Welcome everyone. It is the heart of earning season and we heard from two of the biggest names in technology. That would be google and microsoft. Seema modi is here to break down numbers. Let start with google. Lets start with microsoft, tyler. Great. Reported a huge miss on the bottom line with Fourth Quarter earnings with 66 cents a share. Analysts estimate of 75 cents. Revenues came in weak. Microsoft has been hurt by on going weakness in the pc market and the on going consumer shift to tablets. Amy hood says while the Fourth Quarter results were impacted by the decline in the pc market, we continue to see Strong Demand for the enterprise and cloud offerings. One bright spot, microsofts entertainment and device business, which includes xbox game console, that business saw a 7. 5 jump in sales. Shares of microsoft while down after hours still up about 30 year to date. Now tyler, on to that tech giant google, which reported a huge miss posting a quarterly profit of 3. 2 million up from 2. 8 million. Total revenue grew 19 to 14. 1 billion, but that did not satisfy wall street. Another key number analysts looked for, cost per click, thats the average price that charges advertisers every time someone clicks on their add on a Google Search engine. That dropped year over year. Larry page talked about how when google started they dealt with ecosystem, the pc but now there are places to penetrate and thats not only a challenge but opportunity for google. Thank you very much. It doesnt matter which one you begin with. Thanks very much. Reaction to the numbers, skip, manage ore the hennesy management fund. Want to start with google or microsoft, and what did you think . Well, on the big picture, probably a little disappointed in both. Lets look at google because i think when you peel back the numbers here, there were some positive things for the future. One of those is research and development are cap x, which is an expense which kept revenues down or profits down for google up about 30 this quarter. So an additional 400 million spend on r and d and cap x. Second major issue of a positive nature is the head count shrunk. Almost 9,000 employees. These are two positive elements for the future. On the negative side i go ahead. I was going to jump in skip and ask about microsoft. What happened with microsoft and ed essenti especially coming off the massive reorganization. They have product offerings. Do you see anything here that says that microsoft has a vision for where they are going for growth . Well, i think as the ceo said, its in these new cloudbased offerings. Whats really hurting microsoft, of course, is its relying on the pc and windows environment. Much like the story of dell to a certain extent and hp. So they hurt on that but are trying to turn the ship around and go down other paths. Skip, both stocks had nice runs so far this year. Microsoft at one point was one of the leading stocks in the dow so far this year. Would you buy either of these stocks at todays prices . I think that well, from an individual standpoint, its really the focus on the future, and i would be more positive on the google side than i would be on the microsoft side. All right. So i would buy the google. You would buy google and i know you have google in your portfolio. Would you buy it at 873 . Do they buy more . I would any time you have a price decline like there was aftermarket, its a good time to add to positions, as long as you have a longterm outlook. Real quickly, weve seen the stock market hitting new highs but the Technology Stocks have been holding back a bit. Generally you run a text fund. What is your view what is going on with tech overall . Well, on the big tech names its hard to see this consistent growth just because the numbers are so large for both microsoft and google. A shift of a billion dollars is just a small percentage. I think the opportunities and the small cap sector will provide and might be more rewarding from an appreciation standing. Technology is the key for productivity increases and everybody likes the greatest and best new wide gets. Were awaiting apples next product. Thank you very much. New records on wall street today. The dow and a and pskand s p went up. Investors were also encouraged by more reassuring words by ben bernan bernanke. He told Senate Lawmakers that the fed will continue stimulating the u. S. Economy as long as necessary. By the closing bell the dow rose 78 to 15,549 and the nasdaq added a point and the s p up to bankruptcy. Its in chapter nine protection. Scott cohn is with us with more on what that means for the cities, residents and creditors. And for the nation, tyler. Right. This is a major event. Detroit had 1. 8 million residents and now half that. It was the cradle of American Manufacturing and vacant homes and an Unemployment Rate in the metropolitan area of 9 . Kevyn orr will handle it. He tried to reach an agreement with creditors to keep off the bankruptcy. He could not. Rick snyder who appointed orr said it was painful but said there was no other option. Detroit is the largest American City ever to file for bankruptcy, by far the largest. The longterm debt as high as 20 million so what do the creditors stand to lose on this . Often there is a restruck dooring, they get paid off at pennies on the dollar. Do we have any idea . We dont. A federal judge first has to approve this. This is a request to go into the chapter nine bankruptcy which is the municipal plan right. So the judge has to go throw a threemonth process of approving it and a reorganization plan they have to work out with creditors including pensioners. This is so shocking Something Like that is happening in the united states, and, you know, weve heard about state finances in trouble, citys finances in trouble. Is detroit a onetime unique situation, or will we hear this about a lot of major city sns. There has been a lot of talk about that. Detroit for 40 years has been a place of extreme. Extreme racial strife, white flight, decline of the M Manufacturing base. This city had issues that any mu municipality has had dealing with the declining housing base and more so other city haves to take a look. Its very interesting two of the largest bankrupt seeps in the corporate world in recent years were in detroit, General Motors and chrysler. They came out on the other side much, much stronger. Can that happen for detroit . That certainly is the hope. And all the comments youre hearing now as this longfeared bankruptcy filing happened, our detroit will come out of this. Maybe this is something that even the people who were a posing this for the longest time seem to be conceding that was necessarily, that this was a necessary step. Now under bankruptcy, the whole purpose of the Bankruptcy Law is to allow the city to get out from under debts, meet obligations with its creditors, reorganization and move on. And thats the goal here. All right. Scott cohn, thank you very much. Appreciate it. Lets hope that happens. Meanwhile, wind was taken out of the sails of the windy city today, too. Moodies Investors Services lowered chicago by three notches sitting the large and growing pension lighties and budget pressures. The credit downgrade affects 8. 2 billion of bonds and stocks. Moody says the outlook on the city is negative. Another twist on the long battle to take over dell where shareholders were scheduled to vote today but that didnt happen. What do shareholders think and what is next . Jackie has more from dells headquarters in round rock, texas. Reporter a vote on michael dells 24. 4 billion deal with Silver Lake Partners to take dell private at 13. 65 a share adjourned until next wednesday. This as carl icon and southeastern management put forth a competing proposal, one that keeps dell public and vams the public at 15. 50 to 18 a share. They say hes the right person to lead a turn around privately but dells officer under values the company and analysts wonder if the dell offer is opportunity. They say no, we can turn this company around and shareholders will win. So i like their plan better than dell because michael dell, every time you turn around hell be well off from two years from now but why cant the shareholders benefit. Reporter 300 plus investors attended the meeting today in cou round rock, texas. Im realistic and concerned. Yes, lit ha yes, it will have an impact and thousands of us will see what happens because there is an option to ever more money than the 13. 65 that hes offering us at this point. Reporter carl icon and southeastern taking their own view saying we believe this delay reflects the unhappiness of dell stock hold earlies with the michael dell offer that we believe substantially under values the company. This is not time to delay but move investors forward. They got more uncertainty. Will michael dell sweeten the offer and get the deal passed next week or will shareholders review carl icons offer at the next meeting . A sigh of relief for boeing in the wake of a fire on board a 787 dreamliner last week in london. British aviation investigators are recommending that an emergency locater found on that aircraft be disabled. We begin with healthcare, the dow component and the nations Largest Health insurers signed up almost 10 million new members and fewer people filed claims. Thats a good recipe and that boosted quarterly revenues and profits. They beat analysts estimates. The company increased the outlook for the year. Unh shares, biggest gainers in the dow surging 6. 5 today. Morgan stanley reported a billiondollar profit and plans to buy back 500 million shares, first since 2008. Revenue grew in all major businesses, trading in particular. The stock finished up 4 to 27. 70. It was a case of good news, bad news for verizon, the nations largest wireless carrier. The good news, it activated more iphones than expected in the last quarter and now the bad, the company saw some weakness in its traditional wire line unit, which pressured overall revenue and accept prettily, verizon is joining rivals, at t and tmobile instituting an installment plan for customers that want to update their devices every year instead of every two years. The stock finishing today lower by 1. 5 closing at 49. 97. It was a tough day for sherwin williams. They reported disappointing second Quarter Results and a weak outlook for the Current Quarter and said mexican regulators rejected the bid to buy a paint company. It plunged to 167. 94. Earnings at schloastic went down. Next year the Company Plans to focus on new Educational Technology plans like the ipad to increase revenue. The stock was off by 8 today to 29 and change. Jp morgan facing a record fine, the allegation it manipulated Energy Markets but the only firm accused of wrongdoing. Is there any way to stop businesses from behaving badly but first, how the International Markets closed today. Jp morgan chase faces what could be the biggest fine ever to settle allegations that it manipulated electricity markets in the midwest and california. The federal Agency Committee is closer to a deal with the bank that could mean a fine of nearly a half billion but remember, jp morgan made 6 billion in profit last quarter. So a half billiondollar fine would be less than 10 of one quarters profits. Some legal experts say fines for misconduct need to get better to detour corporate misbehavior of which there has seemingly been a lot lately. Reporter whats a 500 million fine or settlement to Jp Morgan Chase . Not so much says this attorney. On the other hand, the companies being find as stra no, maam fined these amounts can afford it. Reporter she defends companies accused of behaving badly. Sometimes companies do decide, ever a financial decision to disregard a law or break a law because its in their financial interest to do it, and sometimes just as we all have done in the past, maybe in school or otherwise, you know, we think we wont get caught. Reporter but increasingly, they are, all around the globe. Last year british drug maker Glaxo Smith Kline pleaded guilty for unlawfully profecting prescription drugs among other offenses. It was the Largest Healthcare fraud settlement in history. That was 1 3rd in settlements negotiated by the government in 2012, triple the recoveries in 2011 and 50 more than 2006. This year bp was sentenced in january to pay 4 billion, a record for an environmental crime stemming from the 2010 deep water horizon spill in the gulf and a company agreed to pay a fine bringing the rbs and rbs japan totals in that case alone to 612 million. In may, walmart pleaded guilty to violating the clean water act and was sentenced to pay a fine of more than 81 million. Fines for anti trust and price fixing allegations like the one Jp Morgan Chase faces have grown the most in resent years topping 5 billion in 2012 and still says university of baltimore law professor, companies are willing to take the risk. Land and john conner from perdue said we only catch about 25 of the market manipulators and he said at that rate, fines need to be five times what they have been and he said people tied to fix prices should be banned from the industries for life. She thinks her practice will stay busy no matter what. As long as profit maxization is going to be a primary motivator of a corporation, there will be incentive to bend the rules, cut corners. Lawmakers are close to a deal that would lower the rate on new subsidized Student Loans just weeks after allowing them to double to 6. 8 . A bipartisan would help that. Under graduates can borrow at a rate of 3. 9 and graduate 4. 9 and parents can borrow at 6. 4 . Hedge fund manager john paulson famously bet against housing before the bust. Now hes calling it the best investment anyone can ever but is it . How commoditiecommodities, trea currencies faired today. The Housing Market has been red hot lately, and that may be why a california builder decided to go public on wall street. Ucp began selling stock to the public for the first tyime toda on the new york stock exchange. Its the fourth home builder to go public this year. The shares tumbled nearly 7 . Looking at the three other Home Builders that also went public this year, william lie gone and try point. Despite those disappointing ipos some are bullish on it like mooreson. Hes now talking up housing in a big way. Listen what he said yesterday about individual investment in housing. Feel buying a home is the best investment any individual can ever. Afford bt is at an alltime high. It costs less to own a home after tax than it does to rent. If anyone bought a home last year, lets say for 100, you put down 20, today that home is worth 112. So you made 12 on a 20 investment, 60 return. So, is john paulson right on housing . Our next guest, disagrees. Hes the economics Professor Robert shiler who is is the cofounder of the case shiler index. So nice to have you on the program again and really want to get your point of view of why you disagree with john paulson. I dont totally disagree. I think that home prices are moving up and they might for someone with a flipping plan whose going to get out, it might be an attractive investment. Most people are not in that category. Most people think of buy and hold and for the longer run, i dont think housing is a good investment, unless you want the house. So you think that in the shortterm if im going to flip the house, its a better deal than in the long term if im going to stay there and own the house. Without wading too deeply into the numbers, explain why. Well, professional investors like john paulson are very aware of anomalies in markets. One of them is momentum. It been remarked in the stock market, im sure he knows that very well. Its also in the Housing Market, and it has been much stronger in the Housing Market than in the stock market. So when home prices start going up, they will probably go i wrote a paper about this 20 years ago. Its really true. Home prices move in the same direction, 12 nationally for a year or so. Weve been raised to believe our parents did this and the parents before them did this, you buy a home, hold on to it and set for retirement. Right. And then we had the housing crisis. I get that. Are you saying that Going Forward that that rule of thumb no longer exists . I mean, what really changed here . Well, it it if you want a home and you want to live there, fine. Its paulson is right, there is a tax advantage to homeownership, but the question in my mind is are you going to buy a bigger home than you need as an investment or buy a second home and there i think that its not a good longrun prospect because historically, housing has not increased above the inflation rate. Home prices are down now theres a big misperception that houses are cheap now. They are not generally cheap. They are back to an average level. So your argument, basically, if i understand you correctly, after inflation basis, youre not going to ever money owning a home . The dividend comes in the form of a nice place to sleep, a family room, you know, a place you get value from that. Thats it. Dont expect capital gain. Mortgage rates are still very low and i think its more of a Mortgage Market play that might entice people for the longer term. If you really plan to stay in a house for 30 years, you can get a 30 year Mortgage Rate thats still a little over 4 . Thats very good by his tore ri historical standards. Thank you very much. Television history was made today at the emmy nominations. The political thriller house of cards produced by netflix was nominated for best drama series, the first time a program only available through an Online Streaming Service was recognized. House of cards received nine nominations. Also getting nominatenominated, situation Comedy Arrested Development including Jason Bateman as best actor. Before we go, which stocks would you like our market monitor guest to discuss tomorrow . Let us know by logging on to our website nbr. Com and dont forget to include where you you are from. Next week, we also begin a fivepart series on how to not out live your money. So please join us for that and i guess you cant count on your home to bail you out. To bail you out according to professor shiller. Youll be back tomorrow so enjoy your weekend ill be back monday. Thanks for joining us, im susie gharib. Im tyler mathisen, thanks from me as well. Stay cool everybody. See you back here tomorrow. Nightly Business Report has been brought to you by. Sailing through the heart of historic cities and landscapes on a river, you get close to iconic landmarks, to local life, to cultural treasures, viking river cruises, exploring the world in comfort. Narrator why would a goat never leave a horses side. For 16 years . What would possess a big lion to bond with a little coyote . 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