tv Street Signs CNBC June 26, 2012 2:00pm-3:00pm EDT
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chicago sue is actually even lovelier in person. >> thank you very much. you will make me blush. >> all right. tie, see you back at the ranch. >> and, jeff, you're even taller in person. >> that's it and "street signs" begins right now. >> a little midwest nice on "power lunch." great to see kilberg go. a little short. sorry, killer. all right. we will hit the news corp. story coming up here. is there more value in two than one? we will find out. should the company split up? we have a man investing in over a billion dollars in that company. also, europe, general motors and ford in tough times as one man making the argument should gm and ford get completely out of europe. we will ask him and debate that topic. plus, two stars of our small business round table weigh in on
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the fiscal cliff and how it might impact them. and the saint is marching in. drew brees is here with tough talk on concussions as well as maybe contracts. mandy is closing the bell today, you will see her at 3:00 eastern and for now you are stuck with me. the pause that refreshes, dow down as much as 41 points and down as much as 50. we're watching the s&p 500 to see if it can hold onto june gains, up about eight points for the month after briefly going negative for june. four of the five tech are not tech at all. apollo group, news corp., you might have heard about them, staples and sears holdings. a lot to do. let us check in with the best named man in business. brian exactner. >> i think sullivan is an easier and better name than exashactne.
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i won't dance through that dance. i will point out as sully pointed out, the buy is to the up range, internal advancers versus decliners, pretty clear we have an upside bias than downside. home builders, all up today. kay schiller, better than expected. >> i'm fascinated how lamar will get a $1.7 billion loan from a chinese bank. if it all goes through in san francisco, could add 20,000 units to an incredibly tight real estate market and pending home sales tomorrow. airlines are all to the upside. kay talked about the hedging loses at delta. more important, their margins are pretty good and oil is basically flat, they're all positive. back to you. >> thank you. now, let's get back to our top story of the day. news corp. shares are spiking on
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reports it could split into two companies. one would be the publishing and newspaper arm. the other, television and entertainment. we have the story from all angles. let's begin with david. >> thanks. this plan has been worked on, sources tell me, for months, and could be announced as soon as this thursday. that had been the original plan prior to these leaks today. you never know, things could change and there is one man who could make that decision, rupert murdoch whose family controls roughly 40% of the votes and the news corporation. currently, it is one corporation and under this plan, it would become two. investors are applauding today and make it more likely it does happen perhaps with that originally planned announcement for this thursday. why do investors like it? simply put, you remove what has been an anchor to the overall stock price and growth profile of this company by pushing out publishing and those assets
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associated with it, you end up with a much higher growth and potentially higher multiple company. here's to give you some sense putting these numbers together in terms each what we're talking about. newspapers, it would be a much smaller company but you get a sense of the ebit we're talking about and what it looks like in terms of the growth rate forecast for the many coming years. contrast that with the so-called good company being led by the cable networks, film, television, satellite tv. you see overall the growth rates there. they are enormous, in fact, they get to the point according to mike nathan, you're talking about a 14% compounded annual growth rate for operating income of this company and would have the highest growth profile of any in the media universe and would accord it many believe a much higher multiple already playing out to a certain extent today in the market and why we see those shares up some almost 8% during the course of today. we don't know a lot of other details. will debt go with the publishing
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arm? will that allow the entertainment unit to buy back even more stock. it does seem re rtive of chase carey, the man the ceo of this company being much more responsive to what shareholders have been asking for for years. >> interesting, you labeled it the good company, growth, profitability of fox news, fox broadcasting network, movie theaters, movie studio, then look at the publishing arm. we know mr. murdoch has a love for newspapers. but how much or how little growth might be associated with the publishing arm? would it be almost no growth assets? >> there would not be any growth at all. there's a concern, while they've handled the internet quite well at dow jones and the "wall street journal," australia internet access, things of that nature perhaps a bit behind the states, and concern of deterioration in properties in australia in particular. nobody is looking at this as a growth company. it is a cash producing asset that might have a decent dividend associated, perhaps
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take on leverage, more debt on its balance sheet, a bit more and be a not growing company but one that attracts some sort of shareholder base. >> stick around. would it be a good thing for news corp. investors or should you buy into the company now if you don't invest in it already? let's bring in don, president and co-cio of asset management owning more than a billion of news corp. making him at last count the fourth largest institutional investor. don, are you selling or buying more on this report? >> we don't talk about what we're doing in the short term. we only publish it quarterly. you'll be able to see what we've done in a few weeks. >> you're happy today no doubt. >> yes. what it does, a couple things it points out. there is a lot of value in this company. that's a refleck shun in the way the market has responded to
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this. number two, i think it shows chase carey continues to make a very positive dent in the company. and number three, i think the way in which they're doing it, that's what's concerned me, as they talked about this kind of thing, it's not being sold, spun off, so the shareholders will actually not have to pay taxes on the split up of two pieces of property. too many times i see management sell something not pretty and they end up paying taxes and so the shareholders don't benefit very much from it. this is probably an ice cube, the publishing assets. the one wild card in here that i see, that i'd like to see the details on, is the dow jones part and the "wall street journal" part. i see a lot of spillover potentially with that being tied into fox business news. so i'd like to see the details. >> right. >> it is the one publish iing piece that i've seen that
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successfully converted to an electronic format, gotten over a million subscribers and really been successful at it. >> interesting, bryan is an alum of that network. i will ask you -- what i'm hearing, donald, it would go with the spin-off of publishing, that being the dow jones assets. i wonder, in terms of your approach to the company, as you pointed out, you need an irs opinion to make sure it's tax-free. it will take at least six months, could be as much as 12 months. what do you do in the interim? do you still think there is value, given how much the stock is up today? >> i'd be objective. what we look at is the forward rate of return over a long period of time and we adjust for risk. this stock is still selling at a price less than it did five years ago. >> don, if you looked at say the second company, called the publishing arm, to david's point, he mentioned the possibility of a dividend. if you're not growing, you have to offer shareholders something.
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if it splits up the way the report suggest, you will be given both pieces of stock, what kind of dividend would it take for you to want to invest in this slower growth company, the publishing arm? >> i would phrase it a little differently. to me, dividends are a derivative of cash flow. the focus point should be on the cash flow and that cash flow can be returned to shareholders either in the form of a dividend, dependenting in the form of tax rates or share repurchased depending on the price of the stub you're receiving. it depends on a lot of factors which way i would recommend going. >> donald, we don't know who the management will be. in fact, speaking to some sources sort of familiar with it, they say it hasn't been fully decided at this point. i'm curious, chase carey does seem to be ascendent in some cases in decision making ruling the day. would you expect to see him
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ruling the entertainment assets? how much does the management whatever it may be, of this split company matter, in terms of approach to this company overall? >> to answer your first question, i would imagine chase carey would stay in the other side. he's historically been involved in cable and satellite. >> i'm fairly certain that will be the case. yeah. >> the other side, i think, is a function of -- they clearly have a bench and so they can provide opportunities for people. i'm sure there are people capable of running it. again, they're going to have to do someteresting things. "the post" is losing money and when you look at what's happened to classified ads over the last 5-7 years and how much the decline has been, clearly the print business is a fading business. >> don, thank you very much. we will look forward to that quarterly newsletter. thank you very much. >> that was specific to
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news corp. let's dig a little more into this and also whether or not spin-offs generally work at all, either for the company doing the spinning or the newly spun company. ryan is ceo, head of marketing at spin-off report. you've been very patient and we appreciate it. an analysis what generally happens with companies. firstoff, would you favor, based on historical precedent, would you favor from an investor's privilege, a spin-off of news corp.? >> one word, absolutely. you've got to do this. you have these big conglomerate companies now. it's not transparent what they're doing and what the most interesting thing for investors is clarity. we're coming for a reason of restructuring. restructuring, the traditional roots of restructuring just isn't working anymore. investors don't want to invest in management with unproven strategies or disposal sale of a
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business. they don't want them to go for an ipo. what they want them to do is break up entities that don't look like they fit together. this is perfect. you have 25% of the revenue is coming from the publishing business, and the rest coming from the entertainment business. the entertainment business is doing significantly higher double-digit margin, the publishing business is seeing around so muc7%. it works. if you look historically, post spin-off one year from listing to one year after, we did a study, the world's first study recently on the last decade of every u.s. spin-off, not ipo stuff but pure spin-off to shareholders. we saw 23% increase on the spin-off entity and 17% increase one year after on the parent
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busines business. >> so historically, then, you'd want to buy the company that is being -- it's sometimes hard to define, right, if it's a clean break, it's 50-50. >> absolutely. >> if it's clear there's a parent spun off and the parent remains. you're saying it's better generally to buy the part spun off historically? >> historically, yes. this is a somewhat of a parts game and timing game as well. if you take a look at the stats, we've covered over 300 spin-offs in five years. the reason why we sell this business, there's no understanding what maintenance with corporate breakups. -- what happens with corporate announcements. what they don't do is provide any information. if you look at this, they need to -- everyone's investing now because they like the idea, they like the spirit of the company. rupert murdoch himself said just in may, he was opposed to the
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idea. interesting but now he's interested in doing it. it does pave the way for them to get around the uk regulators and be able to divide these companies up. there is a great reason for looking at this. big insider selling, big institutional selling. no one has been talking about that. if you look at the shares donald owns, as per my reports, they're not the shares -- they don't have any voting rights. >> yeah. that's always been a knock on the company as well. ryan, of the spin-off report, great work. i have a feeling we will call on you again. appreciate it. >> buy the entertainment business. >> there you go. i liked him. he said it very clearly. any idea of a timeline? . what are the chances this doesn't happen? with the action you have to imagine. >> it will move up definitely. to the sense this floated out, a trial balloon, to see the market
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test. certainly, they've got an answer without a doubt. it looks very likely, and could be as soon as thursday in terms of announcement. you will not see the actual split take place for quite some time. could be at least six months in the earliest and perhaps as nine months to a year before you see the two separate companies. >> appreciate it. a summer slum so far in small caps. but we found five names really jumping in june, going big straight ahead. plus, u.s. automakers stuck in neutral in europe. is it time for gm and ford to get out of europe all together? one man calling for it. we' we'll debate. a big free agent battle brewing over this man, drew brees, king of who dat nation. stick around. people like options.ing i,
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welcome welcome back. dow at session highs. we're up 56 points. nasdaq and s&p are higher as well. who is the biggest dow gainer you ask? gor jpmorgan? guess what, its cousin, goldman sachs adding it to its conviction buy list. let's get a market flash. >> we're seeing strong shares in terms of amazon, cnet reporting it will reveal its second
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generation kindle fire perhaps at the end of july of this year. amazon could not be reached for a comment trading well above its 50 day and 200 day moving averag average. >> where there's smoke, there is a -- >> fire. >> sorry about that. don't want to drag you into my puns. more original content. courtesy of "street signs." we know it's been a rough month for many stocks and sectors including small caps. the index down about a full percent since the beginning of june. as always, there are exceptions. we did what we do. we dug in and found small cap names jumping in june. here are the five best performers in the "snl" 600. let's start with general communications, president ron duncan buying 38,000 shares recently. who are they, you ask? if you use communications and phone, in alaska, they're who you use.
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spectrum farm, up 26% in june. trying to buy a company. yet their stock has still risen. digital generation, the third best, the opposite side of buyout bid. a few weeks ago, reuters reported they reject ed a reach of 20 bucks a share. and questcor. at 47 1/2 bucks. it was $42 1/2 years ago. it's not just been june. from 4 1/2 bucks to $47 and change. the best performing stock in june. up 55% of late. one of the best shorted names in small caps fiercely fought by traders, bioreference labs. congrats, the best performing stock of the small caps 600 so far in june.
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get ready. we have bizarre behavior from for profit stocks. and the clock is ticking with new orleans saints, less than three weeks to lock in a deal with drew brees. what are they thinking? and drew brees has done a lot to fight concussions. before we go, the dow jones industrial average, up 67 points. we say drew brees is coming on the show, the dow rises. coincidence? of course, let's tie it together. stick around. [ tires squeal, engine revs ]
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drew drew brice not the most interesting man in football. he's probably the most interesting man in sports period. he's a super bowl mvp, an academic all american at purdue and his foundation is working hard to cure the lives of cancer patients. he's here to talk about a different problem, another serious one, concussions. he is in new york city with darren rovell. and drew, guy, before i send it to you, darren, i want to set the interview up by saying i'm a life-long san diego chargers fan, my heart is broken that
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you've done such a good job in new orleans the interview will do reasonably well. thanks. i think you've compromised the interview now. as brian alluded to, we're here, impact for pace, with dick sporting goods, for concussions and establishing baseline for kids. we know concussions are a big problem. 2,000 former players are suing the nfl. i just a have to ask you since dick sporting goods does equipment, when you put your helmet on, how confident are you that the helmet itself can protect the mass and the force coming at you? >> equipment can protect you to a degree but it doesn't -- it doesn't stop everything. especially the rotational force is what you find with a lot of concussion, not the head-on stuff, the rotational force caused a lot of concussions. the crazy stat about concussion is there is 3.8 million concussions per year with athle athletes and recreational
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activity. 85% of that 3.8 million goes undiagnosed or undetected, which is really very scary. through the dick sporting goods foundation and pace, stands for protecting athletes through concussion education, they are providing 3500 free baseline testing software units to youth organizatio organizations. >> which isn't cheap. snow n >> no, it's not. high school students throughout the country to take a proactive first step in regards to identifying and being able to treat these concussions and making sure we're only putting young athletes back on the field when they're 100% ready. >> you have to talk about bounty gate. you haven't said if your guys are guilty or not but you have said the nfl has clearly not brought forth the evidence that you would incothink they would to. why is it in the league's best interest not to bring that
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forward? >> the impression you get when they talk about having it and then skew public perception towards that but then can't provide the evidence is that maybe there is no evidence and that evidence does not exist. factual evidence that indeed shows there was a paid to in injure program in place. unfortunately, i think the damage is done. they influenced the public to the extent that everyone that comes to me thinks it happened. >> is it possible there's not enough? >> the evidence, you say? absolutely. there's a difference between tough talk and hearing what's said in the locker room or sideline to saying there was a paid to in injure scheme in place. and there's a difference between pay to in injure or performance. those have been combined but two different things. if it's pay for performance that
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we're being accused of as a saints organization, i think you'd have to look at the entire league and say, this is something that happens everywhere, at every level, it always has. so if that's what we're talking about, let's be specific and talk about that. >> brian alluded to your contract talks. given your coach, sean payton is out for the year and jonathan vilma, the linebacker is out for the year, are you possibly more valuable to the saints because they need you more now than ever before when you're talking about contract talks? >> i -- whatever anybody else wants to put on me as far as value, the way i look at it is, i have a significant role with the new orleans saints as the quarterback of the team. and certainly my ability to be a leader, to be an example for the
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guys that i play with and certainly to impact the outcome of games. you know, whether we have our head coach with us or not or whether we have key players or not, my responsibility is still the same, to in still confidence in guys, get the best out of guys and certainly to put my best on the field every time as well. i feel like we have a great organization with the new orleans saints. a lot of high character individuals, great leadership. we built a winning environment. there's a reason we've won more games in the last three years than any other organization. the fact is, you're only as good as your next performance. i look forward to getting out on the field with me teammates as soon as i possibly can getting ready for another season. >> go ahead, brian. >> sorry to jump in. i have to ask this as chargers fan because i know drew will head outwest to play. clearly you will be in the super bowl, you have the 11th toughest
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schedule. that's a lock. who will you be playing in the super bowl? pick a team now on national tv, international television. >> right. honestly, the whole strength of schedule thing i always laugh at. obviously, you're basing that off the schedule the year before. as we know in the nfl, a team can change drastically, pretty much overnight with the acquisition of a few key free agents and development of young players and draft picks and maybe a new scheme or new coaching staff or what have you. that's what we were able to do in new orleans in 2006 going from 13 to the championship the next year. the fact is that's why people lof nfl football. >> you're not going to answer the question, are you? >> we play one of the most e citing sports. >> he's not going to answer -- >> it's my expectation every year we will be playing in that big game. that is a long way away. if that's what i'm thinking about right now, i have to pay
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attention to -- >> he's good. you are good, drew brees. thanks very much. good work you're doing with your foundation and also on the fight against concussions, thank you guys very much. >> thank you. >> he dodged that one, dang it. all right. let's take a look at the markets quickly. the dow jones average remains higher, remains 60 points, how many drew brees guaranteed off air he will drop on the new england patriots -- i'm kidding. up next, "street signs," fiscal cliff fears, how small businesses are preparing if our economy takes the plunge and harley, ready to ride but is it ready to deliver? we'll tell you why the stock is a hog today. stick around. s new york state.
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snazzy graphic aside, talk about a fiscal cliffhanger come year end. that is what a series of tax increases and government spending cuts kick in unless congress acts. over past weeks at cnbc, business leaders have been sending all kinds of alarm bells. what are business owners on the front lines of the economy seeing. and a look at how manufacturers are hedging their bets. phil. >> numbers are startling when you look how much they cut back in terms of investment in their plants. they clearly are not spending as much. this data cams from paynet totally a trillion. look at the pull back in terms of investment. 2009, clearly during the recession, growth 9%. then it shot up in the middle 37% last year. in the first quarter, it was down to 17%. why? clearly what paynet is hearing back from the owners of the small manufacturers is they're worried about growth through the rest of this year and flat out
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said, listen, we're jamming on the breaks. small manufacturers worried about the impact of fiscal cliff, cutting back on hiring and capital investment. the ceo of paynet says he has not seen ceos of small companies this worried in a long time. >> when this investment expansion is starting to slow down. some of these subsectors are jamming on the breaks, it tells us all of a sudden, there is caution that wasn't there before. >> take a look at the industrial machinery index over the last three years. you can clearly see the slowdown over the last several months. that drop you saw at the end of 2011, they brought some of it back in 2012. the manufacturers, is the not a case where they're in financial trouble. look at the delinquency rate for small manufacturers. it has come down dramatically in the last six months. we're seeing small mom and pop companies, they've got strong
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balance sheets but they're not investing because they're worried. >> well said. thank you very much. you heard the numbers. now, let us bring in two small business owners for a look how they're preparing for the fiscal cliff. mad delen owns kitchen restaurants, nine locations in southern california and the founder of adventure gear store, half moon outfitters, a funny website of the store and chocolate chip cookies. i like that. we'll get into it another time. madeleine, does the current fiscal cliff we're heading toward, does the current environment impact you negatively or is your business chugging along as it has been the last few months? >> i'm very lucky to say i'm in the restaurant industry. they're doing quite well considering what's out on the streets. the industry standards, looks like the restaurant industry will project $632 billion in
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sales at year-end 2012, about 4% of our gross domestic product. the good news for maria's italian kitchen because we are casual. we cut back on couponings and groupons and living social over for a lot of restaurants and giving great value and great service to tour customers is bringing back the loyalty. i would say the wealthier customers, i don't thi think -- they're back, spending, their habits are really good. the middle income are using it more of a luxury. our customer counts are down but our sales in most stores are up 2 to 5%. >> want to continue. i'll get to the fiscal cliff in a second why we invited you both on. i have to respond to something you said about living sociable and groupon. why did you stop using them? what was your complaint? >> we used them once when they
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first came out. what's happening is you get 3 coupon people in and they don't stay. so the purpose of it is you want to bring people in, you want them to interact with your restaurant. those that are coming in strictly come in with the coupon and you're not seeing them. we're just developing -- doing a different strategic, working through engaging our customers through social media, facebook and our website and bringing back our loyal customers by sending out menus to the neighborhoods and find out that's working fours. fiscal cliff, you're up. you name it. has it impacted half moon negatively? >> something has. we're dragging a little bit, we're down a little bit from last year. really, it has more to do with inventory. we came out of a warm winter, cooling spring, early easter. it's been very hard to get inventory right. i think that's true for big vendors down to the smallest mom
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and pop. that also creates a very propositional environment, which makes it hard to maintain margin. we're getting, here in charleston especially, we're getting the travel at half-moon. selling product, the price is squeezed a little bit and causing us to be down 2-5% for most of our stores. >> are people coming in and say, hey, i want to buy a t-shirt or hiking pants, but, oh my god, greece, i can't buy the shoes, the merel shoes because i'm afraid about greece. are people talking to you about that? >> no. we don't see that at all. there's crisis fatigue out there. that doesn't seem to be -- everybody is concerned about that and i definitely think it's a drag, i think there are a bunch of -- i think there are a lot of different drags on the economy right now from the election to weather psychlcycle past three months and europe, of course, everybody is a little bit worried. i haven't heard it's like an
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overwhelming concern about that. it doesn't feel to me like our consumer at half-moon is worried about a cliff pending. things are down a bit though. >> bottom line, madeleine, the world is not ending financially tomorrow for you either? >> it's not. i have to tell you, california, you know, we are still land of opportunity. there are still hurdles, commodities, utilities are through the roof. i think those are concerns for us. i don't think our customers worry about europe, i think they worry day-to-day what's happening in america and we have to get more restaurants open so we can employ more people. >> madeleine and ber berkes r, we'll talk to you inagain. >> more on this massive ongoing law enforcement operation taking place this afternoon. a law enforcement source tells cnbc this was a sting operation set up by the fbi to grab cyb -
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cyber-hacker information. the way they did that apparently was by setting up a website called carter profit, www.carderprofit.cc. this website became sort of a central clearinghouse where hackers could trade stolen credit card and banking information of victims. we are told this operation by the fbi this afternoon has prevented a loss of over 100 million and there were hundreds of thousands of accounts compromised in the course of all this. it was the fbi all along maintaining that website. carder is hacker slang for somebody who steals credit card information. if you go on that website, what you will see is this, the lo goes of the fbi and department of justice and a sign saying this site has been removed by the federal bureau of investigation in connection with lore action. so the sting operation clearly seeming to be a law enforcement success as of right now, brian, we'll bring you more details as
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we have them. >> eamon javers, thank you very much. if you happened to buy natural gas a couple months ago or weeks ago, congratulations because your long bet has paid off, closing at a five month high. seeing rigs coming offline, demand may be going up a bit. natural gas historically low but well off its all time low. coming up, why herb says watch out for one profit education stock, that name ahead. before we head to break, no secret demand is high for skilled labor. what is a company to do? we've been in atlanta covering this year's largest hr conference to find out. >> companies need to be partnering with schools and crea creating krue ining curriculums facilitate the job needed and it would be a good thing for companies to do. >> retirement in america is being transformed and many older
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to welcome back welcome back to "street signs." i'm david. want to bring tube date on a big story today. news corp.'s consideration of a split. we can tell you now considering probably not the right verb at this point. sources telling me that -- is considering a verb? that they are in fact expected to announce the pursuit of a split of the company into two separate companies this thursday. again, expected to announce the split of the company into two separate companies this thursday. that split itself will take a year, a year to actually effectiate. during the course of that year, management will then be decided. we're not expecting to learn who the new managers of each of the new entities will be. again, despite what were leaks today and questions that perhaps it will derail these plans in
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the works for months, that is not the case and sources say they are on track for a thursday announcement for a split of news corp. thank you. >> thank you. we're joined by mr. herb greenberg to talk about for profit schools, specifically one name. >> actually, i will stop you there. not just one name. >> you've been saying one name all show. >> i know. you've been wrong. >> that's hard to admit. i'm wrong, america. >> what a bizarre story we're talking about. the educational department released gainful employment showing whether students at schools have too much debt relative to income for schools to keep qualifying for federal loans. at least two schools, education management and capello education said in sec filings debt levels cited by the department for their schools are too low. education management went so far as to say the figures were misleading. analyst kelly flynn of credit suisse went so far herself to
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say the credibility of the data is suspect. i have more of this on cnbc.com. the big winner on this group when we get to that one na naname -- >> here it is, apollo. >> the apollo group. >> herb, we have a problem. >> that's because its earnings were better than expected. a number of bearish analysts talked about the quality leaves a lot to be desired as are the continued slide of students who return from one semester to the next that's known as the p persistence rate. amended in sec filing yesterday, they in tend to talk to company management. in its original filing from a week ago, it said it may talk with company management. apollo adopted a poison pill. the stock is down on the news, mark my words on navistar, it will only get better and better.
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we will keep following. >> it better for who? troy sellers? >> we don't know. so many dynamics, will the company file been talking about it, keep watching it, good story. >> thanks for bailing me out. you're a good guy, herb. i appreciate it. the dow still hovering at session highs, and eye giving up on gm could make good sense.
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all right, breaking news right now in the markets, egan jones downgraded germany's rating to an a plus. citing merkel's tension with other states. they think when the members get together they will gang up on germany and putting pressure on germany and germany may take an outsized exposure, so germany's rating downgraded from an a plus
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to an a minus. rough ride this year for the u.s. auto maker, gm down 3%, and ford is up more than together that. should these companies get out of europe all together. we have two guests with us. europe's chief correspondent for auto news, he wrote a fascinating peace about just this. i'm going to start off with you, luka. should general motors or ford get out of the continent? >> i think they should remain here because europe is their competence, and for small guys for diesel engines. the question is do they need to keep producing cars in europe
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because it is a no margin market, and he's heading for the fifth consecutive decline this year having lost something like 4 million in '07. >> rebecca, i understand your points, you love the european styling, but should they stop selling cars in europe if they're not making much or losing money? >> cars -- yes. i don't think they should stop selling cars in europe. i think they need to keep the development center, but also they have to be players in this market. they need to participate. what they have done is contained their losses and it's really just about managing their losses through the turmoil that europe is right now. >> phil, do you agree with that? is it better to lose a little
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but keep the brand around or should they bail? >> they can't bail, europe is too integrated. we're in a global market. you can't just pull out and say "well, we're not going to sell there anymore." they will have to make painful choices about how much they build in what markets and in what plants, but ultimately they'll have to stay there. >> you know, luca, volkswagon is growing there. what would be the best thing for them in the next two or three years? what's the best they can hope for? >> gm has been trying to reduce their losses for awhile, but they lost $16 billion from 1999.
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so it's not easy to turn around the operation. i think the thing they should do is reduce capacity, closing plants, as they did three years ago. now the market is much lower level, but in europe the market went don't rapidly 30% and the style has not decreased but decreased because of the other makers at near plants. so the balance -- >> we have to end it, i apool guise. thank you all, we'll get you back, good debate. "street signs" is over, "closing bell" with bill and mandy is next. just imagine our potential... ...if the other states joined them. let's raise our scores. let's invest in our teachers and inspire our students.
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i don't have to use gas. i am probably going to the gas station about once a month. drive around town all the time doing errands and never ever have to fill up gas in the city. i very rarely put gas in my chevy volt. last time i was at a gas station was about...i would say... two months ago. the last time i went to the gas station must have been about three months ago. i go to the gas station such a small amount that i forget how to put gas in my car. ♪ that i forget how to put gas this is new york state. we built the first railway, the first trade route to the west, the greatest empires. then, some said, we lost our edge. well today, there's a new new york state. one that's working to attract businesses and create jobs. a place where innovation meets determination...
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