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ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Sue Herera.
TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Next chapter. Verizon (NYSE:VZ) buys Yahoo`s core Internet business for a fraction of what it was once worth, marking the end of an era of one of the Internet`s pioneers.
SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Chaotic kickoff. From protests to heckling, it was a rocky start to the Democratic Party`s national convention, as new polls show the race is tightening.
MATHISEN: Precious metal. Why the key to the electric car revolution can be found in a remote part of the Nevada desert.
All those stories and more tonight NIGHTLY BUSINESS REPORT for Monday, July 25th.
HERERA: Good evening, everyone. Welcome.
It is the end of the line for one of the original Internet disrupters, and the beginning of a new one for a telecom giant. Yahoo (NASDAQ:YHOO) has agreed to sell its core business to Verizon (NYSE:VZ) for nearly $5 billion. For Yahoo (NASDAQ:YHOO), it not only ends a drawn out auction process, but it also caps CEO Marissa Mayer`s four year turnaround effort, one that many say failed to materialize.
For Verizon (NYSE:VZ), it extends the telecom company`s digital reach to make it a bigger rival to both Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB). Shares of both Verizon (NYSE:VZ) and Yahoo (NASDAQ:YHOO) finished the day lower.
Julia Boorstin has more on the deal and what`s likely to happen next.
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JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Telecom giant, Verizon (NYSE:VZ), is buying Yahoo`s core as sets. Verizon (NYSE:VZ) hoping to combine data from smart phones with AOL (NYSE:AOL) and Yahoo`s ad systems to improve targeting and create an ad giant to rival Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB).
MARISSA MAYER, YAHOO CEO: They`ve completely modernized the product line and we`ve gone mobile. We`ve invented new forms of advertising. We`ve driven towards the programmatic, buying, the overall buying push that we see happening from advertisers and our user base has grown by more than 50 percent.
BOORSTIN: Verizon (NYSE:VZ) with its AOL (NYSE:AOL) acquisition and Yahoo (NASDAQ:YHOO) owned complimentary technology tools and they both bring scale and users and data about them, which enables more accurate targeting of a broader audience.
CRAIG MOFFETT, MOFFETTNATHANSON FOUNDER: You`ve got AOL (NYSE:AOL), which is primarily for Verizon (NYSE:VZ) and ad tech platform. You`ve got Yahoo (NASDAQ:YHOO) now, which is primarily a content platform, and you`ve got Verizon (NYSE:VZ) itself, which I think in this context, you can think of as customer data about wireless usage. What they`re hoping is that if you combine those three things, you can actually significantly enhance the value of Yahoo (NASDAQ:YHOO)!`s advertising inventory.
BOORSTIN: This deal is all about ad technology. Tools for marketers to decide what types of ads to buy and to automatically distribute and target those ads with tools to measure their impact. And this deal is about the ability to use those ad tech at scale.
Yahoo`s web services draw about one billion monthly users while Verizon (NYSE:VZ), the leading U.S. mobile carrier has 140 million wireless subscribers.
TIM ARMSTRONG, AOL (NYSE:AOL) CEO: I think between the team at Verizon (NYSE:VZ) and a team at AOL (NYSE:AOL) and team at Yahoo (NASDAQ:YHOO), we will set the business up to compete in a completely different level, you know, than any of our businesses have been able to do alone in the past.
BOORSTIN: Though these new assets allow Verizon (NYSE:VZ) to leapfrog Microsoft (NASDAQ:MSFT), the acquisition will give Yahoo (NASDAQ:YHOO) just 5 percent total digital ad market share, according to E-marketer, a distant third to Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB).
But this deal isn`t just about ad tech. Verizon (NYSE:VZ) has been investing in its Go 90 app to create a mobile video platform. It has a long way to go to rival YouTube and Facebook (NASDAQ:FB). We`ll see if Verizon (NYSE:VZ) can drive traffic from Yahoo`s users to create more valuable ad inventory there as well.
For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in Los Angeles.
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MATHISEN: On Wall Street, stocks fell from record levels, a decline in oil prices weighed on energy shares as investors look ahead to a big week of earnings reports and a two-day meeting of Federal Reserve policymakers. The Dow Jones Industrial Average was down nearly 78 points to 18,493.06. NASDAQ off 2.5. The S&P 500, which closed at a record on Friday, declined six.
As for oil prices, they were down more than 2 percent, hitting a three- month low on growing concerns. We talked about it last week about a global glut of crude.
HERERA: To politics now, where the Democratic National Convention is getting underway in Philadelphia. The theme, "United Together". After today`s rocky start, unity appears a long way off.
John Harwood comes to us from the City of Brotherly Love.
John, it`s good to see you as always. The head of the DNC, Debbie Wasserman Schultz resigned yesterday as the party`s chairwoman, effective at the end of the convention. Today, she changed her mind about gaveling the convention into session.
So, walk us through that process and what happened.
JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT: Well, what happened, Sue, was some of that disunity that you just alluded, Debbie Wasserman Schultz went to her home state`s delegation, Florida, and was booed.
Now, once that was demonstrated, nobody wanted to repeat the booing that occurred on the floor of the Republican convention last week that caused everything to conclude that they were not unified. Democrats don`t want that. But it`s going to be a struggle to prevent that from happening again and that`s why Debbie Wasserman Schultz took a step in that direction and turned the gavel over to Stephanie Rawlings-Blake the mayor of Baltimore.
MATHISEN: You know, John, I heard some of the restiveness described by one Sanders supporter this way. Bernie fed us a bunch of Mountain Dew and now he wants us to go to sleep. It ain`t happening.
Well, Democrats be able to get past all of this restiveness?
HARWOOD: Well, we find out tonight because not only do we have Michelle Obama speaking this evening, very popular first lady, but you`ve also got Elizabeth Warren, the hero of the populist, and Bernie Sanders himself will bat clean up and speak at the 11:00 hour. He`s been trying urgently all afternoon through text messages and e-mails to calm his supporters, ask as a personal favor to him that they not boo Hillary Clinton`s, the mention of her name, and he`s going to mention her name in this speech. So, we`ll find out tonight.
HERERA: You know, John, as the Democrats get started, is it possible to measures of the Republican convention last week?
HARWOOD: Not with any great reliability, Sue. It`s always dangerous to poll in the middle of events or immediately after big events. However, the measurements that we do have suggest that Donald Trump has gotten a bump from his convention. In fact, in the average of national polls by RealClearPolitics.com, that website, Donald Trump has moved very slightly ahead.
HERERA: Wow. All right. It`s going to be an interesting evening and a fascinating week.
John, thank you so much. John Harwood of Philadelphia.
MATHISEN: Well, the heat wave in Philadelphia did not keep protesters away. If anything, it just heated them up. The demonstrations at the Democratic National Convention appeared bigger than those at the RNC last week, in Cleveland. And today`s protests were mostly driven by Senator Bernie Sanders` supporters representing a variety of diverse interests.
Eamon Javers was in middle of it all.
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EAMON JAVERS, NIGHTLY BUSINESS REPORT CORRESPONDENT: A fairly significant pro-Bernie Sanders protest here on Broad Street in Philadelphia. This crowd walking south on Broad Street from city hall, all the way down to the Wells Fargo (NYSE:WFC) Center, which is where the Democratic National Convention is actually being held. As you can see from the signs behind me, this group very much for Bernie. Bernie Sanders signs everywhere, "no wall" or "Wall Street corruption" signs. "Hillary for prison" signs. "Bern the system down" for Sanders.
This group very much opposed to Hillary Clinton. I saw one sign that said, "indict the queen" and they`re chanting "shame on the DNC".
So, this is going to be a tough week for Democratic Party unity here in Philadelphia.
For NIGHTLY BUSINESS REPORT, I`m Eamon Javers in Philly.
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HERERA: The election uncertainty is making some wealthy investors nervous. According to a new survey, nearly half are considering selling some of their stocks when the votes are tallied in November.
Robert Frank has the details.
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ROBERT FRANK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Millionaire investors say this election is the most important in recent history and many have their finger on the sell button, depending on the results. Three quarters of millionaire investors say this election is a, quote, "game changer" and they`re nervous about the outcome. That`s according to a UBS survey of investors with one million dollars or more in investible assets.
Millionaire anxiety could lead to large stock sales. Nearly half of the investors planned to reduce their market exposure, and as a result of the election, and a small percentage have already sold. But their investment plans and fears depend largely on their politics, and millionaires are sharply divided along party lines, roughly a third Democrats, a third Republican and a third independent. Sixty-one percent said if their preferred candidate win, it will be good for the market and two-thirds said if the opposing candidate wins, it`s bad for the economy.
SAMEER AURORA, UBS WEALTH MANAGEMENT: Their political leanings, or political affiliation, are directly impacting how they feel about the investment outlook and the prospect of the stock market going forward.
FRANK: Millionaires say the country is on the wrong track, but they`re divided on the solutions. GOP millionaires say the answer is tax cut, a balanced budget, and strict immigration enforcement. Democrats say the answer is higher taxes on the rich, a higher minimum wage, and clean energy.
So rather than a, quote, "market reaction to the election", investors will react according to their politics, split sharply along party lines.
For NIGHTLY BUSINESS REPORT, I`m Robert Frank.
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MATHISEN: Politics in the U.S. and abroad dominated the conversation over the weekend at a meeting of the world`s major economies. So-called G-20 group said it was focused on a number of global uncertainties, and that downside risks persist.
Eunice Yoon reports tonight from Beijing.
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EUNICE YOON, NIGHTLY BUSINESS REPORT CORRESPONDENT: Over the weekend, G-20 finance ministers and central bank governors gathered in a Chinese southwestern city of Chengdu, and the topic was Brexit, Brexit and more Brexit. There was almost universal concern about the impact of Brexit on European growth and therefore, on the global economy.
The G-20 leaders issued a communique where they said they would use every tool available to them in order to try to prop up growth but because it was a G-20, there weren`t a lot of specifics. Now, what they did agree upon is that they hoped that Brexit would be negotiated quickly and in the least disruptive way. Otherwise, as the IMF`s David Lipton told me, there could be a slowdown investment as well as spending.
DAVID LIPTON, IMF`S FIRST DEPUTY MANAGING DIR.: There`s an amicable approach. That they approach this with a sense of mutual gain and find a way to agree on some new rules without creating a period of unnecessary uncertainty.
YOON: Since the meetings followed the Republican National Convention, there was a lot of talk about Donald Trump and his economic policies. There`s a big concern about G-20 leaders about rising protectionism in the United States as well as elsewhere around the world. One of the targets of Trump`s policies is Mexico.
I sat down with the deputy finance minister of Mexico and asked him about the antitrade rhetoric and whether or not he`s concerned it could hurt religions.
FERNANDO APORTELA, MEXICO`S DEPUTY FINANCE MINISTER: What we are working on is to show positive things that happened with free trade, the integration between our economies, and all this relationship that we have that are more profound than the government relationships.
YOON: Another major concern among the G-20 leaders is the health of the Italian banks. The European commission has been negotiating with the Italian government over some sort of rescue plan, I talked with all of the players in the European commission, the Italian Central Bank governor as well as the Italian finance minister, and all of them had a similar necessary and that is that they believe that the fears among investors were exaggerated and they were working very closely in order to try to come up with a solution sometime soon. The E.U. is going to be releasing its bank stress test results on Friday.
For NIGHTLY BUSINESS REPORT, I`m Eunice Yoon in Beijing.
(END VIDEOTAPE)
HERERA: Still ahead, when an e-mail from your boss isn`t what it seems and could cost your company big money.
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HERERA: Surging demand for air travel will increase the need for more pilots. According to a forecast by Boeing (NYSE:BA), global airlines will need to hire nearly 1.5 million pilots and technicians by the year 2035. The Asia Pacific region will account for about 40 percent of total new hires mostly because of China`s growing travel market.
MATHISEN: Well, there`s not only growing demand for air travel, but also for electric vehicles and that means there`s an increased need for lithium, which is one of the key components in batteries for electric vehicles. And that`s putting even more attention on a remote part of the American desert.
Phil LeBeau reports from Silver Peak, Nevada.
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PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT: That`s not a mirage. Those are lithium extraction pods outside Silver Peak, Nevada. The water evaporates, which often takes more than a year, it eventually leaves behind lithium, a primary component in the batteries used for cell phone and electric vehicles as sales of those cars like Tesla`s Model S and the Nissan Leaf, automakers are clamoring for more lithium.
PATRICK HIGHSMITH, PURE ENERGY MINERALS CEO: We`ve been driving lithium demand up for a long time, with electronics, portable electronics. But now, it`s electric vehicles, the larger batteries that electric vehicles use demand a lot more lithium.
LEBEAU: Pure Energy Minerals is hoping to tap the supply of lithium in water tables deep below Nevada`s desert. But unlike the current process of having water evaporate overtime, Pure Energy wants to build a processing plant to produce more lithium faster.
HIGHSMITH: Instead of taking 18 months or two years like larger ponds, this is an industrial process that works in a matter of hours.
LEBEAU: For nearby Silver Peak, the push for more lithium could pump new life into an old mining town that is so small it doesn`t even have a gas station.
But Silver Peak and the lithium deposits in this area are not far from a new battery plant Tesla is building just outside of Reno, and as that plant begins to supply to lithium ion batteries for electric vehicles and energy companies, the people in this area could see their fortunes change.
Phil LeBeau, NIGHTLY BUSINESS REPORT, Silver Peak, Nevada.
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HERERA: Gilead cuts its outlook for the year and that`s where we begin tonight`s "Market Focus".
The biotech company topped analyst`s profit and revenue expectations in the latest quarter thanks in part to an increase in sales for its HIV drugs. But the drug maker lowered its overall revenue guidance and also sees product sales slowing. Shares of Gilead initially fell in afterhours but finish the regular session up 2 percent to $88.55.
Profit and sales at Texas Instruments (NYSE:TXN) beat Wall Street estimates, thanks to strong product demand from the automotive and industrial markets. The chipmaker also said earnings guidance for the quarter was better than expected. Following the news, shares popped in extended hours after ending the regular session up a percent to $66.22.
Currency headwinds dragged down sales of Kimberly-Clark (NYSE:KMB). The makers of Kleenex tissues still managed to beat expectations, and the CEO said, quote, "The worst has passed for the company."
Kimberly-Clark (NYSE:KMB) now expects organic sales for the year to come in at the low end of its previously issued guidance. That sent shares down more than 1 percent to $132.59.
And promotional offers led to more customers for Sprint, helping the wireless carrier post better-than-expected revenue. But despite the success with the steep discounting the company said it will likely raise prices in the not-too-distant future. The company`s CEO said it`s all about getting back to basics.
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MARCELO CLAURE, SPRINT CORP, PRESIDENT AND CEO: We`re going back to the fundamentals of business, and that is bring a great product at a great price and you start to see customers come in, 173,000 postpaid phone it adds, which is what matter in this business, actually the highest in the last night years. So, we`re happy with the result and the progress that we`re making.
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HERERA: Shares of Sprint spiked 27 percent to $5.90.
MATHISEN: The telecom equipment-maker Ericsson said its CEO Hunts __ has stepped down. The news comes after the company`s board of directors unanimously voted to replace him, saying the time is right for a new leader. The company`s current CFO will take over until a replacement is found. Shares up 8 cents to $7.44.
LVMH will sell its Donna Karan brand to G-III Apparel for $650 million. Under the deal, G-III will also get the DKNY clothing line. Shares of G- III, though, fell on the news, off to 14 percent to $42.95.
AMC Entertainment sweetened its offer and is buying rival Carmike Cinemas (NASDAQ:CKEC) for $1.2 billion. The merger creates the nation`s largest theatre chain. Shares of AMC fell 2 percent to $29.92. Shares of Carmike down 44 cents at $30.69.
Outerwall which owns the DVD rental business Redbox will be taken private by the private equity firm Apollo Global Management for more than $1.5 billion. The deal expected to be finalized in the third quarter of this year. Outerwall shares up 11 percent on the session to 52.19.
HERERA: When the big boss says jump, many employs asked how high, and that`s exactly why a new e-mail scam known as CEO fraud is so effective at fooling its victims. It counts on you doing exactly what your boss tells you to do, and FBI says it`s on the rise.
Andrea Day talks to one CEO who became a target.
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TOM KEMP, CENTRIFY CEO: The perfect storm for this fraud to happen.
ANDREA DAY, NIGHTLY BUSINESS REPORT CORRESPONDENT: It`s called business e- mail compromise or CEO fraud. And the con is simple. Swindlers faking e- mail from top managers at a company, requesting a wire transfer. If all goes as planned, the money winds up the criminal`s bank account, according to the FBI, netting billions and counting. The agency reporting a 270 percent increase in just the first four months of the year.
And something Tom Kemp says he`s lucky to have caught just in time.
KEMP: So, I came into the office one day and someone said, hey, we`re working on that wire transfer you requested. And I gave them a funny look. I`m like, what are you talking about? I didn`t request a wire transfer?
DAY: He says it was e-mail chain supposedly from him to the CFO, then forward to accounting, asking for more than $357,000 to be transferred immediately.
KEMP: It just looked like a normal business communication. We stared at the e-mail and we noticed that the "I" and the "F" were flipped around.
DAY: The swindlers had created a domain to look almost like Centrify. Researched the company to find out who was in charge and who could initiate a transfer and then set up an e-mail account in their name.
KEMP: It was completely crazy in terms of just the level of sophistication.
DAY: And he says even after they discovered the scheme, the e-mails kept coming in.
KEMP: The crook was actually communicating with us in real-time, trying to nudge us along to actually the initiate the wire transfer.
DAY: The CEOs of Snapchat and Seagate were once targeted. But in those cases, the phony e-mail was sent to HR, requesting W2s for all employees, not a wire transfer. In Kent`s case, he says he tried to track down the criminals behind it, calling the company vistaprint where the domain was registered.
KEMP: And they admitted that morning that 60 other lookalike domains were created. These domain registration companies, they really don`t require any information or any credit card information to set up a domain, at least for the first 30 days.
DAY: Vistasprint tells us, quote, "Each domain registration goes through various fraud and credit card checks to ensure payment is verified. The e- mail address then used is also run through a variety of propriety checks to flag potential fraud. This is unfortunately an issue that all domain providers face. And every single complaint about the misuse of a domain is investigated."
KEMP: You really need to step up your game in terms of making sure that you don`t have this occur to yourself and your company.
DAY: And he says the best way to make sure is to educate your accounting and HR departments about the fraud, and make certain they know that if something looks slightly off, just pick up the phone and call, even if it`s calling the CEO.
I`m Andrea Day for NIGHTLY BUSINESS REPORT.
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MATHISEN: Coming up, growing appetite. Fewer people have been hitting to the mall, but there may be one thing that`s starting to pull them back in.
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HERERA: Here`s a look at what to watch for tomorrow. Apple (NASDAQ:AAPL), 3M (NYSE:MMM), McDonald`s (NYSE:MCD) and Caterpillar (NYSE:CAT) are just a few that will release quarterly results. The Federal Reserve kicks off its two-day policy meeting and we`ll learn if the phase of newly built homes pick up in June. And that`s what to watch for on Tuesday.
MATHISEN: A new study shows the highest paid CEO run some of the worst performing companies. That`s according to analysis from the corporate governance research firm MSCI (NYSE:MSCI). If you invested $100 in the companies with a highest paid CEO, that invested would have grown to $265 over ten years, but if you invested the same in companies with the lowest paid CEOs, you would have $367. The results call into question whether equity incentive awards for chief executives help drive better results for shareholders.
HERERA: Twitter is striking new live streaming deals. The social media company will host live Major League Baseball and National Hockey League games. Twitter says the package will include one out of market game once a week. It`s not known how the games will be selected. Twitter is making a big push into sports. The company now has deals with four major sports leagues and the Pac 12 network for college sports.
MATHISEN: For the first time in nearly two decades, restaurant sales overtook grocery store sales last year. That change now showing up in retail real estate. So, forget the traditional food court. Retail landlords betting on a new way to drive traffic to the malls.
Diana Olick explains.
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DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT: On a sultry summer afternoon in northwest D.C., workers are lining up for lunch at the food truck. Trucks offering new fare in a new fashion, but parked right in front of old fashioned shopping malls.
MELINA CORDERO, CBRE RETAIL RESEARCH : Food trucks are basically the pop up of the restaurant business, right? They come in. They can set up, low cost. And they`re constantly changing.
OLICK: Trucks don`t traditionally benefit the retail landlord because they`re setting up outside. But some landlords are starting to incorporate the food trucks into traditional retail spaces, creating outdoor food courts.
GERRY STOCKER, FOOD TRUCK CUSTOMER: I think for urban locations, it`s probably a good idea because definitely it`s going to create some more food traffic to the fronts of the malls. It`s all part of a shift on how landlords use food to drive traffic. This includes so-called grocer on, which are a hybrid supermarket with wide variety of prepared foods and an eating area, like you`re seeing now at Whole Foods.
Then, there are food halls in the mall, much more diverse than the old fast food courts and celebrity chef restaurants. But most we spoke to said the name wasn`t all that important.
SARA WISE, CONSUMER: It`s incredibly high profile celebrity chef like Gordon Ramsay. For me, it`s not about a person as much as the food.
OLICK: While the strong credit of a Cheesecake Factory is a sure thing for landlords, they`re also betting on a new concept in a new way.
CORDERO: What we`re seeing a move away from a traditional tenant landlord partnership, and more towards financial partnerships where sometimes, they`re seeing these new complexes as business opportunities for themselves.
OLICK: So, while e-commerce may be driving consumers away from shopping centers, food is pulling them back in and landlords are willing to cater to just about any taste in order to keep consumers hungry.
For NIGHTLY BUSINESS REPORT, I`m Diana Olick in Washington.
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MATHISEN: To read more about how food is ruling retail real estate, head to our website, NBR.com.
HERERA: Before we go, here`s another look at how the day fared on Wall Street, a day that saw oil prices fall more than 2 percent to a three month low. The Dow was down nearly 78 points, well off its worst levels of the day. The NASDAQ was off 2 1/2 and S&P 500, which closed at a record on Friday declined six points.
And that will do it for us on NIGHTLY BUSINESS REPORT. I`m Sue Herera. Thanks for joining us.
MATHISEN: And thanks from me as well. I`m Tyler Mathisen. Have a great evening, everybody, and we`ll see you back here tomorrow night.
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