Transcript: Tuesday, March 18, 2014

NBR ThumANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Susie Gharib, brought to you in part by —

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SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Retirement crisis. One-third of Americans have less than $1,000 saved for their later years. And many aren’t even trying to figure out how much they’ll need. What can be done to get people saving?

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Microsoft’s mojo. Shares pop, and stock closes at a 14-year high on reports of a big push into mobile. Is this a sign of more things to come under the company’s new CEO?

GHARIB: Earnings miss. Oracle’s profit and revenue fall short of expectations, but there’s one key takeaway hidden in that report that investors need to know.

We’ll have all that and more tonight on NIGHTLY BUSINESS REPORT for Tuesday, March 18th.

MATHISEN: Welcome, everybody. Good evening.

A wake-up call big time for our country. Tonight, a comprehensive survey on retirement reveals a startling statistic — one-third of workers have less than $1,000 tucked away for their golden years. And many don’t even know how much they should be saving. Some are calling it an impending crisis, and others want to know how we got here and what can be done to fix it.

But first, here’s Sharon Epperson with the sobering details of the state of retirement planning or un-planning in America.

(BEGIN VIDEOTAPE)

SHARON EPPERSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: Most Americans aren’t even close to being financially prepared to retire.

UNIDENTIFIED MALE: I can’t save for my retirement, because of my expenses and bills.

UNIDENTIFIED FEMALE: I’m not really thinking about planning for retirement yet, but I probably should.

UNIDENTIFIED MALE: I’m not thinking about it. I’m focused on right now.

EPPERSON: More than one-third of Americans have less than $1,000 in savings and investments, according to a new survey from the Employee Benefits Research Institute. Sixty percent have saved less than $25,000 and most Americans are not taking action. Fewer than half have even done a calculation to find out how much they should be saving.

(on camera): At the same time, workers overall confidence in their ability to retire comfortably has increased for the first time in seven years. Eighteen percent say they’re very confident, up from 13 percent last year.

So, why the change?

(voice-over): The increase in confidence is almost exclusively among those with higher incomes or those who are in a retirement plan more than a third of workers with household incomes of $75,000 or more feel very confident that they’ll have enough money to retire comfortably.

GREG BURROWS, PRINCIPAL FINANCIAL GROUP: I think the key message that I convey there is people who are taking action are the ones that are feeling more confident.

EPPERSON: But financial advisers say it’s a false confidence, tied to stock market gains, not to improve saving habits.

IVORY JOHNSON, DELANCEY WEALTH MANAGEMENT FOUNDER: We’re looking at the returns in their IRAs and their 401(k)s and they’re realizing they have more money than they did in 2009. This gives them a false sense of comfort. The problem is they don’t know what the end game is.

EPPERSON: In fact, a separate survey from TIA (ph) finds most folks spend more time choosing a flat screen TV or choosing a restaurant for dinner than they do on planning and investment in an IRA. And that’s an investment many will need to rely on for decades.

For NIGHTLY BUSINESS REPORT, I’m Sharon Epperson.

(END VIDEOTAPE)

GHARIB: Nevin Adams joins us now to talk more about how to save for retirement. He’s director of education at the Employee Benefit Research Institute and co-author of that 2014 retirement confidence survey.

Nevin, let me just begin by saying to you that we all know this is a serious problem. We have to save for retirement. Let’s say somebody comes to you, says, you know, I haven’t started to do anything.

How do you get started? What would you say is the key one or two things? Just one or two things you should do to get started?

NEVIN ADAMS, EMPLOYEE BENEFIT RESEARCH INSTITUTE: The most obvious is get started. Start saving right now. Don’t stop. Don’t try to figure out how much. Just need to go and start that process. That’s so important.

The second step is to go figure out how much you should be saving because as what is pointed out in the introduction, fewer than half of the people responding to our survey have ever tried to make a retirement calculation.

I think most people are just afraid that it’s too complicated, and so, they haven’t made the step. But doing that step can make a big difference.

MATHISEN: Where can you learn how much you need to put away?

ADAMS: There are any number of online calculators and tools these days that will help you do it. We’ve got a great one called Ballpark Estimate at choosetosave.gov. It will take you maybe 15, 20 minutes. You’ll get a very accurate read on your need for retirement.

GHARIB: Do you need a financial adviser or somebody like that to advise you what to do? When does that make sense?

ADAMS: Well, you don’t need to. A lot depends on your comfort as an individual investor. Some people need sitting down, the process of sitting down with an advisor, just to have the discipline to sit down and sort of get over that initial inertia. Honestly, a lot of people who start with a calculator then find that they are waiting for the next step in terms of talking to a financial professional to help them go to the next level.

So, a lot depends on you. The bottom line is, you can start with one or you can migrate to one later on if you’re ready.

MATHISEN: Nevin, how did we get in this mess?

ADAMS: We’ve always been in this mess. This is not a new problem. This is not a new concern.

The thing that probably is happening is people get older and heading into retirement, 10,000 a day they estimate at the boomers, we’re more aware of it. But the problem is not really new.

GHARIB: You know, on that subject you have to save for retirement. But let me bring up the other thing, saving for your kids’ college education. I mean, what do you do? You’ve got to do both? Choose a priority of the kids first and yourself later? You know, what’s your advice on that?

ADAMS: Well, it depends again unfortunately on your individual situation. But you have to look at the priorities. I think most people look at their college — paying for the college tuition and say, I’ve got to do that in two years or in five years, whereas retirement might be 30 or 40 years away. And so, they might very well choose to start with the education first because that’s a need that has to be met first.

I’ve always maintained that you should do both. You may not be able to do as much on both as you’d like. You obviously have to take care of the here and now sooner. But there’s no reason you can’t set goals to do both.

MATHISEN: The here and now like college education may be sooner. But on the other side of the coin, there are other ways to pay for college education through loans and grants and so on and so forth. Should people start by making sure that they are putting as much as they can into any tax-deferred, tax-advantaged account? Is that where you should go first?

ADAMS: Well, I think that’s where people find it easier to go. Certainly, if they’ve got the advantage of a workplace a 401(k) or 403(b) plan at work, that’s going to be easier for them. It’s easier to do. It’s easier to find information. Honestly, it’s easier to have the switch turned on to have the money drawn out of your payroll automatically.

So, yes. And many of those programs also offer you an employer match to go with whatever you save. So, it’s an easy way to add up your money quickly.

GHARIB: Nevin, thank you so much. Nevin Adams, from —

ADAMS: Thank you very much.

GHARIB: — the Employee Benefit Research Institute.

MATHISEN: Well, Susie, a second straight day of gains on Wall Street after Russian President Vladimir Putin said he wasn’t looking to take the rest of Ukraine.

Some data showing a rebound in building permits added to the somewhat upbeat mood today, but the comments by Putin were the main catalyst. Dow adding 89 points, NASDAQ jumped 53 and the S&P was up 13.

Steve Sedgwick is in Kiev and has more now on the Russian president.

(BEGIN VIDEOTAPE)

STEVE SEDGWICK, NIGHTLY BUSINESS REPORT CORRESPONDENT: The crisis in the Ukraine moved on a leg on Tuesday as Russia moved to formerly annex Crimea into the Russian Federation.

In an hour-long address to members of the Russian Duma in Moscow, President Putin was highly critical of the West and highly critical once again of the government which he called illegitimate in Kiev. Although he did say that olive branch to the West that he has no more territorial aspirations for Ukraine. And, of course, there had been a lot of fears that he would move on military to the east of this country.

Prime Minister Yatsenyuk, to his part here in Kiev, has been talking about the need to move forward and give more federal autonomy to the regions. He also talked about NATO not being on gendering terms of membership in the near future. That would sooth some of the Russian fears about NATO being on the Russian federation doorstep.

This is Steve Sedgwick for NIGHTLY BUSINESS REPORT in Kiev.

(END VIDEOTAPE)

GHARIB: Now, one reason behind Wall Street and the markets to move higher today is Microsoft (NASDAQ:MSFT). The stock jumped on reports that the company plans to unveil an iPad version of its popular office software. Shares rose almost 4 percent today, closing in on $40. That’s a level investors haven’t seen since the year 2000 and the dot-com boom.

And as Josh Lipton reports, this first big move by Microsoft’s new CEO could be a peek into the company’s future.

(BEGIN VIDEOTAPE)

SATYA NADELLA, MICROSOFT CEO: Our servers are all getting upgraded.

JOSH LIPTON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): New Microsoft (NASDAQ:MSFT) CEO Satya Nadella hasn’t been on the job long but he’s already signaling that his company could look a lot different under his direction. Next Thursday at an event in San Francisco, Nadella will be talking to the press about mobile and cloud computing. He might also announce that its Office Software Suite will be available for Apples iPad tablets. And that could boost Microsoft’s bottom line big time.

DANIEL IVES, FBR CAPITAL MARKETS: We’re talking $3 billion to $5 billion type of market opportunity potentially per year. And I think it’s been low-hanging fruit for Microsoft (NASDAQ:MSFT) in terms of this opportunity. And now, they finally looked in the mirror and realized they need to open up the platform.

LIPTON: The Office Suite includes tools such as Word, Excel and PowerPoint, and it generates the majority of the company’s profits.

Analysts on Wall Street have been telling Microsoft (NASDAQ:MSFT) to make a version of Office available for mobile devices for rivals such as Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG), rather than tying it to Windows. Now, it looks like Microsoft’s management is coming around. Analysts say that is the right move.

ROB ENDERLE, ENDERLE GROUP: Microsoft (NASDAQ:MSFT) has a number of pillars, to hold the company up. Two of the biggest are Windows and Office. You don’t want to sacrifice one pillar for the other because you could end up losing both. By doing Office for the iPad, they’re able to maintain and secure the pillar which may be the sustaining pillar overall.

LIPTON: Analysts have been concerned that Nadella might act too much like a company man. This news suggests otherwise.

IVES: He’s willing to change it up. He’s not going to be a core Redmond insider. And I think this is a good example that strategic changes could be on the horizon. He’s not afraid to make hard decisions. And that’s why you’re seeing investors cheer this move as it seems like it’s a sign of things to come.

LIPTON (on camera): The C Suite in Redmond is clearly thinking differently. The take home for message for investors and analysts: expect a very different Microsoft (NASDAQ:MSFT) as it transitions from Steve Ballmer to Satya Nadella.

Josh Lipton, NIGHTLY BUSINESS REPORT, Silicon Valley.

(END VIDEOTAPE)

MATHISEN: CEOs are feeling a little bit better about the U.S. economy according to a survey by the Business Roundtable. The chief executives are more optimistic on hiring and capital spending over the next six months, but they see economic growth rising a tepid 2.4 percent this year.

GHARIB: Well, those CEOs and investors all around the world will be keeping a close watch on the Federal Reserve, which kicked off an important two-day policy meeting today. This will be the first meeting headed by new chair, Janet Yellen. Investors are eager to get guidance from her on possible policy changes on interest rates and any changes in the Fed’s numerical goals for the nation’s unemployment and inflation rates.

MATHISEN: Still ahead, the New York attorney general wants to crack down on high frequency trading. Will his proposed reforms do enough to help level the playing field on Wall Street?

(MUSIC)

MATHISEN: General Motors (NYSE:GM) is taking another step stop overhaul its safety processes. Today, the automaker created a new position, a global safety chief, whose job it will be to quickly identify and resolve safety issues. Jeff Boyer, a veteran G.M. engineer, will be the first person to hold that position.

General motors CEO Mary Barra in a meeting with journalists today emphasized the position is permanent and not a temporary one to handle the current recall for an ignition switch defect.

GHARIB: Oracle (NASDAQ:ORCL) reported disappointing earnings and revenues after the market closed today. The business software company earned 68 cents a share. That was 2 cents below analyst estimates. Revenue came in around $9 billion, but that was also slightly shy of expectations. Oracle (NASDAQ:ORCL) shares fell as much as 5 percent in after the-hours trading. But in the regular session, they closed at $38.84, a gain of more than 1 1/2 percent.

Sheila Dharmarajan has been studying all the numbers and joins us now.

So, Sheila, tell us what’s the one key takeaway for investors.

SHEILA DHARMARAJAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: The one key takeaway when it comes to Oracle (NASDAQ:ORCL) earnings is this is a company that is still in transition. And transitions can take time and often be a little bit bumpy along the way. So, over the past few years, Oracle (NASDAQ:ORCL) has been dealing with the industry’s shift towards Cloud computing and also steeper competition from online rivals like Salesforce.com (NYSE:CRM). The company has made lots of acquisitions to get more into Cloud computing and also retool its internal sales force.

This quarter, we are starting to see some evidence that all of those efforts are paying off. Overall, Internet and software sales were up over 4 percent for the quarter, year over year, and President Mark Hurd said this was the best quarter ever when it came to overall Cloud sales.

But as evidenced by the overall quarter, transitions do take time and the question now is whether investors will wait.

Tyler, back to you.

MATHISEN: Sheila, thank you very much.

Disney (NYSE:DIS) avoids battle at its shareholder meeting today with a last-minute compromise. The entertainment company agreed to split the roles of chairman and CEO in the future. CEO Bob Iger’s dual role as chairman and CEO has drawn criticism from some investors in the past but today, he was re-elected to both of his positions.

GHARIB: Disney (NYSE:DIS) is also reportedly in talks to buy Maker Studios. This is one of the largest content providers for YouTube. Now, if the deal does go through, it would be a big bet by a traditional media company on the fast-growing digital studio business.

And as Morgan Brennan tells us, it could be the start of a new wave of acquisitions in Hollywood.

(BEGIN VIDEOTAPE)

MORGAN BRENNAN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): You may not know the term multichannel network, but if you’ve ever watched a YouTube video, you probably know the content. Multichannel networks or MCNs produce digital videos and distribute them through YouTube.

The biggest test thousands of channels, hundreds of millions of subscribers, billions of monthly views, and now, the funding of traditional media giants like Warner Brothers and DreamWorks Animation.

Experts say studios are strategically investing in MCNs to access the cord nevers, young adults to have been increasingly foregoing pay TV subscriptions in favor of online video.

PETER CSATHY, DIGITAL MEDIA MAVEN: It’s a different kind of content. And so, now, you have the studios going from the more traditional content packages of motion pictures, television, down into these micro-segments of content where there’s also a lot of innovation happening.

BRENNAN (on camera): Big studios can offer more distribution and in return get access to new content and new talent geared toward a different kind of audience, an audience whose digital consumption could disrupt traditional pay TV models for years to come.

(voice-over): One site confirmed it, Rico.net reports that Disney (NYSE:DIS) is in talks to buy Maker Studios, one of biggest YouTube networks with 4.5 billion views per month.

Last year, DreamWorks Animation bought YouTube standpoint Awesomeness TV, which has 65 million monthly views. And another MCN, Machinima, with 2 billion views per month just raised $18 million from investors led by Warner Brothers.

ALLEN DEBEVOISE, MACHINIMA CEO: I think it’s a really natural partnership because traditional media companies have all sorts of distribution outlets for — and monetization outlets. And the online video, MCNs have huge audiences and brands that they’re building. So, I think the connection between two worlds makes a lot of sense.

BRENNAN: That’s why many believe Machinima could ultimately be acquired as well. Others are Fullscreen and Big Frame, two MCNs known best for helping creators market content and for representing YouTube stars.

But this fast-growing new industry still has a long way to go. Many companies like Machinima have not yet turned a profit. And thanks to heavy revenue-sharing with YouTube, many are looking for other ways to make money.

For NIGHTLY BUSINESS REPORT, I’m Morgan Brennan in Los Angeles.

(END VIDEOTAPE)

MATHISEN: Google (NASDAQ:GOOG) and Viacom (NYSE:VIA) settle a landmark lawsuit and that is where we begin tonight’s “Market Focus”. The two companies reached an agreement on a 7-year-old case in which Viacom (NYSE:VIA) sued Google’s YouTube unit for uploading content from its programs without permission. The terms of this agreement were not disclosed. Shares of Viacom (NYSE:VIA) up slightly to $88.41. Google (NASDAQ:GOOG) rose more than 1 1/2 percent to $1,211.26.

Shares of DSW (NYSE:DSW) lower on weak sales and a disappointing forecast. The discount shoe retailer saw a fourth quarter profit increased, but revenue missed the street’s estimates. Its New Year forecast also came in short of expectations. The company did boost its quarterly dividend, though. Still, shares fell nearly 3 percent to $38.90.

GHARIB: Amazon (NASDAQ:AMZN) rose on reports that it will release a video streaming device in early April. Reportedly, the gadget will be available on Amazon (NASDAQ:AMZN).com and also at retailers like Best Buy (NYSE:BBY) and Staples (NASDAQ:SPLS). The stock was up about 1 percent to $378.77.

Hertz is planning to spin off its equipment rental business. The company will receive $2.5 billion from the transaction and it plans to use about half that money for a new stock buy back program. Now, separately, Hertz posted quarterly earnings that came in below estimates and issued guidance that also fell short of analysts’ forecasts. The stock slipped a fraction to $27.08.

And General Electric’s credit card business is the subject of two federal investigations. Regulators are looking into possible violations of consumer finance laws. According to a regulatory filing, related to the unit’s planned initial public offering. The new company now named Synchrony Financial is in talks with the Consumer Financial Protection Bureau. G.E.’s shares rose almost 1 percent to $25.65.

MATHISEN: New York’s attorney general was cracking down on high frequency trading, a strategy which uses superfast computers to gain an edge over others. Eric Schneiderman who has already made clear his intention to police speed traders is now expanding his investigation and calling for tougher regulations. It’s something he calls “insider trading 2.0.”

Eamon Javers is following the story for us from Washington and joins us now with the details.

Eamon, what’s he trying to do and why?

EAMON JAVERS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Hi, Tyler.

Well, he says he’s going to launch a longer-term investigation. This is something he’s been looking into for over a year. And that term “insider trading 2.0” is the way he’s branding much of what’s going on in the high frequency trading world. Very tough comments today from Eric Schneiderman. Take a listen.

(BEGIN VIDEO CLIP)

ERIC SCHNEIDERMAN, NEW YORK ATTORNEY GENERAL: Building tremendously lucrative advantages into markets for high frequency traders at the expense of the investing public is wrong. It’s time that we focus on structural reforms and restoring the mindset of winning based on price, winning based on smarts rather than winning based on speed.

(END VIDEO CLIP)

JAVERS: And, Tyler, he said today that one of the ideas he’s looking at is something called batch trading.

Right now in financial markets, you have continuous trading in real time, in high-speed versions. What he’s talking about is something like a one half or one second delay where trades get processed in batches. That, he said, would take out the telecommunications arms race component of all this and make it more fair for average mom and pop investors, Tyler.

MATHISEN: Did Schneiderman single out any high frequency firms by name?

JAVERS: He didn’t. But he did reference Virtu Financial, that’s the high frequency trading firm that filed for an IPO last week. They said in a filing last week he cited today without naming the company they have gone just about four years with only one down trading day in that entire time. Schneiderman says that’s suspicious and he doesn’t like it.

GHARIB: You know, Eamon, every time this topic comes up, the industry people, the high frequency traders say, look, you’ve just got to adapt to new technology. You can’t run away from it. But this go-around, how does the industry defend itself?

JAVERS: Well, that’s pretty much exactly what they’re saying. They’re saying that high frequency trading is actually democratization of technology and of the financial markets. They say they’re helping to bring liquidity and price discovery to markets. They say high frequency trading in essence is a good thing, guys.

GHARIB: All right. Eamon, thanks so much.

JAVERS: You bet.

GHARIB: And coming up on the program, after a big cutback in commercial real estate, is the industry about to go on a hiring spree? That’s next.

(MUSIC)

MATHISEN: January was a rough month for the airlines and for passengers. The industry posted one of its worst monthly on time performances ever. The reason, of course, those brutal winter storms.

According to the Department of Transportation, one-third of all flights arrived late in January. And of those late flights, 29 percent were delayed by weather.

GHARIB: Walmart has its eyes set on a new venture, videogame trade-ins. The world’s largest retailer plans to expand its program that lets shoppers trade in used video games and receive a gift card in return you can use it at Wal-Mart (NYSE:WMT) or Sam’s Club. Wal-Mart (NYSE:WMT) hopes the program will give it a share of the 2 billion pre-owned video game market. But the news sent shares of game stocks lower since two thirds of its products are used games.

MATHISEN: The cold weather last month seems to have slowed new home constructions. Housing starts fell 0.2 percent, extending January’s tumble. But according to the Commerce Department, building permits a sign of future construction activity rose more than 7 percent. That’s the most since October, signaling a possible spring rebound.

GHARIB: That rise in permits also reflects a surge in applications for an apartment building construction, which continues to be a hot sector as more people rent instead of buy. And that means the commercial firms that are managing all those dwellings are ramping up hiring to keep up with demand.

Diana Olick has more.

(BEGIN VIDEOTAPE)

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): The housing recovery is making gains, but renting is still robust. And that has meant a resurgence in hiring at apartment firms.

WILLIAM FERGUSON, FERGUSON PARTNERS CHAIRMAN: From a sector perspective, multifamily is the hottest sector as it results to hiring people simply because of the demographic trends and the cyclicality of the home building business.

OLICK: Eighty-two percent of commercial real estate companies in the U.S. intend to increase their workforces this year, according to a study by Ferguson Partners, an executive search firm. It found demand is greatest for construction executives, asset management, acquisitions and property and leasing management.

Over at Cassidy Turley, a commercial real estate services firm, CEO Joseph Stettinius says they’re hiring hundreds of new employees but hiring with specific purposes in mind.

JOSEPH STETTINIUS, CASSIDY TURLEY CEO: In 2013, we hired 934 net new people. Both through mergers and acquisitions as well as organic. So our growth is ramping up. Let’s say it’s ramping up based on client demand and based on specific reactive opportunities. We still aren’t in a place where we’re hiring in advance of demand.

OLICK: While multifamily may be the hottest sector, industrial warehouse isn’t far behind. As people move from retail centers to online shopping.

Distribution is key, and warehouse space and management is in high demand.

(on camera): The laggard besides retail, of course, is office space. As we become more efficient and rely more on technology, we use less office space per person. That’s why some companies are already using shared spaces or even shared desks. They call it hoteling.

STETTINIUS: What I think it could mean is that second floor and challenging office spaces become distribution centers. And so, it just changes the complexion of a building. And it plays right with mixed use.

OLICK (voice-over): As with all real estate, hiring strength depends on location. But social change is now having an almost equal impact. As technology alters the way we work, shop and live, commercial real estate is recreating itself as well.

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

(END VIDEOTAPE)

MATHISEN: And finally tonight, $400 million is up for grabs, the mega-millions jackpot has swelled to the third largest in multi-state lottery games history after no one matched all six numbers on Friday. Now, the odds of winning are long, one in 259 million. And if no one hits it tonight, Friday’s jackpot could march toward $500 million.

GHARIB: Got to get your ticket.

MATHISEN: Get your ticket.

GHARIB: That’s NIGHTLY BUSINESS REPORT for tonight. I’m Susie Gharib. Thanks for joining us.

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

END

Nightly Business Report transcripts and video are available on-line post broadcast at http://nbr.com. The program is transcribed by CQRC Transcriptions, LLC. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Nightly Business Report, or CNBC, Inc. Information presented on Nightly Business Report is not and should not be considered as investment advice. (c) 2014 CNBC, Inc.

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