NBR Transcripts Friday, August 9. 2013

7/27/2019 NBR Transcripts Friday, August 9. 2013

1/11

ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Susie Gharib, brought

to you by --

(COMMERCIAL AD)

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Presidential news conference. President

Obama spent the afternoon addressing a number of issues important to both business and the American

people, from healthcare to the Fed, to the government surveillance program.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Donnybrook in aisle six. The battle

between J.C. Penney`s board, its CEO and one of its shareholders boils over in public. Is this kind of

open boardroom warfare ever good for shareholders?

HERERA: Bringing jobs home. More companies are moving overseas operations back to the U.S.

but it`s not just workers who benefit. We`ll show you who else is reaping the rewards as we wrap up

our series, "Made in America."

All that and more tonight on NIGHTLY BUSINESS REPORT for Friday, August 9th.

MATHISEN: And good evening, everyone. And welcome. I`m Tyler Mathisen, along with Sue

Herrera. Susie Gharib has the night off.

In a far-reaching press conference today, his first in more than three months, President Obama

took questions and gave answers on top picks critically important to American business. He tackled

everything from healthcare reform and the possibility of a government shut down, to immigration,

privacy, and whom he might choose as the next chairman of the Federal Reserve.

Eamon Javers was in the room and has our report -- Eamon.

EAMON JAVERS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Good evening, Tyler.

Well, the president addressed a series of issues, as you say, in his press conference today, hestarted off by saying that he doesn`t think that the leaker from the NSA, Edward Snowden, is a patriot.

Nonetheless, the president announced a series of reforms that he`d like to implement if U.S.

intelligence gathering. Here is how the president described what he`d like to do.

(BEGIN VIDEO CLIP)


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BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We can and must be more transparent.

So I directed the intelligence community to make public as much information about these programs as

possible. We have already declassified unprecedented information about the NSA but we can go

further.

(END VIDEO CLIP)

JAVERS: And asked about who he`s going to pick for the next chairman of the Federal Reserve,

the president said he didn`t want to tip his hand of who he`s going to pick but he did say that he`s got

two very good candidates.

And he also sort of explained why it is that the White House seems to have been defending Larry

Summers in public in recent days. Take a listen.

(BEGIN VIDEO CLIP)

OBAMA: The perception that Mr. Summers might have an inside track simply had to do with a

bunch of attacks that I was hearing on Mr. Summer`s preemptively, which is sort of a standardWashington exercise that I don`t like.

(END VIDEO CLIP)

JAVERS: So, Tyler, obviously, this is very personal for the president. He`s got a relationship with

Larry Summers. He didn`t like to see the piling on. So, that might explain leaks we saw over the past

couple week explaining that Larry Summers might be the front runner for the job, the president insisting

however, today that he has not picked a candidate just yet.

MATHISEN: He talked a little bit today about the implantation of Obamacare, the healthcare

reform, and the possibility that a government shut down might be used as a weapon in that fundingbattle. Give us some thoughts on that, Eamon.

JAVERS: Well, obviously, he said that if you implement something as big as Obamacare, as he

calls it now, it`s going to have some glitches.

And he was trying to prepare people to expect that there are going to be some glitches here.

Nonetheless, he said he doesn`t like the politics here on the Republican side of threatening a

government shut down over the issue of Obamacare. He tried to position it as Republicans threatening

to shut down the government in order to block 30 million Americans from getting access to healthcare.

That, he said, is simply a bad idea.

MATHISEN: Eamon Javers, thank you very much.

JAVERS: You bet.

HERERA: A development late today in the long running patent battle hitting Apple

(NASDAQ:AAPL) and Samsung over smartphone technology. This is what we know now. The

International Trade Commission, a quasi-judicial federal agency, issued a mixed ruling, banning the


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import of some Samsung devices that infringe on two Apple (NASDAQ:AAPL) patents but found no

violation on four other Apple (NASDAQ:AAPL) patents.

MATHISEN: Shares of the smartphone maker BlackBerry got a big boost today on a report the

company is considering going private. The CEO and board are reportedly discussing the idea because it

would give them time to fix the problems out of the public view. But some analysts remain skeptical

that such a deal is likely to happen. There was no comment from the company. The stock finished the

day, though, up almost 6 percent.

HERERA: And on Wall Street, investors found little reason to buy as the Dow snaps the six-week

winning streak closing at a one-month low. And in typical Friday fashion, volume was light but not just

today, all week long -- logging the lowest volume week since August of 2006. In the end, the Dow closed

down 72 points to 15,425, the S&P fell 6, and NASDAQ was off by six months.

MATHISEN: The Federal Communications Commission is getting involved in the Time Warner

(NYSE:TWX)/CBS (NYSE:CBS) dispute. The agency is urging the two parties to resolve the dispute as soon

as possible, and it`s ready to act if this dispute continues.

Separately, Time Warner (NYSE:TWX) customers have filed a class-action lawsuit against the

cable operator in Milwaukee. The suit seeks on specified damages for breach of contract and

compensation for every customer in southeast Wisconsin. They`re going to miss the Packer game.

That`s one reason why the suit was filed.

Well, one stock that floated down with the market today was J.C.

Penney. Its shares slid nearly 6 percent, as an increasingly nasty spat between its largest shareholder

and the company`s board bubbled over in public once again. Activist investor Bill Ackman, whose

Pershing Square Management holds nearly 18 percent of Penney, today sent his second public letter in

two days to directors. This one, calling for the ouster of company chairman Tom Engibous, in anaccelerated search for a new CEO.

Ackman`s letter charged that personnel decisions were made inappropriately, that him and the board

members were frozen out, and that vendors had told him privately, now publicly, that they were

worried that Penney was being too optimistic in buying inventory.

Penney`s chairman called Ackman`s comments, quote, "misleading, inaccurate and

counterproductive." Whatever, it`s the sort of public donnybrook you rarely see in American business,

but have seen more of in recent weeks.

And here to discuss what happens when companies fight among themselves or fight with each

other is Yale School of Management senior associate dean, Jeffrey Sonnenfeld.

Jeff, great to see you again.

JEFFREY SONNENFELD, YALE SCHOOL OF MANAGEMENT: It`s great to see you, Tyler. Hi, Sue.

MATHISEN: Whenever I see this kind of open board room warfare break out, and it doesn`t

happen all that often, is it ever good for shareholders, or should I run the heck away?


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SONNENFELD: It`s not good for shareholders. And you see a little bit of fleeting pop yesterday,

Tyler thanks quickly disappeared because people thought, well, maybe there is some pending news that

will be good news about some major announcement of a change coming. But no, when you have this

disillusion -- we saw it at the old, old, HP board where Tom Perkins and a guy named Jay Keyworth went

to war with their own board, and that kind of self-immolation was very bad for all parties. You seen it at

Motorola in the past and it`s quite destructive.

In this case, we have a historic breach of duty of loyalty where Bill Ackman, as independent or

an outside investor, he can say what he wants.

As a board member, he has to represent a full board. Revealing confidence is like this and attacking his

own board like this is a breakdown in the trust on the board and, of course, putting out confidential

strategic information is a no, no and this board should probably have him removed.

Sixteen percent is not controlling interest.

HERERA: You know, it also comes, Jeff, with the new CEO being on the job for four months and

being responsible for turning around a company that has been troubled for sometime. It doesn`t --

regardless of whether it`s politically correct or not, which obviously it does not seem to be, they haven`t

given this gentleman much time.

SONNENFELD: No, they haven`t given Mike Ullman much time. Mike Ullman, by the way, was

responsible for a stock price that was four times the present stock price. So -- and Mike was pushed out.

The guy who took the stock up four times where it was today was pushed out by none other than, of

course, Bill Ackman, who had another candidate, somebody who`d given overly rosy portrait to. This

fellow, you know, Ron Johnson, who wrongly contributed to the success of the Apple (NASDAQ:AAPL)

Stores to him and made a mess of things.

Of course, the stocks plummeted. They lost a third of their retail sales. They have massive

layoffs. They`ve driven away their key customers. So, it takes Mike some time to rebuild.

You`re absolutely right, Sue. An interim has to be given a little -- even an interim has to be given

some time to fix the ship.

MATHISEN: Let me take the other side of the argument for just a moment, Jeff, and here is a

company that is clearly troubled. I guess you can make the case that Ackman is being classically

disrupted and sometimes companies in conditions like J.C. Penney need a disruptor to come and shake

things up.

SONNENFELD: You can be a dissenter and a disrupter all you want within the confines of the

board room while you`re on that board. But this is not like municipal or city council meeting or, frankly,

this is a problem of somebody in Congress who thinks they are representing a narrow constituency and

not their full electoral base.

As a board member in the Western governance, you have to represent not just Pershing Square

investors or Bill Ackman`s fancy of the moment, but it has to represent the full base of investors. And

you can`t have broad-side attacks.

If he wants to do it from the inside, fine. Or on the inside, critically, but confidentially, fine. But

you can`t sort of have these attacks leaking confidential information. That`s the break down in trust.


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And that`s -- he likes this Rosie O`Donnell/Donald Trump slap down model , with getting into the mud,

and that doesn`t work here. And his preference for Allen Questrom, of all weird things, the former CEO

who was a short term CEO that is a wonderful retailer, but he`s got Foot Locker on his hands as a board

member, and Men`s Warehouse to deal with.

MATHISEN: All right. Thank you very much, Jeff. Have a great weekend. Jeff Sonnenfeld of the

Yale School of Management.

SONNENFELD: Thank you.

HERERA: A potential settlement between JPMorgan (NYSE:JPM) and the Securities and

Exchange Commission would require the firm to admit wrongdoing in its handling of the London whale

trading loss. It would be a big departure from the longtime practice of banks neither admitting nor

denying culpability. And it would be the first admission under the new program that`s been

spearheaded by SEC chair, Mary Jo White.

MATHISEN: Well, back to school, it`s one of the most important shopping seasons of the year

and this year, shoppers are looking for discounts. So, Courtney Reagan hit the outlets to see how high-end retailers are trying to take advantage of bargain hunters.

(BEGIN VIDEOTAPE)

COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):

Retailers may be holding a collective breath hoping the shoppers are coming soon. This weekend is

traditionally a big one for back to school shopping, but summer sales haven`t inspired confidence that

retail`s second most important season will be a strong one. July saw weak traffic at traditional malls

while base retailers American Eagle and Aeropostale

(NYSE:ARO) both warning investors about lower than expected earnings after disappointing sales.

(on camera): While sales in traffic at traditional malls are somewhat disappointing this summer,

it`s a different story at the outlets.

Here at Woodbury Common, premium outlet in Central Valley, New York, there are actually

lines of shoppers waiting outside to get in to some of the stores.

UNIDENTIFIED MALE: Clearance racks are unbelievable. It`s like no more (INAUDIBLE) at other

places.

UNIDENTIFIED FEMALE: Better to get it here than to get (INAUDIBLE) like Lord & Taylor`s or

something else. It`s cheaper.

REAGAN (voice-over): Lord and Taylor competitors, Saks (NYSE:SKS) and Nordstrom (NYSE:JWN)

are banking on the outlet boom. Both have more outlet locations than full line stores, and they are

opening more.

Michael Kors is expanding its outlet footprint, too.


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KEN LOMBARD, CAPRI CAPITAL PARTNERS: The value proposition continues to lead. With that,

outlets are really the main place you can go one stop shop. You got all the bargains that you could

potentially want.

REAGAN: Bargains on designer accessories for back to school. The surge in high end accessories

isn`t just happening with adults, it`s trickling down to teens.

ERIC YRUMA, KEYBANK ANALYST: The teen is looking for a number of on trend and fairly high

priced point brands. So, it`s Michael Kors, Kate Spade, Tory Burch, Calvin Klein and these brands

continue to have a lot of appeal for that teen consumer in accessories.

UNIDENTIFIED FEMALE: Looking for a wallet to get for school to go out with.

UNIDENTIFIED FEMALE: Michael Kors has bags for like 50 percent off, so they are good and they

are nice bags, too.

REAGAN: So much for being excited about fresh number two pencils for back to school.

For NIGHTLY BUSINESS REPORT, I`m Courtney Reagan in Central Valley, New York.

(END VIDEOTAPE)

HERERA: And still ahead, you scratch my back, I`ll scratch yours.

When companies bring jobs back to want U.S., the economic benefits extend all the way to Capitol Hill.

But, first, a look at how the international markets closed today.

(MUSIC)

HERERA: We start tonight`s market focus with a high flier, a really high flier.

Priceline is just ticks away from being the first stock in the S&P 500 to trade above $1,000 a

share. Investors are jumping into the travel booking company following its better-than-expected

earnings, which we told you about last night. Shares were up another 4 percent today hitting $995

before leveling off.

But Wall Street has loved this company for quite awhile. The stock is up 3,000 percent over the

last decade. So, if you invested $10,000 in 2003 that would be worth about $300,000.

A very different story, though, for shares of Dendreon (NASDAQ:DNDN).

They tumbled to a four-year low after cutting their outlook. The biotech company said sales of its

prostate cancer therapy drug Provenge will be weaker than expected. That drug, which has a high

praise tag, is facing tougher competition from newer drugs. The stock plummeted at 26 percent today

to finish at $3.39.

MATHISEN: And yet another company made it`s trading debut today.


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Several, in fact, Cvent, an event management software maker, soared on its first day of trading following

in the footsteps of -- steps of other cloud- based IPOs. Cvent helps customers plan events, venues and

send surveys.

Shares priced at $21 and finished the day up 56 percent to $32.92.

Five other companies hit the street today, as well, making it the biggest day for IPO since May.

And here is how they made out: Franks International, which provides drilling equipment and

services to the oil and gas industry, was the best of the rest. It gained nearly 20 percent.

QEP Midstream, Mix Telematics and Stock Building Supply all showed gains. But the storage

terminal owner World Point was the only loser in the group.

HERERA: Pretty rough week for the Dow and S&P. They fell four out of five days. Here with his

thoughts on where the market goes from here is David Rolfe, chief investment officer at Wedgewood

Partners.

Good to see you, David. Welcome.

DAVID ROLFE, WEDGEWOOD PARTNERS CIO: Thanks, Sue. Glad to be here.

HERERA: You know, four out of five days has some people down on the floor of the New York

Stock Exchange saying that the big rally is over. Is it over or is this just the pause that refreshes?

ROLFE: I`m a little nervous here. We`re not market timers, per se.

But -- I mean, this market is up nonstop and we`re increasingly finding it hard to find true bargains to

put in the portfolio and we typically only own 20 or 22 stocks. So, the pickings are rather slim, at least

from our vantage point these days.

MATHISEN: Well, let`s go to stocks which our viewers are asked about beginning with one that

sort of meets the sort of description you just had that`s come a long way. Ben writes, "Would love to

hear you opinion about Tesla. The stock has gone up very fast. What does the future hold on Tesla?"

ROLFE: Well, I think the future for the car company is terrific. But as it pertains to the current

shareholders, the stock is up 475 percent in the past year and a lot has to really go right for the company

to make an investment in these shares at current prices I think to be an attractive investment.

So I think it`s a great car, a great potential business, but I think there is so much reflected in the

current stock price. I think I would head for different areas right now.

HERERA: All right. Let`s move on, and Gregory asks us to please discuss Hain Celestial. What do

you think of that?

ROLFE: The same kind of story. I think the stock has far outperformed what the business can

do. It`s a great business but that stock compounded at about 55 percent over the past three years and

when you look at the current evaluation, it`s almost 30 times price to free cash flow. I think the stock is

well ahead of where the business growth is going to be.


8/11

MATHISEN: Let`s go to Biogen Idec (NASDAQ:BIIB). Mohan writes, "Is Biogen Idec

(NASDAQ:BIIB) a buy at this price?"

ROLFE: I think I`m going to go 0-3 for today. It`s great business, lousy stocks, very similar

metrics. Stocks up better than 50 percent, compounded over the last three years, a $10,000 investment

in these shares beginning of 2010 are already up over -- to $40,000.

And again, here is a stock that`s on -- in evaluation metric is very, very rich.

HERERA: So, where would you put cash to work right now? You like Apple (NASDAQ:AAPL) you

say, why?

ROLFE: Well, it`s been a tough year, no doubt about it. We don`t -- we don`t think Apple

(NASDAQ:AAPL) is broken growth company. We think the ecosystem is alive and well. We`re just -- I

mean, we can see the light at the end of the tunnel for some new products in the fourth quarter. It`s

going to continue into next year.

So, 2013 was a year of investing and cap X, you know, buying back the shares. We think fiscal2014 is a resumption of growth and a little more than 10 times earnings. We think the risk reward is

very attractive.

HERERA: And you own the stock, correct?

ROLFE: Yes, we do.

HERERA: All right. David, thank you. Have a great weekend.

ROLFE: Thank you.

HERERA: David Rolfe, Wedgewood Partners.

MATHISEN: Well, it`s not just U.S. companies that are bringing jobs back to the U.S. Some

foreign firms are opening new plants on American soil. Sounds like a win-win, workers get jobs,

corporations get good PR, but they also gain something else -- influence in Washington.

Eamon Javers is back now to wrap our special series, "Made in America."

(BEGIN VIDEOTAPE)

BEV PERDUE, FORMER NORTH CAROLINA GOVERNOR: One of our major goals has been to make

things (ph) --

SEN. RICHARD BURR (R), NORTH CAROLINA: North Carolina is moving forward.

REP. DAVID PRICE (D), NORTH CAROLINA: We think it`s good for the state.


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JAVERS (voice-over): It was a banner day in North Carolina. Lenovo announcing a new

manufacturing plant in the town of Whitsett. And as documented in this Lenovo video, all the

dignitaries were there to cheer on.

REP. RENEE ELLMERS (R), NORTH CAROLINA: Hopefully, this is just going to be start of great

things to come.

JAVERS (on camera): That`s the kind of public relations windfall that companies can count on

when they announce manufacturing jobs here in the United States. But those amendments can be more

than just an economic opportunity. They can also be an opportunity to curry favor with political officials

here in Washington.

(voice-over): In fact, on this web page, the public relations company working for Lenovo that

day boasts that five political leaders spoke on behalf of Lenovo at the event, and that the firm assisted

them in the development of their talking points and messaging for the event.

Lenovo, a Chinese computer company, is a firm that can always use some good press with the

U.S. government and has sought to sell its products to the military, the State Department and others.

OBAMA: This year, Apple (NASDAQ:AAPL) will start making Macs in America again.

(APPLAUSE)

JAVERS: And it`s not just foreign companies. Apple (NASDAQ:AAPL) CEO Tim Cook scored a

coveted seat at Obama`s State of the Union speech earlier this year after his company announced it

would invest $100 million to bring manufacturing jobs back to the United States.

SEN. CARL LEVIN (D), MICHIGAN: Apple (NASDAQ:AAPL) then sought, successfully, the Holy Grail

of tax avoidance.

JAVERS: That`s the kind of intangible Washington goodwill that can come in handy with a

company -- especially when it comes under scrutiny on Capitol Hill for its tax practices a few months

later.

For NIGHTLY BUSINESS REPORT, I`m Eamon Javers in Washington.

(END VIDEOTAPE)

MATHISEN: Still ahead, heavy rains and high heat are hurting the country`s vegetable crops.

Now, supply is shrinking, prices are spiking and you are paying the price.

First, let`s take a look at commodities, treasuries and currencies and how they did today.

(MUSIC)

MATHISEN: My seven-year-old may be very happy to hear this. You may have an excuse not to

eat your veggies. No sir Mackie (ph).


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Farms have been hit by heavy rains, and a plant virus devastating crops, reducing supply and

causing sticker shock at the supermarket.

Tonight, Jane Wells takes a look at the rising price of your leafy greens.

(BEGIN VIDEOTAPE)

JANE WELLS, NIGHTLY BUSINESS REPORT CORRESPODENT (voice-over): There is a problem in

America`s largest backyard garden, also known as California.

UNIDENTIFIED MALE: So you see this as opposed to this.

WELLS: Here in what`s often referred to as the nation`s salad bowl, there isn`t enough lettuce

or tomato.

UNIDENTIFIED MALE: We`re in an unprecedented type of situation here.

WELLS: First, the lettuce. Vegetable marketer Mark McBride says iceberg prices are up 150percent in a year as a perfect storm on weather problems across the nation impacts the crop and in case

you needed an excuse to avoid vegetables look at the price hikes for broccoli, asparagus, cauliflower and

spinach.

MARK MCBRIDE, COASTLINE PRODUCE: On spinach, that was another, since it`s very tender

nature, really got hit hard by the heat where last year we were $8.50 to $9.50. We`ve been as high as

21 to 22 bucks for a two-dozen carton.

UNIDENTIFIED MALE: This is a plant stung by a sugar bee leaf hopper sometime during its

productive cycle.

WELLS: California`s billion-dollar tomato industry is facing a longer-lasting problem. A pest born

virus which destroys the plants, 90 percent of the nation`s processed tomatoes come from here.

MARK BORBA, BORBA FARMS: We`ve had the yields reduced by 70 percent and 80 percent in

some fields. There are some processors that are estimating of the 13 million ton crop they`ve

contracted, that we could have a 2 million ton deficit.

WELLS: Consumers could see prices eventually rice for salsa and spaghetti sauce.

(on camera): Of course, the good thing about vegetables is it doesn`t take long to grow more, as

long as the weather cooperates, and you can always grow your own.

For NIGHTLY BUSINESS REPORT, Jane Wells, Los Angeles.

(END VIDEOTAPE)

HERERA: And in California, if you live in Silicon Valley, you`re just not paying more for your

veggies, you`re also coughing up a lot of cash for your house. In the heart of the tech economy, the


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average price of a home has topped $1 million for four straight months and the tech industry rebound is

a big part of the reason why, of course.

Prior to this year, the only other time that a single family home cost that much was right before

the housing crash back in 2007.

It makes New York look cheap, Ty.

MATHISEN: Absolutely. More than 1 million dollars for the medium home, wow.

HERERA: I know. That does it for NIGHTLY BUSINESS REPORT for tonight. Thanks for watching.

Susie Gharib is back on Monday.

And remember to support your public television station.

MATHISEN: And on behalf of your public television station, thank you very much for your

support. Have a great weekend, everybody. And we`ll see you here again Monday evening.

END

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NBR Transcripts Friday, August 9. 2013