. but i would be a buyer now, as a long term investor at these prices. >> reporter: 2012 was tough, and 2013 is not expected to be much easier. in addition to economic pressures, mcdonalds expects food and labor costs to rise, both of which eat into profit margins. erika miller, "n.b.r.," new york. >> susie: a big "earnings miss" crushed shares of coach today. the luxury retailer reported a profit of $1.23 a share, a nickel below estimates. revenue rose 4%, but also below expectations. shares plunged more than 16% on the news. the company's c.e.o. blamed the
results on "challenging" holiday sales and says coach is now transforming to a "global lifestyle brand" focused on accessories. dan hess joins us now. he's c.e.o. of merchant forecast, a research firm specializing in retail strategy. dan, a lot of people might not be sure what a global life-style brand in and what does it mean that coach will be doing differently than it is doing right now? >> well, a global lifestyle brand is typically a brand that tries to cover every aspect of a customer's life, whether it is her apparel, her shoes, her accessories, even her cosmetics and fragrances. it also tries to appeal to every part of a woman's day, whether it is her morning, her work, her evening, her play. sciewrmt>> susie: so you think that is a successful strategy?
does that make sense to you? >> i think it is a little concerning when you have a handbag company trying to be something other than a handbag company. but it is necessary in order to coach to grow. certainly brands like ralph lauren have succeeded with starting with items and moving on to become a great lifestyle brand. i understand why coach is choosing this strategy. but it might be a tough road ahead. >> susie: one of the areas in terms of handbags are the accessories that have become very popular are companies like tory birch and michael kors is a really popular brand, and mark by mark jacob. is it that the coach name has sort of lost its cache? it is just not as hot a brand as it used to be? >> i think that is part of it. you've got both a lot of new competition in that same price point as coach that didn't exist several years ago. certainly michael khors is a big one, as well as tory birch. and also you've got a brand that isn't quite as
popular. doesn't hold the same cache as it did several years ago. i would imagine visit a brand problem, in our view, is a lot worse than having a competition problem. >> susie: that's interesting, and coach is talking about expanding more in china. we know how brand conscious chinese consumers are. how will coach do in china? is it hot enough of a name? >> well, their business is very strong right now en china. the men's business and their business in china are the two strengths right now of this brand. now, going forward, i think the brand does have to remain popular in the united states and has to continue to gain market share in order to justify a global position and maintain that high level of authenticity. however, right now in china, based on the last quarter and the last couple of years, it is still a hot brand. >> susie: all right. we'll see what happens. thanks so much, dan, for
coming on the program. >> thank you, susie. >> susie: dan hess, c.e.o. of merchant forecast. >> tom: in the "market monitor," >> tom: the major stock indices climbed higher thanks to some big technology stocks. it was a very narrow trading range, just six points, with the index finishing higher by a fraction. still, it was enough for it to close at a new five year high. volume fell from yesterday's pace. 638 million shares on the big board. 1.7 billion on the nasdaq.
the information technology sector led today's gains, up 1.2%. the material sector was among the laggards, falling a modest 0.4%. while the market awaited apple's results after the closing bell today, big blue was in focus during the regular trading session. shares jumped 4.4% as trading volume tripled. i.b.m. turned in better than expected results last night, and had a more encouraging outlook. shares are at their highest price since the company's last earnings report. google's 5.5% rally was the best among the tech sector in the heels of its optimistic earnings last night. these two helped the nasdaq 100 tracking exchange traded fund move to a three month high, but that was before tonight's news about apple's financial results, and apple is the biggest weight of the fund. three semiconductor makers focused on different types of chips were moving. texas instruments fell 1.1% on heavier volume. late yesterday it reported demand continued to weaken. advanced micro devices was up 11.4% after losing less money than feared.
and l.e.d. chip maker cree shot up 22%. earnings were strong thanks to new products. the focus was also on netflix in late trading. the streaming media company had been expected to lose money in the fourth quarter. it didn't. instead, it earned $0.13 per share. while it's a fraction of what it earned a year earlier, it was clearly better than the loss wall street was expecting. netflix credits the profit to more people buying tablet computers and smart t.v.'s, then subscribing to netflix. after closing up 5.5% during the regular session, the stock skyrocketed more than 30% higher in extended hours trading. some credit that big jump to short-covering, when a trader has sold the stock short expecting it to drop in price, instead they have to buy the stock to close their position, adding to a rally. a move over $133 would take netflix to a new 52 week high.
from new businesses, to old industries. railroad giant c.s.x. saw its earnings drop from a year ago as shipments of coal declines. but its profits were just enough to beat wall street estimates. shares were up 4.2% to their highest price since september. a frozen pizza recall had traders and investors selling shares of organic-food maker annie's. the company is worried fragments of metal mesh could be in some of its rising crust frozen pizzas. annie's said it has not any fragments nor received any complaints. still, the news hit the stock sending it down 4.9% on heavy volume. the company came public just nine months ago at $19 per share. it closed at $36.59 after today's selling. four of the five most actively traded exchange traded products were lower with only the s&p 500 tracking fund up a fraction. and that's tonight's "market focus."
>> susie: now that earnings from apple and google are out, the next big tech event is the launch of rim's "blackberry 10" next wednesday. analysts and reviewers have been testing the much-anticipated new operating system. so far the reviews have been positive. but, will bb-10 take even a nibble from apple and android's hold on the smartphone market? suzanne pratt reports. >> reporter: there are sneak peaks of blackberry 10 all over the internet. there's a touch screen version, and one with blackberry's much-
loved traditional qwerty keyboard. but, we won't know exactly what bb 10's operating system and hardware truly looks like until the big reveal; happening in cities around the world next wednesday. those who have played with it generally like it, but doubt it will make much trouble for smartphone giants. >> it is has a lot of interesting little features. but, the big question that they're struggling to answer is why should someone give up the hundreds of thousands of apps on their iphone or android for the ability to quickly peek into their email. >> reporter: for its part, >> reporter: for its part, rim claims 70,000 apps will be ready on launch day. but that number falls way short of what's available on the competition. let's be clear, blackberry users in the u.s. are less than 10% of the smartphone universe. iphones and google android phones make up a whopping 88% of the market.
and, so even if bb-10 is a huge hit, experts say the best that rim can hope for is that diehard blackberry users will upgrade to the new phones. still, businesses, the core of blackberry users, are excited for the new devices. reportedly nearly 2,000 firms have signed up for the bb-10 training program. >> blackberries have always been very secure and very corporate manageable. they come in a package and with features that make it departments very comfortable, so that will still be a plus for blackberry. >> reporter: it wasn't long ago that blackberries were king of america's smartphone universe. today, it's safe to say the future of rim is scrolling on the strong release of blackberry 10. suzanne pratt, "n.b.r.," new york. >> susie: in the money file tonight, saving money on your taxes and boosting your retirement security. here's finra's gerri walsh. >> with washington roiling from one crisis to another, many
americans feel uncertain about the impact of changing tax rates and how to achieve retirement security in a fragile economy. but, especially at times like this, workers should focus on what they can control. no matter your tax rate, contributing to a 401(k) can help you save money on taxes and boost your retirement security. your contributions to a traditional plan are not included in your taxable income, and earnings on roth contributions are tax-free. the good news for savers is that in 2013 401(k) limits go up to $17,500, and employees aged 50 or over can contribute an additional $5,500. but, at the end of 2011, the average account balance in 401(k)s nationwide was just under $60,000. if you're not sure you're doing all you can to lower your taxable wages and secure your retirement, finras new 401(k) save the max calculator can help you do the math to find out. i'm gerri walsh.
>> tom: join us tomorrow on twitter for a tweet-up, that's when you meet together on twitter. we'll talk about teaching kids about saving money. alisa weinstein, co-founder of helpkidsfly.org and author of "earn my keep" will be our guest. here's what you do: follow us on twitter at bizrpt, and use the tweet-up hashtag "financial education". that's tomorrow, thursday at 3 pm eastern. susie, we're really looking forward to chatting it up with alisa tomorrow, she's also our kids & cash commentator tomorrow night. that's "nightly business report" for wednesday, january 23. have a great evening, you too susie.
>> susie: goodnight tom, thanks for watching everyone. join us online at: www.nbr.com and back here tomorrow night. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> join us anytime at nbr.com. there, you'll find full episodes of the program, complete show transcripts and all the market stats. also follows us on our facebook page at bizrpt. and on twitter @bizrpt.