xfdce NIGHTLY-BUSINESS-REPO-00

Show: NIGHTLY BUSINESS REPORT>

Date: January 27, 2004>

Time: 18:30:00>

Tran: 012700cb.118>

Type: SHOW>

Head: Nightly Business Report>

Sect: Business>

Byline: Paul Kangas, Susie Gharib>

Guest: Charles Gabriel, Lionel Barber>

Spec: Business; Economy>

Time: 00:00:00>

PAUL KANGAS, NIGHTLY BUSINESS REPORT ANCHOR: The prosecution says she`s guilty, the defense says she`s innocent. Now, the jury will decide. Opening arguments begin in the securities fraud trial of lifestyle guru Martha Stewart (MSO). We`ll have the story.SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Now the voters will decide in New Hampshire. The polls are open in the nation`s first presidential primary. We`ll get some analysis on what issues investors should pay attention to from Prudential`s man in Washington.

KANGAS: They`re lean, mean earth-moving machines, and they`re helping move Caterpillar`s (CAT) profits higher these days. We talk to the company`s incoming CEO about how he plans to keep CAT on the prowl.

GHARIB: And being a “copy cat” has its advantages. Just ask Xerox (XRX). Its shares hit a new 52-week high after reporting earnings boosted by higher sales of color printers and copiers.

KANGAS: I`m Paul Kangas.

GHARIB: And I`m Susie Gharib. This is NIGHTLY BUSINESS REPORT for Tuesday, January 27.

Good evening, everyone.

Jurors in the Martha Stewart trial listened to opening arguments for three hours today. The domestic diva and her Merrill Lynch (MER) broker are charged with obstruction of justice and lying to investigators in connection with her sale of ImClone Systems (IMCL) stock. Prosecutors said Stewart lied about why she sold the stock and Stewart`s lawyers told the jury that the whole case is based on speculation.

Erika Miller reports.

ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Martha Stewart smiled faintly as she walked up the courthouse steps. But in the courtroom, her face showed no emotion, as assistant U.S. Attorney Karen Patton Seymour outlined the case against her. In opening arguments, Seymour told jurors that Stewart lied to investigators about the reason for the sale of her ImClone stock in December 2001. The government alleges that Stewart sold the shares after being tipped off that ImClone`s founder, Sam Waksal, and his family were dumping their shares. Seymour also claims that Stewart tried to illegally prop up her company`s stock price by misleading investors about the reason for the sale.

JACOB ZAMANSKY, ATTORNEY, ZAMANSKY & ASSOCIATES: I think the government has a strong case built on circumstantial evidence that Martha Stewart lied to the government when she was being investigated and then tried to cover up. As we`ve seen in a lot of things since Richard Nixon, usually the cover up is worse than the actual offense.

MILLER: In his opening statement, Stewart`s attorney, Robert Morvillo, asserted his client`s innocence. Speaking loudly at times and almost in a whisper at others, Morvillo said the prosecution was based on quote, “speculation, surmise and guesswork,” endquote. He said Stewart had a longstanding agreement with her broker, Peter Bacanovic, to consider selling her ImClone shares if the price fell below $60. Morvillo also attacked the credibility of the government`s star witness, Douglas Faneuil, Bacanovic`s former assistant. Faneuil`s motives were also questioned by Bacanovic`s attorney, who pointed out that Faneuil has a plea agreement that promises leniency in exchange for testimony. Faneuil is expected to testify Thursday, since the court will not be in session tomorrow because of an expected snowstorm.

SEAN COFFEY, ATTY., BERENSTEIN, LITOWITZ, BERGER & GROSSMAN: The case rises or falls on the testimony of Doug Faneuil and whether the jury believes him. So, it has always been about destroying his testimony. And I think that`s the name of the game for the defense here.

MILLER: One of the big unknowns in this case is whether Martha Stewart will take the stand to testify in her own defense. If she does, legal experts say her credibility will likely be the determining force in the jury`s verdict.

Erika Miller, NIGHTLY BUSINESS REPORT, New York.

KANGAS: After the bell today, Amazon.com (AMZN) made book on its fourth quarter 2003 earnings, coming in right on target. The online retailer posted pro forma earnings of $0.29 a share, that was a dime better than last year. Sales grew 18 percent during the quarter, its best holiday showing ever. Amazon shares closed down $1.29, at $55.74. Amazon also upped its revenue outlook for 2004. But things weren`t so up this morning on Wall Street. Stocks opened in retreat as profit-takers moved in after yesterday`s big rally, despite good earnings from Dow component Caterpillar, which we`ll hear about in a moment. After an hour of trading, the Dow was down 16 points and the NASDAQ Index down 6. The market headed still lower, despite a rise in the Conference Board`s January consumer confidence index to the highest level since mid-2002. In early afternoon, then, the Dow was down 77 points, the NASDAQ off 33. Stocks could not shrug off that persistent selling, so they closed near their worst levels of the day. The Dow Industrial Average ended with a 92.5-point loss at 10,609.92. The NASDAQ Composite lost 37.75 points to 2116.04. The Standard & Poor`s 500 Index down 11 1/3, ending at 1144.05. Over in the bond market, the 10- year note rose 14/32 to 101 12/32, putting the yield at 4.08 percent.

GHARIB: The road to the White House winds through New Hampshire tonight, as voters there are at the polls today in the first major presidential primary. Democratic frontrunner John Kerry talked to voters in Manchester this morning, just one of six stops around the state today. The other candidates also spent the day trying to pick up votes in order to select the state`s 22 national convention delegates. The first votes, by the way, were cast just after midnight in an annual ritual in Dixville Notch and Hart`s Location, New Hampshire. Joining us now to talk more about the New Hampshire primary: Charles Gabriel, senior Washington analyst with Prudential Equity Group.

Hi, Chuck.

CHARLES GABRIEL, SR. WASHINGTON ANALYST, PRUDENTIAL EQUITY GP.: Well, the polls have been showing that Senator John Kerry is going to be the winner in the New Hampshire primary. I don`t know if you agree with that, and if you do, by how much of a margin, what`s your prediction?

GABRIEL: Well, that`s a big question. There has been a wide divergence in the polls and some of the tracking polls in the last couple days have shown that former Vermont Governor Howard Dean is really closing very quickly, particularly gaining among women over the age of 45, evidently his gambit to bring his wife into the picture has paid off a bit. So it will be very important, because in fact Howard Dean could win the expectations game, he could – just by finishing second as a close finisher here, he could mirror what Bill Clinton did in 1992 after the Gennifer Flowers scandal, he finished number two and went on to win, as you know. I think the other thing that Wall Street will be watching very closely is this really spirited race for number three between Senator John Edwards and Joe Lieberman and General Wes Clark. Clark was the very strong-running number two behind Dean just 10 days ago, and Edwards came in with a bounce, we`ll be watching that very closely as well.

GHARIB: Well, let me ask you something else about Wall Street, a lot of the money managers and the market strategists that I`ve been talking to are saying that part of the drive we`ve seen in the stock market rally recently is that there is the feeling that President Bush is going to have the upper hand in the November election. Wondering, you know, what is your analysis on that point of view?

GABRIEL: Well, I think that`s true. We billed Bush as the equity market candidate – the equity market-friendly candidate. We think that Howard Dean or John Kerry or any Democrat would be the bond market`s best friend. For these reasons: The markets have already basically paid for the recovery they`re anticipating to become stronger based on the Bush tax cuts; they certainly like the Bush pro-business regulatory agenda; and of course, every one of the Democratic candidates proposed to either partially or fully repeal the Bush tax cut. So I think the stock market would like to see George Bush stay in place. On the other hand, the bond markets would love to see the tax cuts repealed, they wouldn`t mind if that weakens the economy a bit. And they would certainly love a little bit of gridlock. So that`s where we were. It`s interesting and perhaps coincidental, but nevertheless, that John Kerry`s surprising come-from-behind victory in Iowa and John Kerry being perceived as the tougher challenger for George Bush just happened to coincide with the first down week in the stock market in nearly two months.

GHARIB: Let me ask you something about corporate America`s reaction, we know that Senator Kerry has been campaigning on a strong anti-business message. How do you feel that corporate America would feel about a Kerry presidency?

GABRIEL: I think that they would adjust to a Kerry presidency. Actually Senator Kerry has kind of steered a centrist agenda into New Hampshire and will take the same thing into all the primaries next week. He`s proposing to only partially repeal the tax cuts and leave the marriage penalty tax relief and the child tax credit and the marginal rate cuts for middle class. He`s only proposing to cut the deficit in half in his first term, exactly what Bush is proposing to do in his second term. He actually has tax credits from manufacturers. So he is not that big a threat. And I think the other thing that Wall Street would quickly surmise is that he`s very likely to have to serve with a Republican Congress. So any ideas they don`t like they`d have a good shot at blocking.

GHARIB: All right. We just have 30 seconds left. Real quickly, the deficit, how big an issue is this going to be, how are the Democrats going to handle it?

GABRIEL: I don`t think nearly the kind of issue that you might assume. We`re still more or less at war. The Bush administration is saying some of the right things, but it`s clearly not going to get really involved in cutting the deficit until next year. And so I think it`s kind of – the Democrats` best pretense to bring up the Bush tax cuts, but I don`t think it`s really going to cut with voters.

GHARIB: OK. Chuck, thank you so much.

GABRIEL: Thank you, Susie.

GHARIB: Appreciate your analysis. We`ve been speaking with Charles Gabriel of Prudential Equity Group.

A bright outlook tonight from Caterpillar: The heavy equipment maker says the manufacturing recession is finally over and it has the profits to prove it. CAT reported fourth-quarter earnings today that were 10 percent higher than a year ago.

As Diane Eastabrook reports, the company`s new CEO hopes to bring in even bigger profits this year.

DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: The world`s largest maker of mining and construction equipment seemed to be firing on all cylinders in the last quarter of 2003. Caterpillar earned $0.97 a share. That was $0.09 better than the same period in 2002 and $0.03 better than Wall Street estimates. James Owens, caterpillar`s current vice chairman and incoming CEO, credits a booming U.S. housing sector, a weaker dollar and robust growth in Asia for the impressive quarter.

JAMES OWENS, CEO DESIGNATE, CATERPILLAR: Our orders started picking up rather smartly in the third quarter and that carried into the fourth. And December was a very strong month for us, particularly in sales to users.

EASTABROOK: Owens says all indications point to an even stronger year ahead for Caterpillar. Continued low interest rates and weakness in the dollar should keep boosting sales of engines and construction equipment both domestically and internationally. Owens says higher precious metal prices should also enhance sales of mining equipment. But higher prices for other commodities threaten to ratchet up Caterpillar`s own raw material costs. Still, Owens thinks the company can offset them.

OWENS: We`re already seeing, globally, steel prices tick up quite a bit, but we`re pretty well-positioned with long-term contracts and supplier relationships and we`re looking to control those costs effectively in the coming year.

EASTABROOK: Perhaps the biggest wild card for Caterpillar is labor unrest. The company`s current contract with the United Auto Workers union expires at the end of March. CAT has had a contentious relationship with the union and weathered a lengthy strike in the mid 1990s. But both sides have been in contract talks for the past month and analysts are hopeful they can reach a new deal peacefully.

SCOTT LEE, MANUFACTURING ANALYST, FITCH RATINGS: Both sides, obviously, have an incentive to come to some amicable terms, you know, to work this out even before, kind of, the March deadline. So I`m sure they`re in heated talks right now.

EASTABROOK: James Owens takes over the executive suite at Caterpillar next week. He says he has no plans to change the company`s overall strategy, but he does plan to strengthen its position in emerging markets like Russia, China and India.

Diane Eastabrook, NIGHTLY BUSINESS REPORT, Chicago.

KANGAS: Now let`s take a look at some “Stocks in the News” tonight.

The most active issue on the New York Exchange, Lucent Technologies (LU), moving up $0.07 a share on 48 1/2 million shares.

Followed by AT&T Wireless (AWE) up $0.24.

Then Agere Systems (AGR) gained $0.41. Nice move, 12 percent. The company did narrow its fourth-quarter loss to only $0.02 a share from $0.09 a share a year ago. And revenues were up a respectable 18 percent.

NorTel Networks (NT) lost $0.11.

Followed by Micron Technology (MU), a $0.71 gain there. UBS Financial brokerage upgraded it from neutral to buy in the belief that DRAM prices will be improving. It was fifth in volume incidentally.

And Xerox (XRX) had a great day, up $1.20, or 8.6 percent. Fourth-quarter earnings, $0.22, way up from a penny a year ago. And the company sees improving demand for color and digital printers.

General Electric (GE) gained a nickel.

SBC Communications (SBC) down $0.74. SBC came in with fourth-quarter results excluding items, $0.34 down from $0.49 a year ago. But that was in- line with estimates. And revenues, however, did fall a bit short.

Agilent Technologies (A) moved up $2.19. Goldman Sachs upgraded it from in- line to outperform after the company said first-quarter earnings will be in the range of $0.20 to $0.24 a share versus its previous guidance of only $0.05 to $0.15 a share.

Texas Instruments (TXN) hit by some profit-taking, down $1.49, tenth in volume.

DuPont (DD), which is a Dow stock, down a half a dollar on the close. But it traded as high as $43.65 during this morning. Fourth-quarter earnings came in sharply higher, $0.63 versus $0.35. And that does include a gain from the sale of its INVISTA textile unit. Excluding that gain, DuPont still earned $0.29, down from $0.34 the year before, but $0.04 above the Street estimate. The company is positive on this year`s outlook.

Then we see Merck & Company (MRK) stock edging up $0.16 a share. Fourth- quarter earnings, $0.62, down from $0.83 last year. That`s a 23 percent drop but right in-line with estimates. The company did lose some patent protection on major products.

Bank of New York (BK) down $1.60. The company cut this year`s earnings guidance to a $1.91 from $1.95, which is the Street estimate.

And another bank hit by selling, SunTrust (STI), $3.05 loss there. The Legg Mason brokerage downgraded it from hold to an outright sell.

United Defense Industries (UDI) down $3.56. Fourth-quarter earnings lower, $0.54 versus $0.82 a year ago. Now that was $0.04 higher than the Street estimate. But the company sees lower-than-expected earnings this year, but $2.33, that`s $0.10 shy of the Wall Street consensus estimates.

Millipore Corporation (MIL) rising $4.12. Fourth-quarter earnings nicely higher, $0.53 versus $0.41 a year ago, and a nickel above the Street estimate. The company says 2004 results will be easily above the Wall Street estimate of $2.11 a share.

And Quest Diagnostics (DGX) jumping $4.69. Fourth-quarter earnings comfortably higher, $1.02 versus $0.82 a year ago. Revenues up 17 percent and Standard & Poor`s repeated a buy recommendation on Quest.

Microsoft (MSFT) topped the active list on NASDAQ, moving down $0.55.

Then a major casualty, Novellus Systems (NVLS), tumbling $5.85. Yesterday the company did report better-than-expected fourth-quarter earnings, but it also said the first quarter would be about $0.08 a share in earnings, $0.03 below the Street estimate. And today Oppenheimer repeated a sell recommendation.

Intel (INTC), $0.80 loss there.

Cisco (CSCO) down $0.70.

Applied Materials (AMAT), fifth in dollar volume on NASDAQ, down $0.92.

Dell (DELL) lost $0.69.

Altera (ALTR) off $1.62. Fourth-quarter earnings higher, $0.12 versus $0.07 a year ago, but revenues fell short of expectations, that`s what hurt the stock.

Broadcom (BRCM) down $0.75.

Amgen (AMGN) down $0.83.

XM Satellite (XMSR) on some profit-taking fell $1.79.

TiVo (TIVO) up $1.21. The company made an 8 million secondary offering today, was priced $9.30, raised $74 million which the company will use to fund expansion.

And then Silicon Laboratories (SLAB) up $7.57. The company in with sharply higher fourth-quarter earnings, $0.39 versus $0.19 on an 82 percent jump in revenues.

And those are the “Stocks in the News” tonight, Susie?

GHARIB: Paul, Putnam Investments is trying to win back the clients it lost in the mutual fund scandal. The company said today it`s slashing expenses on all of its funds and providing more information about how its funds` managers are paid. Last fall, regulators accused Putnam of turning a blind eye when its managers broke the rules by rapidly buying and selling mutual fund shares. Clients were quick to bail out on that news. In November alone, Putnam lost 12 percent of its assets under management.

KANGAS: The problems at Putnam and other mutual funds were under scrutiny today on Capitol Hill. A Senate subcommittee wanted answers about how mutual funds charge, and over-charge, their customers.

As Angela Terrell Heath reports, the panel got an earful.

ANGELA TERRELL HEATH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The Senate Subcommittee on Financial Management questioned mutual fund whistleblowers this morning. James Nesfield worked for hedge fund Canary Capital and said his job was to search out market timing opportunities. While mutual funds said publicly they hated market timers, in private, Nesfield found hundreds willing to help out.

JAMES NESFIELD, NESFIELD CAPITAL: I found, as I got closer to the upper levels of management, the morality was gray and easily shaded by immediate need or greed.

TERRELL HEATH: The discovery of late trading and market timing abuses has put pressure on mutual funds to lower their fees. Nesfield says his information helped New York Attorney General Eliot Spitzer break open the mutual fund investigation. Spitzer has already forced Alliance Capital (AC) to cut its fees by 20 percent and reportedly will announce a similar agreement with Massachusetts Financial Services next week. He says he`s looking out for investors.

ELIOT SPITZER, NEW YORK ATTORNEY GENERAL: Requiring mutual funds to return to investors money that should never have been taken from them is not rate setting.

TERRELL HEATH: But the Securities and Exchange Commission and fund industry observers disagree, saying Spitzer`s brand of regulation interferes with the marketplace.

JEFFREY C. KEIL, V.P., GLOBAL FIDUCIARY REVIEW, LIPPER INC.: I`m proposing that we have a more structured approach to the fee process so boards understand very clearly how they are supposed to benchmark the fees, what`s appropriate, what factors they have to consider and elevate the level of fiduciary responsibilities.

TERRELL HEATH: John Bogle, founder of Vanguard and a longtime critic of fund fees, told the senators there has been some progress in reducing fees, but more needs to be done.

JOHN C. BOGLE, FOUNDER & FORMER CEO, THE VANGUARD GROUP: You`re talking about, from a manager`s standpoint, not huge amounts of money, but it`s a beginning. And if you believe the journey of a thousand miles begins with a single step, each step I think is a wonderful improvement. We`ve got to go a lot further.

TERRELL HEATH: Senator Fitzgerald, chairman of the subcommittee that held today`s hearing, calls the mutual fund industry the world`s largest skimming operation. Next week, he will propose legislation to shut it down.

Angela Terrell Heath, NIGHTLY BUSINESS REPORT, Washington.

KANGAS: Tomorrow, make your dollars go farther by investing overseas in an international bond fund.

GHARIB: The Asian bird flu has now spread to China, and that`s why the World Health Organization is calling for countries to work together to stop the spread of the avian virus. Researchers are worried about the virus mutating into a form that could spread from one human to another, which could lead to a pandemic. The bird flu is in 10 Asian countries and has killed eight people.

KANGAS: There`s a new virus clogging e-mail systems worldwide, and it`s already infecting 300,000 computers. The MyDoom virus began making the rounds yesterday. It looks like a normal error message but contains an e- mail attachment that, when opened, generates thousands of new e-mails. Experts say MyDoom also appears to open up a back door so hackers can invade the computer later.

GHARIB: Here`s a look at what`s happening tomorrow. The Federal Reserve wraps up its policy meeting with the 2:15 p.m. decision on interest rates. Also tomorrow: the December reports on durable goods orders and new home sales. Earnings-wise, it`s Altria Group (MO), Hershey Foods (HSY), Procter & Gamble (PG), Pulte Homes (PHM) and Time Warner (TWX).

As we reported earlier in the program, Martha Stewart`s trial on securities fraud began in earnest this morning. But tonight`s commentator says, despite what you might think, that`s not the trial to watch these days.

Here`s Lionel Barber, U.S. managing editor of “Financial Times.”

LIONEL BARBER, U.S. MANAGING EDITOR, “FINANCIAL TIMES”: Here`s a hot tip for all those interested in corporate governance. The Martha Stewart trial is not the most important criminal trial in the world today. Not even close. The case to watch is taking place in a drab, wood-paneled room with 1970s decor in Dusseldorf, Germany. Josef Ackermann, chief executive of Deutsche Bank (DB) is in the dock, along with five other former directors of Mannesmann, the telecoms company.

Ackermann and his fellow defendants awarded close to $75 million of director bonuses during the $232 billion successful hostile takeover of Mannesmann, launched four years ago by Vodafone (VOD) of Britain. Handing out golden parachutes after hostile takeovers is par for the course in corporate America. But in Germany, zealous prosecutors argue it is a breach of fiduciary duty.

And here`s the rub. This case is a test of Germany`s willingness to open up to Anglo-American norms of executive pay and disclosure. Ackermann, a Swiss-born American-style investment banker, is a reformer. He`s determined to blow the cobwebs out of German boardrooms, he wants to make Deutsche Bank a world leader, a powerful voice therefore risks being silenced. Nothing less is at stake than the future of German capitalism.

I`m Lionel Barber.

KANGAS: Recapping today`s market action, some profit-taking is the order of the day. The Dow falls 92 points. The NASDAQ Composite loses 37 points. And please be sure to join us at our World Wide Web site, NBR.com.

GHARIB: And that`s NIGHTLY BUSINESS REPORT for Tuesday, January 27. I`m Susie Gharib. Good night, everyone.

And good night to you, Paul.

KANGAS: Good night, Susie. I`m Paul Kangas, wishing all of you the best of good buys.

END

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by FDCH e-Media, Inc. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. c 2004 Community Television Foundation of South Florida, Inc.

TO PURCHASE A VIDEOTAPE OF THIS PIECE, PLEASE CALL 888-266-3601

Content and programming copyright 2004 Community Television Foundation of South Florida,

Inc. Formatting and transcription copyright 2004 FDCH e-Media, Inc. (f/k/a Federal Document Clearing House Inc., eMediaMillWorks, Inc.), No quotes from the materials contained herein may be used in any media without attribution to Community Television Foundation of South Florida, Inc. This transcript may not be copied or resold in any media.

xfdce NIGHTLY-BUSINESS-REPO-00

Show: NIGHTLY BUSINESS REPORT>

Date: January 19, 2004>

Time: 18:30:00>

Tran: 011900cb.118>

Type: SHOW>

Head: Nightly Business Report>

Sect: Business>

Byline: Paul Kangas, Susie Gharib>

Spec: Business; Economy>

Time: 00:00:00>

PAUL KANGAS, NIGHTLY BUSINESS REPORT ANCHOR: From Wall Street to main street, we have covered 25 years of business and financial news.SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Twenty-five years of highs and lows, of triumphs and tragedies.

KANGAS: Twenty-five years of successes and failures, and it is always the people who make the biggest difference.

GHARIB: Tonight, we look at the “25 Most Influential” business people of the last 25 years.

KANGAS: I`m Paul Kangas.

GHARIB: And I`m Susie Gharib. This is NIGHTLY BUSINESS REPORT for Monday, January 19.

KANGAS: Good evening everyone. NIGHTLY BUSINESS REPORT is celebrating its 25th anniversary.

GHARIB: Twenty-five years as America`s most-watched daily business and financial news program.

KANGAS: Tonight, we look back at the people who have had the greatest impact over those two-and-a-half decades.

GHARIB: From hundreds of nominations from you, our viewers, a panel of professors from the Wharton School at the University of Pennsylvania selected the winners.

KANGAS: The criteria were simple. They must have created new and profitable ideas, affected political, civic, or social change in the business or economic world.

GHARIB: Created new business opportunities or more fully exploited existing ones, caused or influenced dramatic change in a company or industry, and inspired and transformed their companies, industries, or employees.

KANGAS: The winners list has names you might expect, and some names that might surprise you.

GHARIB: So here in alphabetical order, are the “25 Most Influential” business people of the last 25 years.

KANGAS: Entrepreneur Mary Kay Ash lived her life, and ran her company, by the golden rule: do unto others as you would have them do unto you. Sticking to that motto, she built one of the largest direct sellers of cosmetics in the world with more than a billion-and-a-half dollars worth of sales. Her ingenious creation of a rewards system for the women selling her products started in an era when men ran the work force. Since then, millions of women worldwide have become empowered by Ash`s work ethic and her vision. The company`s mission is to enrich women`s lives, and it supports hundreds of charitable projects worldwide.

If you`ve shopped online in the last few years, chances are you`ve visited the Amazon, Amazon.com (AMZN). It`s the brainchild of Jeff Bezos, cooked up, so the story goes, during a road trip from New York to Seattle. His business plan for selling over the Web has become a virtual blueprint for Internet retailing. Amazon.com started life as a book-selling site. Now it peddles everything from hard hats to housewares, and in the process, Bezos has become one of the nation`s wealthiest people.

GHARIB: Our Wharton judges call John Bogle “the Henry Ford of the investment industry,” because he brought reasonably priced investments of high value to the masses. Bogle did it by founding the Vanguard Group back in 1974, and focusing on index funds, a concept that had been around for a long time in the academic world. But Bogle created a whole new business model around it: no loads and no sales fees. Then he motivated other money managers to buy into the vision of bringing investment to ordinary Americans.

JOHN BOGLE, FOUNDER, THE VANGUARD GROUP: I`m more persuaded than I`ve ever been before that owning the entire stock market and holding it forever at very, very low cost is the ultimate investment strategy. For the young viewers, it is the “killer app.”

PETER CAPPELLI, PROFESSOR OF MANAGEMENT, WHARTON: I think one of the reasons why Jack Bogle is on this list is because he had a tremendous impact on this sort of average person. So many of the other leaders had big impacts on their companies obviously and to some extent on their industries and perhaps on other people in the business community. But Jack Bogle had an impact on the average person, the average investor, which made a big difference in lives of those people.

GHARIB: Bogle is also known for his persistence. He butted heads with the rest of the investment community to get his pioneering ideas into the marketplace, and he`s still going strong. Even though he retired from Vanguard in 1999, he continues to be his industry`s fiercest and most persistent critic, fighting for the rights of individual investors.

KANGAS: He`s the most unlikely of billionaires, with a penchant for risky business ideas that almost always make money, lots of it. Richard Branson began the Virgin franchise as a business novice in the late 1960s, with a student magazine. Now more than 200 companies later, the Virgin name is on planes, trains, cellular phone services, music megastores, even a bridal boutique. It`s the largest privately-held company in Britain with annual revenues of over $5 billion. Branson thrives on the challenge that running such a large company provides, saying he`s lived by the dangerous and sometimes rather foolish maxim that he`s prepared to try anything once.

GHARIB: When Warren talks, people listen, Warren Buffett that is. The “Oracle of Omaha” is considered the greatest stock investor of modern times. Starting out in 1954 with a nest egg of just $100, he`s now one of the richest men in the world. His firm, Berkshire Hathaway (BRK), has a market cap of more than $100 billion. It`s a holding company with a wide swath of long-term investments ranging from media to insurance to furniture to candy.

WARREN BUFFETT, CHAIRMAN, BERSHIRE HATHAWAY: We`ve bought some interesting companies. We have great managers out there. The businesses are doing generally well. And I`m having more fun than ever.

GHARIB: Wharton`s Mike Useem calls Buffett “a man for all seasons.”

MICHAEL USEEM, PROFESSOR OF MANAGEMENT, WHARTON: He`s an investment manager extraordinaire. He came in to run Salomon in the early `90s, proving that he can run a company like everybody else. And number three, he`s become a conscience of the Street, offering great wisdom on such contentious topics as expensing stock options.

GHARIB: With old-fashioned values, a tremendous range of talents, and a gift for telling it like it is, Buffett concedes he has two key rules of business. Rule number one: never lose money. Rule number two: never forget rule number one.

KANGAS: It was James Burke who pulled Tylenol off the shelves of the nation`s drug stores in 1982 after capsules laced with cyanide were found. That critical choice for Johnson & Johnson (JNJ) and Burke, its chief executive officer, cost the company $100 million. But Burke went on a mission to restore consumers` trust again, relaunching the product in a new tamper-resistant package, and one year later, Tylenol had regained 90 percent of its market share. The Wharton judges believe Burke`s actions and his commitment to serving the public in the best possible way, still shine today as an excellent example of management in a crisis.

Not many billionaires begin their business by selling computer components from their college dorm room, Michael Dell (DELL) did. He now runs one of the largest provider of computing products and services in the world, and was the youngest ever CEO of a Fortune 500 company. Dell made our “25 Most Influential” list because he revolutionized an industry and a supply chain by cutting out retailers and selling custom- ordered computers right to consumers. Dell manages his business in the belief that the status quo isn`t good enough, that striving for the next success keeps the company alive and vibrant.

For more than half a century, Peter Drucker has educated managers, imbuing them with personal responsibility and business accountability. That`s why in 2002, he was presented with the Presidential Medal of Freedom, the nation`s highest civilian honor. Drucker was the first college teacher to bear the title “professor of management” back in 1950.

GHARIB: Bill Gates has the vision thing. He began writing computer code at age 13 in suburban Seattle, dropped out of Harvard to start a software company named Microsoft (MSFT), and saw the promise few other people did, that personal computers in the home and workplace were the future. His software products now run 90 percent of the world`s PCs.

BILL GATES, CHMN. & CHIEF SOFTWARE ARCHITECT, MICROSOFT: Most of the great advances in personal computing are driven by people who personally want to use the product that they`re creating.

GHARIB: Wharton`s Bob Mittelstaedt says that Gates is among the top 25 because Gates changed the way we work, and the way his employees work as well.

ROBERT MITTELSTAEDT, MANAGEMENT PROFESSOR, WHARTON: There have been very few successful business people who started as entrepreneurs and managed to run a company all the way up to a very large size. What Gates has done has been to have a vision that has served the company well, evolved over time, but he`s also had the ability to bring in a lot of very smart people and let them do their thing in a way that most entrepreneurs are not capable of doing.

GHARIB: And our Wharton judges also point out that Gates is using his influence and his money to make a social difference in the world today. The Bill & Melinda Gates Foundation has a $24 billion endowment to support global health and learning initiatives. Its immunization programs and Internet access programs have brought new hope to communities around the world.

KANGAS: For William George, leading with the heart, not just the head, is the key to corporate success. That was his credo in his years at Medtronic (MDT), the world`s leading medical technology company, and it continues today. George believes companies must instill a sense of purpose and passion into their employees no matter what the company does. He calls it “authentic leadership,” making a difference in the lives of people you serve, both your employees and your customers.

Louis Gerstner is credited with engineering one of the most stunning corporate turnarounds in the last 25 years, when he rescued IBM (IBM) from near disaster. From his joining Big Blue in 1993 as chairman and CEO, to his retirement in 2002, he transformed a corporate culture, focused on his core customers, and reignited growth. Gerstner is known as a CEO who never promises more than he can deliver, and he retains a sense of humor of sorts about his work. His best-selling book about his time at IBM was titled, “Who Says Elephants Can`t Dance?”

Alan Greenspan is the ultimate market-mover, and by many accounts one of the most powerful men in the world because of his impact on the U.S. economy. A master of number crunching, Greenspan was appointed to lead the Federal Reserve in 1987, and has guided monetary policy through inflation, recession, and more than one stock market crisis. While his comments are closely watched on Wall Street and main street, he can be inscrutable in his speeches. He once remarked, “if I seem unduly clear to you, you must have misunderstood what I said.” Greenspan was awarded an honorary British knighthood last year, recognizing his contribution to global economic stability.

GHARIB: For Andy Grove, the unconventional approach put him in the right industry at the right time with, as the Wharton judges put it, “the right mindset.” Modern computers wouldn`t be possible without microprocessors, and Intel (INTC) wouldn`t have been possible without Grove`s leadership.

ANDY GROVE, CO-FOUNDER & CHMN., INTEL: If we hadn`t developed the 286, the 386, the 486, the Pentium processor as fast as our little feet would take us, we would be history, too, obsoleting your own product before other people obsolete yours.

GHARIB: Grove`s resolute nature was shaped as a child in Stalinist Hungary, escaping as a teenager to New York. That experience gave him the determination and drive to make a success in anything he chose, and Intel is what he chose. Rather than making a conventional career choice to join Bell Labs, Grove made an unconventional one: starting up Intel with others and putting his creative stamp on the chipmaker. One those creative strokes from grove: branding the slogan “Intel Inside” on the computers bearing his chips. That brand can now be found on 80 percent of computers around the world. And “Intel Inside” has become the gold standard in the industry. Wharton`s Mukul Pandya says there`s a key lesson to be learned from Grove`s leadership.

MUKUL PANDYA, EDITOR & DIRECTOR, KNOWLEDGEWHARTON: Don`t give up. I think that – and turn your weaknesses and setbacks into stepping stones for success. Don`t follow the beaten path. Have the courage to think differently and use your (UNINTELLIGIBLE) to make the right business decisions. And having made them, be resolute in sticking to them until you reach your goal. I think Grove exemplifies this outlook more than any other business leader of the current times.

GHARIB: Grove himself admits his life hasn`t taken the beaten path. In his book “Only the Paranoid Survive,” there`s a chapter he calls “Let Chaos Reign: Only Stepping Out of the Old Ruts Will Bring New Insights.”

KANGAS: No one has changed the face of America`s automotive industry in the last 25 years like Lee Iacocca. He`s known as the father of the Ford (F) Mustang, one of the most successful models ever. His stint as the president of Chrysler (DCX) saw him turn around a troubled and virtually bankrupt company by borrowing millions of dollars from the government, then paying back every one of them. Iacocca believes the key to his success is being decisive, that business decisions can be reduced to people, products, and profit.

GHARIB: Steve Jobs is on the list of the “25 Most Influential,” because he built a better mousetrap. Our Wharton panel says he has the ability to see what other people can`t, even when it`s right under their nose. The technology components that went into the development of the Apple Computer (AAPL) all existed for years at Xerox (XRX), but it was Jobs who put them together in a new and different way because he didn`t think a computer had to be a big mainframe. And Apple isn`t his only plum project. Apple`s iPod music machine, its iTunes online music store, and the films of the Pixar (PIXR) animation studio are other examples of Jobs` approach to development: elegant, well-designed products that bring complicated technology to a mass market.

STEVE JOBS, CEO, APPLE: We are fundamentally changing the way we do business without losing sight of why we do business. And that is to make the best tools in the world for people who think creatively.

GHARIB: As Wharton`s Mukul Pandya explains it, Jobs` most remarkable quality is to see the invisible.

PANDYA: He qualifies because he has the ability to see what is not apparent to other people. He qualifies because he is a genius at simplifying things in a way that opens up new markets. He is the kind of influential leader he is because he is a tremendous motivator of people and teams to create fantastic products. And you see that consistently in his career. And finally, he is a tremendous leader because of his resilience. These four qualities make him what he is. And make Apple and Pixar what they are.

GHARIB: Herb Kelleher had an idea that transformed an industry, and made him the “Soul of Southwest Airlines (LUV).” It was 1967 when he set out to change the stuffy airline business with a quirky, innovative carrier that broke all the rules. There were low-cost airlines before, but they weren`t reliable. Kelleher made sure that Southwest`s planes arrived on time, departed on time, and made money. He promoted from within, giving his employees opportunities to learn and grow, and gaining their faith with a “no layoff” policy that endures to this day. Our Wharton judges say he`s one of the “25 Most Influential” not because of what he did, but how he did it.

CAPPELLI: I think what`s important about Herb Kelleher and what he`s done at Southwest Airlines is that it wasn`t necessarily a new technology or wasn`t necessarily so much a new business idea, it was about execution. And it was execution around the way he managed the company and managed the employees.

GHARIB: Still you rarely see, in any industry or company, the chairman as cheerleader, carrying the culture of Southwest all over the country. And experts say that`s a key role Kelleher has also played for Southwest, carrying the culture of the company nationwide.

KANGAS: By investing with the concept “buy what you know,” Peter Lynch became one of the most successful mutual fund managers in history. He bought stakes in the companies and industries he understood with products and services that held promise, then held them long-term, ignoring the ups and downs of the day-to-day markets. His strategy paid off for investors in the Fidelity Magellan fund he took over back in 1977. Putting $10,000 in the fund then would have reaped $288,000 when Lynch retired in 1990. That`s an annual average return of 29 percent.

For Charles Schwab, the idea was to create a world of smarter investors. Using $100,000 borrowed from his uncle, Schwab started the first company giving consumers the tools to buy and sell stocks themselves without the help of traditional stockbrokers. It was a radical concept at the time, the mid 1970s. Now Charles Schwab (SCH), the company, is one of the nation`s largest brokerage firms, and competes with other firms who built on Schwab`s low-fee model.

It`s a phrase heard in businesses around the world, “just FedEx (FDX) it.” And it`s the result of Frederick Smith`s simple idea that became a phenomenon. In 1971, Smith incorporated a small airline into a logistics solution, delivering packages overnight. Transportation is in his blood. Smith`s father helped found the Greyhound bus line, his grandfather captained a paddleboat on the Mississippi River. Smith is also a pioneer in using the Internet as a business tool, letting customers track packages themselves over the Web.

To quote an old phrase, George Soros marches to a different drummer. The billionaire hedge fund operator is best known in business circles as the man who broke the Bank of England by speculating in currencies. But he has morphed from financial genius to policy practitioner to philanthropist. He now uses his network of foundations, spending about half a billion dollars every year, to encourage democracy and economic growth in developing nations.

They call him “The Mouth of the South,” but Ted Turner puts his money where his mouth is. The brash billionaire from Georgia made his money in media, launching CNN, the world`s first all news cable television operation. But beginning in the mid 1980s, Turner turned to Philanthropy. His Turner Foundation gives millions of dollars to environmental causes, and his promised gift of a billion dollars to the United Nations is among the largest single donations ever by a private individual.

GHARIB: Sam Walton knew the value of a dollar, and he was determined to provide the best value for the dollars of his customers. The story is almost legend. The folksy, down-to-earth merchant started in Arkansas and grew one store into the number one retailer in the world. And he wasn`t afraid to walk the walk, or in this case, dance it. In 1984, Walton did the hula on Wall Street after promising employees that if the company had a pre-tax profit of 8 percent or higher, he would don a grass skirt. Walton didn`t invent discounting, but he had the insight to realize it was the future of retailing. The first Wal-Mart (WMT) opened in 1962, and to this day the stores still reflect his belief in service to the community as well as the customer.

MITTELSTAEDT: Sam Walton`s legacy really is that a single individual can make a difference in an industry. It doesn`t happen instantly, but over a period of time, his commitment to bringing good value and lower prices to customers and his commitment to his own employees in terms of motivating them to feel good about what they do, is something that is unparalleled for single individuals in almost any industry much less in the retail industry. We know his name and it`s synonymous with those two things.

GHARIB: And his name and known is respected around the world. They call him the “Patron Saint of CEOs.” Jack Welch is a no-nonsense, laser-focused leader who our Wharton judges say could see the future, then make certain his company got there. Welch joined that company, General Electric (GE), in 1960. By the time he became GE`s eighth and youngest chairman and CEO In 1981. The company had a market cap of about $12 billion. When he retired in 2001, GE was one of the world`s largest conglomerates, with a market cap of about $400 billion. But for Welch, it isn`t all about money.

JACK WELCH, FMR. CHMN. & CEO, GENERAL ELECTRIC: Whether it`s a success from a – whether it`s a great deal where you learn a lot about yourself or whether it`s a failure to learn about yourself, the idea of learning all the time is critical.

GHARIB: Wharton`s Mike Useem says Welch`s contribution is all about leadership.

USEEM: We look at Jack Welch`s style, he has really written the textbook on how you develop great leadership within. He has always said that he does not know how to make jet engines. He does not know what to put on Tuesday night TV, on GE-property NBC television. What he is good at, and he`s absolutely right, is identifying leadership potential, putting those people with potential in a position where they can lead, making certain they`re quickly gone if they can`t, providing support for their further leadership development, and then at the end of the day what he has is probably one of the best leadership teams in the corporate world, probably anywhere.

GHARIB: Welch`s latest success is as an author. His book “Jack: Straight from the Gut” ranked number one on best-seller lists, proving another good thing he brings to life.

KANGAS: Oprah Winfrey is a modern media mogul with an empire that includes television, film, magazines and books. Among the most powerful women in American business today, Winfrey came from humble beginnings and created a powerful brand through hard work and perseverance. Our Wharton judges also cite her commitment to community, the Oprah Winfrey Foundation supports the education and well-being of women, children and families around the world.

Mohammed Yunus is proof that small money can lead to big changes. Yunus is the founder of Bangladesh`s Grameen Bank, a village bank set up in 1983 to provide micro credit loans, small amounts of money to the rural poor in an effort to fight poverty. Grameen now has more than a thousand branches, many in villages like this, and has loaned more than $2 billion. Experts say Yunus` ideas on coupling capitalism and community service have changed the face of rural economic development forever.

That is quite a list, Susie.

GHARIB: It is, Paul. Now the big question, who is number one? Who is the most influential businessperson of the past 25 years?

KANGAS: Be sure to join us for our 25th anniversary program this Thursday, January 22, and you`ll meet him or her and hear firsthand the winner`s own story of success.

GHARIB: Until then, I`m Susie Gharib. Have a good evening, everyone.

And you too, Paul.

KANGAS: And you as well, Susie.

I`m Paul Kangas, wishing all of you the best of good buys.

END

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by FDCH e-Media, Inc. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. c 2004 Community Television Foundation of South Florida, Inc.

TO PURCHASE A VIDEOTAPE OF THIS PIECE, PLEASE CALL 888-266-3601

Content and programming copyright 2004 Community Television Foundation of South Florida,

Inc. Formatting and transcription copyright 2004 FDCH e-Media, Inc. (f/k/a Federal Document Clearing House Inc., eMediaMillWorks, Inc.), No quotes from the materials contained herein may be used in any media without attribution to Community Television Foundation of South Florida, Inc. This transcript may not be copied or resold in any media.

xfdce NIGHTLY-BUSINESS-REPO-00

Show: NIGHTLY BUSINESS REPORT>

Date: January 13, 2004>

Time: 18:30:00>

Tran: 011300cb.118>

Type: SHOW>

Head: Nightly Business Report>

Sect: Business>

Byline: Paul Kangas, Susie Gharib>

Guest: Robert Doll, Louis Uchitelle>

Spec: Business; Economy>

Time: 00:00:00>

PAUL KANGAS, NIGHTLY BUSINESS REPORT ANCHOR: Stocks headed south on Wall Street today as investors got a case of the jitters ahead of some big-name tech earnings. The Dow fell 58 points, the NASDAQ Composite dropped 15.SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: “Widespread,” that`s what the SEC is calling the practice of “revenue sharing” between mutual fund firms and the brokers that sold their funds. Coming up, a look at the latest shoe to drop in the unfolding mutual fund scandal.

KANGAS: Then, this isn`t your mother`s telephone, it`s an Internet phone, and is bringing voiceover Internet protocol, or VOIP, to businesses and homes near you. We begin a two-part look at the next big thing in telephony.

GHARIB: My guest tonight says stocks will make it two up years in a row, that`s just one of his 10 predictions for 2004. We`ll go over the whole list with Robert Doll of Merrill Lynch Investment Managers.

KANGAS: I`m Paul Kangas.

GHARIB: And I`m Susie Gharib. This is NIGHTLY BUSINESS REPORT for Tuesday, January 13.

Good evening, everyone.

More revelations today of abuses in the mutual fund industry. Regulators at the Securities and Exchange Commission said they found widespread abuses at 14 Wall Street brokerage firms in the sale of mutual fund shares. An investigation revealed that “revenue sharing,” those undisclosed payments between funds and the brokers who sell them, is common practice.

Darren Gersh reports.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The SEC calls it a “common practice.” Mutual funds make extra payments to brokers to sell their funds without informing investors.

STEPHEN CUTLER, SEC DIRECTOR OF ENFORCEMENT: Even if it turned out to be the case that he was being sold or she was being sold the best-performing fund around and the lowest cost fund around, I still believe, firmly believe that the customer has a right to know what it is that the broker has received from the fund, or the fund family in exchange for recommending that transaction.

GERSH: The SEC would not name names, but says it has eight active investigations into so-called “revenue sharing” by broker-dealers, and a dozen more in mutual funds, most focusing on inadequate disclosure. After a 10-month review of the industry, the SEC says it found 14 out of 15 broker- dealers received cash from mutual fund investment advisers. Ten were paid with commissions from mutual fund trades. And 13 appear to favor mutual funds that make extra payments by giving them access to sales reps and putting them on the firm`s recommended list. Half of the brokers examined paid sales reps more for selling funds that agreed to revenue sharing.

LORI RICHARDS, SEC COMPLIANCE DIRECTOR: We did find that brokerage commissions are being used to pay for distribution, contrary to what many mutual funds had told us.

GERSH: In November, the SEC forced Morgan Stanley (MWD) to pay $50 million to settle charges it failed to disclose its revenue sharing arrangements. Now to combat the practice, the SEC is going further, tomorrow, putting out a new rule that would require brokers to disclose revenue sharing in writing at the point of sale.

ANNETTE NAZARETH, SEC DIR. OF MARKET REGULATION: Now for the first time, the most relevant information that we think is necessary for investors to receive with respect to the costs and the conflicts will be in the hands of investors at the time that they commit.

GERSH: That means the impact of any revenue sharing arrangement would be listed in dollars and cents per transaction, and as a percentage of the total investment over the last 12 months.

Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.

GHARIB: On Wall Street today, a tech sell-off sent the Dow lower by 58 points and the NASDAQ down by 15. Much of that selling was due to nervousness ahead of a key earnings report tomorrow. Intel (INTC) reports its fourth-quarter numbers after the bell, and the results could set the tone for other tech stocks and the broader markets as well.

Suzanne Pratt reports.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: No matter how you look at it, tomorrow`s report from Intel is an important one for Wall Street as well as main street. Intel is expected to post solid fourth- quarter results. According to First Call, most analysts believe Intel earned $0.25 a share on revenue of $8.6 billion. That would be a significant improvement from 2002`s fourth-quarter number. But, experts say in order to justify its sizzling share price as well as those of other surging tech stocks, Intel may need to beat estimates. On top of that, investors are anxious to hear what Intel has to say about the future.

THOMAS SMITH, DIR. OF INFORMATION TECH., STANDARD & POOR`S: In the report from Intel, we will be looking closely for the capital expenditure forecast, because that will tell us a lot about the optimism at Intel for the coming year.

PRATT: And, if Intel issues upbeat guidance about the first quarter as well as the rest of the year, that could lift all tech stocks, not just semiconductor names. That`s because good news from Intel usually means more business for companies further along in the PC food chain, such IBM (IBM) and Dell (DELL). And while some experts say that good news is needed to support the recent rally in the NASDAQ, others are more upbeat.

JIMMY CHANG, SR. TECHNOLOGY ANALYST, U.S. TRUST: I think it`s going to be a fairly strong first half. But, I think by the second half, we`ll run into difficult comparisons and we`ll start to look at 2005, which is still a big unknown.

PRATT: If Intel`s numbers were to fall short tomorrow, experts say, watch out. Any disappointment from such a bellwether could rattle tech stocks as well as the overall market.

Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.

KANGAS: Some carry-over strength from yesterday`s late rally helped stocks on Wall Street open modestly higher. Brokerage upgrades on Toys “R” Us (TOY), Terex (TEX), and Allied Capital (ALD) were also supportive. Thirty minutes into the trading session, the Dow was up 24 points and the NASDAQ Index had gained 2 points. The market lost its footing on rumors that hedge funds were planning to do a considerable amount of selling, especially in the tech sector, as the earnings season gets under way. By noon, the Dow was down 105 points and the NASDAQ Index posted a 30-point loss. Tech stocks were further undermined by a revenue warning from German software giant SAP (SAP). A rise in crude oil futures above $35 per barrel was another negative. Even so, the Dow Jones Industrial Average managed to trim its closing loss to 58 points exact, putting it at 10,427.18. The NASDAQ Composite lost 15 1/3 points, ending at 2096.44.The Standard & Poor`s 500 Index fell just over 6 points to 1121.22. Over in the bond market, the 10 year-note climbed 20/32, to 101 29/32, putting the yield at 4.01 percent.

GHARIB: It may have been a down day for stocks, but our guest tonight still believes it`ll be an up year for the markets. That`s one of the 10 predictions for 2004 from Robert Doll, president and chief investment officer of Merrill Lynch Investment Managers.

Hi, Bob, Happy New Year to you.

ROBERT DOLL, PRES., MERRILL LYNCH MGRS.: Good evening, Susie.

GHARIB: Well, I have got to first congratulate you on being more right than wrong on your predictions for 2003. You got eight out of 10 right, or partially right which is a pretty good track record.

DOLL: Thank you.

GHARIB: Let`s go down your list for 2004. You start off saying that you`re going – we`re going to have strong economic growth, but a lot of that growth is not necessarily going to come from consumer spending. Tell us your thinking on that.

DOLL: The (UNINTELLIGIBLE) here, Susie, is that growth will be strong, but importantly, more balanced a healthier. The consumer will be OK, but what has been picking up strongly is the business side of the economy. We may get some strength from some exports, some inventory investment. Job growth might actually be there, be positive this year. All of that a healthier, more balanced and strong economy.

GHARIB: And you`re predicting strong earnings, better than expectations.

DOLL: Same there, Susie, also believing revenue growth, top line growth, the healthy part of earnings growth, will continue as was the case in the second half. We believe earnings will be up between 12 and 15 percent in 2004.

GHARIB: Let`s talk a little about your next two predictions, yield on the 10-year Treasury goes up, and the Fed raises rates, which you also predicted in 2003, unfortunately you were wrong about that. What`s your analysis now?

DOLL: Our belief, Susie, is we`ll keep predicting it until we get it right. Our belief is that a 1 percent Fed funds rate is inconsistent with an economy growing as strongly as this one is. We don`t think the Fed has to get aggressive about raising rates, but we do think they have to begin a process of moving back toward equilibrium, which is higher than one. They can claim a 2 percent, a doubling of rates, that they`re still accommodative. And with the strong economic growth, deflation fears receding, some evidence of pricing power, a weaker dollar, the list goes on, long-term rates, 10-year Treasuries, we think, will have a yield higher than 5 by the end of this year.

GHARIB: Let`s go to the rest of your predictions. You see another good year for stocks, saying that high quality big cap stocks will lead the way. What`s your analysis there?

DOLL: The analysis is there will be transition. We`re not there yet, but before the end of the year the stuff that didn`t work last year will work this year, that is, higher quality, higher capitalization, and lower beta. A transition – getting that transition right is the real trick for portfolio managers this year, that`s the real challenge.

GHARIB: And how good – you say it`s going to be an up year for the stocks, by how much?

DOLL: Our guess is double, low double-digit earnings growth, some multiple contraction as interest rates go up, so high single digits out of the stock market we think follows the big year in `03.

GHARIB: All right, oil and gold prices rise, tell us…

DOLL: More commodity price increases, under-investment in that sector of the economy for a long time, all pointing to a continued upward move. Oil prices are stubborn, above 30, likely to stay there in our opinion.

GHARIB: Another worry you have is that household debt and also government debt, budget deficits, could derail the bull market going beyond 2004.

DOLL: Yes, there are some structural imbalances that a lot of people have focused on, it has been the wrong thing to focus on as cyclical strength has been very high, that continues in `04. But somewhere out there, Susie, we`re going to have to worry about those things again.

GHARIB: All right. And then your prediction for the elections, you think President Bush is going to win and that the Senate and House will also have many more Republican victories. So what`s going to be the impact of all of that on the markets?

DOLL: If that`s accurate, the president will come back, try to make permanent his tax cuts, tort reform, conservative judiciary appointments, perhaps initiate some legislation to partially privatize Social Security, all that post-November.

GHARIB: All right. A very interesting list and analysis. We thank you very much.

DOLL: Thanks, Susie.

GHARIB: We`ve been speaking with Bob Doll of Merrill Lynch Investment Managers.

KANGAS: Now let`s take a look at some “Stocks in the News tonight.”

The most active New York Exchange issue was Lucent Technologies (LU) on 54.2 million shares. The stock moving up $0.06. The company received $350 million in orders for its equipment from two Chinese telecom companies.

NorTel Networks (NT) moved up $0.21.

AT&T Wireless (AWE), a $0.42-gain there.

But Accenture (ACN) down $3.25. The management and technology consulting firm had first-quarter earnings, excluding one-time gains, of $0.27. That was a penny below the Street expectation. Also Accenture warned second- quarter earnings will be $0.21 to $0.27. The Street estimate is right at the high end of that, $0.27.

Motorola (MOT) moved up $0.12. As expected, this company got just over a billion dollars in communications equipment orders from several Chinese telecom companies. Motorola, fifth in volume.

Silicon Graphics (SGI) moved up a penny.

Pfizer (PFE) dropped $0.47.

A similar loss in GE (GE). GE`s earnings due out Friday for the fourth- quarter. The Street is looking for $0.45, that would be up from $0.31 a year ago.

EMC (EMC) was up $0.23.

And then Texas Instruments (TXN), tenth in big board volume, fell $0.61.

CVS Corporation (CVS), the big drugstore firm – chain, up $1.05. The company sees 2003 earnings above its earlier guidance because December same-store sales were up a better-than-expected 9.4 percent, that was due to strong demand for cold remedies as the flu season began early this past year.

SAP (SAP), that`s the big German software firm. The company sees its fourth-quarter revenues falling, 3 percent from year-ago levels. And that hurt that whole high tech group.

Storage Technology (STK) moved up $1.72. The company sees fourth-quarter earnings at least at $0.55, maybe a bit better. The Street estimate, $0.53.

Allied Capital (ALD) rose $1.66. Merrill Lynch upgraded it from neutral to buy on the company`s improving earnings outlook. The company is involved in business development.

Toys “R” Us (TOY) gained $1.26 after Banc of America Securities upgraded it from sell to neutral.

DeVry (DV) rising $2.22. The Thomas Weisel brokerage upgraded it from underperform to peer perform, mainly due to a rise in the company`s undergraduate enrollments.

Terex Corporation (TEX) up $2.58. The Robert Baird brokerage upgraded it from neutral to outperform, increased fourth-quarter earnings estimates by $0.02, up to $0.22 a share, and also increased its price target for Terex stock from $25 to $38 a share. Nice move for that one today, a lot of good news there.

American Italian Pasta (PLB) was down $4.17. The company is forecasting 2004 earnings will come in around $2.70 a share, that`s $0.03 below the Street estimate. Bear Stearns, meanwhile, downgraded it from outperform to peer perform. And all of this (UNINTELLIGIBLE) did initiate a quarterly cash dividend of $0.1875 per share.

NASDAQ`s most active, Intel (INTC), $0.56-loss.

Cisco Systems (CSCO) dropped $0.14.

And so did Microsoft (MSFT).

Oracle (ORCL) was down $0.30 a share. Larry Ellison is stepping down as chairman. The chief financial officer will become the chairman. Ellison will remain as chief executive officer. And Ellison also disclosed that he was married just before Christmas.

Applied Materials (AMAT) was down $0.78, number five in volume.

Amazon (AMZN) bucking the trend here, up $1.96.

Dell Incorporated (DELL), a $0.28-loss.

Juniper Networks (JNPR) down $0.71.

Yahoo! (YHOO) fell $0.94.

And Qualcomm (QCOM) dropped $0.65 a share, tenth in volume.

A new issue today, Crosstex Energy (XTXI), a natural gas company, 2.3 million shares offered at $19.50, it opened at $23.25. The high of the day, $25.69. It closed very close to the high. Good first day.

Insignia Solutions (INSG), look at that percentage gain, 153.5 percent. The company is in a pact with none other than IBM (IBM) to develop a system for managing and updating mobile phones.

Transkaryotic Therapies (TKTX) tumbling $4.01 on news the company will not sell its Fabry disease treatment in the United State because of a lack of subjects to do clinical trials with.

And then a good gainer, Therasense (THER) rising $6.34. Abbott Laboratories (ABT) will acquire this company for $27 a share in cash.

And those are the “Stocks in the News” tonight, Susie?

GHARIB: Thanks, Paul.

Voiceover Internet protocol, also known as VOIP, is bringing telecom into the 21st Century. The technology makes it possible for a phone call to travel a network in data packets, much like the transfer of computer files or e-mail. Recent upgrades have improved sound quality to where VOIP now stands to overtake traditional phone networks.

Stephanie Woods reports.

STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: The town of Herndon has made the switch to voiceover Internet protocol. Doing so has saved the town money. It also could save lives. Now if a child is reported missing in the area, the local government`s phones will call up a picture of the victim, suspect, and any other information that`s included in an Amber alert.

BILL ASHTON, IT DIRECTOR, TOWN OF HERNDON: One of the beauties of voiceover IP technology is that you can run applications across it. The phone then becomes another platform where you can deliver applications. Amber alert was a great application to deliver to our desks.

WOODS: Cap Gemini Ernst & Young is switching its traditional circuit switch phone system to one that uses Internet packets. The change means savings on long distance and the ability to set up phones quickly.

ROBERT FILBY, CAP GEMINI ERNST & YOUNG: We today have a couple contact centers that we run internally that are entirely IP-based. So we can add agents quickly. We can have call center agents in any location, as long as they have access to our network. And that has proved to be extremely flexible and a huge cost savings.

WOODS: VOIP is becoming mainstream for business. More than 13,000 firms use the Internet for calls. It took Cisco Systems (CSCO) 3.5 years to sell its first million Internet phones, the second million sold in a year. The company expects voiceover IP sales to really take off this year.

DON PROCTOR, VICE PRES., TECHNOLOGY, CISCO: In the early days, the primary motivating factor for anybody using voiceover IP was to get lower costs. Today, I really think we`re really seeing not only lower total cost of ownership, but also new capabilities being a primary driver.

WOODS: Voiceover IP isn`t just for big business anymore. Using a broadband connection and a converter box like this, an estimated 100,000 consumers are already making calls on the net. Companies like Vonage and 8×8 (EGHT) are selling unlimited voice calls and features like voicemail on your e- mail for less than $40 a month. And the big boys are jumping into the game. This year, Time Warner (TWX) plans to offer voiceover Internet to all its broadband customers in cooperation with MCI and Sprint (FON). AT&T (T) are betting on VOIP as a way to bypass the local telephone company and offer consumers Web-based features.

LARRY CRENSHAW, TECHNICAL MANAGER, AT&T: We think of voiceover IP as more than just a telephone service. You have to think of it as a service that will enable consumers to manage all of their communications needs, as well as something that will enable in the future the collaboration of things like video, documents, Web browsing, gaming.

WOODS: The new technology is shaking up the telecom landscape, driving down prices and cutting into revenues paid by carriers to the local telephone companies.

SCOTT CLELAND, PRECURSOR GROUP: VOIP is real and consumers will win big, but the investment play is much more muddy. The Bells and long distance carriers are losers, cable are winners, and the equipment players, a few will have some benefits but it won`t be anything like the gold rush of the bubble.

WOODS: The traditional local telephone companies are on the defensive. BellSouth (BLS), SBC (SBC), Qwest (Q) and Verizon (VZ) have each announced plans for voiceover Internet. Verizon will soon offer customers the ability to manage calls on the Web as it upgrades the switch circuit network to Internet protocol.

DAVID YOUNG, VERIZON: A lot of what VOIP promises is integrating the power of the Internet and the flexibility that you get with applications and computer processing power. You can get that without actually putting the voice over the Internet.

WOODS: In the case of Herndon, VOIP may save lives, but emergency 911 calls made over the net can`t be easily traced to an address. That`s one of a host of concerns regulators are looking into as the service goes from a nascent business into the mainstream.

Stephanie Woods, NIGHTLY BUSINESS REPORT, Washington.

KANGAS: Tomorrow, is VOIP a phone ca or an Internet service? It`s a call regulators will have to make soon.

GHARIB: Burger Ling is jumping on the low-carb diet craze. Its offering its Whopper hamburger without the bun, and launching a new line of salads with steak, chicken and shrimp that follow the low-carb guidelines of the Atkins and South Beach diets. Burger King calls it an extension of the “have it your way” philosophy. So far, rivals McDonald`s (MCD) and Wendy`s (WEN) have yet to offer low-carb specific menu items.

KANGAS: Kodak (EK) is continuing its pull out of the traditional camera and film market. The company says it will stop making Advantix cameras, which use special drop-in film canisters. Kodak and Japanese manufacturers jointly introduced the APS, or advanced photo system, cameras and film in 1996. But the format was soon eclipsed by the burgeoning growth of digital photography. Kodak shares today were up $0.03 cents, closing at $26.36.

GHARIB: Here`s a look at what`s happening tomorrow. The December producer price index, and the Federal Reserve releases its latest Beige Book survey of the economy. Also tomorrow, earnings from Apple Computer (AAPL), Delta Air Lines (DAL), Genentech (DNA), Intel (INTC), National City Corporation (NCC), and Yahoo! (YHOO)

In tonight`s commentary: how productivity could derail the economic recovery. Here`s Louis Uchitelle, economics writer for “The New York Times.”

LOUIS UCHITELLE, ECONOMICS WRITER, “THE NEW YORK TIMES”: The jobless recovery, which seemed (ph) to have ended, resurrected itself in December. Job creation failed to materialize last month despite the rising output of goods and services. That rising output should be drawing many more people into the workforce than it has so far. The problem is productivity. One way or another, employers are getting more and more output per hour from their workers. But the sale of this output is not rising as fast as the supply. So companies are keeping a lid on supply by hiring as few people as possible.

Put another way, supply has been rising at 5.2 percent annual rate since the end of the recession in the fall of 2001. But demand for what is produced is rising more slowly, at an annual rate of less than 4 percent. Until these percentages are reversed, and demand begins to exceed supply, employers are likely to resist new hiring.

That is a problem. For a while, tax cuts, mortgage refinancing, credit card spending and the like can make up the shortfall and keep the economy afloat. These stopgap measures might even get us through the November presidential election. But if job creation and wage growth fail to materialize, then the economic recovery that has been gaining strength since last August almost certainly will falter.

I`m Louis Uchitelle.

KANGAS: Recapping today`s market action, some profit-taking ahead of tomorrow`s big name earnings reports. the Dow lost 58 points and the NASDAQ Composite fell 15 points. And please be sure to join us at our World Wide Web site, NBR.com.

GHARIB: And that`s NIGHTLY BUSINESS REPORT for Tuesday, January 14. I`m Susie Gharib. Good night everyone.

And good night to you, Paul.

KANGAS: Good night, Susie.

I`m Paul Kangas, wishing all of you the best of good buys.

END

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by FDCH e-Media, Inc. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. c 2004 Community Television Foundation of South Florida, Inc.

TO PURCHASE A VIDEOTAPE OF THIS PIECE, PLEASE CALL 888-266-3601

Content and programming copyright 2004 Community Television Foundation of South Florida,

Inc. Formatting and transcription copyright 2004 FDCH e-Media, Inc. (f/k/a Federal Document Clearing House Inc., eMediaMillWorks, Inc.), No quotes from the materials contained herein may be used in any media without attribution to Community Television Foundation of South Florida, Inc. This transcript may not be copied or resold in any media.