tv First Business KICU January 23, 2013 4:00am-4:30am PST
damage control: boeing's latest approach to its dreamliner trouble. in today's cover story, new trends in manufacturing and efforts to make the industry safer. how to re-route your money to avoid banking blunders. rumors are swirling about a hot new tech couple. plus, how the obamas are causing a stir at j crew... again. first business starts now! you're watching first business: financial news, analysis, and today's investment ideas. good morning. it's wednesday, january 23rd. i'm angela miles. in today's first look: stocks at a 5-year high: the s&p 500 is inching toward 1,500.
it rallied yesterday on strength from banking stocks. overall it was a green day on wall street for stocks and commodities. in earnings news after the close, google glory: not only were profits up at the search engine company, but ad sales are solid. for csx railroad, however, profits are chugging slower as the demand for coal is dropping. and british prime minister david cameron delivers his highly anticipated speech today on the uk's future in the european union. let's get a trader's take on earnings coming in from google and ibm after the close with larry shover of sfg alternatives. what do you think, larry? > > traders were surprised. with ibm, no one thought they would beat with revenue, and they did. the big wild card for ibm was their service sector, and that must have beat street
expectations. we rallied 2.5 after the close. with google, a different story. it is true that ad revenue has gone down; however, there are more clicks on tablet devices, smart phones... so at the end of the day, they are making a lot more money with less per click for google, so therefore the stock rallied pretty hard after the close. > will oil be a headline story of the day today? yesterday it climbed above $96. > > it is a big story, but really the story behind the story is that oil is stuck in cushing, oklahoma, right now. so, it is trying to work its way down to the gulf refineries. refinery margins are starting to increase again. they are going to want to import the oil from cushing, oklahoma, so producing again is definitely going to balance out the supply and demand scenario. expect oil prices to go down in the next two to three months. > economists are questioning whether fed chair ben bernanke will be around for much longer. what do you think about that? > > it seems like the market is agreeing that he probably won't be around. but whoever he hands the baton to is probably going to keep his foot on the gas pedal just like ben did.
> good to have you on the show. that is larry shover of sfg alternatives. thank you larry. > > thank you. it's estimated that there are more than 8.5 million industrial and service robots in use in the world. they make cars, process food and protect us in defense applications. and as our cover story shows you, more of them are being designed to work side-by-side with humans in the workplace. more than 120 companies brought their latest creations that lift, sort and do repetitive motions in the workplace. "we're trying to give the robots more human attributes and also add sensor technology." a lot of this is dedicated to heavy-industry. the plexi-glass safety wall used in this display is often common in the workplace to prevent injury. but now, more robots are being developed for the workplace, with people standing right next to them. "it hits me and this message pops up on the screen." "it means that you can have the robot working side-by-side with
someone and there won't be a need for any safety walls around the robot." since 2008, universal robot, a danish company, has installed 1500 robots in nearly 50 countries including china. but the chinese are not likely to outsource repetitive electronics work at factories such as foxconn - at least, not yet. "in my eyes, it's not quite there yet." another development, visual capabilities: the r&d that went into smartphone technology is now being applied to robots. "vision technology is continuing to increase. they can see color and identify damaged packages." advancing technology in the workplace has also magnified the job shortage in america, according to researchers at mit. they say during the last recession, 1 in 12 people in sales lost their jobs. corporate spending on equipment and software related to sales has increased 26% since the end
of the recession. walmart is warning its suppliers around the world only to use factories that are authorized by the retail giant. the crack-down is in response to calls for safer working conditions after 112 employees were killed in a fire last november at a bangledeshi factory supplying clothes to walmart and other retailers. walmart claims the factory was not authorized. also, as target plans to open its first store in canada this spring, walmart has a canadian expansion plan underway. boeing is assuring customers it has the fix to its dreamliner problems. the company said recent battery problems that grounded all 787 dreamliners should not disrupt the delivery schedule of new 787s. that's according to a report by
reuters. scandanavian airline 'norwegian air shuttle' got the notification this week from boeing, which said deliveries will be on schedule for april. president obama is expected to go along with a debt limit measure being considered by the house. the house plans a vote today on a measure that puts the debt limit increase on pause until may, but allows the country to continue paying its bills. in the senate, democratic and republican leaders are hinting at getting down to the real business of pounding out a budget. "not a single piece of important legislation can pass the senate or become law without the votes of both democrats and republicans. so we'll be willing to compromise and work with our colleagues across the aisle." "if we don't work together to control the debt, the cost of our interest payments alone will eventually crowd out funding for things we all agree on, from defense to
infrastructure and assistance for those who need it most." in other legislative news, the house has already approved a $50-billion aid package for hurricane sandy relief, and senate majority leader harry reid said yesterday the senate could move swiftly to pass it. the controversial keystone xl pipeline may be back in play. the project has received approval from nebraska governor dave heineman this week. heineman approved a re-routing of the pipeline, which would transport crude oil from canada to the u.s. heineman said the route for the pipeline now avoids the state's sandhills region, which enviromentalists previously opposed, calling the region "environmentally sensitive." any move forward will have to be approved by the obama administration, which blocked progress of the project a year ago. superstorm sandy is taking a toll on corporate america. verizon blamed its $4.23-billion loss on storm costs. travelers
insurance company turned a $394-million profit, but that was down from $618 million last year because of hurricane- related expenses. and delta airlines, which cancelled nealry 20,000 flights, had a net income of $7 million, off $425 million from a year earlier. despite near constant pleas for more revenue, the u.s. postal service is being investigated for runaway travel spending. the report comes from the postal service's office of the inspector general and finds that the agency overpaid employee travel expenses by more than $1 million. additionally, it claims that employees used government-issued travel cards for personal travel. the postal service has agreed to the watchdog's recommendations. feeling pressure after the newtown shootings, groupon is halting all gun-related deals. the daily deals company says it is responding to customer pressure and has canceled all planned any existing discounts for shooting range and clay shooting outings. the curtain is closing on 300 blockbuster stores across the country. according to a report, dish network is shutting down stores that are underperforming or near the end of a lease. dish bought the video rental chain in 2011, when it was
bankrupt. the move is costing 3,000 employees their jobs. last year, the colorado economic development commission granted dish $2.5 million in job growth tax credits. famous for not charging fees, southwest airlines introduces a new one. passengers who can't stand the cattle call boarding process can now opt out by paying $40 to board early. southwest does not have assigned seating, and already offers passengers early check-in for $10, but this new option guarantees priority. burns caused by car seat heaters have the attention of the national highway traffic safety administration. the request for automakers to look into the issue came after usa today reported on burn injuries resulting from use of the heaters. auto industry officials are in the process of drafting recommendations. peugeot's new hybrid is riding on air - and we really mean it. the french automaker is
introducing new hybrid technology that combines a conventional engine with compressed air propulsion. it's called "hybrid air." the goal is to develop a hybrid that's cheaper than existing models and takes on toyota. some costly items are getting cheaper in 2013. cnn reports that consumers can expect to pay less on expenses including gas, vacation packages, and used cars this year. prices are also set to drop on solar panels and flatscreen tvs. the clothes sported by the first family on inauguration day made a mark in history. j crew has retired two of the items worn by first lady michelle obama and daughter malia. the items no longer available include mrs. obama's belt and the purple edition of malia's jacket. the pieces were pulled "out of respect." the obamas have been known to generate traffic that has crashed the j crew website by wearing the retailer's apparel. still to come, cutting out the
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a couple of potential deals may be in the works. there's buzz brewing in the beer industry about an anheuser-busch in-bev buy out of mexico's grupo modelo. if the deal goes through, it would mean anheuser-busch, in-bev would control roughly 52% of the american beer market, and that number caught the eye of u.s. anti-trust regulators. on tap: a number of wall street analysts who are publicly wondering if the deal will go through at all. meanwhile, a major tech deal is said to be in the works. according to cnbc, microsft is in talks to invest $1 to $3 billion in dell. joining us via skype, rob enderle of the enderle group. good morning, and do you suspect a deal will happen here? > > i think it is certainly likely. microsoft has a tremendous amount of cash, that they often struggle with figuring out what to do strategically with. the end result is that dell is going to need a lot of cash to take the company private, and so they don't carry a substantial amount of debt. so the more equity cash we can get by investors, the less they have to
carry, and the more profitable the resulting company will be. so this could be that one marriage made in heaven where the needs of both companies could be solved together. > can you give us more on exactly how microsoft benefits in the steel? > > well, what they get is a stronger partner in dell; and clearly as a major investor in the company, can have much more to say about what dell is doing and what dell would be building. also, they would have an interest in making sure dell is successful that goes beyond the partnership arrangement they have today. so, the partnership would strengthen at a time when a lot of companies are looking at exiting the pc business or going vertical, dell would be mostly a short-term, main partner of microsoft, and a stronger one at that. > who gets hurt by this? does it start to bite into apple's sales at all? > > potentially. i think the bigger risk is with microsoft's
other partners. clearly, there are going to have to be assured that microsoft will firewall dell from the core microsoft, so that dell isn't mammothly advantaged. you know, lenovo, hewlett-packard, acer, those companies are going to want to be assured that this partnership won't put them at a disadvantage. but yeah, apple, which is another vertically integrated company, clearly would face a stronger partnership, the stronger microsoft-dell partnership, as a result of a successful engagement like this. what about microsoft's new surface that's coming out on february 9th? will this help the company? > > well, that is getting kind of interesting, because you would think that part of this deal might be that dell might take over service from microsoft. when you're making a huge investment in the company, competing in the company that you are investing in would seem to be counter-strategic. so, i would think that it would be far more likely that dell might negotiate with microsoft a way to take over the service effort from microsoft, bring that up, while still allowing the service effort to operate in perhaps a more intimate matter with microsoft than any other organization outside the company would operate. so that's going to be a really interesting thing to see solved. > thank you for your thoughts, rob. > > my pleasure. still ahead, why it could be time to break up with your bank. more on that after the break.
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a public service from the obesity action coalition. at one time or another, everybody gets a case of the banking blues. joining us via skype today, jenna wortham of "the new york times" with a report on how some customers who are fed up with their banks may have found a cure. happy to have you with us. it's an idea that started with a software engineer from australia. how did it work exactly? > > "simple" is actually an app that you download your phone,
and you access via the web. and you do all your banking through that. so instead of going to bank of america or chase or into one of those brick and mortar stores, you do all of your banking through the app and online. > i love what the founder said: "banks make money by keeping customers confused. they have no incentives to make the experience better." so is he gaining because of the confusion that's out there? > > yes. i think his hope is that he can provide a much more simple experience to customers, and in doing that, in taking away some of the fees that people encounter with their traditional banks, including overdraft fees, transfer fees, he can lure those customers over to his company the start- up. > who is backing this bank? it seems risky. > > it does seem risky. but, the company is working with two federally insured banks so that they actually don't handle people's money themselves, they leave that to more traditional, professional banking banks. and then they actually also work with venture capitalists, so they have money coming in to help fund the venture and get it off the ground as well.
> how likely do you think it is that customers will go this route and leave traditional banks? > > i think it's still up in the air. they are definitely still in the earlier stages of the company. they are still building momentum. but, there are a lot of people that aren't happy with their traditional bank, and they might be convinced that it is worth giving something else a try. > are you seeing other forms of banking out there? > > there are other similar options, but this kind of feels like a new thing, it feels like a stand-alone business. i don't think we've seen other companies quite "simple" yet. > it seems like the big banks might become wise to this. so what can this bank do that the rest of the other banks can't? > > it is certainly a risk that traditional banks like bank of america or chase will kind of roll out their own mobile banking services that are on the same level with what "simple" is trying to offer. so i think they have to try to stay ahead of
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tim biggam of trading block joins us. tim, i would love to get your thoughts on the volatility index, the vix. it supposedly is measuring fear in the market, and it seems as though there is none. it is at a 12. this is a very low number. what is this telling you? really i think a lot of complacency out there, certainly given the fact that the market has rallied up almost unabatedly since the beginning of the year with the fiscal cliff resolution. a lot of that might be due to a lot of the bigger players unwinding their protection they had on pre- fiscal cliff, kind of feeling the affects here. but, as a contrarian, i think, given the fact that we are at five-year highs on the s&p 500, five-year
lows on the vix, pretty good time. certainly has never been cheaper in that time period to be buying some puts as protection here. > > i have to ask you about this latest call on apple as well. there is an analyst out there who says based on what he is hearing from activations of iphones at verizon, he believes apple could go higher than $1,100 in the next year. what you think? > > the next year would be very difficult to say the least. you put the market cap number on that and the revenues and margins, just do the math: it would be... not impossible, but certainly very difficult. kind of the chatter we heard up around $700 before the stock fell back down. in my opinion, once you kind of get the froth out of a p/e multiple in apple or any stock, difficult to put it back in. so, $1,100 may be tough. let's worry about $600 before we get to $1,100.
> i want to know, too, from a trader's take, sometimes we get these wild calls in the market. when you see a headline like that, what do you do? what goes through your mind? > > usually i look the other way. certainly, it's a headline for a day, it's not a meaningful sort of analysis. similar to goldman sachs, oil at $200, never came close. it's kind of the joe namath. if you happen to hit it, you're a hero; if not, no one remembers it. so, i would dismiss that and just look at it fundamentally. again, i think apple is solid here going forward, but a double in less than a year would be difficult on the biggest market cap in the u.s. > that is why i count on you to give us that kind of information. thank you. that's tim biggam of trading block. > > you bet. thanks angie. we are running out of time for today. be sure and come back tomorrow for a preview of the films movie studios will roll out this winter. find out which ones are worth your money. from all of us at first business, thank you for watching.