Marketplace: News Archives

Monday, November 13, 2000
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It's Monday, November 13, 2000. I'm David Brancaccio.

How low can the Nasdaq Composite index go? If you shopped that question around stock analysts over the weekend, a lot of them would have shrugged, sucked their teeth, and so oh, maybe 2850. Today it was a self-fulfilling prophesy. The Nasdaq went into freefall early today after Hewlett-Packard stunned investors with a grim profit outlook. The index got down to 2859, then bounced sharply the other way to trade in positive territory and then closed down 2.1 percent at 2966. Marketplace's Jessica Smith has the Hewlett Packard story.

Smith: "Hewlett Packard's been struggling to stay on top of changes in the industry, so it doesn't end up back in the garage, where it started. It was hoping for a heroine in the form of Carly Fiorina, a new CEO and the first woman to run a company in the Dow Industrial Average. But today, two days ahead of schedule, Fiorina announced her profits would be lower than expected."

Fiorina: "This morning we announced that while we exceeded out topline growth objectives for the fourth quarter, missed on the bottomline. So before I get started I have one question for you: do CEOs get to ask for a recount?"

Smith: "But the Cult of Carly, as some call it, couldn't counter the general cooloff in computer sales, as companies and consumers decide they don't need to buy so many PCs anymore. Cory Johnson is editor at large at The Industry Standard."

Johnson: "If you look across the board you see at Apple, Compaq Dell and IBM, all the boxmakers are having problems big problems."

Smith: "Such as Europe's falling currency, which hit profits overseas. But Walt Szaicki, senior portfolio manager at Bank of America Capital Management, who holds Hewlett Packard stock, says the firm also made some costly internal moves, like hiring new sales staff."

Szaicki: "Its important to have a sales force that is capable and you can cover all your customers but in some cases sales to corporation slowing coupled with higher expenses, that will impact profits."

Smith: "Still, the last thing investors need these days is another hi-tech giant announcing lower-than-expected earnings. Already jittery over an economic slowdown and presidential uncertainty, investors are ultra sensitive and trigger happy with their sell orders. HP's bad news caused the Nasdaq Composite to crash below the 3000 mark for the first time in a year. I'm Jessica Smith for Marketplace."

Hewlett Packard had been in talks to buy business consulting giant PriceWaterhouseCoopers. Not any more. Today, HP said those talks are off.

With nothing definitive today on the Presidential election, the Dow closed down 85 points or 0.8 percent, after dropping 233 points earlier. Bonds were up with the Federal Reserve meeting Wednesday.

With the presidential contest now in overtime the campaign troops of Texas Gov. George W. Bush and Vice President Al Gore need to keep their political operations up and running - and financed. Thing is, campaign money is for campaigns, not recounts. Heather Szerlag in Washington has this report on how the campaigns are paying for "Round Two" here.

Szerlag: "As the Bush and Gore camps deploy squadrons of lawyers and campaign workers to wage battle in Florida and now perhaps...other states the question arises: How WILL combatants pay for their ground troops? According to campaign finance watchdog group Common Cause federal laws regulating election result challenges are murky. But under the Federal Election Campaign Act, donations to help fund a recount or a contested election fight are not considered campaign contributions. And therefore no limits are in place on how much an individual donor can give but they must come from individual donors rather then corporations or union treasury funds. The Democratic National Committee has already pledged to raise three million dollars to fund the Gore Effort. And this weekend the Bush team dispatched an ``urgent message'' by e-mail asking supporters for up to $5,000 each to help finance the recount campaign. Bush campaign spokesman Bob Hopkins says there's no way to tell at this point how much money the email solicitation will raise."

Hopkins: "The email program just started on Saturday so it's hard to determine what the results are at this particular point in time. No dollar amounts have been set but we expect a very strong response."

Szerlag: "Hopkins says the Bush camp is not keeping a tally on expenses for their electoral crusade but he expects that general overhead costs such as travel expenses and continuing to keep most of the campaign staff on board will be high. And one of the biggest expenses will be upkeep for the legion of lawyers now clogging Florida's courts with suits and countersuits over handcounts and vote certification. Paul Rothstein, a constitutional law professor at George Washington University, says it is unclear whether Bush or Gore will get their money's worth from the legal wrangling now underway in Florida."

Rothstein: "Both sides have a right indeed an obligation to their voters to employ the procedures the law provides for clarifying the vote it is unlikely that the courts will determine who is going to be president - highly, highly unlikely."

Szerlag: "Unlikely or not, both sides are pulling out all the stops in their final showdown and when it comes to covering those upfront costs both parties already are getting a little help from their friends. In New Mexico where Bush holds a razor thin 17 vote lead over Gore a former Republican state lawmaker picked up the nearly $2,000 tab for impounding ballots in 70 precincts. Many of the top gun lawyers on both sides, including the dueling former Secretaries of State Warren Christopher and James Baker, say they are working for the good of the country - not for billable hours. For Marketplace, I'm Heather Szerlag."

Paying a political debt of a different may be one of the underlying factors in a new set of ergonomic standards from OSHA, the Occupational Safety and Health Administration. At least, that's the viewpoint of the National Association of Manufacturers, which has filed suit to block the new rules aimed at reducing on-the-job injuries caused by doing the wrong movement over and over. The manufacturers lobby sees a Clinton nod here to organized labor for their support on Election Day. As Helen Palmer reports from the Marketplace Health Desk, that's not the manufacturers only complaint.

Palmer: "Repetitive stress injuries - tendinitis - sciatica - the musculoskeletal disorders these new rules hope to prevent are staggeringly expensive - as much as $60 billion in direct costs, says the Occupational Safety and Health Administration . That makes the $4 billion OSHA reckons it would cost to eliminate the risk factors a minor expense. But Pat Cleary, the National Association of Manufacturers Human Resources expert, reckons it would cost his members twice that much in the first year - and another problem is the scope of the new rules."

Cleary: "They define a work-related injury as that injury caused by work or aggravated by work - this rule has taken OSHA into the soft-ball fields and bowling alleys of America."

Plamer: "Why, he asks, should an employer be on the hook if you pulled a muscle moving the couch - or playing soccer with the kids?"

Cleary: "They simply don't want any Government regulation on job safety."

Palmer: "Pat Seminario, health and safety director for the AFL-CIO, says employers groups are short-sighted in opposing these kinds of rules."

Seminario: "Programs on ergonomics reduce injuries, they save employers money, reduce workers compensation costs and often increase productivity and efficiency. "

Palmer: "For workers, she says, these new standards are the most important regulations OSHA has ever issued. Neverthless, their future is uncertain - challenged in court - and hostage to the same politically murky future as the whole country. For the Health Desk at WGBH Boston, I'm Helen Palmer."

And we conclude the top of our news today with the Marketplace Wedding Announcements: The tree growing and cutting company Weyerhaeuser wants to buy rival Willamette for $5.25 billion. Willamette's board isn't wild about this, but its stock shot up more than 32 percent today.

The big meatpacker Smithfield Foods is offering $4.1 billion to buy a much bigger rival, IBP. Smithfield is big into pork. IBP is the biggest name in beef and had already been offered less by the investment house Credit Suisse-First Boston. Agriculture Secretary Dan Glickman wants the Justice Department to closely review a merger that will put 40 percent of the country's pork and 30 percent of the country's beef production under one management. Smithfield shares closed down 11 percent. IBP went up nearly 7 percent.

And another glamorous union today, FedEX is buying American Freightways trucking for a little less than a billion dollars. It already owns Viking, which specializes in shipping heavy stuff in the west. American Freightways does this in the east. If you're buying furniture via the internet, perhaps you care, but it won't mean much for the overnight, light package service that made FedEx famous, but has analysts currently worried about growth. Still, FedEx shares closed up 0.4 percent today.

More on the extreme volatility in the markets, when we do the numbers.