estimates. revenue of $35 billion was also below expectations by more than $2 billion. suzanne pratt takes a look behind the numbers. >> reporter: yes, it is possible for the most valuable company in america to disappoint investors. still, analysts are putting a positive twist on the miss. they say consumers are simply holding back on buying iphones now in order to wait for the next generation. >> no one expects the next iphone, which we're calling the iphone 5, to be the same as the iphone 4 and iphone 4s, at least in the way it looks on the outside. >> reporter: as a result, only 26 million iphones were sold in q-3. many on wall street were hoping for 29 million units. nevertheless, ipad sales were strong, with consumers snatching up 17 million of the tablets compared to the 16 million anticipated. we still don't know when iphone 5 will hit the stores, but this fall is when it's widely expected. and with a wide variety of android phones nibbling at apple's market share, hopes are high for something innovative. >> apple needs it to be dominant. it needs to basically... this fall, to raise the bar in the smart phone space. if the iphone 5 doesn't do that, i think apple will have a problem. >> reporter: if you're wondering about tomorrow and how apple's stock will fare, consider this-- apple's two best trading days this year came on the days after it released first and second quarter earnings. of course, those we're both blowout quarters. suzanne pratt, nbr, new york. >> tom: still ahead, our week- long series about online security continues with the cyber-attack threat to businesses and national security. "nightly business report" is brought to you by: captioning sponsored by wpbt >> tom: earnings worries, weak economic data, and european anxieties all weighed on the major indices. in europe, greece may need to restructure its debt again. here in the u.s., one measure of manufacturing fell to its slowest growth in two years. u.s. factory production fell to 51.8 in july from 52.5 the month before. any number above 50, though, means manufacturing is growing. the dow lost 104, the nasdaq's fell 27, the s&p dropped 12. >> susie: those disappointing apple earnings could set the tone for trading tomorrow. joining us now to talk more about apple, joe mayer, technology analyst at motley fool. joe, you heard our report, a lot people, a lot analysts are saying that apple should get a pass this time because so many customers are waiting for that iphone 5. so is that fair? what do you say to that? >> i had a feeling you were going to hear that from apple, that there was going to be a miss. there probably is something to that and something to a larger issue with europe and china, both results there were weak across the board and they were okay in the u.s.. but i think it's pretty predictable that some people will put off buying the new iphone because there's going to be a newer, faster thinner one coming out, but at the same time that's a little bit of passing the buck. there's been a lot good material coming out from other manufacturers and there's been a lot of good competition while apple hasn't brought much to market in the past couple quarters. >> susie: so who is nibbling at apples angles? >> i think samsung is definitely the big player there and they are running googles system android i. own shares of google. google has gotten way out in front with android because it free and they've put a lot of resources making it a comparable system to the iphone. what a lot of people don't realize is that android phones don't need to be as good as the iphone in order to sell. the iphone is like a bmw, we don't want one, we can degree it a great car, great phone, but we don't need the best one to get us where we want to go. for most people an android phone fits that, that's why they've got the most market share. >> susie: what what does this mean for the stock, let's take a look at apple stock performance this year. it is up 50%. it got as high as 644 on april 10. and today in after hours it got down to $570. is this a buying opportunity or is it time to take your profits and walk away? >> yeah, i would walk away. i feel the concern about an appearally investor, when you dig into the numbers you'll see that selling prices are falling for things like the ipad. year over year that was down about 18% and investors, i'm sorry shoppers are trading down buying the cheaper ipad models, the ipad 2 in this case instead of the new ipad and that's cut into profits, and that's a dangerous long-term trend for apple. >> susie: there are still comparisons between steve jobs and the new c.e.o., kim cook, they may not be fair, but when there's a miss like this on the financials, a lot of people say is this a reflection of what kim is doing at apple. what do you say to that? >> i think it's a little early to start hurling that blame at him. steve jobs was so involved with the ipad development works the iphone 4s. when you start talking about iphone 6, start talking about the next ipad, at that point you can start pointing fingers at tim cook. but for right now he's just transitioning to running the business his way. >> susie: lfrt. joe mayer at motley fool. before you go, any disclosures to make on the stock you mentioned? >> i do own google. >> susie: thanks, joe. >> thanks. >> tom: 0.2% growth is not a number usually greeted with glee, but when you are talking about housing, it is a great number. real estate tracking firm zillow reports home prices nationwide rose 0.2% in the second quarter to an average of $149,300. this is the first year-over-year increase in five years. and as darren gersh reports, it is now pretty clear the housing market has finally hit bottom. >> reporter: on wall street, they say no one rings a bell when a market hits bottom. well, the housing market now looks like an exception to that rule. >> the bottom has officially arrived, we believe. >> reporter: yes, you heard that right. >> we're done. the crash is over. housing is improving. >> reporter: economic historians will debate whether the housing market bottomed at the end of last year or in the spring of this year. but one thing most analysts agree on is the next few years will see moderate increases in home prices nationwide. still, the climb back is going to feel pretty slow. >> the bottom is going to look like a long, flat affair for most markets, where higher rates of negative equity and pretty substantial foreclosure pipeline is going to keep a lid on price appreciation. and we look for price appreciation in the 1% to 3% range. >> reporter: but even 1% to 3% home price appreciation will make a world of difference for the economy as a whole. >> it will make it easier for small business people to get a loan, because they use their home as collateral to get that loan. and eventually, it should start to help local government. they rely on property tax revenue, which has been under a lot of pressure. once that starts to turn, then the cuts at local government should end. so all the bad things that have been happening, all the headwinds created by the decline in house prices should start to turn into tailwinds. >> reporter: but those tailwinds will be strong in some markets and weak in others. homes prices in chicago and atlanta fell about 5% over the last 12 months. but in miami, home prices were up 6.4%, and phoenix boomed, up 12%. don't count on gains like that continuing. lots of homes in those cities are still worth far less than their mortgages. as prices rise, homeowners who are suddenly above water are expected to rush to sell, periodically flooding the market. >> so we think, in markets like that, we are likely to see these cycles of spikes, followed by plateaus, followed by spikes again. >> reporter: but the general direction for home prices is now clearly up, and that alone is something to celebrate. darren gersh, nbr, washington. >> susie: the issue of cyber security is getting high level attention in washington. this week, the senate considers legislation to protect critical u.s. industries like banks and utilities from cyber-attacks and electronic espionage. president obama supports the bill. we're focusing on this issue this week. tonight, we're talking to a cyber security expert who advises the white house and major corporations, roger cressey, senior vice president at booz allen. roger, what's the biggest risk here? you had vulnerable are we? >> we're very vulnerable, we're under attack right now. there's really two categories, the first one is the theft of our nation's intellectual property, and that's going on at an unprecedented level by countries such as russia, china and also criminal groups. the second category is threats to our critical infrastructure as you mentioned. our electronic, such as telecommunications, digital areas as well as power and what other areas of critical infrastructure, there are tremendous vulnerabilitys in these sectors and industry is not doing enough to secure it themselves so, we're in a race against time. the question is what can we do to better secure these areas of critical infrom structure. >> susie: you're advising government, you're advising the private sector. what should be done? >> well, a couple things. the first thing we should do is we do need to have legislation passed by congress. unfortunately what's happened is it's been watered down so some of the voluntary standards that are the there now are a little short of what most people would like to see. the second thing we need to do is have a true public-private partnership where the government shares information that is critical to have companies get ahead of the attacks. what we're doing right now is we're very reactive to cyber attacks. we need to get pro-active and think where it's going to go and stop it before it actually hits. >> susie: one of the things that comes up in these debates when you're talking about legislation or any other meshers we take, many companies say they don't think it fair that they should have to take on all the added costs of uptrading their security network. what do you say to that, should there be some incentives or some subsidies from the government to do this? >> i think that would be true if they were doing enough on their own. but because critical infra structures, telecommunications, the financial services sector, the electrical grid, we as citizens have a right to believe that that is going to be better secured, and they're not doing enough. so clearly we want government to do more, but at the same time we don't on onerous regulations that will stifle innovation. those who talk about regulations as being the biggest concern is the worst case scenario that they're using, which paralyzes the process for any type of progress so what i would like to see is greater incentives in place and a basic level foundation of regulation that allows everyone to have the same security standards, and we move up from there. regulation is not the answer, but you can't do it just by voluntary alone. >> susie: obviously it's a very controversial issue here. what are the consequences if there is no action? >> well, we're under attack right now and while our nation's critical infrastructure hasn't suffered that national level event, that digital pearl harbor that some people talk about, we need to be thinking about how these sectors can be better protected, better secured so that we're not looking to do things after a national level event. our history has been that government only pacts aggressively after we have already sur suffered a serious loss. that was in case in terrorism post 9/11, in cyberspace we need to do it better and we need to be pro-active. >> susie: all right, you sure have raised our information and a reality check. thanks, roger cressey. tomorrow we continue our look at cyber security with some tips on how to stay safe when browsing the internet. >> tom: british prosecutors today issued criminal charges against eight people involved in media giant news corp's phone hacking scandal. the two most prominent people charged-- former editors rebekkah brooks and andy coulson. prosecutors say they conspired to intercept voice mails and other communications from more than 600 people, including celebrities, the royal family, and crime victims. coulson left the paper to work as an aide for british prime minister david cameron. brooks ran newscorp's british newspaper division. both deny the charges. >> susie: consumer advocates are calling it a win for the flying public. a federal appeals court today ruled the department of transportation has the right to require airlines to show consumers an "all-in" ticket price that includes taxes and fees. spirit and southwest airlines had objected, saying the rules violated their right to engage in commercial speech. the court also upheld rules prohibiting ticket and baggage fee hikes after a fare is purchased. >> tom: it was the third straight day of selling in the major stock indices. the s&p 500 caught a small bid in the final 40 minutes of the session. "the wall street journal" reported the federal reserve is moving closer to providing additional help for the economy, possibly as soon as next week. all ten major stock sectors were lower. the biggest losses in the telecommunications sector, down 1.8%. materials and energy fell about 1.5% each. trading volume picked up-- 807 million shares on the big board; 1.76 billion on the nasdaq. before apple reported its disappointing results, at&t's wireless division helped it report a stronger than expected second quarter. at&t made 66 cents per share, three cents better than estimates. its growing smart phone business drove wireless data revenues up 19%. but it was a lower outlook for its business services that hit shares. the stock has benefited from its relationship with apple selling the iphone. earlier this month, it hit a four-year high. today, the stock fell 3.1%. it was the second biggest percentage loser in the dow. the biggest loser was cisco systems. shares fell 5.8%. volume more than tripled. the selling came after cloud software company v.m. ware announced a buyout of a technology networking company, possibly threatening new competition. more people keep signing up for netflix online streaming media services, but the company is spending more money to get them. while earnings were more than double estimates, coming in at 11 cents per share, they were down considerably from a year ago. netflix has been investing in overseas expansion, as well as exclusive content deals to attract subscribers. shares were up a fraction during the regular session, closing at $80.39, but plunged as much as 14%, below $69 per share, in after-hours action. the total number of subscribers were on the lower end of its forecast, and the company's third quarter outlook was weaker than anticipated. u.p.s. is the latest company to point to europe as a worry, even saying economies around the world are showing signs of weakening. earnings were two cents per share shy of estimates. demand foe asian exports was soft, while its u.s. shipment growth has been credited to internet shopping and those are low-profit-margin shipments. shares fell 4.6%. the stock is down more than 7% in a week. in addition to its weaker results, the company cut its full year earnings forecast. we have a deeper look at u.p.s. shares on our web site, nbr.com. you can find it under the "blogs" tab with michael kahn. coal stocks were fueling the selling in the energy sector. peabody was down 11.3% after a disappointing earnings report and cutting its outlook. alpha natural resources shed more than 10%. consol dropped 4.3%. coal demand has been hurt by cheap natural gas. one consequence of the hot, dry summer over much of the u.s. is demand for electricity. that has helped spark a rally in natural gas. in june, natural gas was trading around $2.25, pushing lower thanks to a warmer than usual winter, record high supplies, and new sources of natural gas thanks to fracking. tonight, it settled at $3.18, a seven month high. the five most actively traded e.t.f.s were lower, the steepest losses in the russell 2,000 tracking fund. and that's tonight's "market focus." >> tom: the global investigation into the there's banking scandal continues spreading. individual traders have joined the 16 banks that set libor as targets of scrutiny. the london interbank offering rate is an interest rate used to set trillions of dollars of borrowing costs including adjustable rate mortgages and private student loans. tomorrow the role of top regulators comes under congressional investigation. time think geithner is expected to be grilled in the first of two capitol hill hearings this week. he was the head of the finish in 2008 when u.s. regulators first became aware of problems with libor. e-mails and phone transcripts show american regulators were suspicious of the interest rates reported by banks responsible for setting libor. in june 2008 the new york fed sent an e-mail to british banking authorities entitled recommendations for enhancing the credibility of libor. the fed has defended out response. this month british bank barclay's agreed to pay $450 million to set charges it tried to manipulate the interest rate. it cost the company's top executives their jobs. cleve stevens is a social ethicist and author of the best in us,. dr. stevens, this libor scandal the latest for the banking industry, subprime lending, trading scandals. what are the cultural conditions that may be fueling this? >> well, it actually is fueled by what i view as the fundamental business dogma of the time which is that only thing that matters is shareholder value. or if not the only thing, the single most important thing. ultimately, when the profit is the driving and exclusive driving factor you're going to end up with greed is good. that as cliched as that sounds, that is in fact an element of what's contributing to these astonishing scandals. >> tom: you're speaking to an audience of shareholders out there and it's got to be heresy for them to hear shareholder value is not the ultimate rule here. so what are you trying to say to them? >> well, what i say to them is that the irony is that when you focus on the growth of the development of the people and you do it driven toward excellence, not focusing on the shareholder value, the irony is that the shareholder value increases, profits go up. >> tom: how else do you measure that if not ultimately at the end of the day, the quarter, the year? >> you do measure that. you don't throw that out. in fact, in this model or this way of thinking that becomes the measure not just of whether or not you're producing the results but whether or not you're effective in leading the people. so that becomes a measure, but it's not the end game. the end game is something larger than that. that becomes a buy product of the way in which the leader is working. does that make sense? >> tom: we've seen bank leaders called to the carpet, we've seen regulators called to task. from a leadership perspective what would you say to these regulators and banking leaders? >> well, one of the things i probably would ask them is, what do they understand as the fundamental drive of business, and if it is only profit how else can they expect it's not to arrive at this kind a situation. i would ask them if they can see any other natural outcome when the culture is so driven by the exclusive it of profit. >> tom: cleve stevens, the author of the best in us. >> reporter: i'm erika miller. tomorrow, i'll tell you why store-brand products are surging in popularity, even as the economy improves. >> susie: also tomorrow, we'll be watching for earnings from major drug makers like eli lilly and bristol myers squibb, and we will talk about the outlook for airlines' profits and ticket prices. >> tom: even though apple wasn't as profitable as some analysts expected last quarter, the company's success is another lesson in the power of brands. a strong name brand can be a strong contributor to the bottom line, even for those borrowing the brands of others through licensing deals. here's rick horrow with tonight's "beyond the scoreboard." >> reporter: crazy about your favorite sports team? can't resist the urge to buy every product with their logo on it? you aren't the only one. one of the benefits of being a strong brand is the ability to license your logo to manufacturers for the opportunity to make a lot more money. the sports and collegiate licensing business is a $21.7 billion worldwide industry, generating over $1 billion in royalties annually. companies of all sizes have gotten into the licensing game. walmart, the world's largest retailer, has a deal with nascar to manufacture merchandise with nascar, driver, and team marks. but beyond the standard hats and t-shirts, what makes sports licensing even more intriguing is the variety of branded products in the market. for example, the collegiate licensing company licenses virtual products, including facebook games for zynga and outfits for xbox avatars. the nba has multiple unique licensing partners. footwear and apparel brand herstar produces high-end, team- branded women's dress shoes, while pangea brands makes a toaster that singes team logos into bread. and coming soon to a theater near you is turbo, a collaboration between the izod indycar series, indianapolis motor speedway, and dreamworks. the logic behind sports licensing is simple-- take the affinity fans have for a team, add it to a product of value, and sell it for a nice markup. i'm rick horrow. >> susie: and finally tonight, it's the goal of all olympic athletes-- winning gold! but you might be surprised to find out that gold medal isn't all gold. in fact, it's about 93% silver with a smidge of gold and a little bit of copper. melt it all down, and the 412-gram medal is worth about $650 at market value. the same amount of pure gold would run about $20,000. but tom, it's an olympic gold medal and that's priceless. >> tom: the investment of a lifetime, takes you to get to the games, but once you win it you want to keep it no doubt. >> susie: absolutely. that's "nightly business report" for tuesday, july 24. have a great evening, everyone, and you too, tom. >> tom: good night, susie. we'll see you online at nbr.com and back here tomorrow night. 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