Transcript: Thursday, January 29, 2015

NBR ThumANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and
Sue Herera.

(NASDAQ:GOOG) misses, Amazon (NASDAQ:AMZN) breaks its losing streak, and
Dow component Visa (NYSE:V) splits four for one, potentially setting the
tone for trading tomorrow after a triple-digit gain today.

earnings season. But things are different this time around, and it could
change the way you make investment decisions.

MATHISEN: Mixed shame-up. Meet the man who has a big task ahead of
him and that would be turning around the world`s largest restaurant chain.

All that and more tonight on NIGHTLY BUSINESS REPORT for Thursday,
January 29th.

HERERA: Good evening, everyone.

Another busy day on Wall Street — the busiest day of the current
earnings season and after some upbeat corporate results slight gain in oil
prices and good news about jobs, all the major averages end the day sharply
higher. But we begin tonight with some big after-the-bell earnings reports
from names like Amazon (NASDAQ:AMZN) and Visa (NYSE:V).

First, a rare top and bottom line miss from Google (NASDAQ:GOOG) after
a surprise drop in user clicks on its online ads. The search company took
in $6.88 per share after adjustments, well below the Wall Street estimate
of $7.11 a share. Revenues grew 15 percent and were just shy of $18
billion, but again, that was short of forecast.

Shares of Google (NASDAQ:GOOG), one of the mostly wildly highest
stocks in mutual funds initially dipped but then higher after hours.

Bertha Coombs covers Google (NASDAQ:GOOG) from the NASDAQ exchange and
she joins us with her one big takeaway from the firm`s results.

Good evening, Bertha.


You know, the thing we are seeing from these big tech companies like
Google (NASDAQ:GOOG) is that mobile is really what matters and you need to
have engagement with people on their mobile phones and that`s where you`re
going to sell them advertising. Although initially lower, shares are
getting a bit of a boost as the executives on the conference call seem to
be saying, hey, we get it. We know they`re talking about engagement on
YouTube, on mobile, and how they are working on trying to get better
advertiser engagement with regard to that. That is going to be the key
here over the next few months.

MATHISEN: All right.


MATHISEN: Excuse me, Bertha, I appreciate that. Stay right where you
are. We`re going to get your take on Amazon`s results in just a moment.

But first, let`s move to Visa (NYSE:V) and the news here was very good
for the world`s largest credit and debit card issuer. It got help from
lower gasoline prices and robust job market, among other things here in the
U.S. Earnings is $2.53 a share, excluding items. That topped forecast by
4 cents. Revenue a slight beat there, as you see, $3.38 billion versus
$3.16 billion. And after announcing that four-for-one stock split, shares
of the costliest stock in the Dow index, that`s presplit, were initially
higher in late trading as you see on that graphic.

Mary Thompson now with her one big takeaway on Visa`s numbers.


takeaway is that it`s steady as she goes for Visa (NYSE:V). The payments
giant reporting an 11 percent increase in profits for the quarter, thanks
to revenue growth in all three of its business segments — service, data
and international.

Service is the revenue it collects from banks for putting their name
on the card, essentially. Data is the fee that it collects for processing
transaction. And then, international are those cross border transactions
that it processes as well.

All of these good results delivered despite the negative impacts of a
stronger dollar. Total processed transactions for the company in the
quarter, up 10 percent. That was a little less than expected because cross
borders transactions weren`t quite as robust as analysts had expected.

The company also affirmed its earlier guidance outlook for 2015, and
said it`s splitting stock four for one.

For NIGHTLY BUSINESS REPORT, I`m Mary Thompson in New York.


HERERA: Also reporting tonight, e-commerce giant Amazon (NASDAQ:AMZN)
which saw a 15 percent jump in net sales last quarter, but had to spend a
bundle on Amazon (NASDAQ:AMZN) prime video streaming service.

A huge top line beat of 45 cents a share, excluding items, easily
topping forecast of 17 cents a share. Revenues topped $29 billion, but
just missed estimates. Shares seeing an initial jump in after-hours

And once again, Bertha Coombs rejoins us from the NASDAQ exchange with
her big takeaway from Amazon`s results — Bertha.

COOMBS: You know, Sue, Amazon (NASDAQ:AMZN) is still spending, trying
to keep people engaged with them, particularly through Amazon (NASDAQ:AMZN)
prime. You have to think of them now a little bit like a Costco
(NASDAQ:COST) or B.J.`s where they want you to be a member to keep you in

The good thing that they did this quarter was to show they can still
make money doing that. They don`t seem to have anything that`s going to be
a huge spender outside spending coming up. So, investors are much more
encouraged that maybe some of all of this activity that seems to be so
strong can slow to the bottom line now.

HERERA: All right, Bertha, thanks again. Appreciate it.

Bertha Coombs at the NASDAQ market site.

MATHISEN: And let`s give you a Wall Street wrap-up.

Stocks shook off the early losses and ended sharply higher after the
round of strong earnings from consumer related stocks and on news that new
claims for jobless benefits fell now to a 15-year low last week.

At the close, the Dow was higher by 225 points. Rising oil prices
helped too. NASDAQ gaining 45 and the S&P was up 19 points. Oil did end
slightly higher but not before it dipped early in the session, below $44 a
barrel for the first time in six years.

But it did rebound late in the day. Domestic crude up 8 cents today.
Brent higher by 66 cents. It topped $49 a barrel.

HERERA: And as we near the halfway point in the current earnings
season, we`ve seen a real divergence between companies with an upbeat
outlook on the economy and those with a down beat one.

So, where do things stand so far?

Dominic Chu takes a look.


Earnings season so far has been all about a battle between goods news and
bad news, and there`s been enough of both to cast a confusing shadow over
the health of corporate America and the overall economy.

Today is no exception. Take luxury goods retailer Coach (NYSE:COH).
Shares posted strong gains after the company reported better profits than
analysts had anticipated, while certain business trends are still showing
signs of weakness, some investors are encouraged by better traffic and a
higher rate of visitors who actually ended up buying something.

Perhaps Coach (NYSE:COH) is a sign that people are willing to spend on
discretionary items like handbags and shoes. Then, there are things we buy
regardless of how the economy is doing, like dish-washing soap, toothpaste
and pet foods, all things made by Colgate Palmolive, which is also strong
in today`s trading after the company said one measure of sales growth grows
and that outweighed a lower profit forecast.

But it wasn`t all good news. Continued weakness in the price of crude
oil led a number of big companies in the industry to cut their spending
plans in the coming year. Among them, ConocoPhillips (NYSE:COP) and
Occidental Petroleum (NYSE:OXY). Both companies said that they would
reduce the amount of spending on exploring for and producing oil this year.

We`re currently around 40 percent of the way through large cap
earnings season, and according to data from Thomson Reuters (NYSE:TRI),
overall S&P 500 earnings growth for the fourth quarter of last year is
slated to be around a little over 5 percent. But top line or sales growth
is only expected to be around 1 percent.

(on camera): Oil giant Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM)
will both report earnings over the next couple of trading days, and will
give investors the latest read on just how much of a drag energy companies
will be on overall corporate earnings growth.



MATHISEN: So, if companies are reporting a mixed bag of earnings and
giving weak guidance about future profits, what will drive the stock market
higher or can it turn higher?

Let`s get thoughts from Steve Massocca. He`s chief investment officer
with Wedbush Equity Management.

Steve, do you think the market can or will go higher this year?

will be relatively range bound this year. I see both positive and negative
indicators out there affecting the market moving forward. We`re coming off
many years of a very hefty stock market rally. Prices in the market are
tending to be if not expensive, certainly not cheap. So, I`m looking for
the market to be rather range bound, maybe slightly higher or slightly
lower but I`m certainly not looking for the double digit percentage
increases we`ve seen in prior years.

HERERA: And how much of that also has to do with the mixed earnings
picture that we`ve seen so far this quarter?

MASSOCCA: Well, a good deal. I mean, I think there are many old
parts of the earnings picture or corporate profitability picture in America
that are mixed. If you look like the news today, Coach (NYSE:COH), a
company that isn`t that reliant on international revenues, therefore it
doesn`t have — is not susceptible to currency impact and really doesn`t
have anything to do with the oil patch does well. But when you start
looking at companies that are either in the oil patch or provide goods and
service to the oil patch, clearly, if not in the fourth quarter, certainly
in the first and second quarter, you`re going to see degradation in those
income statements.

MATHISEN: You know, sometimes, we can look at earnings and say, OK,
they`re coming in OK and a lot of companies beating the forecast. But the
guidance has been a little soft or soggy. Are a lot of these companies

MASSOCCA: Well, I don`t know if I want to use the term sandbagging
but time after time, quarter after quarter, it`s a reoccurring theme on
Wall Street. The numbers come in good, the revenue numbers come in good,
but management says, well, you know, the upcoming quarter to be challenging
and we`re going to put a range out there that would be maybe brackets, 10
percent or 15 percent around Wall Street estimates, maybe the lower end of
that — and then, surprise, surprise, the next quarter, they beat the
numbers once again.

So, I certainly think corporate America is sort of caught on to a
little trick here and wants to keep Wall Street, you know, happy with the
actual reported number by keeping expectations down.

HERERA: All right. How would invest then in an environment where you
think we`re going to be range bound? Do you stay in the United States or
do you look elsewhere around the globe for value?

MASSOCCA: Well, I think you have to be concerned about currency as
you look around the globe. I think there`s values and equities in Europe
and Asia, but I would be concern about the U.S. dollar continuing to rally
and about, you know, losing whatever you make in the stock market, losing
that in currency.

In terms of our own market, I think there`s a lot of value still in
the equity income space. I think there`s a lot of companies out there with
significant dividends that are trading at very reasonable valuations. And
so, even if you don`t get a 10 percent or 15 percent move in the stock
market, if you`re getting paid a 4 percent or 5 percent or 6 percent yield,
you`re going to be doing pretty well.

There are literally hundreds of stocks in the U.S. that yield in
excess of 5 percent. There`s actually over 200 stocks in the U.S. that
yield an excess of 8 percent. And I think those areas —

MATHISEN: All right. Let`s do a little — I want to do a little
investment haiku right now.


MATHISEN: One sector one word you would buy and one sector you would

MASSOCCA: I would buy business development companies or BDCs in the
U.S. right now. I think they`re relatively inexpensive —


MATHISEN: And avoid —

MASSOCCA: And I would stay away from energy right now. It`s too

MATHISEN: Steve, thanks very much. Steve Massocca with Wedbush
Equity Management.

HERERA: Well, one of the biggest gainers in the Dow today was
McDonald`s (NYSE:MCD). Shares of the hamburger giant sizzling 5 percent
higher on news we reported last night. CEO Don Thompson will be replaced
by the company`s chief brand officer.

So, who is the incoming chief executive and what challenges does he

Sara Eisen has more.


America`s biggest restaurant chain is getting its first British CEO. Steve
Easterbrook grew up in Waterford and has been with McDonald`s (NYSE:MCD)
since 1993. He took a brief hiatus to run U.K-based Pizza Express
(NYSE:EXPR) and Wagamama back in 2011.

Easterbrook is credited with turning around McDonald`s (NYSE:MCD) U.K.
business and running its European arm. Most recently, he`s been the chief
brand officer focused on marketing, menu innovation and digital initiative.

on Steve Easterbrook. But it`s going to take more than one person. It`s
going to take a whole new strategy at the top because they have lost,
they`re not getting the millennials and they`re losing their current
customer base because the whole market is shifting into healthy foods.

EISEN: McDonald`s (NYSE:MCD) is coming off first drop in annual same
store sales in at least 10 years. The U.S. market has been particularly
worrisome. Investors fear McDonald`s (NYSE:MCD) is losing touch with core
customers and with millennials who are turning to fast casual chains like
Chipotle, Shake Shack, Panera and others. That will be the primary
challenge for Easterbrook in turning around the company`s performance.

GEORGE: You can`t go the route of Sears (NASDAQ:SHLD). You can`t go
the route of JCPenney. You have to bring it back. You can`t just make
minor changes. You have to make some major changes.

Otherwise, the millennials won`t come in. They`ll go to Chipotle.
They`ll go to every place else, but they won`t be coming to McDonald`s
(NYSE:MCD). And they need to capture the millennials.

EISEN (on camera): Another challenge when it comes to the turnaround:
this company is massive — 36,000 global chains, 1.9 million people working
at McDonald`s (NYSE:MCD) and franchises. No question it is going to take

But investors do appear optimistic. The stock rising on the news
after going absolutely nowhere the last 2 1/2 years during Don Thompson`s
tenure, at a time when the broader market rallied more than 45 percent.



MATHISEN: Well, from news about the world`s biggest burger chain, to
the latest about one that got a lot of people talking and was mentioned in
Sara`s report. That would be Shake Shack. Its stock will begin trading on
the New York Stock Exchange tomorrow. And according to Dow Jones, the
always packed purveyor of patties, priced its IPO at $21 a share. That was
above expectations.

HERERA: I`m so glad you got that. I really am.

Still ahead, biotech stocks had been blasting off, as you probably
know. But after a slew of IPOs and a number of secondaries, is the party
nearing an end.


MATHISEN: With more Americans streaming data and video to their
smartphones and tablets, carriers and satellite companies are desperate for
any available wireless airways. And just today, the FCC raised a record
$45 billion by auctioning off some wireless airways far surpassing
expectations. Now, the winners are going to be revealed and the winner
will be revealed in coming days. But among the bidders — well, the usual
suspects here. Verizon (NYSE:VZ), AT&T (NYSE:T), T-Mobile and Dish

HERERA: A big vote in the Senate today. Despite a threat of a veto
from President Obama, the Republican-controlled Senate has approved a bill
that authorizes final construction of the Keystone pipeline. The vote was

The pipeline has been a top priority of the new Congress, but today`s
results are a few vote shy of the 67 needed to override a presidential

MATHISEN: Also in Washington, President Obama is proposing a lot more
spending in the 2016 federal budget to be released on Monday. The White
House is looking for a 7 percent jump in federal spending next year, which
amounts to an additional $74 billion worth, that eliminates the automatic
spending cuts in the so-called sequester legislation. $561 billion would
go towards defense spending and another $530 billion in non-defense

HERERA: Unto some international news, and Central Bank of Denmark
which just cut its key interest rate for the third time in the last two
weeks. Now, the idea here is to weaken the value of its currency, the
Danish crown, which would keep it within a tight range against the euro.

MATHISEN: And now to Russia where that nation`s finance minister is
discussing the economy and how hard it`s been hit by falling oil prices and
Western sanctions over Russia`s role in destabilizing Ukraine and its
relationship with debt-ridden Greece.

Geoff Cutmore has more now from Moscow.


ministers in Brussels have extended the timeline on existing sanctions.
When I spoke to the Russian finance minister, he said his economy will
learn to adapt. We also talked about signs of division with the new Greek
government, suggesting it has not signed up to these new acts against the

When I asked him whether he would be willing to extend finance to the
Greeks, he said they haven`t been asked yet but it is something they would

submitted to the Russian governments, we will definitely consider it, but
we`ll take into account all the factors of our bilateral relationships
between Russia and Greece. So, that`s all I can say. If it is submitted,
we will consider it.

CUTMORE: The finance minister also talked about the state of the
economy and how the falling oil price and the economic sanctions had
knocked $200 billion off the economy in 2014.

I asked him about the current state of interest rates currently 17
percent for this economy. He said those rates could do with coming lower,
now that there is less volatility surrounding the Russian ruble.

For NIGHTLY BUSINESS REPORT, I`m Geoff Cutmore in Moscow.


HERERA: Shares of Alibaba have their worst day since going public and
that`s where we begin tonight`s “Market Focus”.

The Chinese ecommerce giant earnings topped estimates but revenue
missed, disappointing investors. This as the company spent more trying to
attract customers on mobile phones.

The company`s executive vice chairman said he believes there`s strong
growth potential in mobile.


in this transition to mobile because the first thing that we focus on is
user growth and user engagement. So, as long as we see robust growth of
monthly active users, going up to 265 million a month, that`s a very, very
large number and net add of 48 million active users in just a matter of
three months. In the long run, we see that whole monetization is going to
trend up.


Shares slumped almost nine percent to $89.81.

Ford`s report was similar. Its earnings topped estimates, but revenue
was slightly below consensus. The automaker maintained its 2015 profit
outlook. And the company also said its loss in Europe would be wider than
previously thought for 2015. Still, shares were almost 3 percent higher to

JetBlue`s profit soared in its fourth quarter, as it benefited from
lower fuel costs and operating expenses. The airline`s revenue slightly
below estimates, but investors ignored that. Shares rose nearly 9 percent
to $17.16.

MATHISEN: PulteGroup`s results were better than expected, easily
topping the street`s forecast. The home builder cited a pick up in
customer traffic — new orders, closings and a slight increase in average
selling prices as well. Shares there popped 6 percent, $21.82 was the

Dow Chemical (NYSE:DOW), one of the largest chemical companies in the
U.S., also posted a beat. That`s thanks to growth in its agricultural
science business, helped largely by new crop protection products. A
stronger dollar did hurt results. Still, shares rose more than 4.5 percent
to $45.01.

Shares of Hershey melted today after the chocolate maker posted weaker
than expected quarterly earnings and cut its 2015 outlook. The company
blamed the stronger dollar and rising cocoa and diary prices. Separately,
Hershey says it plans to buy Krave Pure Foods, a beef jerky maker. So, say
hello to Hershey jerky. The stock tumbled 4 percent to $103.29.

Biogen Idec (NASDAQ:BIIB) out with results after the closing bell.
The drug maker`s profit easily topped estimates while revenue was in line.
That`s thanks to strong demand for its multiple sclerosis drug. The
company also issued a forecast far above consensus. Shares initially
jumped after hours. Before the close, they were up a fraction to $353.25.

HERERA: Well, Biogen Idec`s strong results are just one example of
the overall strength in continued growth in biotechnology companies. So,
what`s behind the surge in biotech and what`s next for the sector?

Meg Tirrell takes a look.


Biotech has been on an incredible run and the question everyone keeps
asking is, when does it end?

The NASDAQ biotech index has returned more than triple the S&P 500 in
the last three years. 2014 set a record for initial public offerings,
blowing out even the big bubble year of 2000. And this year, so far, the
momentum continues. This week, ten health care companies plan to go public
on the NASDAQ.

Greece starts trading today and last week, biotech companies raised
$2.6 billion in secondary offerings, according to RBC capital markets.
Analysts and investors say at some point, the market won`t be able to
absorb more deals.

deals over the last few weeks, the first couple weeks of January, and it`s
sort of been a mixed bag. Some of the offerings have been successful and
some haven`t. And that suggests that maybe either a waning appetite or
just a limit to the capacity of biotech analysts to research companies
quickly enough to make investment decisions.

TIRRELL: But we might not be at the end just yet. Biotech bulls
point to a couple of things driving momentum. FDA approved 42 new drugs
last year, a record number. Mergers and acquisitions have been on a tear
and technology, particularly in genetics, have vastly improved.

President Obama has even invited the heads of research at several drug
makers to the White House tomorrow to discuss investments plan to improve
health and treat disease.

FUNTLEYDER: There are a number of areas that quite frankly, where we
have brand new cures for things we didn`t have before. So, that`s really
fueled the excitement.

TIRRELL (on camera): So, while there`s questions to the end of
biotech`s run, optimism is still winning the day. Of 18 CEOs interviewed
at the JPMorgan (NYSE:JPM) health care conference earlier this month, only
two said we`re in a bubble, and all of them said they expect biotech to
outperform the broader market again in 2015.



MATHISEN: Coming up, not even Harley Davidson is immune from the
strengthening dollar but investor seemed to be focused on something else.
We`ll tell you.


HERERA: Profits of Harley Davidson hitting the brakes last quarter,
skidding 41 percent, mostly on the impact of a stronger dollar on overseas
sales. Still, sales were higher and earnings topped Wall Street forecast
and shares today revved up nearly 4 percent higher.

So, what`s next for the motorcycle maker?

Morgan Brennan takes a look.


For Harley Davidson, currency headwinds will add even pressure to sales and
margins this year, overshadowing a projected increase in worldwide
motorcycle shipments. But analysts say despite those epic woes, results
were still better than feared.

JAMES HARDIMAN, WEDBUSH SECURITIES: The concern was that some of
these international markets, as the U.S. dollar appreciated, that you would
see a drop-off in demand, and the good news I think coming out of today is
we saw the opposite.

BRENNAN: Harley`s been expanding beyond its core ridership, American
baby boomer males since the downturn, targeting millennials, women,
African-Americans, and pushing aggressively into new markets overseas. The
company has been gaining ground in Europe, Latin America and Asia,
especially China and India. That`s now where the line share growth is
coming from. International shipments now make more than a third of the
company total and fourth quarter retail sales increased 9 percent abroad,
versus a nearly 2 percent decline in the U.S., despite lower gas prices.

New bike models had successfully been geared towards these new
customers as well. In India, three out of four motorcycles ridden are
Harley street bikes.

HARDIMAN: They`ve been working for years to expand their distribution
in those markets and I think it`s a key component here of the growth moving

BRENNAN (on camera): But again, that could depend on the dollar,
because a stronger greenback could make exports more expensive. Competitor
Polaris Industries (NYSE:PII) which reported earlier this week is already
forecasting a slower year for the very reason.

For Harley, however, that hasn`t yet happened, pushing shares higher
as international demand chugs along.



MATHISEN: Finally tonight, a look at how much we`re expected to spend
on this Sunday`s Super Bowl. National Retail Federation predicts Americans
will spend a record $14 billion on the big game, about 89 bucks a person.
That spending includes new HD TVs that are purchased ahead of the kickoff,
chicken wings, pizzas, and an estimated 325 million gallons of beer that —
all of that will be consumed.


All right. That does it for NIGHTLY BUSINESS REPORT for tonight. I`m
Sue Herera. Thanks for joining us.

MATHISEN: And I`m Tyler Mathisen. Thanks from me as well. Have a
great evening. We`ll see you back here tomorrow.


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