NBR Complete Transcripts: 06-22-2006
Thursday, June 22, 2006AT&T's Privacy Policy Is Leaving Customers Exposed To The Government
SUSIE GHARIB: Consumer groups attacked AT&T`s new privacy policy today, even though it doesn`t go into effect until tomorrow. Privacy advocates are concerned that the telecom company could hand over account information of its Internet and video customers to the government. AT&T`s policy overhaul follows recent reports that the company gave the National Security Agency access to its voice and data networks without a warrant. AT&T is now being sued over that matter. Stephanie Dhue reports.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: The changes to AT&T`s privacy policy give the company ownership over customer account information. Legal experts say the policy will limit AT&T`s liability in any future lawsuits over its use of customer data and it opens the door to new uses of that information. HANK LEVINE, ATTORNEY, LEVINE, BLASZAK, BLOCK & BOOTHBY: AT&T essentially is claiming or preparing itself to claim broader rights to do, sell, otherwise treat that data, as if it were, as it is, it now claims, AT&T`s, not the customers.
DHUE: AT&T`s new policy states, quote, while your account information may be personal to you, these records constitute business records that are owned by AT&T. As such, AT&T may disclose such records to protect its legitimate business interests, safeguard others or respond to legal process. AT&T`s old policy was not as explicit, saying customer records may be shared to respond to legal requests. AT&T says customers must agree to the new guidelines before they can get service. Privacy advocates say the new policy goes too far.
NANCY LIBIN, COUNSEL, CENTER FOR DEMOCRACY AND TECHNOLOGY: It represents a significant shift in the kinds of privacy protections that consumers are going to have when they do business with AT&T.
DHUE: AT&T is also making clear to its customers that it will track their video-watching habits to quote personalize their viewing experience. At a Senate Judiciary Committee hearing this afternoon on its merger with Bellsouth, AT&T CEO Ed Whitacre defended the plan.
ED WHITACRE, CHAIRMAN & CEO, AT&T: The spirit of our policies, privacy policies and practices have not changed. We wanted to make our policies easier to read and easier to understand for our customers and to reflect the changes to our company and our new products.
DHUE: But lawmakers are clearly concerned about the changes.
PATRICK LEAHY (D) VERMONT: Beginning to wonder if anybody deals -- American deals with your company, whether they have any privacy at all left.
DHUE: Sprint and Verizon say they have no plans to adopt similar policies. But analysts say if AT&T can make the changes without a big public outcry, its competitors will follow suit. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
Univision Is Up For Sale
SUSIE GHARIB: Also up for sale these days, Univision. The biggest Spanish language broadcaster in the United States has put itself up for auction. But, as Scott Gurvey reports, the bids are not exactly rolling in.
SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: The behind-the- scenes struggle for control of Univision is worthy of any of the Telenovelas popular on Spanish-language television. This is the fastest- growing TV market in the United States, and Univision attracts about 80 percent of the audience. Analysts say that makes it an attractive buy, which could fetch as much as $13 billion, $40 a share. Mexico City based Televisa was considered to have the inside track, but yesterday it missed a bidding deadline set by Univision. Televisa needed American partners because U.S. Law prohibits foreigners from owning more than 25 percent of a domestic broadcaster. Televisa was apparently unable to come to terms with a consortium of American buyout firms. That left only one bid -- American billionaire Haim Saban (ph), leading another consortium. But that bid was reportedly rejected, coming in at only $11 billion, $35 a share. LELAND WESTERFIELD, MEDIA ANALYST, BMO CAPITAL MARKETS: Some of the private equity firms in each syndicate have dropped out along the way. In a smaller deal, you`d hardly notice; in this deal, very visible. Why? The multiples and the valuation are very high for this growth, unique growth asset. So some may be skittish about valuation.
GURVEY: Univision`s stock has been rising this year in anticipation of a ratings boost as a result of the popular World Cup, as well as a move to the Nielsen national TV index starting next year. That`s the index most national advertisers use when they place commercials.
TUNA AMOBI, MEDIA ANALYST, STANDARD & POOR`S: The attraction comes, in our opinion, from the demographics of the Spanish language segment. We think that, based on all the statistics, whether its the population growth or the disposable income or the growth in Spanish language advertising that we`ve seen, we believe the statistics support continued strong growth of the Spanish language media segment, and no company in our opinion is better positioned to benefit from this trend than Univision.
GURVEY: A spokesman for Televisa says it is still preparing a bid. But analysts say Univision may cancel the auction if it thinks the bids are too low. Analysts say that may not be bad for investors in the long run. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.
Cathay Pacific Remembers The Dragon
SUSIE GHARIB: Boeing may be about to log off its in-flight Internet service permanently. The aircraft maker said today it is evaluating the service to decide what`s best for both the business and its customers. The comments came in response to published reports that Boeing may dump its connection service, because it hasn`t made money in six years. The service is estimated to have cost Boeing about a billion dollars so far. Connection lets users surf the Internet during flight. It`s currently used by a handful of international carriers on long-haul flights. Also today, Boeing announced that Hong Kong based Cathay Pacific Airways has ordered six of its 747 extended range freighter jets.
PAUL KANGAS: Speaking of Cathay Pacific, the carrier is carving out airspace in mainland China`s tightly controlled aviation market. Cathay is spending nearly $1.75 billion to buy the shares it doesn`t already own in Hong Kong-based Dragon Airlines. That also doubles its stake in the mainland carrier Air China. As Mark Niu reports from Hong Kong, the deal could have a huge impact on just what carriers fly in the skies over China.
MARK NIU, NIGHTLY BUSINESS REPORT CORRESPONDENT: Hong Kong has long been considered the gateway to mainland China. But up until now, the territory`s flag-carrier Cathay Pacific has only been allowed to fly to three cities in mainland China. The Dragon air deal now gives them direct access to 20 other Chinese cities.
TONY TYLER, CHIEF OPERATING OFFICER, CATHAY PACIFIC: And that is the last piece of the jig saw that we needed to put together in order to be a true force in world aviation.
NIU: The deal also gives Cathay access to Air China`s network, which includes flights from city to city throughout the world`s most populous country. Cathay is doubling its stake in Air China from 10 to 20 percent. Cathay is the only non-mainland shareholder in a mainland passenger airline.
TYLER: Getting into an equity alliance, strong equity alliance with the biggest and most iconic airline from the world`s fastest growing market, and an airline that is in the earliest stage of development, with enormous potential.
NIU: And that potential for development is certainly making itself known, particularly in more mature commercial aviation markets. At (inaudible) airports in Hong Kong more than 40 million passengers pass through here every year. It`s by far the busiest airport in this southern China (inaudible) river delta region. But just across the border, only about an hour away from here, several mainland Chinese airports are quickly catching up.
Take Guang Cho`s Bayoun (ph) airport. Eight years ago, 12 million people passed through annually. Today that`s doubled to nearly 24 million. But aviation analyst Elizabeth Bosher believes the Cathay deal will only bring more traffic into Hong Kong and the rest of China.
ELIZABETH BOSHER, DIR. GENERAL, AEROSPACE FORUM ASIA: I think this is going to happen, is that international passengers coming in to Hong Kong will be able on one ticket, first of all to arrive in Hong Kong, then maybe to move into the mainland on Dragon Air to their first port of call, but then they can take Air China to a far wider range of destinations. NIU: But getting to those destinations might not be as simple as that, because while traffic in the skies may increase, traffic may also jam.
BOSHER: All of Chinese airspace is still under military control, but that certain corridors are opened up for use by civil aircraft. The problem is that these corridors, particularly between very-frequented points like Shanghai and Hong Kong, are simply not wide enough, large enough to cope with the amount of traffic that now wants to go through it.
NIU: And that traffic will grow. China`s other two national carriers are also likely to be looking for similar deals with foreign airlines, raising the stakes in the competition for a piece of China`s skies. Mark Niu, NIGHTLY BUSINESS REPORT, Hong Kong.
"Bill of Health"-Alternative Medicine Options
SUSIE GHARIB:These days more and more people are looking outside the mainstream for help with some of their medical problems. That`s where complementary and alternative medicine comes in. As Jeff Yastine reports in tonight`s "bill of health" report, the field is booming, and now drawing the attention of Federal researchers.
JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Some people call it holistic medicine; others, alternative or complementary medicine and it covers everything from acupuncture to herbal supplements, hypnotherapy and more. Now, its results are still subject to debate and investigation, but that hasn`t stopped nearly half of all Americans from having used some form of alternative medicine in the past year and in the process, have spent more than $27 billion.
LARRY SHERMAN, HOLISTIC MEDICINE LECTURER: What I do and what other people do, in holistic medicine is help people to heal themselves.
YASTINE: People like Larry Sherman are believers in the power of alternative medicine. He lectures often on its benefits at gatherings like this one.
SHERMAN: I think more people are prone to using holistic medicine now. But still a lot of people -- there`s a saying -- seeing is believing and this is something that you can`t see; it`s something that you have to do. You have to plant seeds in your head just the way you plant seeds in a garden.
YASTINE: That garden is big enough that the National Center for Complementary and Alternative Medicine, part of the National Institutes of Health, has a budget of more than $100 million, funded by the Federal government. The center was created by Congress in 1998. The mission: to study the effects of outside-the mainstream treatments, like acupuncture.
RICHARD NAHIN, SR. ADVISOR, NCCAM: Very few of these have been studied in any detail. It`s only been in the last 10 years or so that a very systematic approach has been taken to studying these using the most scientific rigorous methods. A good example is acupuncture. We`re beginning to understand if acupuncture works, what it might work for, and how it might work.
YASTINE: Practitioners like Brian Sheen say the ongoing Federal research has helped bring more mainstream acceptance to complementary and alternative medicine and he says the growth of the Internet is also boosting awareness.
BRIAN SHEEN, DIRECTOR, THE QUANTUM HEALING CENTER: Because now, it`s no longer I have to wait to go to the authority to get my answer when I have my doctors appointment. I got a question, I can go online and there are doctors out there; there are so many resources that I can get direct knowledge. I can talk to the chat rooms of people who`ve been dealing with this problem. And so there`s this information source on the Internet that didn`t exist before.
YASTINE: One thing emphasized over and over to us - the research on the safety and effectiveness of many therapies is still ongoing and no one should use any alternative therapy without consulting their personal physician first. Jeff Yastine, NIGHTLY BUSINESS REPORT, "bill of health."
Commentary: Net Neutrality
SUSIE GHARIB: Tonight`s commentator tackles a topic that Congress is tackling. It`s called net neutrality. Here`s Robert X. Cringley, columnist at pbs.org.
ROBERT X. CRINGELY, COLUMNIST, PBS.ORG: The U.S. Congress has recently been tussling with a technical concept called net neutrality. This either means that Internet service providers will be able to offer priority treatment to certain kinds of content - their own content or that of customers paying a premium or they`ll be prohibited from doing so.
This is arcane, but the value of this as yet unnamed congressional decision is in the hundreds of billions of dollars. Internet service providers feel that they should be able to make money from priority services, while the nerds who invented the Internet thought that they specifically prohibited such special deals. That`s why Congress is involved. But given the preponderance of teleco lobbying dollars, the future of net neutrality is definitely in doubt.
This doesn`t mean, however, that we won`t still be able to download music and videos from the net because for all the whining of the cable and telecos, from a technical standpoint, the target of this push against net neutrality is only one thing, and that`s Internet telephone service. Internet telephone service is especially sensitive to packet meddling, meaning that an AT&T or Verizon can keep out a (INAUDIBLE) or a Vonnage. This is done all the time in other countries by the way where Internet manners are less genteel and local communication companies are more firmly in charge.
From the teleco perspective, what`s at stake is their voice service that they see as the basis of their fortunes. For the cable companies, it`s a chance to have an effective monopoly among their Internet customers. So net neutrality isn`t generally about Amazon or Apple or eBay or Google or Microsoft or Yahoo!. That is, unless they want to get into the telephone business, which of course they do or did. I`m Bob Cringely.
Last Word: Stealing Office Supplies
SUSIE GHARIB: Finally tonight, if you`ve been wondering who`s been walking off with all the paper clips and pens your office buys, you might want to check the pockets of your younger workers. A new survey shows that one in five workers between the ages of 18 and 24 don`t think it`s stealing to take home office supplies. They consider it just taking things or a fringe benefit. Experts say the younger employees are more apt to take materials because they`re more apt to leave their jobs. So they don`t worry about being fired for theft. And apparently Paul, this isn`t a small problem. It`s believed that employees steal more than $50 billion-- that`s with a "B"-- worth of goods from their employers each year.
KANGAS: What do they call these people, Susie, paper cliptomaniacs?
GHARIB: That`s cute.
Paul Kangas' Stocks In The News
PAUL KANGAS: Wall Street opened lower on profit-taking from yesterday`s sharp rally. Rising oil prices also prompted some of the selling. A drop in the May leading economic indicators was yet another negative. After an hour of trading, the Dow was off 50 points. The NASDAQ down 18. An uptick in interest rates today and fear of another rise at next week`s Fed policy meeting kept stocks on the defensive for the rest of the day. So the Dow Industrial Average closed off 60.35 points at 11,019.11. The NASDAQ Composite fell 18.22 ending at 2,122.98. Standard & Poor`s 500 index down 6.60 at 1,245.60. Over in the bond market, the 10-year note fell 13/32 to 99 11/32, lifting the yield all the way up to 5.21 percent.
Big board volume leader on 18.4 million shares, Sprint Nextel (S) losing $0.54. The Baird brokerage downgraded the stock from "out perform" to "neutral" on concerns over subscriber growth prospects.
Then Boston Scientific (BSX) down $0.50 a share, traded as low as $18.06. The "Wall Street Journal" today reports some cardiac centers are cutting back on the use of drug-coated stents due to rising concern over blood clots. Johnson & Johnson, the other dominant company in the stent field and its stock was down $0.61.
General Electric (GE) fell $0.18.
Pfizer (PFE) $0.04 drop there.
Fifth in volume was EMC Corp (EMC) which dropped $0.20.
$0.13 loss in Time Warner (TWX).
Hewlett-Packard (HPQ) fell $0.77.
Ford Motor Co (F) held steady. That was a triumph (ph) on the active list.
ExxonMobil (XOM) $0.09 drop.
And Univision Comm (UVN) was down $1.04. You heard the story earlier.
British Airways (BAB) down $4.09. The Department of Justice and its British counterpart are probing alleged cartel activity involving this company and other majors in regard to price fixing on air fares and cargo, etcetera. Then General Mills (GIS) edged up $0.90. Merrill Lynch upgraded it from "neutral" to "buy" on a valuation basis, thinks the stock is reasonable, excuse me.
Mastercard (MA) had a nice move of $1.30 gain. Morgan Stanley started covering it with an "over weight" rating and a $56 a share target price. You`ll recall that the stock went public on May 25th at a price of $39 so it`s moved up nicely.
Green Mountain Power (GNP) big move, up $5.76. Northern New England Energy will acquire the company for $35 a share in cash.
Gerber Scientific (GRB) rose $0.91, almost 9 percent move. Fourth quarter earnings came in at $0.17 a share, $0.06 above the Street estimate and the company is looking forward to a strong 2007 performance.
AG Edwards (AGE) the major brokerage jumped $1.16. First quarter earnings jumped to $1.01 versus only $0.67 a year ago and revenues were up a handsome 17 percent.
Google (GOOG) topped the active list, down $2.18. The company did sell its 2 percent stake in baidu.com and baidu stock tumbled $4.20 to $80.20 on the news.
Apple Computer (AAPL) was up $1.72.
Then Microsoft (MSFT) a $0.20 loss.
Teva Pharmaceuticals (TEVA) dropping $1.02.
And Qualcomm (QCOM) fell $2.82. Nokia is not going to produce CDMA- based handsets with Sanyo and of course Qualcomm sells that CDMA technology, so not going to get any business that they had planned.
Intel (INTC) down $0.15.
$0.38 drop in Cisco Systems (CSCO).
Oracle (ORCL) off $0.20.
Bed Bath & Beyond (BBBY) down $2.21, $0.35 first quarter earnings. That was in line, but the estimate, full year $2.17 is below the Street estimate.
And then Dell (DELL) down $0.21 a share, tenth in volume. And Oracle, we wanted to get Oracle in. $0.20 a share gain after the close, fourth quarter earnings, $0.29, a penny better than estimates. The stock moved up $0.09 to $0.10 a share after hours.
And those are the stocks in the news tonight.
