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bob pisani on the floor of the new york stock exchange. welcome back. a little bit of a surprise here. dell has just released their earnings a few minutes early. looks like 24 cents the estimate. the consensus estimate 23. now, we're trying to determine whether this is a real apples to apples comparison. sometimes there are charges in here. but right now if we can get up that intraday chart of dell, there you see dell moving up. so it looks like it is a beat here. right on the other side of the bell we'll give you some more information on what exactly is going on here. bottom line is the dow is down as much as 80 points on the day. we did move up rather nicely first on industrials and then later in day on commodities -- there's the closing bell. you know who's next, maria bart rome poep bartiromo. and it is 4:00 on wall street. do you know where your money is? hi, everybody. welcome back to "the closing bell."

i'm maria bartiromo on the floor of the new york stock exchange. and we have dell's numbers as you just heard. the company reporting earnings a couple minutes early right before the closing bell actually. 24 cents a share is the number. better than expectations. revenue also looking like a beat at $12.88 billion in revenue. net income coming in at $472 million for dell's second quarter. again, the earnings per share and the revenue looking to beat analysts' expectations. the stock rockets in the extended hours, up right now 7%. $15.64 a share. dell computer one of the main highlights here in the extended hours. it is listing a number of boats in the technology sector. the company says it has outperformed expectations because of its strategy, and of course that does include cost, expense cuts. we're going to get right to jim goldman right now. he has more on the quarter for dell. over to you, jim. >> let's look at these numbers because this is a bit of a surprise for this company to report just before, as you said, the closing bell. it took all of us off guard, i can tell you that. but let's get right to these numbers because that 24 cents a share that dell is reporting

does include pretax expenses of $87 million, or about 4 cents per share for "organizational effectiveness actions. of course we'll get more directions and color on exactly what that means. but that 24 cents in fact does beat by a penny the 23-cent estimate. also on better than expected revenue. as you were talking about last hour, maria, certainly that is the important metric here to see that sales are improving at this company. $12.8 billion against the 12.6 or 12.7 billion that wall street was anticipating. gross margins, 18.7%. good news there. let's break it out by business sector as well because that is going to help tell this story. large enterprise revenues, $3.3 billion, right in line with expectations. public revenue a little bit of aw disappointment here. this is part of the government contracts that the company enjoys. 3.8 billion versus the 4 billion that some on the street were anticipating. 2.8 billion was small and medium business. ftn midwest was looking for 2.7

billion. that beats his estimates. also on the consumer side of things this is where the good news really comes from, $2.9 billion. bill firmly at ftn was looking for $2.6 billion. so really surprisingly good news among consumers. and we got a hint of that when hp reported its earnings recently as well that consumer spending does seem to be picking up as far as pcs were concerned. shipments up 10% during the quarter, revenue up 3% on that news. and again, this is the kind of momentum story that investors have been anticipating for dell. the question now is this momentum enough to justify the 23% growth in the company's stock last quarter and the 10% growth we have seen since that quarter ended just a few short weeks ago? we'll get more confidence call information in just a few moments, maria, but at least at first blush investors like what they see. back to you. >> jim, thanks very much. we certainly are looking for a rally there. let's get instant reaction. rick munnarez, media analyst at

motley fool. we talked about an earnings beat on the bottom line but it looks like we're also having a beat on the top line. >> yeah, didn't expect this. that will teach me to buy a crystal ball from nostradamus on ebay next time. but at least the earnings -- i haven't read it, but what jim's saying is true, that there's about four or five cents in extra charges, one-time charges, we're talking about 28, 29 cents, you know, complete win. and sort of just what i figured, that the company's beaten analysts' estimates three quarters in a row. this isn't going to stop. analysts have to catch up to dell's bottom line, and now we have a company that's not losing as much on the top line. it's a great day for dell. >> they're talking about current demand pretty good. and if that's the case do we see a continuation of this second half of the year into 2010? what do you think? >> no, i mean -- well, keep in mind shipments aren't the same as what they're selling for. these machines are selling for a lot less than they were last year. people are buying discounted netbooks. desktops are cheaper. everything, even companies are spending less. i'd like to see computer prices firm up again, i don't know if that's going to happen in the near-term. obviously it's encouraging but it's not this great dell has

made a turnaround. let's say it's turning the corner slowly, sort of like zoolander doing that whatever it was that he did. >> bottom line, when you look at these numbers, since it was better than you expected, would you commit new capital to this stock at this price? >> at this point i think so. obviously the stock's going to jump on this news, so it's important to be cautious. the dell story, it's been two or three dry years for dell, i think it's now finally time to start getting excited for dell computer for a change. >> all right. we will leave it there. great to talk with you, rick. thanks very much. meanwhile, the broader market here, we are looking at a pretty good tone even though much of the rally today had to do with boeing. an 8% rally in boeing led the market higher with the dow jones industrial average up 37 points at 9,580. having said, that the s&p 500, this is the third straight new 2009 high for the year. year to date high for the s&p 500. this is the highest close on the s&p, at 1,030 since october 6th, 2008, when the index finished at 1,056. that's when rich peterson over at standard & poor's.

nasdaq also higher today even though nasdaq was mixed at best. 2,027. live to bob pisani on the floofrt nyse with more on today's action. bob. >> you can say it's low volume, we're sort of churning around not doing much but intraday if was really quite exciting. there was a lot going on. >> down how many, 80 points? that's a major reversal. >> let's take a look at the key movers. first financials. i can't emphasize enough what are called high beta financials and their impact on the volume here. four or five stocks that are significant portions. up to 40% of the volume on the new york stock exchange this week. just look at aig. and of course we had a whole hour essentially discussing various aspects of aig. the bottom line is this. not only was there a short squeeze it has been going on for weeks, but in addition, mr. benmosche making some positive comments in the last week. then recent revelation that's mr. benmosche was in fact talking to hank greenberg, also helped move the stock up in the last day. i hope you heard what we were talking about in the last hour, mr. greenberg calling in to cnbc

and saying those recent rumors on the chat boards that he might be leading an investor group to try to take over aig not true here. take a look at citigroup. you can see citigroup moving forward here throughout the day, over 1 billion shares there as well. finally, second leg of this whole rally occurred when the dollar dropped around 1:30 eastern time. that had a dramatic effect on some of the big commodity names. that helped more everybody forward as well. there's a big drop in the dollar. murphy, you can see a move up in some of the oil names. they have been lagging throughout this week. finally the aerospace maria bengsed boeing they're xpth first flight of the 787 dreamliner by the end of 2009. as a result not only all the aerospace names but the sparts suppliers that are influenced by boeing like goodrich and precision casting had a very nice day. i want to emphasize what good numbers dell had. they have been under pressure but margins have been under pressure for some of these big box makers because the netbooks, the margins are very poor from

netbooks. here they are doing very well. great cost control, great execution. >> thank you very much, bob pisani with the latest there. bob just told us aig the big winner today. cnbc's mary thompson looking at that story she has more on aig. mary? >> huge gain today in aig about a 28% gain just part of a more than 270% gain in the stock. over the past month. volume was huge today. about four times normal with over 146 million shares changing hands. that is basically four times its average volume overt last ten days. some people blaming high frequent frequently traders but others saying the reason could be a classic short squeeze on the stock. with a float of 117 million, shares in 18% short interest, those shares of stock getting burned as the stock rise. also those who want to short thv stock o'borrow shares to sell them are finding it tough to find the stock to borrow. that contributes to the rally. this a rally that-some are

attributing to positive news from aig. including the company reporting its first quarterly profit in seven quarters. and the get tough attitude they say as well is helping out from the firm's new ceo robert benmosche. he's basically saying right now he's not going to sell any assets just to please the government, he's going to sell assets from aig when the price is right. of course the government an 80% owner of aig right now. there's also optimism those assets may be getting more valuable as the economy improves and aig trietsself. add to that mr. benmosche has reached out to the firm's former ceo hank greenberg who still has plenty of fans out there given his 40-year history with aig, a history that was very successful. still investors looking to get in on the rally may want to consider this, options trading has been very active with calls trading about nine times their 30-day average and puts at about six times their daily average. "fast money" contributor jon najarian says if you look at the calls sold versus the calls bought, calls sold are still dominating. if you're selling a car you're bearish on the stock

essentially. you're also profiting from the premium you get from the sale. maria, back to you. >> all right, mary, thanks very much. we break down the rest of today's action right now with david chalupnik, head of wekts first american funds. jeff mortimer chief investment officer with charles schwab management. nice to have you on the program. thanks so much for joining us. jeff, let me kick this off with you. what are you doing in terms of investment strategies over at charles schwab? >> the rally has certainly been powerful. it's been a wonderful move off the march 9th lows. we continue to be constructive on this market. i think the buy the dip mentality has diminished, and i think the market is not giving even people that want to buy at lower prices even a chance to get in. we have been dollar cost averaging in, we continue to stay aggressive here, even with this move. >> do you agree with that, david? what is it that might sort of get you to take some chips off the table, given the valuation? or do you feel this is

justified? >> yes, maria, we do agree with jeff. you know, everybody's been waiting for a correction, and we really haven't gotten that correction, and there's a lot of money sitting on the sidelines. so that money is coming into the market. more importantly, though, what is happening in the market is low-quality stocks are outperforming high-quality stocks, and that's been pretty consistent since the march low. and typically, when you do have that, the next six months after that ends the market is still pretty good. so we do believe there's more to go. >> so what do you want to do, then, in terms of an investment strategy then, david? how would you be invested? what sectors do you want to avoid, and what do you want to avoid? >> yes, we do want to overweight cyclical sectors. so we are overweight materials. we are slightly overweight energy. we are overweight big financials because they are cyclical and certainly their quality is improving. we're also overweight technology, and we are underweight the more stable areas, consumer staples, utilities. >> jeff, what about technologies? let's talk a little about that.

we just had numbers from dell computer. beating on the bottom line and the top line in terms of their second quarter. do you think that's sustainable? do you want to be putting money into tech after a 50% run-up since the lows? >> again, i think we've come a long way from the march lows when it was guns and gold were on people's minds. we've moved up significantly. most stocks, the averages. i would be worried that i'm too safe. i think investors right now, there is a bubble that is forming and that's in money funds and out of the stock market. and i thin people that worry that boy, we've moved too far too fast are looking at the coin on the wrong side. you must understand that markets tend, just as david has said, the low-quality stocks move off the low, but as you transition in there markets still get constructive and move higher. so i would make sure that you had exposure on pullbacks, dollar-cost averaging into this market. >> okay. we will leave it there. gentlemen, thanks very much. we appreciate your time tonight. we'll see you soon. stocks of course rallying off the lows, down 80 points

earlier. let's take a look at the other business headlines. the commerce department reports that the gdp report -- the gdp was out today. it was down at an annualized rate of 1% in the second quarter. that's a contraction. a contraction of 1%. well, that marks a record fourth consecutive decline. it did come in better than expected and it is smaller than the decline we've seen in the previous two quarters. the labor department reports initial jobless claims were down by 10,000 last week to a seasonally adjusted rate of 570,000. the number of americans continuing to collect unemployment benefits dropped as well to just over 6.1 million. that is the lowest level since early april. and the fdic reporting its list of problem banks is now at a 15-year high. 416 banks in the country are problematic. that's in the second quarter. that's up from 305 problematic banks in the first quarter. continuing banking industry strain also shrinking the regulators' insurance fund by 20% to $10.4 billion. that is the lowest level since

1992. fdic chairman sheila bayer says there are no plans to tap the treasury to bolster that fund. tax breaks for home buyers, cash for clunkers, and now dollars for dish washers. just ahead an in-depth look at the effects of government stimulus. can we really see a sustained economic recovery without taxpayer assistance? the debate coming up. and later, why both consumers is and investors may end up profiting from a price war in the video game industry. we'll break down potential winners. you're watching cnbc, and we are first in business worldwide. diabetes or at risk for diabetes. introducing new nutrisystem d, the clinically tested program for losing weight and reducing blood sugar. hi i'm mike, and i lost 100 pounds on nutrisystem d when i was first diagnosed with diabetes, that first step was more like a giant leap. till i discovered nutrisystem d. in a clinical study people on nutrisystem d lost 16 times more weight and reduced their blood sugar 5 times more than those on a hospital-directed plan. plus a1c was reduced .9%. choose from over 140 menu options, there is no

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welcome back. fresh off the heels of cash for clunkers, the government now is ready to apply rebates to appliances. a new program will set aside $300 million for consumers who save on purchases of energy-efficient dishwashers, refrigerators, and ovens. but are government spending programs like these the only way economic growth can be created and sustained? that's a question we're posing right now to brian levitt, an economist with oppenheimer funds, along with bill hampel, chief economist with the credit union national association.

gentlemen, good to have you on the program. so bill, what do you think? people who didn't agree with the cash for clunkers program are basically saying it was short term, it was a short-term pop, you don't really have long-term sustainability. do you agree? >> it's too small to do anything significant, but at least it was a good sign that the consumer's willing to go out and spend. so to that extent i think it was very useful to sort of spread some positive psychology among consumers. >> brian? >> you know, i agree. it does show that there is some pent-up demand from the consumer, which is important. it shows that if there's a subsidy available to us we will go out and meet some of our life cycle needs, i.e. go out and spend money to replace a rusted-out car. but the idea really becomes can we create this spending based on true economic forces, i.e. creating jobs and having wage improvements that keep consumers to go out spending. i think what's important that we need to note is this is not going to be the typical recovery where the consumer leads us out of it. it's more likely they are going to see business investment and

exports, which are at such depressed levels they really start to move us out of this before we see movement in the consumer given where the employment is. >> but it's a good question to look at because if the cash for clunkers program and now the soon to be cash for appliances program shows a willingness for consumers to come out and spend money and they're doing it now instead of down the road when they would have done it, and that's improving the gdp now, does that mean that the gd pfalz going forward? >> well, look, i mean -- >> are we just pushing it out? >> what you did do was you sold a lot of cars in the third quarter. that means you probably sell some less cars in 2010. what it also means is remember, when you get this $4,500 subsidy, for most consumers you're taking on debt to make these purchases. if you're going to buy a $20,000 car and you get a $4,000 subsidy, you've still got to make up $16,000. sow go out and take on more debt. so it does potentially mean that unusual going to go out and make some of those other big

purchases. but it is important to note that over 80% of americans at this point seemingly have survived this recession. >> right. >> so we will go out -- i keep saying it. we will make those lifecycle purchases. i don't think think we'll go out and make the discretionary purchases we did because on the margin there's still 10% probably plus that are still underpaying from the employment market but on the margin we'll go out and make some of those discretionary purchases. the consumer doesn't have to be robust. what it does have to do is be modest, allow the 30% of the economy that's not the consumer to continue to drive economic growth here. >> so bill, i guess the question is is this sustainable? are we looking at sustainable growth that we're seeing here when you look at the gdp, when you lack at the activity that we saw in the last 30 days as a result of these programs and some of the activity to come? is that a long-term sustained activity? >> not yet. the growth we're expecting in the second half of this year is coming almost entirely out of the stimulus package, the huge government spending we're

having, and also the inventory cycle. what that has to do is break the back of the labor market sought unemployment numbers start looking better. then that 70-pound gorilla who's cowering in the corner, which is the 70% of the economy which is the consumer, will maybe pick up its head and start spending again. but we need to -- the spending now isn't sustainable unless it convinces the consumer that it'sable okay to start spending again. >> and also convinces the employer to create new jobs. how likely is that? >> well, i think the growth we're having in the second half of this year from, again, the inventory cycle and the stimulus package and a few other smaller things will have the effect of tamping down the decline in jobs and starting to add new jobs, ands that what'll get the household sector going again. again, as brian said, because of the leverage the household sector has to work off we're not looking for anything robust but if we can get 1 1/2% to 2% growth in real consumer spending last year, that would be sustainable.

>> brian, would we have gotten more bang for the buck in terms of stimulus money actually putting money directly into the hands of small business? that small business, would we have gotten more bang for the buck to have incentives for business to create jobs? >> i think so. i mean, what these short-term subsidies do probably is quicker in getting people to go out to the dealerships. it takes smaller businesses a longer time to go out and figure out how they want to use that money. but what we believe here at oppenheimer funds is that would have been a much better way to create some long-term sustainability. as we've talked about before, we've seen the larger businesses go through their cost-cutting processes. the smaller businesses still remain under pressure. and if you don't have those small businesses creating the innovation that's are going to create jobs, then the long-term sustainability of this recovery remains in question. >> so what do you do now, then, in terms of stimulus? what do you think this economy needs at this point in terms of looking for sustained growth? >> i think we've had enough stimulus so far. the huge package that was passed several months ago is actually

only unfolding right now. i think that is going to be enough to get the household sector going again soto get enough spending so the small businesses will be able to add jobs. so far i think we've had enough stimulus. >> all right. we will leave it there, gentlemen, great conversation, and we appreciate it. thanks very much pup next, shares of appliance maker whirlpool meanwhile getting a nice boost today. we'll tell you what's moving the stock when we come right back.rc y in this small sidecar, but i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and i've got plenty of room for the internet. and the nation's fastest 3g network. gun it, mick. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t.

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we're following on the "closing bell" ticker tonight. whirlpool was upgraded to an outperform from a neutral by cowan & company. the analyst telling clients there's stabilization going on and reduced cost and productivity improvement. the firm also hike k its earnings expectations for both this year and next year for whirlpool. the stock was up 4 1/2%. spirits, wine, and beer maker diageo reporting its full-year profit was up. the company made $2.6 billion for the quarter -- for the full year, rather. pardon me. the company is warning next year will be challenging, however, saying it expects to deliver low single zijt operating profit growth because of the uncertain global economy. diageo shares tonight down 3%. and tivo sliding to a $3 million second quarter loss because of declining subscriptions. while that was smaller than expected, the company is still predicting its third quarter loss will be greater than wall street's expectations. tivo shares tonight down 3 1/3%. up next, an exclusive interview with the bank td bank and the ceo. he'll give us his take on the state of the financial sector and whether he is looking to make acquisitions in this

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here's a look at some of today's winners and losers.

welcome back. toronto dominion financial, one of canada's largest financial institutions, reported adjusted earnings increased 17%. but with loan loss provisions doubling, the company's earnings fell 8 1/2%. joining me now, inside these numbers in a cnbc xwlufs is td bank financial ceo ed clark. he joins us from his company's headquarters in the u.s., cherry hill, new jersey. mr. clark, good to have you on the program. welcome. >> great to be back here, maria. >> great to see you again. can you characterize the quarter for us? clearly you set aside more money for bad loans. tell us what went on in the last three months, particularly with that need into crease loan loss reserves. >> it has been pretty spectacular. why the record earnings for us, 1.3 billion, up 17%, but in that you really have two effects going on. we've had tremendous revenue growth, great volume growth.

our deposits and our loans on both sides of the border are growing at double-digit rates, taking significant market share from our competitors on both sides of the border. and at the same time having to absorb fairly significant increases and loan losses, even though our actual overall performance relative to competitors is better. so if you look at our u.s. operation, we're clearly a very positive outlier. but even with being a positive outlier, we've had more than a doubling of our loan loss provisions over the last year. so all on, we're pretty pleased with the results. >> so where are we in terms of the tightness in credit availability? can you talk to us a little about that versus where we were in the heart of the financial crisis about a year ago? >> yeah, i think it's eased. we continue to take market share. so we never withdrew from the credit market. so as i said, we've been growing our lending book on both sides of the border at double-digit rates. really quite dramatic growth in lending. i think now what we're starting

to see is actually a slowdown in loan demand. at the same time in which i think a number of the u.s. banks have repaired a bit of their balance sheet and are coming back into the market. so it's probably going to get to be a more competitive market on the lending side. but certainly for the past year we've been able to take dramatic market share. >> in terms of the wealth management business, what can you tell us about the mentality of the investor today? >> well, the -- we continue to grow new customers and net assets. in the united states t.d. ameritrade is the fastest growing. the brokerage firm's adding dramatically. and the volumes continue to be very strong both sides of the border. we're a very, very major player in canada as well in the online brokerage space. and our trading volumes are at record levels, frankly. >> you know, we're looking at so many developments in the banking sector here. we've got the fdic talking about a continuation of troubled banks out there, whether it's regionals or smaller banks.

how would you characterize things given your vantage point? you know, one analyst came out the other day, dick bove, saying he's expecting another 200 banks to fail in this environment. and we are certainly not out of the woods. >> yeah. i think what has surprised me, two things that surprised me, we went through that first phase of the great financial panic where banks distinguished themselves as either they had done the bad products or not done the bad products. and as you know, we didn't do them. so we came out of that with quite a different performance. as we headed into the recession, i would have thought that the performance of the banks would have been more similar. but in fact i think what we're learning is some banks really did some very bad lending. and so i think you're actually going to get a dispersion of the performance in this economy, where some banks will be able, like us, to earn their way through their loan losses and frankly a large number of other banks, whether the estimate's 200 or 400. obviously, there are going to be a significant number of banks

that just can't earn their way through the loan losses that they have. >> now, i know you said the quarterly dividend will remain fixed at 61 cents, canadian cents. 36 cents, u.s. cents. is there any reason for you to need to come back to the market in terms of raising zmapt talk to us a little about that given the fact we've seen such an incredible a capital raised recently in the system. >> yeah. we're continuing to grow our capital very rapidly. so we have a tier one ratio of well over 11%. and we have a tangible common equity ratio well over 8%. so our capital is fundamentally tangible common. as you know, we're one of the few aaa-rated banks left in the world. so we have an extremely strong balance sheet. today, year to date, our payout ratio in dividends is only 45%. so we're actually a very strong dividend-paying company. we have the earning power to pay that strong dividend.

>> so what do you do with that earnings power at this point? are you looking for opportunities to acquire banks in this environment? >> i think we're cautiously, is the way i would put it, looking for opportunities. we have obviously -- i think it's known publicly that we've looked at different assisted deals. i think we'll continue to look at assisted deals because they obviously provide with you catastrophe insurance. and i think as the cycle matures we will then start to look at deals where we think we can in fact estimate the loan losses. but i think that's a few quarters away at least. >> so where are the regions of the country that might be, you know, possible that you could fill in any holes you're looking for in terms of acquisitions? >> yeah. i think fundamentally we're looking out on the east coast, we're present from maine to florida, we might look outside that territory if we could find a franchise in a strong growth area, urban area. but fundamentally we're the east

coast. >> so we probably will see, then, increasing foreign banks coming in to try and be opportunistic during this moment in time. >> yeah. i think there are -- you know, there's a few foreign banks that have weathered the storm quite well. there's also obviously a few domestic banks that also. so when you look at the fbiddin for the fdic deals, i actually think the fdic's doing a pretty terrific job if you look at the kind of price thats that they w able to obtain for the last two auctions by bringing in strategic buyers, the losses have been minimized in both those cases by very strong bidding. so i think the fdic is doing an excellent job in managing what is obviously a difficult situation. >> and of course yesterday the ndic voting 4-1 in favor of making it easier for private equity firms to buy failed banks in the u.s. good idea? >> i think there will be circumstances where the right buyer may well be the private equity. i think what the fdic has been trying to do is make sure you

have a level playing field. i think in some circumstances the private equity firms had an advantage given their capital structure. as you know, the rule is 10% tier one ratio for them. we obviously keep capital well in excess of 10%. so it's hardly a punitive number for them. and i think there will be circumstances where it's good to have the private equity players in. i also think the fdic's been very encouraging to strategic players, and the result of that is if you look at each of the bids they become more and more competitive, therefore a better and better deal for the fdic. >> does any of this action make it easier or encourage you to make that bid for guaranteed financial? >> we didn't make a bid for guaranteed financial, but when we look at what the deal was, it was an excellent deal for the fdic. >> let me ask you about the most recent activity in terms of other financials looking at this market. when would you say that we would be out of the woods, broadly

speaking? a lot of people wonder if in fact commercial realize is going to have an upset next year and perhaps may represent another will go down for the system. >> yeah, i think there are still a fair number of problems to work their way through. so we are saying to the marketplace despite the fact that we think we're moving into a phase of slow growth, it's still going to involve increasing unemployment rates, and therefore i think most financial institutions will still have continued increase in loan loss provisions. i think the really main factor is how have you positioned the bank. and when we went into this downturn, we said we were going to continue to grow, continue to invest in our model, and make sure when we came out of this cycle we had a lot of momentum. so i think if you've been doing that what our results show is you can earn through those increases in loan losses. and that's what we're determined to do. >> mr. clark, let me ask you finally here, it's been reported, of course, that your bank handles some business for

customer funds for allen stanford's offshore bank, $2 billion last year alone. can you give's a sense of that business and whether or not there were red flags or what you can tell us about that offshore bank? >> you know, it was a pretty straightforward custodial relationship that we had. and so we don't really have any involvement in that file and we don't think we have any exposure as a result of it. >> well, good news certainly as you continue your success. mr. clark, good to have you on the program. >> good talk toug again, maria. >> thank you very much. we'll see you soon. ed clark, toronto dominion. it was once touteds a recessionproof sector but the video game industry has been pinched by weak consumer spending. a new price war could be heating up, meanwhile, that could end up paying off for shoppers in the holiday season. i'm peter jacobsen, and i've lost 31 pounds on nutrisystem. dan marino influenced me and he really pushed me to get on nutrisystem. yeah, i'll take credit for peter jacobsen.

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toyota's the company behind the hugely popular camry. and it's driving health care reform. >> there's a very standardized way in which a worker at toyota places the front left tire on a camry. >> at the university of pennsylvania's department of medicine dr. rick shannon is taking lessons directly from the assembly line of corporate giants like toyota and also alcoa in bringing their standardization models into the

hospital. every year nearly 100,000 patients nationwide die from hospital-acquired infections. by standardizing practices like making sure each nurse dresses a catheter exactly the same way every time, penn's oncology unit has reduced the number of infections by 90% in just one year. >> consider the fewer days that these patients spend in the hospital and the opportunity that creates to admit new patients. the economic opportunity is really quite sizable. >> reporter: saving dollars and lives. that's today's "healthy horizons" report. i'm rebecca jarvis.

we're just getting started eyre in asia, and here are the stories to watch. china bank has said it's offering a new public share offering worth $1.6 billion, a move analysts say would deal a fresh blow to the weak domestic stock market.

meanwhile, china's $200 billion sovereign wealth fund, the largest in the world, could be boosting its overseas investments by tenfold this year, saying it sees signs that the global economy has bottomed out. and in japan core cpi for the month of july is expected to record its largest drop ever, raising concerns about deflation in the world's second largest economy. tune in to cnbc world to catch all the action overseas. at cnbc's asia headquarters i'm adam bakhtiar going global with your money. well, gamers hunting for a bargain are getting a break. microsoft's cutting the price on its xbox 360 by $100, matching a similar move by sony made just days earlier. both the xbox and the playstation 3 now cost $299. and there is speculation that nintendo may also cut prices on the wii console as well. is this the start of a price war? it certainly feels like it. or an overdue move to match consumers' habits? joining us now, two industry

analysts, evan wilson from pacific crest securities, and ben schachter of broad-poi broad-point mtech. good to have you on the program. what do you think, price war or something else? >> i think this is something that traditionally does happen in this space. so it's not unexpected, and i think it is overdue a bit and we would like to see nintendo cut sooner rather than later. >> what is this going to do to margins? >> well, i think overall for the publishers what they care about is having hardware as cheap as possible. so for the publishers they want hardware to go down to as close to zero as it can get. for the hardware makers themselves obviously it's more of a fine line in terms of driving down costs so they can get more their own hardware out into the channels. >> ben, do you agree? >> well, that's absolutely the case. the publishers would like hardware to be sold at zero. we've seen very slow price movements as it's taken the hardware manufacturers to cost down these boxes a longer time than they were originally expecting. sony didn't cut the price of their psp last year, which is kind of an interesting move because typically we see price cuts like these every single year. >> so are you skeptical that

these price cuts will drive the industry back to meaningful growth? >> yeah, price cuts are part of the natural evolution in a video game console cycle. they're having a difficult time in the industry right now. price cuts will elongate the cycle but it probably won't return us to robust growth anytime in the near term. >> evan, do you agree with that? how important are these price cuts in terms of getting customers in the stords buying these products? >> actually, i'm ben, and that's evan over there. >> my mistake, gentlemen. forgive me. my apologies. >> i think the price cuts are important. they're certainly needed. but again, i think they're overdue. so i do worry about growth in the industry. it definitely will help. but we should have had these either last year or at least six months ago. nintendo still hasn't cut. it's really unheard of that nintendo has the original price point this far into the cycle. so we really need to see them cut, hopefully this month. >> and remember, on the box leek t like the xbox 360 that's been in the market since november 2005 it takes a pretty big impetus to drive someone into the market

for the first time. >> so evan and only evan, what happened to the idea that this group was recessionproof? >> that's crazy. this is a consumer product. and i think what people saw in the past was that this industry is more correlated with the economic cycle than the hardware cycle. but now we're seeing that the hardware cycle is being impacted by the economic cycle. so clearly you're going to see some weakness in software as well. going forward i think it's only one input, the economy, that is, only one input. you'll have big games and hardware price cuts and things like that. but we can't obviously ignore the impact of the economy. >> you know, i mean, isn't that true, ben? i mean, this is a consumer product. no kidding. people are going to slow down in terms of spending on everything, right? >> that's absolutely true. but we also have to keep in mind that great games sell hardware. and if there are real drive titles out there that people want to play, they'll go in and buy them. if you think about the macroeconomic difficulties we're having now, but yet there is a version of "call of duty" which is the hottest game this year that's priced at $150. it will probably sell out. so if there's great games that are out there, consumers will respond. >> all right. what about the market share

story? do you think now that microsoft and sony start making headway in terms of market share on nintendo's wii? >> no, i think actually what you're going to see is nintendo sometime follow suit with a price cut of their own. and if they can cut by $50 or $100, they'll be sub 200 and that will be more influential than the two cuts you just saw from microsoft and sony. >> do you agree with that, ben? >> i actually think you are going to see sony and microsoft begin to take some share now. the wii, while it's a great product, a certain sort of fad nature to it. it's not completely a fad, but a certain, you know, hot, hard to get console, it's not there anymore. it's really come back down to earth. and i think, you know, they absolutely need a e cut. but even with the price cut i do think you're going to see microsoft and sony take some share this year. >> is there a spillover effect? there must be some kind of an impact on the -- from the console cuts on other areas of this market, in particular the software makers when you look at electronic arts or take two. do you think there's a spillover effect? >> yeah, this is great for the publishers.

like i said before, they'd like to see as much hardware out there as possible. the zero dollar price point is the perfect place for them because it expands the install base. if we do see an acceleration in the hardware sales that will help them in the near term but also grow the total market size for them to exploit for the rest of the cycle. >> so do you want to be looking at those stocks as possible investment here? do you think they're going to see a sales spike as a result of that, evan? >> i think unfortunately the market has read through these price cuts for a lot of time and since these three a few months ago people have been expecting these price cuts so, if you see the reactions in the stock it's kind of a ho-hum event. >> do you agree with that, ben? >> basically. i think in this industry it always comes down to who has the best games p this year activision will have call of duty which will be the drive game. that stock i still like. but if you don't have the hit games you're not going to see leverage and the stock's not going to work. >> that's a good point. so let's talk about all of this and what the effect will be on the upcoming very important holiday season. i guess price cuts. you've got a new line-up of new games in september through november. is this going to help for the holidays, do you think?

>> this definitely helps, but we're still cautious on the holiday season overall. i think ben said it right, that you're going to have a few publishers really benefiting from their position in the industry. everybody else seems to be falling away from the wayside. we've seen a huge number of games actually out to next ñq,ploit the holiday season because i think the benefits will be so consolidated within the industry. >> and ben, do you agree with that? >> i basically agree with that. i think the other issue that's impacting the industry this year is the music genre. that genre was a high a.s.p. genre that had somewhat of a peak last year, maybe 2007. it's just not going to be the growth driver that it once was. so you have a big game coming out in just a couple waekz called the beatles rock band, and it's a $250 price point, and i just think at a $250 price point it's difficult to see that really drive many point. gentleman, great to have you on the program. we so appreciate your time tonight. >> thank you. >> we'll talk with you soon. up next on the "closing bell," harley davidson announcing plans to drive into one of the fastest-growing segments for motorcycles. access to favorite courses

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here are the stories we're watching in europe. tomorrow, the retail giant is set to post first-half reports.

how did this grocery business cope with falling prices? we're talking about uk consumer confidence. back very much under the microscope. how optimistic are british shoppers and what will this tell us about the fate of the retail industry in britain? and we've got iberia reporting another european airline telling us how it is up in the skies right now. we've seen it's facing harsh headwinds. what will iberia tell us? find out. catch all of the action overseas. and the headlines out of the united states tonight, former stanford financial group cfo james davis is pleading guilty to three plane counts for his alleged role in the ponzi scheme. he is facing up to 30 years in prison. the government will recommend a lighter sentence because of his cooperation on the case. accused texas financier allen stanford was taken to the hospital after experiencing a

rapid heartbeat. he was due in court today for a hearing. harley davidson sunounci i e announcing plans to sell its motorcycles in india next year. they're hoping the middle class will trade in smaller, more inexpensive motorcycles for its hogs. what's ahead on "fast money"? hi, rick. >> hi. the traders are going to be breaking down today. stock reversal. give you the plays for tomorrow. plus, hey, we've got the latest from dell's conference call. and the traders and i, of course, are live at 5:00. >> i'll see you in five minutes, rick. thanks so much. up next, several key events tomorrow could have an impact on trading. we'll break it down, what you need to know when the opening bell sounds on friday. some people buy a car based on the deal they get. others by the car of their dreams. during the lexus golden opportunity sales event,

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san here's what to watch for tomorrow.