Marketplace: News Archives

Wednesday, November 1, 2000
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It's Wednesday, November 01, 2000. I'm David Brancaccio.

Quote: "We know we have let our investors down." That mea culpa was offered by WorldCom Chief Executive Bernie Ebbers today as he announced the company would separate its consumer phone services from the rest of the company in an effort to boost its sagging stock. The effects of this strategy were not immediately apparent, with WorldCom shares plunging another 20 percent today to their lowest levels in three years…as Marketplace's Michelle Brier reports.

Brier: There were two major announcements from Worldcom today and neither seemed to please Wall Street. First the company slashed its revenue projections through next year. Then it said it would create a tracking stock to separate its long distance phone business from its data and internet division. investors responded by dumping Worldcom shares.

Calabrise: "Basically, if you look at the stock price, they're treating them like they are going out of business."

Brier: "Kevin Calabrise is an analyst with Argus Research. He says Worldcom's revenue warning took the markets by surprise."

Calabrise: "It's coming from not just the slow growth in consumer long distance where everyone knew it would be off significantly, like we saw with AT&T. But also, its their international growth brought down for next year and their data growth, they've brought down expectations."

Brier: "Calabrise thinks the tracking stock will help Worldcom revive its image and share price. Essentially, the company is unmerging the MCI part of itself, just two years after acquiring the long distance carrier. Intense competition from the Baby Bells, wireless and internet phone service have made it hard for even giant Worldcom to make money..."

Calabrise: "The entire long distance industry got blindsighted by the technology moving faster than anyone expected."

Brier: "Worldcom's new tracking stock - to trade under the ticker symbol MCIT- could launch early next year. Unlike a spinoff, it will not need regulatory approval. In New York I'm Michelle Brier for Marketplace."

It's one thing to get down to the dry cleaner and find it closed, but what happens if things are all locked up at a hospital emergency room when you show up for treatment. This is not a fear, but a reality in Massachusetts and elsewhere. A new report from Boston's Emergency Medical Services documents this, as Helen Palmer reports from the Marketplace Health Desk.

Palmer: "Boston's Emergency Medical Services report that on everage, two Massachusetts hospitals have closed their emergency departments every day this year. Worst hit is Mass General - closed for 45 hours each week recently. But Alan Woodward, chief of emergency services at Concord's Emerson Hospital, says the Bay State's hardly unique.

Woodward: "This is an international problem that we saw last winter; it was a severe problem in England, in Germany and particularly in Canada."

Palmer: "In this country, he says it's worst on the west coast - and in Massachusetts. Why? Because rationalization and streamlining under managed care has shrunk the system."

Woodward: "We've closed from 127 down to 77 emergency departments and in addition we've closed more than half of our hospital beds."

Palmer: "But there aren't fewer patients - indeed, as those without health insurance rely on emergency departments for their routine care, as the baby boomers age, and people live longer, so demands on the health system increase.

Koh: "This is an example of health care under extreme duress, and it's affecting us not just here but across the country."

Palmer: "Massachusetts Commissioner of Public Health, Dr Howard Koh, called me from a car - this is a public health issue that has to be addressed urgently, he says. He's set up a task force, and released "best practices guidelines" - but that doesn't address the fundamental mismatch between supply and demand."

Hollander: For yrs now we have been asking our caregivers to do more and more with less and less.

Palmer: "Ron Hollander is the President of the Massachusetts Hospital Association."

Hollander: Why the emergency rooms? Because that's where system breakdowns often end up.

Palmer: "And the system is breaking down, he says - because it's overstretched at every level - there's a shortage of nurses, of home care and mental health and long-term care workers. Part of that's due to the financial squeeze coming from the government which cut reimbursement under the Balanced Budget Act, and from HMOs trying to restrain costs in their turn. The diversion of ambulances is one way it impacts the public first hand. Just let's hope, he says, that we don't have a bad flu season this winter. For the Health Desk at WGBH Boston, I'm Helen Palmer for Marketplace."

The folks who do the ordering at factories haven't been this pessimistic since the Asian economic crisis pushed things down in the manufacturing sector at the end of 1998. A survey of purchasing managers out today indicated that business has now slipped for three months in a row, with momentum draining a bit faster than the what we're seeing in the economy at large. Interest rates slipped further today…with the yield on the ten year treasury note falling to 5.74%. These low rates have been prompting folks to buy new mortages. Those are running at the highest level in one and a half years. A constitutional amendment's been introduced to get rid of the electoral college…it's more than two hundred years old and hasn't won a single football game. Marketplace's Stephen Henn reports.

Henn: "If you believe the polls this election is a barn-burner - a cliff hanger - it's too close to call. And for the first time in 112 years there's an off chance that the person who wins the popular vote won't be moving into the White House in early 2001 according to Congressman Jim Leech."

Leech: "There is a scenerio that one candidate could get the popular vote and another candidate could get the popular vote and it could be by a substantial margin. In which case I think you are going to have a lot of popular descent. It won't delegitimize the next president it will weaken the next president."

Henn: "It's the 538 electors who make up the college that ultimately cast the deciding votes for president. When you and I go to the voting booth November 7th - we'll be voting for a slate of electors -not presidential candidates. In forty eight states those electors are divvied up according to a winner take all system - so if candidate X eaks out a one vote victory in California he still gets all 54 electoral college votes. And if candidate Y wins by a million votes in Texas 999,999 of those votes don't mean squat. So it's theoretically possible to win the election without winning the most votes. But that's not the electoral college's only quirk according to Dr. Walter Burns, a Constitutional Scholar at the American Enterprise Institute."

Burns: "Last I counted 26 out of the fifty states allowed the electors free choice they could vote for whomever they pleased."

Henn: "24 states require electors to vote for their parties candidate - but its an open question if those rules are enforcable. The only constitutional requirements for being an elector are that are that you're not serving in the House or the Senate and you haven't aided a rebellion against the U.S."

Burns: "I'm 81 years old - laughs - I've been somewhat involved in politics and I couldn't name a single person who has been an elector. They are essentially anonymous."

Henn: "For all it's quirks, though, the electoral college has proven pretty durable. So far there have been more than 700 separate attempts to change it and it is with out a doubt the most frequently attacked part of the constitution. But the college is still kicking along. In Washington, I'm Stephen Henn for Marketplace."

And that's the top of our news for Wednesday, November 01, 2000. Today the Dow fell two thirds percent, 71 points. The Nasdaq fell a percent after its big surge Tuesday. Details when we do the numbers.