Marketplace: News Archives

Monday, November 20, 2000
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It's Monday, November 20. I'm David Brancaccio.

Technology stocks were clubbed down further today after an influential brokerage house downgraded some of the high-tech leaders. The Nasdaq composite dropped about five percent to close at 2875 with Oracle and Juniper two of the day's biggest losers. Stocks of the venerable, brand name companies in the Dow also fell, but not by nearly as much. Marketplace's Michelle Brier has more from New York.

Brier: "It was like the entire technology sector woke up on the wrong side of the bed this morning. Investors were dumping everything and anything internet related, says David Blitzer, chief investment strategist at Standard and Poor."

Blitzer: "It began with an oracle executive leaving to take a top position in a competing company. That sent oracle down. Then a widely watched analyst downgraded Cisco and Juniper - two other bellwether stocks, which sent those down. In the background, a lack of decision in the presidential election leaves a negative cast on everything."

Brier: "The defection at Oracle by vice president Gary Bloom, the second major change to the company's leadership in six months, did not fill investors with confidence. Nor did the warning by Morgan Stanley Dean Witter that web network providers Juniper and Cisco would face serious revenue growth problems ahead. Analyst Larry Wachtel at Prudential Securities says those comments sent tremors through the market."

Wachtel: "It shows you that the economy is cooling down and effecting some of these exalted stocks. It doesn't take much in a cautious atmosphere to bring the market down. And when you go after the sacred cows - and Juniper and Cisco are sacred cows - then everything else falls by the wayside."

Brier: "Wachtel agree the election wrangling in Florida isn't helping to calm edgy investors who desperately want the race settled ahead of this week's thanksgiving holiday. In New York, I'm Michelle Brier for Marketplace."

Just two weeks after rejecting an offer from Pepsi, Quaker Oats reportedly is being wooed by Pepsi's main rival, Coca-Cola and also by the French company that owns Evian bottled water. Quaker Oats won't comment but all the talk boosted the company's stock price by 5.2 percent today and is drawing attention to Quaker Oat's "crown jewel." And we're not talking oatmeal, here. Marketplace's Sarah Gardner reports.

Gardner: "The name Quaker Oats may conjure up homey images of steaming hot ceral and sweet pancake syrup on the kitchen tablebut Quaker's hottest property is what some of us still think of as that lime-green sugar water for sweaty athletes. Gatorade, of course, isn't just sugar water and now comes in flavors from Fierce Grape to Green Tangerine. It's been dubbed the "Microsoft of sports beverages" because it holds an 80 percent share of the sports beverage market. John Sicher publishes Beverage Digest."

Sicher: "I think Gatorade's growth has come from two sources. One, it's been marketed brilliantly by Quaker Oats and two, it's been able to tap into this growing awareness by consumers about what they consume."

Gardner: "Folks like Coca-Cola and Pepsi see their future growth in non-carbonated sports and energy drink products consumers believe have some health benefits. And even though most of us probably don't exercise as hard as your average quarterback and don't need to replenish all those fluids, carbs and electrolytes, we like to think we do. Whoever wins the battle for Gatorade, however, will have to contend with a suddenly trendy alternative drink among football players. This fall some of them were gulping pickle juice on the sidelines, believing it cuts down on cramping and dehydration. I'm Sarah Gardner for Marketplace."

Whatever rulings are ultimately made by the Florida Supreme Court, which heard arguments today about just how the presidential election should be allowed to proceed in that state, a consensus is building that the most technologically advanced country in the world needs a more efficient way of counting votes. From Washington, Marketplace's John Dimsdale looks at some of the reforms being considered.

Dimsdale: "The most common method of voting in this country is the punch card used by about 40 percent of the electorate. The drawbacks are now well known to the whole world. One-fifth of the electorate still vote on mechanical-lever machines that were first introduced in the late 1800s, and are no longer made although repair parts are available. Oregon conducted all its voting by mail this year. Turnout increased, but the vote count is slow and there were breakdowns caused by missing signatures and mis-marked ballots. The computer age has yet to solve the problems although electronic voting shows some promise. Touch screens make choices clear and optical scanners make counting votes quick and reliable. There are still concerns the electronic data is vulnerable to tampering, but several systems have paper backups for verification during recounts. The biggest drawback appears to be the cost which ranges from three to five billion dollars for enough electronic machines nationwide. Former Federal Election Commission member Trevor Potter says the country is stuck with an outdated system because there hasn't been any pressure to change."

Potter: "Although election officials have known there is a high error rate with these punch cards, unless you have a very close election no one else has been aware of it because the error rate is smaller than the margin of victory for the winning candidate so no one's worried about it."

Dimsdale: "Potter welcomes congressional calls for a study of the fairest, most convenient and trustworthy system of voting. Whether more reliable voting machines will be available for the next election depends on the political pressure from voters and taxpayers. In Washington, I'm John Dimsdale for Marketplace."

The fate of two countries' leaders was decided in Tokyo today. Peru's president Alberto Fujimori fled his country for his ancestral homeland in Japan where he presented his resignation after a nine-week corruption scandal worked its way up the power ladder. While he was holed up in a luxury Tokyo hotel, moving vans were reported to be rolling up to the presidential palace in Lima. And Japan's unpopular Prime Minister Yoshiro Mori, narrowly defeated a no-confidence vote, saving the ruling Liberal Democratic Party from an assault by reformists. But as Marketplace's Jessica Smith reports from Tokyo, doubts about his ability to lead may mean his days are numbered.

Smith: "Analysts say Prime Minister Mori's image as a bumbling incompetent, coupled with dissatisfaction with the economy and Japan's alarming public debt helped trigger this crisis. As a proportion of Gross Domestic Product, Japan's public debt is higher than that of any other industrialized nation, partly due to public spending program. Mori's slightly younger opponent within the ruling Liberal Democratic Party, Koichi Kato, seized on this as he mounted his campaign against Mori. Kato is also seen as a proponent of deregulation, which many in the financial markets would like to see. Ron Bevaqua is senior economist at Commerz Bank Securities."

Bevaqua: "Anything that reduces the power of the old guard within the LDP means less focus on spending money and more focus on reform of the economy whether it is regulatory or legal or in some way destined to help speed the transition away from weak uncompetitive firms and industry to more competitive firms and industries."

Smith: "Japan's economic health is especially crucial to Asia, but many analysts warn not to get too excited about change, especially among prime ministers, which one famous politician here described as interchangeable. In Tokyo, I'm Jessica Smith for Marketplace. And that's the top of our news for Monday."

And that's the top of our news for Monday. If you're just joining us, you'll want to hear what happened to the Nasdaq Composite - it dropped five percent today. The Dow fell 167 points or 1.6 percent. Details when we do the numbers.