Transcript: Friday, June 13, 2014

NBR ThumANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and
Susie Gharib.

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Check, please.
Priceline buys online restaurant reservation company Open Table. And
shares soar. Will the move keep Priceline`s profit engine growing?

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Inside Intel
(NASDAQ:INTC). The stock rockets to a 10-year high on strong demand for
corporate personal computers. But can the run continue?

GHARIB: And full moon Friday. It`s Friday the 13th, but stocks rose.
And our market expert has a list of stocks that she calls “good buys” for
right now.

We have all that and more tonight on NIGHTLY BUSINESS REPORT for
Friday, June 13th.

MATHISEN: Good evening, everyone, and welcome.

Today is Friday the 13th and there is a full moon tonight. Despite
those ominous signs and continued turmoil in Iraq, investors were
enthusiastic sending all the major averages higher if only slightly after
two straight days of triple-digit losses for the Dow.

The blue chip Dow stocks got a boost from shares of Intel
(NASDAQ:INTC), which rose nearly 7 percent after it rose its full-year
guidance on strong demand for business for personal computers that use its
chips.

And a dip in consumer sentiment for June was offset by a drop in whole
sale inflation last month, thanks to lower costs for food and energy.

Here is how the markets looked at the closing bell today. The Dow was
41 points higher at 16,775. NASDAQ gains 13 to close at 4,310 and
finishing six points higher was the S&P at 1,936.

But for the week, the Dow and the S&P turned in their worst performing
weeks in two months.

GHARIB: A more stable calmer day in the oil markets today but oil
prices still pumped higher. Despite Sunni militants continuing their march
toward Baghdad there are no signs of supply problems coming out of Iraq.
On the NYMEX, West Texas Intermediate up slightly, closing at nearly $107
barrels a day. Brent Crude ended the day at $113 a barrel.

Meanwhile, from the White House today, President Obama spoke again
about Iraq, saying, quote, “The United States will do our part but not by
sending troops.”

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Iraq needs additional
support to break the momentum of extremist groups and bolster the
capabilities of Iraqi security forces. We will not be sending U.S. troops
back into combat in Iraq, but I have asked my national security team to
prepare a range of other options that could help support the Iraqi forces,
and I`ll be reviewing those options in the days ahead.

(END VIDEO CLIP)

GHARIB: President Obama also said American action is going to take
several days and people should not expect this is something that will
happen overnight.

MATHISEN: And reservations are now being accepted by Priceline.com,
the online travel site paying $103 a share, or $2.6 billion cash for the
restaurant reservation site, Open Table. You give a waiter $2.6 billion,
you`ll get a table.

Investors gobbled up shares of Open Table today, sending the stock 48
percent higher. Shares of Priceline down 3 percent.

So, what synergies does Priceline see by acquiring Open Table, and if
this is a case of where if you can`t grow growth, you buy it?

Julia Boorstin has more.

(BEGIN VIDEOTAPE)

JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: With
restaurant booking company Open Table, Priceline is expanding beyond the
crowded travel booking business with the leader in a new field.

KARA SWISHER, RE/CODE: They want to expand in the area and Open Table
is the biggest player in that area, I think. There is a lot of global
expansion to be had. It is a hard business for Open Table to have been on
their own, and they were definitely looking for expansion themselves.

BOORSTIN: Open Table has 15 million monthly users who book tables at
the more than 51,000 restaurants which uses software. And while Open Table
will operate independently, that the valuable new audience for Priceline to
target its services.

Open Table has significant potential to expand, just 20 percent of its
restaurants are outside the United States, and Priceline has a proven track
record of building relationships with hotels overseas.

Plus, Open Table is focused on mobile growth.

DARREN HUSTON, PRICELINE CEO: If you think of the scenarios, you
know, paying the check at the table or paying your hotel room in your room,
without having to go to the waiter or checkout desk, those are obvious
ideas that we want to look into.

BOORSTIN: The deal shines a spotlight on related spots, Yelp, Groupon
(NASDAQ:GRPN) and food delivery site, GrubHub, and sent their shares
soaring.

With Priceline facing growing competition and slowing growth, it`s
just the latest company just turned to acquisitions to drive results, with
Apple (NASDAQ:AAPL) buying Beats and Facebook (NASDAQ:FB) buying WhatsApp,
Internet companies in particular are looking at M&A to sustain returns.

For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in Los Angeles.

(END VIDEOTAPE)

GHARIB: The other standout stock of the day, Intel (NASDAQ:INTC). As
we reported, shares jumped almost 7 percent to just about $30 a share.
This is the highest level in a decade.

Investors bought up the stock after the company raised its revenue
guidance. As we told you last night, the semiconductor maker is citing
strong corporate sales for its upbeat outlook.

So, is it time to add Intel (NASDAQ:INTC) to your portfolio?

We turn to Doug Freedman with RBC Capital Markets in San Francisco.

So, Doug, let me just ask you the basic question, buy, sell or hold
Intel (NASDAQ:INTC) at this point? What are you telling your clients?

DOUG FREEDMAN, RBC CAPITAL MARKETS: We`re telling our clients to hold
onto it. We have a sector perform rating and we are very bullish on the
overall semiconductor sector of which Intel (NASDAQ:INTC) is a major part
of it.

MATHISEN: When you call it a sector perform, what does that really
mean? And how well do you expect the sector to perform? Because it`s
basically a commoditized sector these days.

FREEDMAN: I would agree that the sector is — I don`t know that I
would call it commoditized, what I would say is the sector is mature
secure, and we`re behaving with our companies along those lines, where
we`re getting much greater cash turnout of the sector. And I think that
the sector still has legs in terms of its ability to cash flow to investors
and they`re still attractive names within the group, despite the
outperformance that it`s put up this year.

GHARIB: It seems like the main reason that there is so much interest
now in Intel (NASDAQ:INTC) is because Microsoft (NASDAQ:MSFT) is retiring
its Windows XP operating system and so a lot of people will be upgrading
with their PCs.

So, is this a short-term phenomenon or is this something that goes
beyond the next six months or so?

FREEDMAN: That`s a huge question that we`re really trying to answer
and it`s very hard to get at the core right now. There is no doubt there
is some impact from corporations that need to get off of XP operating
systems, still being used by a very large number at the install base. And
as a result of that, they are likely probably buying some new hardware. We
did have quite a bit of cannibalization pushing into the subsidy program.

So there are a couple of pieces we`re trying to dig out. I would say
the market is benefitting from the windows upgrade cycle and we think that
that lasted at least another quarter. It is probably going to take six or
nine months to figure out just what type of an impact it is having.

MATHISEN: Where does Intel (NASDAQ:INTC) stand with respect to mobile
chips and products and do you find that to be a particular weak backhand
for this company?

FREEDMAN: I would completely agree they are pretty much coming from a
ground level of almost zero in the mobile market. Investors are incredibly
focused on how well they will do there, whether they can get into that
market. Management is dedicated into getting into the market.

They`re losing billions each year in their efforts to break into this
market. We happen to advocate a buy-over build strategy, I think they
should be more inquisitive in the space as opposed to try to invest in it
from the ground up.

GHARIB: All right. Lots of good information. Thanks so much, Doug.

Doug Freedman with RBC Capital Markets.

MATHISEN: Well, the nation`s diabetes epidemic is growing at an
alarming rate, with nearly one in 10 Americans suffering from the disease.
And that`s why some of the world`s biggest drug companies which are
gathering at the American Diabetes Association`s annual meeting are
battling to get a piece of this burgeoning market. Meg Tirrell has more.

(BEGIN VIDEOTAPE)

MEG TIRRELL, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
Diabetes affects 347 million people worldwide and that number is only
getting bigger. In the U.S. alone, 29 million people have the disease.

KAREN ANDERSEN, MORNINGSTAR SENIOR EQUITY ANALYST: Over the next
couple of decades, prevalence could actually reach 10 percent of the global
population.

TIRRELL: Most people with diabetes have type 2, formerly known as
adult onset diabetes. Increasingly, it`s being diagnosed in kids. It`s an
expensive problem. Diabetes cost the U.S. $225 billion in 2012, up 40
percent from 2007. The largest cost came from hospital care and
prescription drugs.

(on camera): That makes it a big battleground for drug companies.
The global market for diabetes medicine is $54 billion, and it`s growing by
as much as $5 billion a year. It`s dominated by a handful of drug
companies, all of which will head to San Francisco this weekend for the
annual meeting of the American Diabetes Association.

(voice-over): Novo Nordisk (NYSE:NVO) has the biggest share of the
market, followed by Sanofi, Merck (NYSE:MRK), and Eli Lilly (NYSE:LLY).
British drugmaker AstraZeneca has pegged diabetes as a key area for growth,
though it`s not currently among the top 10 diabetes drug makers worldwide,
it`s projected its revenue from that category will reach $8 billion by
2023. But it`s historically been a hard market to break into.

ANDERSON: Barriers to entry in this insulin market are very high,
very expensive to produce insulin, and I think that that`s going to be, you
know, keeping a lot of competitors out of the market and help these
companies retain a very strong pricing power and very strong profitability
going forward.

TIRRELL: The stakes are high and this weekend should provide a
glimpse of how new medicines may affect big business and our health.

For NIGHTLY BUSINESS REPORT, I`m Meg Tirrell.

(END VIDEOTAPE)

MATHISEN: To read more about the fast-growing market for diabetes
drugs, you can find the story on our Web site, NBR.com.

GHARIB: Still ahead on the program, is the economy starting to create
more high-paying jobs than low-paying ones? Reversing the trend that we`ve
seen since the Great Recession. The answer, coming up.

(MUSIC)

MATHISEN: U.S. economic growth is expected to accelerate in the
coming months at the fastest pace in a decade. The Paris-based
organization for Economic Cooperation and Development is now forecasting
economic growth of 2.5 percent this year and even more in 2015.

Thanks to the domestic energy boom, a strong U.S. stock market and a
rebound in jobs.

GHARIB: Some encouraging news about the U.S. job market.

It turns out that a new report says many of the jobs created since the
recovery are for high wage workers, not for low wage workers as previously
thought.

Steve Liesman explains.

(BEGIN VIDEOTAPE)

STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
Well, the economy has produced a lot of low-paying jobs since the recession
ended, a new report suggests that quality, good paying jobs are making a
comeback.

Wells Fargo (NYSE:WFC) economist Sarah House looked at the job growth
in just the past year and found a much more upbeat picture that we`ve seen
since the recession. The number of high-paying jobs created are running
ahead of the low-paying ones, reversing the trend.

SARAH HOUSE, WELLS FARGO: We`re actually seeing higher-paying jobs
outpace low-paying jobs. Above average industries have actually been
hiring more quickly.

LIESMAN: Among the industries leading the charge, oil and gas,
America`s fast-growing energy industry needs faster job growth with a
business wages of nearly $31 an hour.

Less physically rigorous but still high paying is job growth and
professional business services where 635,000 jobs have been added in the
past year and the average wage, nearly $30 an hour. These are the jobs of
accountants, lawyers, architects and managers.

The trend makes House more optimistic on the overall economy.

HOUSE: Consumers have a little more wiggle room in their budgets to
go out and spend meaning potentially, they can save more money and put a
little more in their retirement funds. This is overall the really positive
sign that we`re seeing from the labor market.

LIESMAN (on camera): Of course, there are still plenty of low paying
jobs being created, like in retail and food services, the leisure and
hospitality industry where wage are just $14 an hour on average, grew by
400,000 in the past year.

But there is some good news there, too. Wage sectors above average by
3 percent. With millions of Americans still underemployed, there is a long
way to go before declaring the job market healthy. The good job growth is
some better pay industries give Americans hope that they can find a few
more dollars in their paychecks this year, and that could help with the
economy on better footing.

For NIGHTLY BUSINESS REPORT, I`m Steve Liesman.

(END VIDEOTAPE)

MATHISEN: Also helping the economic recovery, the rebound in housing.
But even though home prices are rising and credit is still tight, some
borrowers who have previously lost a home to foreclosure can actually
become home owners again. And the number of these so-called boomerang
buyers is rising fast.

Diana Olick has their story.

(BEGIN VIDEOTAPE)

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
Linda van Doren lost her job in 2007. Unable to pay her bills, soon after,
she also lost her Tampa area home.

LINDA VAN DOREN, LOST HOME IN SHORT SALE: It was either eat, or stay
in the home I couldn`t afford with no money not coming in. And I had a
short sale. And it was devastating.

OLICK: But Van Doren never gave up on home ownership.

VAN DOREN: In the back of my mind, I knew what I was going to do. I
was going to purchase another home when I could, and I did exactly that.

MATT WEAVER, PMAC LENDING SOUTH FLORIDA: We see a lot of boomerang
buyers, I would say 20 percent of my current clientele has either suffered
a short sale or a foreclosure in the past and are now re-buying back into
the marketplace.

OLICK: Many of Matt Weaver`s clients are using a program launched
last summer by none other than the government itself. The FHA`s so-called
Back to Work program. Borrowers need to show they lost at least 20 percent
of household income for at least six months, and that caused the loss of
the home. They then need to show they recovered from that with
satisfactory credit for a minimum 12 months.

These are fully documented loans showing unemployment and other debt,
but yes, you can get another home for just 3 1/2 percent down, and a
competitive rate. The program, however, is not for everyone.

SYLVIA ALVAREZ, HOUSING EDUCATION ALLIANCE EXEC. DIR: Well, you still
have to have the right housing to debt ratio. That`s key, if you`re over
indebted, you`re not going to get a mortgage.

OLICK: Despite improvements in the foreclosure rate, hundreds of
thousands of Americans today are still losing their homes. Linda Van Doren
waited three years to get back into ownership, but even that was faster
than she ever expected.

VAN DOREN: It`s mine. I can do what I want to do. I love it. I
come to work and I know what I`m working for.

OLICK (on camera): There are no hard numbers yet as to how many
borrowers have used the new FHA program. But just a little perspective, it
is a very tiny fraction of the more than 7 million homeowners who lost
their homes to foreclosure or short sales since the housing crisis began.

For NIGHTLY BUSINESS REPORT, I`m Diana Olick in Washington.

(END VIDEOTAPE)

GHARIB: The Justice Department is getting ready to take Citigroup
(NYSE:C) to court, unless the bank agrees to pay more than $10 billion in
fines. And that`s where we begin tonight`s “Market Focus”.

Citigroup (NYSE:C) is facing charges that it ripped off investors by
selling risky mortgage-backed securities which later went bad ahead of the
financial crisis. Reports say Citigroup (NYSE:C) offered $4 billion to
settle the charges but the feds are looking for much more. Shares fell
about 1 1/2 percent to $47.59.

The owners of Univision are reportedly looking to sell the business
for $20 billion. The Spanish language broadcaster is talking with several
media giants, including CBS (NYSE:CBS) and Time Warner (NYSE:TWX),
according to those reports.

It was expected that Univision`s owners were going to take the company
public next year, that option still being on the table. Shares of both CBS
(NYSE:CBS) and Time Warner (NYSE:TWX) were off slightly today. CBS
(NYSE:CBS) closed at $60.45, Time Warner (NYSE:TWX) at $67.84.

An update on the possible Sprint/T-Mobile merger. There are reports
now that a definitive deal between the telecom companies are still weeks
away, but they have agreed on some terms. Reportedly, the merged company
will be branded T-Mobile, not Sprint. And the two agreed on a $2 billion
break-up fee. Shares of Sprint rose more than 1 1/2 percent to $8.73. T-
Mobile fell a fraction to $32.91.

MATHISEN: Disney (NYSE:DIS) expects its global retail sales of the
“Infinity” video game to hit $1 billion. The company launched the game
just 10 months ago, to help turned around that struggling gaming unit
there. Despite that, shares were unchanged today for Disney (NYSE:DIS) at
$82.80.

Federal regulators looking at Netflix`s claims that Verizon (NYSE:VZ)
and Comcast (NASDAQ:CMCSA) (NYSE:CCS) are responsible for slow content
streaming speeds. Netflix (NASDAQ:NFLX) has been complaining about deals
it has had to cut with the two companies to ensure that its videos get to
customers without hitches. Shares of Netflix (NASDAQ:NFLX) were up 1
percent to $427.71. Verizon (NYSE:VZ) up a fraction, $49.18. But Comcast
(NASDAQ:CMCSA) (NYSE:CCS) shares were closed at $52.47, off just slightly.
Comcast (NASDAQ:CMCSA) (NYSE:CCS) is the parent company of CNBC, which
produces this broadcast.

The renewable energy firm Abengoa yield saw its shares surge in the
company`s trading debut. The offering raised more than $720 million after
shares were priced well-above the expected range at 29 apiece. The stock
finished at 27 percent higher at $37 a share.

GHARIB: Restaurant chain PF Chang reporting a data breach involving
customer`s credit and debit cards. After learning of the breach, PF
Chang`s, with more than 200 locations in the U.S., instituted a manual
credit card system at all of its outlets. The company also set up a Web
site for customers to get updates and information about the hacking.

MATHISEN: Our market monitor tonight says investors are too worried
about the things everybody is worried about, but not worried enough about
the world`s less talked about risks. She is Susan Fulton, president of FBB
Capital Partners.

Susan, welcome. Good to have you with us.

I was intrigued by the idea that we spend too much time worrying about
what everybody else is worrying about and not enough time worrying about
the things we really ought to be worrying about. Give me some examples of
the former and the latter.

SUSAN FULTON, FBB CAPITAL PARTNERS: Well, we`re worried about
inflation. And I don`t think we ought to be.

We`re not worried about deflation. I think there are several things
that could put us in trouble that way. One is — one is gasoline prices.
I see them continuing to move up. And that is going to be —

MATHISEN: That`s the opposite of deflation?

FULTON: What happens is, gasoline is a tax on our consumption level.
And it takes — it is like food and housing. If you have to spend more on
it, you have less money for anything else.

So, it`s not a discretionary item. It is an item that you have to do
to get to work. And at least historically, if you look backward, when
gasoline prices have gone up we have had major economic problems in the
stock market. And I would use as an example 2008, the first time that our
firm saw that the world was going to be in trouble was when gas prices got
to $145 a barrel. And we sold half our gas. Because what it was going to
do is contract the market, which is exactly what it did.

The second thing is the Europeans are now charging — actually have a
negative interest rate. And they`re hoping that will get their banks to —
to — their banks to lend more to their population. But since everybody is
lazy and bankers are lazier than the average, what it`s actually going to
do is have their bankers buying treasuries which will keep treasury yields
way down.

GHARIB: It`s a fascinating conversation, but let`s look at the really
big picture, the portfolios. Do you have a couple of stocks that you are
recommending tonight and let`s go down the list, Bank of America
(NYSE:BAC), the top of the list — not a very popular stock with investors.
What do you find attractive here at $15.42.

FULTON: Well, it`s a Warren Buffett stock. It`s a stock nobody
likes. And all of its problems that we believe have already happened. So,
it is going to have — it is going to have to talk the federal government
into letting it pay a dividend again.

But it has very, very strong cash flow, lots and lots of exposure to
the checking, savings account market, which is the cheapest money a bank
can get. And we think that they will be able to start paying the dividends
this year sometime.

GHARIB: All right. Let`s move on to another choice of yours, that
would be Caterpillar (NYSE:CAT), Cat.

FULTON: Yes, Cat was a dog last year, it has begun to move up this
year and has a little bit of a pullback. We think that it`s under-valued
right now. We believe it may run ahead of itself. But we think that it
has lots of get up and go and it`s a global growth market.

GHARIB: Let`s talk about Mondelez. Ticker symbol MDLZ. You have the
$42 price target on this stock. How do you get there? What drives it?

FULTON: Well, that two things we believe are going to drive Mondelez
up is, number one, it`s the old craft overseas.

GHARIB: Right.

FULTON: So, it`s a developing market play. It is the kind of thing
people buy when they first begin to get money. And the second thing is
it`s got an activist investor in — a substantial part of it, who is
looking at cutting costs and increasing shareholder value. So, it`s got
some pressure on its back.

MATHISEN: All right. Susan, thank you very much for being with us
tonight.

Do you have any disclosures about those three stocks you mentioned?

FULTON: No, I own none of them.

MATHISEN: OK. Susan Fulton is president of FBB Capital Partners —
thanks again.

And coming up, stock in the rough as the U.S. Open gets underway.
What`s the golf industry doing to get people swinging again?

(MUSIC)

MATHISEN: More trouble at General Motors (NYSE:GM), which announced
another big auto recall today, the newest one involves more than a half
million Chevy Camaros from the years 2010 through 2014 for ignition switch
problem that cut power to the engine. It`s the latest defect, similar to
the one on those older compacts, that`s been linked to at least 13 crash
related fatalities.

GHARIB: And finally tonight, as we approached Father`s Day this
Sunday. We take a look at the struggles facing the favorite past time for
a lot of dads, the game of golf. Fewer new players, high fees for teeing
off, and slowing sales of new equipment have put golf in the rough.

So, what`s being done to keep the game on court?

Dominic Chu has more from Pinehurst, North Carolina.

(BEGIN VIDEOTAPE)

DOMINIC CHU, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): The
game of golf celebrates one of its biggest events of the year, the U.S.
Open golf championship in Pinehurst, California, also home to next week`s
U.S. Women`s Open.

The events come at a critical time for the golfing world, according to
the National Golf Foundation, there are 5 million fewer people playing golf
than there were a decade ago, although that number has stabilized since
2011.

ASHLEY MAYO, GOLD DIGEST: Golf requires a lot of time and a lot of
money and that`s something a lot of people can`t afford.

CHU: And that`s translating into a slowdown in golf equipment sales.
Earlier this year, both German sports giant Adidas and Dick Sporting Goods
cited weakness in their golf business. Of course, that`s just one side of
the story. Other members of the golfing community believe that the
negative headlines are over-blown.

RAND JERRIS, USGA: Popularity in golf is directly tied to what is
going on economically. So while we experience this little period of
downturn in the game, we do think it`s going to be temporary.

CHU: Major championships like the U.S. Open are seen by the industry
as a way to reignite interests in the game. There is also interest in
bringing younger people into the game and that`s being done by some of
today`s biggest players.

MAYO: Ricky Fowler, Jordan Spieth, Dustin Johnson, all of these
exciting young golfers are getting young golfers into the game. They look
athletic. They say all the right things. They wear all the right clothes,
so they`re really exciting.

CHU (on camera): But some real big issues remain, like will Americans
spend their hard-earned money on golf or other things? For NIGHTLY
BUSINESS REPORT, I`m Dominic Chu, Pinehurst, North Carolina.

(END VIDEOTAPE)

MATHISEN: It takes a lot of time, a lot of money, and it`s hard.
Golf is hard. Dominic can hit it, by the way, a long way. I have played
with him.

GHARIB: All I know is every golfer counts the days to the weekends,
so they can play and then on Monday, they say how was it? They don`t want
to talk about it.

MATHISEN: No, that`s very true.

GHARIB: That`s NIGHTLY BUSINESS REPORT tonight, I`m Susie Gharib,
happy Father`s Day, everyone.

MATHISEN: Thank you.

GHARIB: Tyler, have a great time with your boys.

MATHISEN: We will, indeed. And to everyone — happy Father`s Day.
I`m Tyler Mathisen. Have a great weekend. We`ll see you on Monday.

END

Nightly Business Report transcripts and video are available on-line post
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