xfdce NIGHTLY-BUSINESS-REPO-00

Show: NIGHTLY BUSINESS REPORT>

Date: September 24, 2003>

Time: 18:30:00>

Tran: 092400cb.118>

Type: SHOW>

Head: Nightly Business Report>

Sect: Business>

Byline: Paul Kangas, Susie Gharib>

Guest: Alan Hevesi, John Waggoner>

Spec: Business; Economy>

Time: 00:00:00>

PAUL KANGAS, NIGHTLY BUSINESS REPORT ANCHOR: Oil traders send prices soaring on world markets, after OPEC springs a surprise. The cartel is cutting projection by 3.5 percent. Investors fear those higher oil prices could mean lower economic growth, so they dump stocks, pushing the Dow and NASDAQ down sharply.

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: This man is a key player in the move to bring sweeping changes to the New York Stock Exchange. He`s Alan Hevesi, the comptroller of the state of New York, and we`ll ask him how he wants to shape the future of the big board.

KANGAS: Then, hold the phone. A federal court hangs up on the nation`s new anti-telemarketing “do not call” list. Millions of Americans signed up to keep from being bothered by calls. So what happens now?

GHARIB: And the Atlanta Falcons learn new ways to market themselves from home, or more specifically, from the Home Depot (HD). We`ll show you how retailing tactics are scoring big for this National Football League franchise.

KANGAS: I`m Kangas.

GHARIB: And I`m Susie Gharib. This is NIGHTLY BUSINESS REPORT for Wednesday, September 24.

Good evening, everyone.

A surprise decision by OPEC today to cut oil production sent oil prices gushing, and stocks skidding on Wall Street. The Dow tumbled 150 points, and the NASDAQ dropped 58, or more than 3 percent. That news from OPEC to drastically slash output ignited investor worries that higher oil prices could slow the U.S. economic recovery.

Scott Gurvey has details.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: The OPEC announcement sent the crude oil futures market into orbit. The price of a barrel of light sweet crude for November delivery traded as high as 28.59 before closing at 28.24, up 1.11, or 4.1 percent, on the New York Mercantile Exchange. The Organization of Petroleum Exporting Countries pumps about a third of the world`s oil, and while it does not have the overwhelming power it once wielded, it does have a significant impact on the price of heating oil and gasoline. OPEC`s decision to cut production by 900,000 barrels a day is said to have come because of concerns among the 11-member nations over recent weakness in price, and increases in inventories among the major importing nations. The markets had expected OPEC to keep its daily production ceiling at 25.4 million barrels.

WILLIAM WALLACE, OIL TRADER, MAN FINANCIAL: A 900,000 barrel a day cut is pretty significant, and I think I say more than people thought that would have been here. And we`ve been weak lately. The last week-and-a-half, the market has certainly been trending lower, so all the people who were betting the market was going lower are now having to get out. So it`s little higher pitch than normally we have.

GURVEY: It is no coincidence the OPEC cut is about the same size as Iraqi production. OPEC is, in effect, taking back the extra production it added when Iraqi production was cut off by the war. OPEC has had a hard time holding the line on production caps and today`s cut faces a questionable future.

JAMES STEEL, OIL ANALYST, REFCO: I think it`s going to be difficult for them to maintain this discipline. There is real financial problems in some of the OPEC countries: they tend to be low growth, they do have trade problems. So it will be difficult insuring this. But the discipline in OPEC overall in the last few years has certainly been better than the historical average.

GURVEY: Most economists believe the impact of the OPEC production cuts on the American economy will be minimal, unless the price of crude rises above $30 a barrel.

Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.

KANGAS: News of that drop in OPEC oil production didn`t sit well on Wall Street as stocks opened moderately lower. After an hour of trading, the Dow was off 32 points, and the NASDAQ Composite fell 13. Also contributing to the slide was Viacom (VIA) cutting its earnings expectations for the year, and Lehman Brothers downgrading Genentech (DNA) stock. The oil stocks were about the only ones showing gains and they were just modest ones. By mid-session, the Dow was off 110 points, NASDAQ down 38. Persistent selling pressure pushed many stock indices below recent support levels, and that activated even more sell orders, sending the market sharply lower. The Dow Industrial Average fell to a 150 1/2-point, or 1.6 percent, closing loss, putting it at 9425.51. The NASDAQ Composite tumbled 58 points or 3.1 percent, ending at 1843.70. The Standard & Poor`s 500 Index lost 19 2/3 points, or 2 percent, ending at 1009.38. Over in the bond market, the 10-year note advanced 19/32 to par and 29/32, pushing the yield down to 4.14 percent.

GHARIB: More pressure today on the New York Stock Exchange to change the way it does business. Several high-powered state treasurers met with officials of the NYSE to talk about reforming the Exchange`s corporate governance practices. One of the people at that meeting was Alan Hevesi, New York State comptroller. And he joins us now.

Mr. Hevesi, nice to have you on the program.

ALAN HEVESI, NEW YORK STATE COMPTROLLER: Thank you very much for inviting me.

GHARIB: Let me begin by asking you at the meeting this morning what were the changes that you and the other treasurers were calling for?

HEVESI: We requested very forcefully that there be a full, total, complete independent investigation of all the factors that went into the decision-making regarding Richard Grasso`s remuneration and any other decisions that may provide some ethical issues as the stock exchange tries to reform itself. And then we insisted on a group of reform principles including complete transparency, full disclosure, independent board members, independent directors on each of the committees, separation of the regulatory function from the management function, separation of CEO from the chair of the board. A series of reforms in the context of what has become a national issue, I`ll call it, I`ll understate it, that has severely damaged the credibility of stock exchange.

GHARIB: What was the response of NYSE directors who were at that meeting?

HEVESI: You know, I was very surprised by it. I thought they would hear us out. We had 10 treasurers and comptrollers, representing well over half a trillion dollars in assets, in the room, making the presentation. There were 11 directors of the stock exchange. And I thought that at the end of our presentation they would thank us, have one spokesman respond and then tell us they would report back, and they didn`t do that. Nine of the directors spoke directly to us and said, we get it. We know we have to reform this institution, that there will be a different board, there will be different rules, that the stock exchange has to be a role model for transform. And that sort of surprised me because now this was transcribed on the record, these nine directors committing themselves to a program of reform. And that was very, very surprising to me.

GHARIB: As you know, Mr. Hevesi, many people have been calling for the resignations of everyone on the NYSE board, what are your thoughts on that?

HEVESI: Well, we didn`t go into an individual accounting and saying, Mr. Jones, you have to leave, and Mr. Smith, you are out. That`s not our role and our function. But the underlying presumption is that there will be a different board at the end of this process. And it`s not going to be a long-term process if it`s going to work. I mean, John Reed, the new interim president, has indicated it will be a smaller board to begin with. We`re insisting on independent board members. We`re insisting that our own institutions be represented in some way by somebody who knows the investing community. That by definition means a different board.

GHARIB: Do you have any suggestions for a new leader for the NYSE, any candidates that you would like to see on the board?

HEVESI: Well, not that I`m going be public about. First we have to see John Reed`s performance. He has the credentials and he has the independence but the measurement will be or the judgment will be, does he reform this institution and start us on that path? And whoever replaces him has to commit to a program. It`s not just the credibility of the individual, it`s what they are going to do with this in the context of this scandal.

GHARIB: Beyond the New York Stock Exchange, have you approached the Securities and Exchange Commission to talk about these changes, structural changes that would you like to have done?

HEVESI: Yes. Both by phone and by mail we sent a letter today to Mr. Donaldson, the chair.

GHARIB: Any reaction?

HEVESI: Yes. I mean, very positive reaction, but it`s in process. We asked the SEC to select the independent investigation of the stock exchange. We think we`ll get a good response. Donaldson indicated he wanted to meet with us. And we were told that we could expect an invitation to meet with Mr. Reed when he gets back to the United States on Monday. So this is a work in progress obviously, but I`m more optimistic after this meeting than I was going in.

GHARIB: That`s great. California state treasurer has called that-Dick Grasso, the ousted chairman of NYSE, should give back some of that $140 million compensation. Do you agree with that? and if so, what is an acceptable amount of money to return?

HEVESI: Well, we`re not going to negotiate his severance. He`s protected by contract. But the symbols are real. I mean, I hope Dick Grasso does understand that the industry and the institution that he served so well for so long is in grave trouble and a lot of this is communicating of messages. To give back some of that money, I think, is an appropriate message to try to ease some of the pressure of the public reaction to what went on.

GHARIB: All right. Thank you very much, Mr. Hevesi. I appreciate your coming on the program.

HEVESI: Thank you, my pleasure.

GHARIB: We have been speaking with Alan Hevesi, New York State comptroller.

A federal judge has put the new national “do not call” registry on hold. Fifty million phone numbers are already on the Federal Trade Commission`s list to end unsolicited telemarketing calls. But an Oklahoma federal judge says the FTC overstepped its bounds, and Congress must give the agency the authority to enforce it. The FTC says the court is wrong and will seek a stay to overturn the ruling. Congressional leaders agree, and say they`ll quickly get a new law on the books to make the registry valid.

REP. BILLY TAUZIN (R-LA), CHMN., ENERGY & COMMERCE COMMITTEE: When you have that kind of a huge popular support for an activity of our government, to have a court strike it down and not to repair the damage and put it in place immediately would be a travesty. We`re going to do that. We`re going to correct that.

GHARIB: The telemarketing industry says the “do not call” registry will cost it $50 billion a year in lost revenues, Paul?

KANGAS: Well, there was a lot of money lost on Wall Street today too, Susie, as we`ll see in our “Stocks in the News” tonight.

The most active New York Exchange issue, trading 26 million shares was Viacom B (VIA.B), down $1.44. The company said its full-year earnings will grow less than 10 percent. And then earlier the company had growth projected somewhere in the mid teens. So quite a disappointment there.

Accenture Limited (ACN) bucked the overall trend on Wall Street with an $0.86 gain. Today`s “Wall Street Journal” notes the company just got a $500 million contract from AT&T (T) to take over its credit and accounts receivable operations.

Motorola (MOT) giving back $0.04 after a little spike up recently.

Micron Technology (MU) was down $0.57. After the market closed, Micron reported a fourth-quarter loss of $0.20 a share, nowhere near as bad as last year`s $0.97, and $0.05 better than the $0.25 loss expected on Wall Street. The stock showed little further movement in after hours trading however.

Lucent Technologies (LU) dropped a nickel, number five in big board volume.

AOL Time Warner (AOL) losing $0.47.

NorTel Networks (NT) down $0.13.

Pfizer (PFE), a $0.70 loss.

General Electric (GE) dropped $0.75.

And then EMC (EMC), tenth in volume, down $0.80 a share.

McDonald`s (MCD) edging up $0.03, but it traded as high as $24.25 this morning when the company announced it`s boosting its annual dividend by 70 percent. It will go from $0.23 1/2 a share up to $0.40 a share; one of a recent group that have been boosting dividends rather liberally.

ExxonMobil (XOM) down $0.16. The big oil didn`t show much reaction to that better than $1 rise in oil prices on the OPEC news. But some of the smaller issues did better: like Amerada Hess (AHC), up $0.91; Occidental Pet. (OXY) rose $0.07; and then the oil-related in the oil service sector did much better, Noble Corp. (NE) up a $1.16; Transocean (RIG), a $1.06 gain. A real mixture there.

Genentech (DNA) down $4.55. Lehman Brothers downgraded this stock from overweight to just equal weight.

And Biovail (BVF) was down $1.15. Goldman Sachs began covering this stock with just an in-line rating. And that was a disappointment to some shareholders.

A.O. Smith (AOS) down $4.68. The company makes electric motors, water heaters, things like that. And it cut its third-quarter earnings guidance from the range of $0.42 to $0.46 a share all the way down to $0.18 to $0.20. It also said 2003 earnings, instead of being $2.40 to $2.60 as originally thought, will be down to $1.75 to $1.80 a share.

Then a new issue today, Journal Communications (JRN). This company owns a regional fiber optic network, among other things, 17 1/4 million share offered to the public at $15 a share. The stock opened at $16.10, the high of the day, $16.70, then it settled back a bit. But still up on the day.

Beckman Coulter (BEC) moved up $0.95. It traded as high as $49 and then I believe over $49 1/2 at one stage today. The news, a California jury awarded the company $934 million in a breach of contract lawsuit against Flextronics International (FLEX). Flextronics was halted this morning at $15 even. That was down $0.82 and it did not reopen for trading today.

J.M. Smucker (SJM) up $1.81. Deutsche Bank Securities upgraded it from hold to a buy.

The most active issue on NASDAQ, Microsoft (MSFT) losing $1.14.

And Intel (INTC) had a similar loss of $1.16.

Cisco Systems (CSCO) down $0.83.

Amgen (AMGN) down $2.73.

Oracle (ORCL) lost $0.43, number five in dollar volume on NASDAQ.

eBay (EBAY), a $0.56 drop.

Applied Materials (AMAT) dropping a $1.21.

Amazon.com (AMZN) giving back some recent gains, $0.83 loss there.

Nextel Communications (NXTL) dropped $0.32.

And Yahoo! (YHOO) down $1.21, tenth in NASDAQ dollar volume.

FuelCell Energy (FCEL) bucked the overall trend with a very nice gain of $2.13, over 19 percent. The company and its partner, Caterpillar (CAT), sold their first fuel cell generation plant in the state of California. The buyer, the Los Angeles County Sanitation District.

And then on the downside on NASDAQ, Aeterna Laboratories (AELA) dropping $2.17. Phase III trials of the company`s Neovastat, a compound to treat a form of kidney cancer, did not meet the primary objective.

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

GHARIB: Thanks, Paul.

The National Football League`s teams are finding they can`t take it for granted these days that tickets will sell themselves. While some franchises are in strong football markets where sellouts are routine, weaker teams often have a tougher time. Continuing our series “Defending the Franchise,” Jeff Yastine looks tonight at a team that took its marketing tactics from a retailer, and is nailing down results.

JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: The Atlantic Falcons. For years, the team has been mediocre. On the field, they went to the playoffs just seven times in 37 years, and off the field, sellouts have been nearly as rare. But all that is changing after Home Depot co-founder Arthur Blank bought the team last year for nearly $550 million.

ARTHUR BLANK, ATLANTA FALCONS OWNER: It`s everything you`re doing to create that unique environment where you take ownership over six hours. That`s what fans are investing in: six hours from the time they leave their driveway until the time they get back home. So we take that six hours in a very serious way, and make sure we`re giving them a real good value for their time.

YASTINE: But the team`s marketers faced a challenge: how to get fans to care about a team that`s been at best only a marginal success on the field, and is also in a big, fast-growing, transient city like Atlanta, where many fans are still rooting for the teams in the cities where they last lived. And the team`s executives turned to market research for answers. The team conducted an e-mail survey of 6000 season ticket holders to find out their likes and dislikes, and use those results as a starting point beginning with a rollback of ticket prices. Prices were cut in some seating areas by 35 to 70 percent. The cheapest now go for $100, about $12 per game. There are changes outside the Georgia Dome as well. Parking and public transportation were improved based on fans` input, and the team set up what they call “Falcons Landing,” a sort of pre-game interactive miniature theme park. There`s live music, you can have your face painted with team colors or make a run for that game-winning touchdown that every fan dreams about.

DICK SULLIVAN, EXEC. V.P. MARKETING, ATLANTA FALCONS: We`ve built brands before. And I think when you look at building a brand, you want to make sure that it has a lot of emotion to it. And by creating an experience, you`re going to build brand strength, yore going to build brand stature over time, and that was really a piece of it. It`s not just to be-work just towards more wins and losses. And the fans told us that, just like the Kentucky Derby, people don`t go to a three-minute race, for the Kentucky Derby, they go for the entire weekend. And that was really our goal.

YASTINE: So far, it`s working. Average attendance per game three years ago was 55,000 people. That rose to about 70,000 last year; season ticket sales almost doubled. The Falcons are experiencing similar results this year. Of course, it helps to have star quarterback Michael Vick leading the team, although he`s sitting out part of this season with an injury. But Falcons` owner Blank says what`s happening with the franchise is no different than what made Home Depot a success.

BLANK: It`s really exactly the same. At Home Depot, we focused on customers, we focused on our associates, and obviously produced great financial results. Here it`s the same kind of philosophy: we focus on fans instead of customers; we focus in on players, coaching staff, organization-instead of associates. And then you produce the kind of results you see here; the kind of energy today you feel in the building.

YASTINE: In this home opener, the Falcons lost a squeaker to the Redskins, but 70,000 people showed up. Sellouts like this were once the exception; now, they`re the rule.

Jeff Yastine, NIGHTLY BUSINESS REPORT, Atlanta.

KANGAS: Tomorrow: the NFL isn`t just selling football anymore, as “Defending the Franchise” continues.

GHARIB: The Securities and Exchange Commission changed some of the rules governing mutual funds today. It`s now requiring fund companies to disclose more information in their advertisements. Currently, mutual fund ads tend to focus on short-term performance during market upswings. Besides showing one-, five-, and 10-year returns as they do now, firms will be required to show the most current monthly numbers.

WILLIAM DONALDSON, CHAIRMAN, SEC: The amendments before us are designed to encourage advertisements that convey balanced information to perspective investors, to help investors understand the limitations of past performance information. The amendments are also designed to remind investors that performance is only one piece of mutual fund puzzle.

GHARIB: While critics say that many of the reforms adopted today are long overdue, and don`t address more important issues, like how fund managers are paid and how hedge funds are regulated.

Here`s a look now at what`s happening tomorrow: Weekly jobless claims come out, also tomorrow, the August reports for durable goods orders, and new and existing home sales.

In the “Money File” tonight, a look at funds that are flexible. Here`s John Waggoner, mutual fund columnist for “USA Today.”

JOHN WAGGONER, MUTUAL FUND COLUMNIST, “USA TODAY”: If you feel like your fund manager is trapped in a box, then you might consider a go-anywhere fund. The only problem: you never know where your fund manager is going to go.

Both Morningstar and Lipper, the mutual fund trackers, classify funds according to their investment styles. A fund that looks for stocks of large companies with hot earnings growth, for example, is a “large-company growth fund.” One that looks for beaten-down stocks of small companies is called a “small-company value fund.” The fund classifications make it easier to compare funds with similar investment styles.

But financial planners and investors rail against style drift, funds that move from fund classification to fund classification. After all, it`s nice to know what you own. But if you own a fund that invests only in one type of stock, sooner or later, those stocks will fall out of favor. If your manager stays strictly within his style box, there`s not much he can do to avoid getting clobbered.

Go-anywhere funds let managers drift in and out of their style boxes, buying small or large companies as they see fit. Some even have more leeway; they can load up on bonds if they think stocks look awful. The advantage: some go-anywhere managers can produce eye-popping gains and avoid terrible falls. And you won`t have to sell one fund and buy another to follow a market trend. The disadvantage: if your manager stocks up on bonds and the market soars, you`ll feel like the village idiot.

Many go-anywhere funds live in Morningstar`s “blend” style box. But you`ll have to read the fund`s prospectus to figure out just how much leeway the manager has. And make sure you look for a go-anywhere fund with a good record, otherwise, you could regret the trip.

I`m John Waggoner.

KANGAS: Recapping today`s market action: rising oil prices lead to falling stock prices. The Dow slides 150 points, and the NASDAQ Composite loses 58 points.

NIGHTLY BUSINESS REPORT and the Wharton School of the University of Pennsylvania want you to help us select the most influential business persons of the past 25 years. Join us at NBR.com, where you can find our selection criteria, and then give us your nominations. A panel of Wharton judges will make the final selection, which we will announce early next year.

GHARIB: And that`s NIGHTLY BUSINESS REPORT for Wednesday, September 24. I`m Susie Gharib. Have a good evening, 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 2003 Community Television Foundation of South Florida, Inc.

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xfdce NIGHTLY-BUSINESS-REPO-00

Show: NIGHTLY BUSINESS REPORT>

Date: September 8, 2003>

Time: 18:30:00>

Tran: 090800cb.118>

Type: SHOW>

Head: Nightly Business Report>

Sect: Business>

Byline: Paul Kangas, Susie Gharib>

Guest: Cary Sherman, Alan Blinder>

Spec: Business; Economy>

Time: 00:00:00>

PAUL KANGAS, NIGHTLY BUSINESS REPORT ANCHOR: An upgrade on Big Blue (IBM) stock makes for a big day on Wall Street, pushing the Dow Jones Industrial Average higher by 83 points and adding 30 points to the tech-heavy NASDAQ. The NASDAQ is now sitting at an 18-month high. The day on Wall Street, coming up.

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: MCI, the former WorldCom, began its bankruptcy hearing today, seeking court approval of its plan to emerge from bankruptcy. At issue: who gets what, and how much, when it comes to the telecom giant`s creditors.

KANGAS: Congress reacts to the president`s $87 billion request to fund the war on terror. Iraq is ground zero for that fight. Most of the money is earmarked for troops and military resources, but $21 billion would go to nation-building.

GHARIB: Then, the Recording Industry Association of America has made its list, and if you download and swap music files on the net, you could be in for a big surprise. It`s now suing individual users for copyright infringement.

KANGAS: I`m Paul Kangas.

GHARIB: And I`m Susie Gharib. This is NIGHTLY BUSINESS REPORT for Monday, September 8.

Good evening, everyone.

Will WorldCom get out of bankruptcy? That is the question before a federal judge in New York, who began today hearing arguments for and against the telecom giant`s reorganization plan. There is considerable debate whether the company, now calling itself MCI, should be allowed to emerge from bankruptcy, given that it committed the largest corporate fraud in history.

Erika Miller reports.

ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: It was expected to be a grueling day of testimony on WorldCom`s plan to emerge from bankruptcy protection. But Judge Arthur Gonzalez adjourned the hearing early, at midday, so WorldCom can continue negotiations with two creditor groups opposing its reorganization plan.

LAURIE FIFE, ATTORNEY REPRESENTING WORLDCOM: Basically we have been in settlement discussions with the two principal objectors starting last night or several days ago. We asked the judge to adjourn the hearing so that we can continue the settlement discussions.

MILLER: The parties will have until midnight to reach an agreement. At issue is whether WorldCom`s plan pays these dissenting bond creditors enough money. Bankruptcy experts say there`s a good chance an agreement will be reached.

SHELDON HIRSHON, BANKRUPTCY ATTORNEY, PROSKAUER ROSE: I`m sure that they know each other`s territory, and they know what it is that are the pressure points. So I`m sure that there is probably more common ground than one would perceive looking from the outside.

MILLER: WorldCom, now operating under the MCI name, says its plan is backed by creditors holding 97 percent of its debt. The company proposes to emerge from Chapter 11 with about $4 billion in debt, compared to $41 billion now. The new company would also have a billion dollar cash cushion. Rivals are blasting the proposal, saying it would give MCI an unfair competitive advantage. But experts say those objections will not have much bearing on the hearing.

RICHARD BREEDEN, MCI`S COURT-APPOINTED MONITOR: They have their own claims outside of the bankruptcy or that they hope to bring outside of the bankruptcy. But in terms of purely the bankruptcy proceeding itself, the competitor claims are not really an issue here.

MILLER: If WorldCom does emerge from bankruptcy, experts warn the company will still face the daunting task of regaining the trust of customers and investors.

PATRICK COMACK, TELECOM ANALYST, GUZMAN & CO.: I think that all the recent negative headlines concerning MCI has damaged their valuation, post-bankruptcy. It just seems like a lot of this negative stuff is hitting MCI a little late in the game.

MILLER: If both sides can`t reach an agreement, they`ll be back here at the courthouse to resume their arguments tomorrow morning.

Erika Miller, NIGHTLY BUSINESS REPORT, New York.

KANGAS: Wall Street opened moderately higher in the growing belief the U.S. economy is in the beginning of a solid recovery. The blue chips and the tech sector got a nice boost from C.S. First Boston`s upgrade of IBM stock from neutral to outperform. After an hour of trading, the Dow was up 75 points and the NASDAQ Composite posted a 25-point gain. Buyers remained in control, with their enthusiasm further bolstered by a firm drug group which received positive comment in this week`s “Barron`s” financial magazine. Early this afternoon, the Dow was sporting a 93-point gain while the NASDAQ Index was up 27 points. A Smith Barney upgrade of the chip equipment group helped keep the rally on track, but just mediocre trading volume made further gains difficult. So the Dow Industrial Average closed up 82.95 points at 9586.29. The NASDAQ Composite rose 30.38 points, ending at 1888.62. The Standard & Poor`s 500 gained 10 1/4 points, closing at 1031.64. In the debt market, the 10-year note fell 19/32 to 98 18/32, putting the yield at 4.43 percent.

GHARIB: The Bush administration came under fire today for the president`s request for $87 billion for the war on terror. The money would be used for military operations and reconstruction in Iraq and Afghanistan.

But as Darren Gersh reports, many in Congress are now questioning that effort.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The $87 billion the president is asking for will cover operations in Iraq and Afghanistan, but it is really just an estimate. Mr. Bush cautioned the real cost could be higher.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We will do what is necessary, we will spend what is necessary, to achieve this essential victory in the war on terror, to promote freedom and to make our own nation more secure.

GERSH: Fifty-one billion of the total spending will go to support military operations in Iraq, another 20 billion for reconstruction. That`s on top of the $62 billion in military funding for Iraq the administration got from Congress earlier this year. But even though all that money will come from additional government borrowing, financial markets shrugged off the news.

STEVEN EAST, ECONOMIST, FRIEDMAN, BILLINGS & RAMSEY: We didn`t know exactly what the number was going to be, but we knew it was going to be an adult number, and we got that number over the weekend. And the financial markets really haven`t reacted to it.

GERSH: But critics did react. They say, after downplaying the cost of the conflict, the administration is only now presenting the real bill to the American people.

CHRISTOPHER PREBLE, FOREIGN POLICY ANALYST, CATO INST.: I have now doubt that they would support these costs if they thought they were making them safer, but I don`t see how that is happening. I don`t see how the war in Iraq makes us safer from terrorism. I think it is creating the conditions for even more Osama bin Ladens.

GERSH: With troops in the field, Congress is expected to approve the president`s latest request, but Democrats are demanding the administration answer some questions first. They want an estimate of the total cost of the war and a schedule for withdrawing troops.

REP. JOHN SPRATT (D), SOUTH CAROLINA: What`s your exit strategy? When do we get out, and when does this extraordinary burden on the budget cease or substantially diminish?

GERSH: The cost of rebuilding Iraq has been estimated at 50 to $75 billion. Congress would like to see our allies pick up much of the tab, but the rest of the world did not seem in a hurry to contribute to a conflict that is already being funded by American taxpayers.

Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.

KANGAS: The Medicare bill takes center stage on Capitol Hill tomorrow as House and Senate lawmakers meet to hammer out their differences over the proposal`s prescription benefit plan.

But as Stephanie Woods reports, many seniors worry it`s the wrong prescription for Medicare reform.

STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: For Tony Fransetta, the Medicare debate is personal. Fransetta retired after a 34-year career at Ford (F). He enjoys generous prescription drug benefits from the company. As president of the Florida Alliance for Retired Americans, Fransetta is now lobbying Congress to make sure retirees aren`t worse off under the new Medicare plan.

TONY FRANSETTA, PRES., FLA. ALLIANCE FOR RETIRED AMERICANS: My message to Congress is, you got elected promising true prescription drug coverage the same as you have, deliver it.

WOODS: Fransetta has good reason to worry. The Congressional Budget Office estimates as many as 37 percent of employers may drop retiree drug coverage if the government implements a plan of its own. The House and Senate Medicare plans leave gaps in coverage, and some seniors may end up with far less generous benefits.

UNIDENTIFIED MALE: A bad bill is worse than having no bill at all.

WOODS: In a meeting with Florida Senator Bill Nelson, seniors from the Florida Alliance wanted assurance that employers would be required to continue prescription drug coverage.

SEN. BILL NELSON (D), FLORIDA: If it does not have the part that protects your private plans, I`m going to vote against it.

WOODS: A coalition of employers is working to quell those fears. Companies with a large number of retirees with generous health care benefits stand to save an estimated $500 to $600 per retiree each year if the Medicare plan is passed. The coalition is running a half-million dollar ad campaign supporting the bill and telling lawmakers they won`t drop coverage, but will tailor their plans around Medicare.

RICH LAVIN, HUMAN SERVICES VP., CATERPILLAR: As we look at both versions of the legislation, we think that we can effectively wrap around provisions of the legislation-wrap around the benefit to enhance the overall coverage for employees and retirees.

WOODS: Tax credits may be one way to insure employers don`t drop coverage. But anything that increases the $400 billion price tag will be difficult for lawmakers.

ANDY LAPIERRE, POLITICAL ANALYST, ISI: The whole point of passing a drug benefit for members of Congress is to win favor with senior citizens, and if a very large contingent of those senior citizens feels that this would in fact be against their interest, that poses a real serious political problem to the bill.

WOODS: Medicare is a top priority for the president. Lawmakers will now have to balance that with the new costs in Iraq. Former House Speaker Newt Gingrich expects health care to outweigh defense demands.

NEWT GINGRICH, CEO, CENTER FOR HEALTH TRANSFORMATION: Health is really much bigger, and health is growing much faster. And I think being able to transform the health system into one which is better for your life and better for your wallet, is the biggest domestic challenge of the next 10 years.

WOODS: The key will be to deliver a bill seniors will support while still keeping costs under control.

Stephanie Woods, NIGHTLY BUSINESS REPORT, Washington.

GHARIB: The recording industry is taking the fight over online music piracy to the next level: filing suit today against hundreds of music lovers. The Recording Industry Association of America, this is the trade group representing the five major record companies, filed 261 copyright infringement suits against individual users today. Joining me now from Washington to talk more about this issue: Cary Sherman, president of the Recording Industry Association of America.

Hello, Mr. Sherman. Welcome to NIGHTLY BUSINESS REPORT.

CARY SHERMAN, PRES., RECORDING INDUSTRY ASSN. OF AMERICA: Thank you.

GHARIB: Well, first of all, what are you hoping to gain from these lawsuits?

SHERMAN: We`re trying to send the message that illegal downloading and uploading on the Internet is illegal, that you`re not anonymous when you do it and that there can be consequences. We have to get this piracy under control if the music industry is going to be able to continue to deliver music, new music, new artists to fans.

GHARIB: Who are the 261 individuals that you`ve targeted?

SHERMAN: We targeted the people who were distributing for other people to copy, millions of other people to copy large quantities of copyrighted music files. And we did it basically in the order of they egregiousness of the offense. So on average, of these 261 people, they averaged about 1000 music files.

GHARIB: Given that there are allegedly millions of people who are downloading music files, do you think that by suing a few hundred will stop the practice?

SHERMAN: You can`t underestimate the deterrent impact of lawsuits. Nobody wants to get sued, and when in fact people understand that they are at risk, they will change their behavior. The reason that people don`t shoplift is that there`s a risk of getting caught. And we want to establish the same kind of risk equation with respect to Internet uploading and downloading.

GHARIB: So what`s going to be the-you mentioned earlier that there are consequences. What are going to be the consequences?

SHERMAN: Well, the consequences here are financial damages in which people pay for their illegal act. But the long-term benefit here is that we`re going to create, hopefully, a marketplace in which legitimate commerce can survive. The Internet is now offering lots of legitimate sites that music companies have licensed with their entire catalogs. So people now have legal alternatives in order to get the music that they want the way that they want it. They have to give those sites a chance and stop using the illegal services.

GHARIB: Are you at all concerned that your strategy here is going to backfire, that you`re going to damage the relationship you have with existing customers because many of these people who are downloading are also buying CDs from your record companies?

SHERMAN: Unfortunately, most of the people who are downloading are buying fewer CDs by about a two to one margin, and that`s why sales have fallen 31 percent in the last three years.

GHARIB: But might you also alienate those very customers that you already have?

SHERMAN: Well, you know, does the cable industry worry that they`re going to alienate cable customers who really aren`t paying but are stealing cable signals? The satellite companies basically go after people who are stealing satellite signals. Saks Fifth Avenue goes after shoplifters. We have to do the same thing if we`re going to preserve a health music marketplace..

GHARIB: Mr. Sherman, just a little bit of time we have let. Let me ask you this about being proactive. Rather than fighting this trend, what about embracing the change and adapting to it? Is there anything the music industry can do that would be adapting to this trend?

SHERMAN: The music industry has made enormous strides in adapting to the Internet. And they consider it an unbelievable opportunity for the future. Music is now being offered in completely new ways where you can get an a la carte download, you can get streaming subscription services. You can access music in more ways than ever before in history at very reasonable prices.

GHARIB: All right, thank you very much, Mr. Sherman. We appreciate your time.

SHERMAN: My pleasure.

GHARIB: We`ve been speaking with Cary Sherman, president of the Recording Industry Association of America.

GHARIB: Bank of America (BAC) is responding today to allegations that it helped a hedge fund illegally trade mutual funds. The banking giant says it will move quickly to make appropriate restitution to mutual fund shareholders hurt by trading practices at its Nations Fund unit. Bank of America also plans to hire an outside firm to evaluate the mutual fund unit and its trading practices. Last week, New York Attorney General Eliot Spitzer said Bank of America and three other firms profited by engaging in late day trading and market timing with hedge fund Canary Partners. Canary settled with Spitzer`s office for $40 million but admitted no wrongdoing.

Paul, so far there have been no formal charges against Bank of America in the case.

KANGAS: Bank of America shares actually rose $0.83 to close at $76.98 today. Now let`s take a look at some other “Stocks in the News” tonight.

The most active big board issue on a fairly active 50 million shares, Lucent Technologies (LU) moving up $0.16.

Followed by NorTel Networks (NT), up $0.44, good percentage move. NorTel is teaming up with Bell Canada (BCICF) to build Canada`s most advanced next generation network.

Nokia (NOK) moving above 17 with that $0.51 gain.

And Pfizer (PFE) up $0.96. It traded as high as $31.80. “Barron`s” financial magazine this week has an article noting the drug stocks are trading at relatively low price-earnings multiples, and some of them have decent dividends.

AOL Time Warner (AOL), a $0.16 loss there, number five in big board volume.

Micron Technology (MU) in that strong high-tech group, up $0.83.

A $0.90 gain in Texas Instruments (TXN).

General Electric (GE), a $0.34 rise.

Motorola (MOT) gained $0.53.

And Schering-Plough (SGP), a $0.30 gain, number 10 in big board volume.

Moving along, there is none other than Big Blue (IBM), up $2.15, a 2 1/2 percent gain. And of course, as I mentioned, C.S. First Boston upgraded it from neutral to outperform, and also increased 2004 earnings estimates for IBM by $0.30 a share up to $5.10 per share for Big Blue next year.

Wal-Mart (WMT), another Dow stock, but down $0.30. It traded as low as $58.05. The Sanford Bernstein brokerage downgraded it from outperform to market perform in the belief that the company`s growth in same-store sales is starting to taper off a bit.

Yet another Dow stock, Merck (MRK), rising $1.60, another major drug stock bolstered by that positive “Barron`s” article. And of course, Merck yields about 2.9 percent as you see there.

Sony Corp. ADR (SNE) is up $2.65. Sony is in a pact to license WMS Industries (WMS) the rights to make and market slot machines using Sony`s Columbia Pictures film properties from the movie “Men In Black.” Apparently they figure that will bring in a lot of revenues.

Barr Laboratories (BRL) up $5.80. The FDA has approved the company`s oral contraceptive called Seasonale. And the First Albany brokerage upgraded Barr stock from buy to a strong buy.

EMC Corp. (EMC) up $0.58, good percentage move. Soundview Financial brokerage began covering the stock with an outperform rating.

On the downside, CIBER Incorporated (CBR) fell $1.04, almost a 10 percent drop. The company now sees third-quarter earnings and revenues below its July guidance. And it also plans to cut 140 jobs.

Back on the upside, Stifel Financial (SF) rising $0.93. It traded as high as $13.75. The news, Stifel is going to make a tender offer for up to 850,000 of its shares, or 12 percent of those outstanding. And the price will be $13.25 per share.

Intel (INTC) topped the active list on NASDAQ, moving up $0.47.

A similar gain in Microsoft (MSFT).

Cisco Systems (CSCO), a $0.44 rise.

But Dell (DELL) down $0.41 today.

Oracle (ORCL), number five in dollar volume, was a $0.40 gainer.

Applied Materials (AMAT) moved up $0.88. Smith Barney upgraded the semiconductor equipment sector from market weight to overweight.

UTStarcom (UTSI) down $4.14. Prudential Securities sees tough competition for the company coming from China Telecom (CHL).

Amgen (AMGN) up $0.92.

eBay (EBAY) down $0.53.

Nextel Communications (NXTL) dropped $0.13, number 10 in volume.

Regeneron Pharmaceuticals (REGN) jumping $5.43. Aventis Corp. (AVE) will pay the company up to $510 million for the rights for its anti-cancer drug.

Then Abgenix (ABGX), another nice gainer, up $2.16. The Adams Harkness brokerage believes this company could benefit from positive upcoming news from ImClone Corporation (IMCL) regarding ImClone`s Erbitux colon cancer treatment.

And then RF Micro Devices (RFMD) rising $1.45. The company sees at least break-even second quarter, up from its previous forecast of a loss of $0.04 to $0.05 a share.

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

GHARIB: Paul, another case of SARS has surfaced, this time in Singapore. It`s Singapore`s first new case of Severe Acute Respiratory Syndrome in over five months. Health officials are now trying to track down anyone who may have come in contact with the man. The diagnosis follows a warning earlier in the day from the World Health Organization that the virus could re-emerge at any time. SARS killed 33 people in Singapore this spring, and sickened 328.

KANGAS: Tomorrow, we talk with the man in charge of reforming the nation`s corporate accounting standards: William McDonough.

GHARIB: Univision (UVN) is about to become a Hispanic broadcasting powerhouse. The Federal Communications Commission approved today Univision`s $3.5 billion purchase of Hispanic Broadcasting Corporation (HSP). The nation`s top Hispanic television group will take over HBC`s 63 radio stations. But the FCC says two of those radio stations must be sold as part of the deal. As for the stocks, Univision rose $0.75 to $37.50, and HBC gained $0.81 to $31.73.

KANGAS: Federal regulators want more information on ArvinMeritor`s (ARM) bid for its larger rival Dana Corporation (DCN). The auto parts makers both said today that the Federal Trade Commission has asked for more details on the $2 billion hostile takeover. Dana Corporation has rejected Arvin`s advances, saying it undervalued the company and would create serious antitrust concerns. And as for the stocks, Dana Corp. was up $0.06 closing at $15.54, ArvinMeritor gained $0.10 to close at $19.39.

GHARIB: Here`s a look now at what`s happening tomorrow. On the economic calendar, it`s weekly retail sales and the July wholesale trade numbers. As for earnings, retailer Neiman-Marcus (NMG) reports its fiscal fourth-quarter results.

In tonight`s commentary: it`s not easy being Alan Greenspan. Here`s Alan Blinder, partner in the Promontory Financial Group and former vice chair of the Federal Reserve.

ALAN BLINDER, COMMENTARY: Someday, a cultural anthropologist will study the lives of bond traders, a curious tribe with their own primitive rituals and icons. Right now, the tribe is mad at Alan Greenspan. That`s quite a turn of events, really, for it wasn`t very long ago that these same folks were worshipping Mr. Greenspan as if he were a god, imbuing him with magical powers to fix everything.

But then the bond market bubble burst, and members of the tribe lost lots of money. With those losses, they apparently also lost faith in Mr. Greenspan. Well, I`ll be the first to admit that Alan Greenspan is not a great communicator. He and his colleagues apparently allowed bond traders to believe that the Fed was more worried about deflation than it actually was.

But the truth is that the Fed always viewed the risk of deflation as minor. It was the bond traders who got carried away, not the Fed. Just read what Fed officials actually said and wrote. And let`s remember that the Fed`s main job is to manage the economy. In that regard, it`s worth recalling what Mr. Greenspan prophesied months ago: that the U.S. economy would snap back strongly after the war in Iraq. There were many doubters at the time, but his prophesy now seems to be coming true.

So let`s.

(AUDIO GAP)

. elocution is not the greatest, but he`s one hell of a good central banker.

I`m Alan Blinder.

KANGAS: Recapping today`s market action, the Dow gained almost 83 points, and the NASDAQ Composite rose 30 points to an 18-month high.

NIGHTLY BUSINESS REPORT and the Wharton School of the University of Pennsylvania want you to help us select the most influential business persons of the past 25 years. Join us at NBR.com or you can find our selection criteria and then give us your nominations. A panel of Wharton judges will make the final selection which we announce early next year.

GHARIB: And that`s NIGHTLY BUSINESS REPORT for Monday, September 8. 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

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Date: September 3, 2003>

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PAUL KANGAS, NIGHTLY BUSINESS REPORT ANCHOR: New York Attorney General Eliot Spitzer has a new target tonight: the mutual fund industry. We`ll detail his allegations of illegal trading practices, and how they may have cost you money.

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: The blackout of 2003 was in the spotlight on Capitol Hill today as lawmakers looked for answers as to why 50 million people were left in the dark last month.

KANGAS: Bernie Ebbers says “not guilty.” The former WorldCom CEO was in an Oklahoma courtroom today to face charges of defrauding investors. We`ll tell you where his case stands, and what`s next for the former chief executive.

GHARIB: Then we`ll show you how head rolls and finger flexes are keeping workers at one company off the sidelines and on the payroll.

KANGAS: I`m Paul Kangas.

GHARIB: And I`m Susie Gharib. This is NIGHTLY BUSINESS REPORT for Wednesday, September 3.

Good evening everyone.

New York Attorney General Eliot Spitzer is now taking aim at the mutual fund industry. He said today that investors were likely cheated out of billions of dollars as a result of widespread illegal trading activities by several major fund companies. Spitzer also announced a settlement with a small New Jersey hedge fund, which played a central role in the scheme.

Erika Miller has more.

ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: At a news conference today, New York Attorney General Eliot Spitzer boldly attacked some of the nation`s top mutual fund families. He accused them of encouraging certain hedge funds to illegally trade shares after hours.

ELIOT SPITZER, NEW YORK STATE ATTORNEY GENERAL: Late day trading, to use a metaphor that I think captures it, is like being permitted to bet on yesterday`s horse races. You know who is going to win and even after the race is over, you`re permitted to place a bet that will guarantee that you make money.

MILLER: In other words, Spitzer says there was a double standard. Certain hedge funds were able to buy mutual fund shares after the close of trading at the day`s closing price. That allowed the hedge funds to profit from news that moved the market in after hours trading. All other investors had to wait and pay the next day`s closing price, standard practice in the industry. Spitzer also accused the mutual fund companies of permitting hedge funds to time the market. That involves profiting from the difference between a fund`s closing price and its value in the following day`s trading.

SPITZER: Timing is akin to playing at a casino with loaded dice: You don`t necessarily win, but your odds are improved so dramatically that you have an enormous advantage.

MILLER: The complaints came as Spitzer announced a $40 million settlement with Canary Capital Partners, a small hedge fund based in this nondescript New Jersey building. Spitzer says Canary got special trading privileges from Bank of America`s (BAC) Nations Funds, Bank One (ONE), Janus, and Strong. But no legal action has been taken against any of the fund families, and all say they are cooperating with the investigation. Canary did not admit or deny any wrongdoing, but it did agree to help Spitzer in his investigation. Some analysts predict Spitzer could ultimately obtain a settlement that rivals the $1.4 billion he got from Wall Street firms back in April. And like that agreement, Spitzer has promised to pass along part of the fines to injured shareholders. For its part, the Securities and Exchange Commission says it is also looking into the accusations raised by Spitzer.

JACK COFFEE, LAW PROFESSOR, COLUMBIA UNIVERSITY: The SEC, I think, is going to have to investigate how widespread these allegations are. If the mutual fund takes a bribe from this hedge fund to allow it to engage in market timing, one suspects they would take tacit bribes from other hedge funds or from wealthy money managers.

MILLER: Spitzer says the investigation is continuing, and he hinted it may soon expand to include other mutual fund companies as well.

Erika Miller, NIGHTLY BUSINESS REPORT, New York.

KANGAS: Wall Street opened modestly higher in an extension of yesterday`s impressive late rally, which lifted many popular stock averages to 15-and 16-month highs. After 30 minutes of trading, the Dow was up 32 points and the NASDAQ Index posted a 17-point advance. A lower-than-expected 0.2 percent rise in July construction spending slowed the upturn in mid-morning, but another brokerage upgrade of the enterprise software sector restored upward momentum. At mid-session, the Dow was up 45 points, NASDAQ up 18. The market maintained its gains thanks to the Federal Reserve`s Beige Book survey showing the economy continued to improve in July and August. The very active volume on the rally was another positive. The Dow Industrial Average closed up 45.19 points at 9568.46. The NASDAQ Composite rose 11.42 points ending at 1852.90. The Standard & Poor`s 500 Index gained 4.28 points and closed at 1026.27. Even the bond market was higher, the 10-year note edged up 2/32 to 97 8/32, putting the yield 4.60 percent.

GHARIB: On Capitol Hill today, the blackout of 2003 was at the top of the agenda. The House Energy and Commerce Committee kicked off two days of hearings into the crisis. Lawmakers want to know what went wrong and what`s being done to make sure it doesn`t happen again.

Stephanie Woods reports.

STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Lawmakers want to know who`s to blame for leaving 50 million people without power. Energy Secretary Spencer Abraham told the House Energy and Commerce Committee it is premature to speculate on the cause of the blackout.

SPENCER ABRAHAM, ENERGY SECRETARY: We are gathering information on about 10,000 individual events that happened across thousands of square miles in the space of about nine seconds.

WOODS: Abraham promised the joint U.S.-Canadian investigation would focus on the facts, but Democrats accused Republicans of using the blackout to ram through a controversial energy bill that includes drilling in the Alaskan wildlife refuge.

REP. EDWARD MARKEY (D), MASSACHUSETTS: If we don`t know what caused the blackout in the first place, how can we know whether the proposed cure is worse than the disease? That`s like a doctor telling you he has no idea what caused you to black out, but he would like to see you in the morning for brain surgery.

WOODS: Democrats want to vote on a narrow bill focused on electric reliability issues, but Republicans countered that electricity should not be separated from energy issues like the spike in gas prices and a shortage of natural gas.

REP. CHRISTOPHER COX (R), CALIFORNIA: All of our electric power system, save for nuclear and hydro, operate on sources of energy that are not included in the electricity title and the energy legislation, and we`ve got to take a look at the entire picture.

WOODS: Even though investigators are still in the dark about the exact cause of the blackout, human error appears to have been a factor. Michigan`s governor says the utilities in her state weren`t notified that FirstEnergy (FE) in Ohio was having problems.

GOV. JENNIFER GRANHOLM (D), MICHIGAN: If our utilities had had the ability to identify that a problem was occurring either through the regional transmission organization or some other entity, during that previous hour then this problem of cascading might have been prevented.

WOODS: FirstEnergy has said its not to blame. The CEO of the company will have the chance to make his case tomorrow when the hearing continues tomorrow.

Stephanie Woods, NIGHTLY BUSINESS REPORT, Washington.

KANGAS: Boeing (BA) is under the microscope at the Pentagon tonight. The Pentagon`s inspector general is investigating whether a former Air Force official who now works for Boeing gave the aerospace giant information about a rival bid from Airbus on a key contract. Air Force Secretary James Roche confirmed the investigation at a hearing before the Senate Commerce Committee today. The Air Force contract to lease 100 Boeing 767 aerial tankers has come under attack from senators who say the Pentagon is overpaying. Critics complain it could cost $5.7 billion more to lease the planes than to buy them.

SEN. JOHN MCCAIN (R-AZ), CHAIRMAN, COMMERCE COMMITTEE: In the beginning the Air Force appeared not so much to negotiate with Boeing as to advocate for it, to the point of appearing to allow the company too much control not only over pricing and the terms and conditions of the contract, but perhaps also over the aircraft`s capabilities.

KANGAS: But the Air Force says the lease allows the Pentagon to replace quickly its current fleet of aging aerial tankers. At 43 years old, the current fleet of KC-135Es is older than many of the pilots who fly them.

GHARIB: Well, big incentives weren`t enough to boost vehicle sales for the nation`s largest auto makers last month. Sales stalled across the board. GM`s (GM) sales were just about flat in August coming in at about 472,000 cars and trucks. GM blamed disappointing fleet sales for the sales slump. Ford`s (F) August sales dropped 15 percent from last year`s levels. Ford also lowered its North American production estimate for the fourth quarter. At Chrysler (DCX), vehicle sales posted a 6 percent drop to 190,000 cars and trucks, but the company noted that August 2002 was one of its best months ever. Meanwhile, several foreign automakers said their sales rebounded in August. And analysts say that`s partly because of the stronger car lineup, which could be a big concern for Detroit.

CHRISTOPHER STRUVE, AUTO ANALYST, FITCH RATINGS: One of the questions would have to be that over the last five to 10 years the car portfolios of the domestics have been pretty weak. You`d have to ask yourself, have they permanently lost those buyers to the Hondas (Company: Honda Motor Company Ltd.; Ticker: HMC; URL: http://www.honda.co.jp/) and Toyotas (Company: Toyota Motor Corporation: Ticker: TM; URL: http://www.toyota.com/) of the world?

GHARIB: Detroit`s automakers are turning up the heat on competitors. Both GM and Chrysler rolled out new incentive programs that offer generous deals on many 2003 and 2004 models. No word yet from Ford on new incentives.

KANGAS: The former chief executive of WorldCom, Bernie Ebbers, says he`s not guilty in the company`s $11 billion accounting fraud. Ebbers appeared in an Oklahoma City courtroom this afternoon to be formally arraigned. Ebbers entered a plea of not guilty to 15 criminal charges brought by the Oklahoma Attorney General`s Office. Prosecutors say they have enough evidence to convict him, but Ebbers` attorney says the state`s complaints doesn`t list any specific examples of wrongdoing by his client. Ebbers was released on a $50,000 bond. His is expected back in court for another hearing on October 30.

And late today a federal appeals court dealt a setback to the Federal Communications Commission`s new media ownership rules. The court granted an emergency delay of the rules, which would have let broadcast networks own more local stations and companies own newspapers and TV stations in the same market. The appeals court said if the new rules are eventually rejected down the road, it would be almost impossible to undo any mergers that go ahead now. The FCC says it`s disappointed by the decision, but will continue to push for the rule changes.

GHARIB: Caremark RX (CMX) says a merger with AdvancePCS (ADVP) is the right prescription for growth. Caremark is buying AdvancePCS for $6 billion. The deal creates the nation`s largest pharmacy benefits manager with annual revenues of $23 billion. Caremark says AdvancePCS will add 75 million patients to its rolls and that the deal will create about $125 million in cost savings during the first year, Paul?

KANGAS: Susie, Caremark and AdvancePCS stocks were among the most actives tonight. We`ll see them in just a moment. Now let`s take a look at some “Stocks in the News” tonight.

Big board volume leader on very active 40.7 million shares was Lucent Technologies (LU), up $0.13 a share.

Followed by NorTel Networks (NT) which was $0.29. NorTel got a $1 billion order to provide Verizon (VZ) with next generation voice and networking equipment.

And there you see it Caremark (CMX) up-or down $2.10. It`s going to have to come up with $6 billion in stock and some cash to buy AdvancePCS. And that could represent some earnings dilution. We`ll see Advance in a moment.

GE (GE) was up $0.68 a share. J.P. Morgan upgraded it from underweight to neutral.

Pfizer (PFE), number five in big board volume, gained $0.42.

And then AOL Time Warner (AOL), a $0.24 gain.

Ford Motor (F) was down $0.37. Of course, its sales in August were down 15 percent.

AT&T Wireless (AWE) gained a dime.

Nokia (NOK) rising $0.21.

And Agere Systems (AGR.A) gained a dime, number 10 in big board volume.

AMR (AMR), parent of American Airlines, doing well, up $1.07. Merrill Lynch repeated a buy recommendation and put it on its Focus One list.

The airlines were generally strong, and that includes AirTran Holdings (AAI), up $1.07. Its August revenue passenger miles up a whopping almost 33 percent.

And Continental Airlines (CAL) did well, rising nearly a dollar. It traded as high as $18.15. Its August passenger traffic estimated to be up about 4 to 5 percent.

Eli Lilly (LLY), a casualty today, down $4.70 on concern the FDA`s conditional approval of its incontinence and depression drug called Cymbalta might face delays.

And then SAP (SAP), this is the big European software firm, up almost $3 a share. Morgan Stanley upgraded it from equal weight to overweight. And C.S. First Boston upgraded it from neutral to outperform.

On the downside, Pepsi Bottling Group (PBG) down $2.36. The company cut its third-quarter earnings guidance to the low end of its earlier $0.66 to $0.70 estimate. It`s due to increasing competition, according to the company.

Charles River Labs (CRL) tumbled almost $5 a share. The company cut its 2003 earnings estimate from $1.67 down to about $1.58 at worst.

Shaw Group (SGR), big percentage gainer, up $1.72. The company`s Stone & Webster received a $570 million construction contract from Astoria Energy.

And Omega Protein (OME) up $0.93. And it traded as high as $7.85. This is a producer of fish oil and fish meal and it received a $9.50 per share cash buyout bid from an Argentinean firm. But the company isn`t absolutely sure of the bid`s validity. Incidentally, Zapata (ZAP), which owns 60 percent of Omega, rose $3.62 to $60.90 a share.

NASDAQ`s most active issue, Microsoft (MSFT) on the strong high-tech area, up $1.04.

Cisco (CSCO) gained $0.75. Cisco`s CEO said its August sales exceeded its expectations, but he`s still cautious.

Intel (INTC) down $0.52.

Oracle (ORCL), a $0.37 gain.

And there you see AdvancePCS (ADVP), up $7.45. That buyout bid from Caremark is for 2.15 shares of Caremark for each share of Advance. That works out to a value of about $50 a share as of today. Ninety percent will be in stock and 10 percent in cash.

eBay (EBAY) down $2.26. This is the two-for-one split stock, keep in mind.

Dell (DELL), it was up $0.58.

Amgen (AMGN) down $1.53.

KLA-Tencor (KLAC) fell $1.83.

And Qualcomm (QCOM) down $0.84 per share.

Take-Two Interactive Software (TTWO) had a great day, up $6.63. This is a video game publisher and its third-quarter earnings came in at $0.18, nicely higher than last year`s $0.12. Revenues up a respectable 27 percent. And the company plans to acquire TDK Mediactive for cash and stock worth about $22 3/4 million. Also Take-Two says expect more acquisitions to come.

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

GHARIB: Paul, workplace injuries cost businesses millions of dollars in lost wages, lost productivity, and higher insurance costs. But some companies are trying to prevent those injuries by treating their workers like athletes.

Diane Eastabrook explains.

DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Allen Edmonds managers are prepping for the office gridiron. Their coach is Fred Ludwig, an injury prevention specialist from Prevention Services, Incorporated. Ludwig`s regimen of head rolls and finger flexes are supposed to help prevent ailments like migraines and back problems that often sideline workers.

FRED LUDWIG, INJURY PREVENTION SPECIALIST, PREVENTION SERVICES: They don`t carry as much stress through their neck and shoulders as a result of keeping up with the stretching activities throughout the day.

EASTABROOK: For the past six months, Prevention Services has been working with the Wisconsin shoe company to cut down on workplace injuries. On the shop floor, repetitive motion injuries are a common problem. Ludwig scours the plant offering tips to workers on ways of preventing those problems and others.

LUDWIG: That little disc that normally sits in between the bones, actually gets pushed out of its position.

EASTABROOK: Mark Everest founded Prevention Services eight years ago after spending nearly 15 years developing corporate wellness programs. Everest thinks many wellness plans fall short, because they tend to attract the workers who need the least amount of help.

MARK EVEREST, PRESIDENT, PREVENTION SERVICES: You attract the fit, so you`re really preaching to the choir. With this program, our trainers go to the worker, so the wellness comes to you, the injury prevention comes to you, the medical counsels come to you. All of this information is disseminated one-on-one coming to you day-in and day-out.

EASTABROOK: Injury prevention plans appear to be cost effective, too. A recent study by risk management firm Aon found such programs reduced insurance indemnity payments, workers compensation claims, and lost time claims across the board.

LUDWIG: Palms out front. Give it a good push.

EASTABROOK: But Allen Edmonds CEO John Stollenwerk thinks the plans offer other benefits.

JOHN STOLLENWERK, PRES. & CEO, ALLEN EDMONDS SHOE CORP.: I think it`s really important and it really is a big morale booster, because it`s a lot of fun. There is a lot of camaraderie.

EASTABROOK: Allen Edmonds says the Prevention Plus plan is so new here it hasn`t yet had a significant impact on health insurance claims, but the company believes it will farther down the road.

Diane Eastabrook, NIGHTLY BUSINESS REPORT, Port Washington, Wisconsin.

KANGAS: Tomorrow, the power companies explain their role in the blackout of 2003.

GHARIB: Gateway (GTW) is cutting jobs and closing one of its factories as it struggles to cut costs following three years of losses. The computer maker hopes to save around $130 million a year by closing its plant in Hampton, Virginia, and laying off 450 workers. Gateway also plans to eliminate an undisclosed number of jobs at its main plant in Sioux Falls, South Dakota. Gateway stock rose $0.02 to $6.10, that`s a new 52-week high.

KANGAS: Hewlett-Packard (HPQ) reaffirmed its fiscal fourth-quarter outlook today, and says it still plans to cut about 1900 jobs during the quarter. The company says it`s on track to meet its previous guidance of $0.34 to $0.36 a share. Analysts are looking for $0.35 a share for the quarter ending in October. Hewlett`s chief financial officer told analysts today that consumer spending is upbeat in the United States, but still a bit weak in Europe. HP stock today closed up $0.44 at $20.64.

GHARIB: Here`s a look at what`s happening tomorrow. The revised report on second-quarter productivity and cost come out. Also tomorrow, the Institute of Supply Management`s non-manufacturing index for August, July factory orders, and weekly jobless claims. Earnings-wise, National Semiconductor (NSM), Del Monte Foods (DLM), and Albertson`s (ABS) are all scheduled to report.

In the “Money File” tonight, Americans buying prescription drugs in Canada. Here`s Kevin McCormally, editorial director at “Kiplinger`s Personal Finance.”

KEVIN MCCORMALLY, EDITORIAL DIR., “KIPLINGER`S PERSONAL FINANCE”: With Congress back in Washington after its summer holiday, one of the big issues to be decided is how to build a prescription drug benefit into Medicare. And tied up in that legislation is the contentious issue of whether to allow Americans to buy American-made prescription drugs in Canada, where government price controls often keep costs far below what you`re charged at the corner pharmacy.

Now, you`ll be forgiven if you didn`t know it was illegal for Americans to go up north to stock up; tens of thousands do it all the time. Some senior groups organize across-the-border bus trips to cheap Canadian pharmacies. And increasingly, citizens save big bucks by sending their U.S. doctor`s prescriptions to Canadian mail-order pharmacies. One Massachusetts city even openly encourages its employees to get their drugs from Canada to save the city millions of dollars.

But this drug re-importation is illegal, or technically illegal, as the proponents like to say; the technicality being that the FDA and the border guards have been happy to turn a blind eye to individuals getting prescriptions for personal use. If Congress changes the law, you won`t have to worry about that technicality.

But speaking of technicalities, American citizens technically don`t need a passport to go to and from our friendly neighbor to the north. All you need is an oral declaration of citizenship. But here`s a classic catch-22. The border guard doesn`t have to believe you. He or she can demand proof. So if you head up north for some cheap meds, be sure to take your passport or a certified copy of your birth certificate. You want to be sure you can get back into this country with your medicine, whether it`s legal or not.

I`m Kevin McCormally.

KANGAS: Recapping today`s market action: The Dow gained 45 points, the NASDAQ Composite rose 11 points.

NIGHTLY BUSINESS REPORT and the Wharton School of the University of Pennsylvania want you to help us select the most influential business persons of the past 25 years. Join us at NBR.com where you can find our selection criteria and then give it your nomination. A panel of Wharton judges will make the final selection, which we will announce early next year.

GHARIB: And finally tonight, it appears the tax advice that many Americans seek from the Internal Revenue Service may not be much help. The Treasury Department sent its investigators into several IRS centers last year, seeking answers to a number of tax law questions. Well, the testing showed that IRS workers gave correct answers only 57 percent of the time. That means the half-million people who visited the centers during the time of the study could have received the wrong answers to their questions. The IRS disputes that figure, but admits its employees do need to be more accurate.

Paul, the agency is setting a goal of being right 80 percent of the time this year and 85 percent by next year.

KANGAS: I hope they don`t confuse that percentage with top tax bracket percentages. Boy.

GHARIB: That would b a problem.

KANGAS: Oh boy.

GHARIB: Nobody`s perfect.

That`s NIGHTLY BUSINESS REPORT for Wednesday, September 3. I`m Susie Gharib. Good night everyone.

Good night to you, Paul.

KANGAS: Good night, Susie.

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

END

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