>> tom: the tech sector heats up, after the bell. new products drive strong earnings at microsoft and amazon.com, but the stocks drop on the news. >> susie: and this farm has over a $1 billion price tag. we look at verizon's late day move into server farm terremark. you're watching "nightly business report" for thursday, january 27. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:

this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> tom: good evening and thanks for joining us. the tech sector in focus tonight. from earnings at microsoft and amazon.com to verizon's big deal for computer server farm terremark worldwide, susie, tech was active in after-hours trading. >> susie: tom, lets start with microsoft. a double surprise from the software giant tonight-- better than expected quarterly earnings, and the numbers were released earlier than expected. the report was supposed to come out after the closing bell, but was accidentally released on the microsoft web site 15 minutes early. microsoft earned 77 cents a share in its fiscal second

quarter, nine cents more than estimates. revenues also came in better than expected-- about $20 billion. the company credited the sales boost to business customers upgrading their computers, and the debut of its kinect controller for the x-box 360. >> tom: amazon.com also turned in quarterly results after the close. it beat estimates by three cents per share. the sale of electronic books for its kindle reader outpaced sales of old school paperback books. but expenses last quarter increased, thanks to marketing for its kindle and investments in its distribution systems. the stocks of microsoft and amazon were down after their reports. but shares of terremark were the star in after-hours trading, surging as much as 35%. verizon is offering $1.5 billion for the computer server farm, or $19 a share. the deal is part of verizon's push into cloud computing. we'll have more in tonight's "market focus."

>> susie: caterpillar's going full throttle. it posted today a quarterly profit that quadrupled from a year ago. the worlds largest maker of construction and mining equipment earned $1.47 a share in the fourth quarter of last year. that's 20 cents more than estimates. revenues also came in a billion dollars more than expected, up 62% to almost $13 billion. looking ahead, the company expects annual revenues to top $50 billion this year, bringing caterpillar back to pre-recession levels. when i talked with c.e.o. doug oberhelman, i asked him where is all that growth going to come from. >> we're seeing growth in sales and revenue just about across the globe. and most industries with the exception of our turbine business and large reciprocating engines which we think are coming but they'll be coming, the growth will be coming later, so geographically and industry and productwise

it's sort of a nice ramp all across the spectrum in 2011. >> susie: how about in the u.s., how strong is the recovery for cat bill-- caterpillar equipment? >> well, the u.s. certainly has been slow coming out of the recession. there is to doubt we're one of the last economies to the party. it is coming, however. and i've just been with groups of dealers and customers the last couple of weeks. they are a lot more optimistic today than they were a year ago. now these are not big number increases, of course from very depressed levels in the last couple of years but the anecdotes, the order level, the activity is definitely inproving. we put out our december retail activity which is a big increase. so it's coming but slowly and frustratingly slow, i would say. >> susie: as you heard president obama in the state of the union address the other night is calling for more spending on our infrastructure, building a high speed rail system, do

you see that really happening and how would that translate into business for caterpillar? >> well, you've got two great questions there i will take the second one first. if we see more infrastructure spending and when that money actually hits the ground, it will help us. but remember, if infrastructure spending that starts today is months if not a year or two before it hits the ground. secondly, we are watching a very i would say conservative fiscal level of spending around the u.s. not only at the federal level and the states. and that's a concern to us because on the one hand the u.s. has to get its house in order as to most states. on the other hand we need to stimulate the economy, get people back to work so it is a legal balance to achieve. >> now you always talk about a lot of growth in the emerging markets. how important is china for your growth plan. >> 1.4 billion people modernizing is a good thing for this planet.

people coming out of poverty, moving up into the middle class. that's good for all of us. we in america need those export jobs. in fact, we exported about 13.5 billion from the u.s. in 2010. that's up almost a third from 2009. 68% of our sales or so in 2010 were outside. so those external markets are important for caterpillar and for our workers. >> all right so, when china talks about slowing down its economy, what kind of impact would that have on caterpillar? >> well, they have talked about this and executed pretty well over the years ups and downs, growth and then slowdowns. they probably need to break their economy a little bit. i don't see how they can grow at double digit gdp growth rates forever. having said that a slowdown to 6, 7 approximately%-- 6, 7, 8% is probably healthy it doesn't impact us all that much but it is something they have to keep their eye on and work hard at. >> susie: let's talk about jobs because caterpillar has

been rehiring over the past year and now with all the pickup in business that you are talking about, how many more people do you plan to hire in 2011? >> with a forecast going over 50 billion in 2011 we're going to need more help to increase our production and do more of the things we've got to do. we're to the going to put a number out. we don't are really have a forecast but i'm confident as sales grow and we need more production we will have more people a year from now than today. >> that is good news for a lot of out of work americans. >> it is. >> susie: let's talk about caterpillar stock it was the best performing dow stock last year and it is almost quadrupled since march of 2009. so does the stock go from here? >> we're focusing on earnings. we're focusing on quality of our business, growing market share, expanding geographically, spending capital will position us for the future. as long as earnings increase, our stock price will go along with it. but i will not make a prediction on that one. >> susie: fair enough mr. olberhelman thank you so

much for your time. nice talking with you. >> you bet. thank you. >> tom: here are the stories in tonight's "n.b.r. newswheel." stocks rose slightly-- the dow gained four points, the nasdaq was up 15, the s&p 500 added nearly three. big board trading volume dipped below a billion shares, while nasdaq volume held firmly above two billion shares. new claims for jobless benefits rose by 51,000 in the past week to 454,000. economists think bad winter weather is to blame. they see the trend reversing next week. durable goods orders tumbled in december, falling 2.5%. that was a surprise, because an increase in big-ticket, long- lasting items was expected. and standard & poor's downgraded japan's debt rating. the ratings agency says the world's third largest economy is struggling under a huge debt load. japan's debt is more than double its g.d.p.

still ahead, with gold prices down sharply since the start of the year, is gold losing its luster? >> susie: wondering what caused the financial crisis? well, now we know, maybe. the panel investigating the meltdown has finally released its report. and after months of digging, there's still disagreement. six democrats on the panel say the regulatory system broke down, starting at the federal reserve. financial firms bet too much, households borrowed too much, and some players totally ignored ethics. but republicans on the panel say there were actually ten causes. among them, worldwide credit and housing bubbles, too many toxic mortgages, and credit rating agencies that didn't do their jobs. commission chairman phil angelides says the bottom line is that the financial crisis didn't have to happen. >> the captains of finance and the public stewards of our financial system ignored warnings, and importantly failed

to question, to understand, and to manage the evolving risks in a financial system that is so essential to the well being of our country. theirs was a big miss, not a stumble. >> susie: the commission has posted hundreds of documents online. in one, federal reserve chairman ben bernanke says only one of the country's big financial firms was on solid footing during the crisis. but he doesn't say which one.

>> susie: so tom, 12,000 on the dow, 1300 on the s&p during trading hours but didn't close there. psychologist who study investor behavior say that there is some worries about round number whence it comes to these milestones so didn't happen today. maybe it's tomorrow or next week. >> tom: maybe, lots of after hours news that we mentioned at the top of the program could put a bit of a bid into the market by tomorrow. we'll have to wait and see. but clearly those big round numbers will remain in focus here. speaking of, let's get to tonight's market focus. another day of slim gains, but any gains mean the major indices hit new post-recession highs. but some of the buying may be interrupted tomorrow, if some after-hours trading is any indication.

we mentioned the microsoft earnings at the top of the program. after the close, shares fell about 1% from this closing price, which is the highest since may. meantime, amazon came in to tonight's report on a nice 5% rally. just last week, it was at an all-time high. but revenues in the fourth quarter were less than anticipated, and shares fell as much as 10% below this closing price after the bell. computer data storage firm sandisk also had some optimistic buying today before its quarterly results. shares have had a nice 70% rally over the past year. after the close tonight, the stock was down as much as 3%, even though it easily beat earnings estimates. but it rebounded from that drop. and the tech deal tonight,

verizon buying technology data center firm terremark. ahead of that news, verizon saw a small gain, while terremark was up 2.5%. but after the deal announcement, terremark jumped over the buyout price of $19. in addition to the technology news after the close, a quartet of semiconductor-related stocks saw some buying off of earnings. cirrus logic jumped 19% as earnings almost doubled. teradyne jumped 12%. it makes semiconductor testing equipment. earnings more than tripled. integrated silicon added 10%, and lsi logic lost money last quarter, but saw revenues grow. consumer goods stocks held back the broad market during the regular session. sara lee fell another 5% on heavy volume. the company had been looking for a buyer to offer at least $19 per share, but according to "the

wall street journal," it likely will separate its coffee and meat businesses. colgate palmolive slid 3%. this is the last 180 sessions, with shares down to six-week lows. earnings were okay, but revenue was disappointing. and the company warns of building pressure from high commodity prices. that same issue is in play at p&g. procter and gamble's latest quarter was three cents better than estimates, but down from a year ago with higher commodity costs. p&g was he leading loser of the dow industrials, down 3%. up through this week, shares had been rallying. the other sizable loser in the dow was at&t, down 2%. this is the last 30 sessions. this most recent low was the same day verizon announced it

would start selling the iphone, breaking at&t's exclusivity. earnings were a penny over forecast, but new customer growth slowed. steel stocks have seen some volatility this week as they report higher earnings. higher raw material costs is one market worry. nucor was the latest to report. it lost money in the fourth quarter, thanks to high commodity costs. it and u.s. steel dropped about 2% today. the world's largest steel maker, acelor mittal, fell as well. and that's tonight's "market focus." >> susie: gold has been a less- than-glittering investment lately. investors leaving the largest exchange traded gold fund have pushed prices to a three month low. so far this month, gold has posted its biggest monthly loss in over a year. so is this a temporary pullback, or is the metal losing its luster? erika miller reports. >> reporter: whether it's a necklace or bracelet, gold will always be attractive as jewelry.

but will it also be attractive as an investment? after nearly a decade of big gains, investors have been rushing out of gold this month. ditto for the world's biggest gold-backed exchange traded fund, which saw record redemptions this week. analyst paul christopher blames the rally in the stock market for luring investors away from safe havens like gold. >> you want to think about gold as an alternative currency, so that when there are better prospects in other financial assets other than gold, then gold would naturally tend to suffer. >> reporter: he thinks stocks will outperform gold long term, especially if the global economy continues to recover. but barclays analyst suki cooper thinks the retreat in gold is only short-term profit taking. >> we expect gold prices to average a fresh annual record high of $1,495 per ounce. we expect prices to continue to build on their gains until the third quarter of 2011. >> reporter: she believes the factors behind gold's rally the past few years are still firmly

in place. >> if we are looking at the longer term drivers in gold, they still very much remain intact. there's the longer term concerns such as currency debasement, and inflation could spiral. those factors are still their driving investment demand. >> reporter: many gold analysts are watching to see if gold falls below the key technical level of $1,275 an ounce. if it does, expect a heavy wave of selling, particularly by options traders. longer term, analysts say gold's direction depends on interest rates and inflation. >> u.s. inflation right around the 1% to 2%, while yields are rising, would be a sign that the economy is gaining more traction, while inflation is not. and that would really put a damper on prospects for gold going forward. >> reporter: if gold prices continue to fall, investment interest may wane. but the flip side is better deals on jewelry. and analysts say a pick up in consumer demand could help support prices. erika miller, "nightly business report," new york.

>> susie: earlier, caterpillar's c.e.o. talked about the importance of the chinese market. but it's not just construction companies that are experiencing a boon there. the western part of the country is seeing a surge in new business and jobs, thanks to government incentives. nick mackie takes a look. >> reporter: cranes dot the skyline, building homes, high- rise office blocks, and high- tech factories. it's a far cry from five years ago, when all this was mainly farmland.

over the past 18 months, $3 billion of inward investment has flowed into xiyong micro- electronics park, with key players including hewlett packard, foxconn, quanta, inventec and acer deciding to locate here. the park's deputy director, zhu jiang, says chongqing is now on track to be a global manufacturing base for notebooks and tablets. >> ( translated ): by 2015, notebook production will reach 80 million units, our exports will reach u.s. $80 million, and 400,000 people will be employed in notebook manufacturing or related fields. >> reporter: companies are buying into chongqing because they seek lower operational costs, and to get closer to inland china's huge maturing consumer base. the city recognized this early on and was quick to craft and finance its strategy to build a new industry from scratch. labor and energy costs are 30% cheaper here than in china's coastal region.

but the downside, for now, is that 90% of component makers are still over there, a thousand miles away. there are costly supply chain problems for parts coming in or goods bound for export. so the government offers incentives to compensate its early movers. >> ( translated ): initially, the government provides subsidies to offset high logistics costs, to help the enterprises get over their early-stage difficulties. once more and more companies locate here, there'll be economies of scale, and logistics costs should improve. then, that's when the government will step back. >> reporter: as part of its strategy, the government first stepped forward in xiyong five years ago by establishing a new university city, so that colleges and vocational schools could relocate from the main urban area. chongqing's college of electronic engineering, with 20,000 students, now supplies technicians and engineers for the tech-basedndustry. its chief of enterprise

cooperation, mao weiping, says companies work closely with the college, and even provide machinery to ensure the right skill sets are developed. >> ( translated ): nearly half of our graduates go on to work for the micro-electronics park and its related industry. also, each year, we send about 2,000 to 3,000 students to the park's companies for work- related experience. >> reporter: while chongqing's labor pool is strong on low- skilled and mid-level workers, it's weak, however, on retaining top flight engineers, who usually head for the established r&d centers in beijing and shanghai. with the cost of living soaring in china's premier cities, chongqing believes more engineers will seek opportunities here, notably when the big tech players shift up a gear. xiyong illustrates that, even in a once backwater, if the local government's vision is global, the support strong, and the execution fast, leading corporations are quick off the blocks to back chinese-style state-controlled capitalism in

order to compete in a competitive marketplace. nick mackie, "nightly business report," chongqing. >> tom: here's what we're watching for tomorrow: our "market monitor" is erik ristuben, chief investment officer of client investment strategies at russell investments. did the u.s. economy grow during the last three months of last year? we'll get a first look at fourth quarter g.d.p. ford motor is expected to post its best yearly profit in more than a decade. we'll ask c.e.o. alan mulally what's driving business. >> susie: linkedin could be the first of the big social networking companies to go public. the site aimed at connecting business professionals with other professionals filed with regulators today for an initial public offering. but linkedin did not say how much money it's hoping to raise, or when it will do the offering. other social network firms are expected to follow in linkedin's footsteps, with groupon and facebook going public over the next 18 months. >> tom: shares of bank united begin trading tomorrow at the new york stock exchange.

late today, they priced at $27 a share. that's $2 more than the expected range. the bank raised $783 million. we'll talk with its c.e.o., john kanas, tomorrow. he invested $23 million of his own money in the bank when it was bought by private equity firms, including w.l. ross, blackstone and carlyle group in 2009.

>> susie: with high unemployment and a shaky outlook for housing, you'd think consumers would stay away from stores and stop shopping altogether. but last month, shoppers were out in force, ringing up the best holiday season in four years. tonight's commentator says there's a good reason for it. he's bernard baumohl, chief global economist at the economic outlook group. >> the year 2010 left us with a tantalizing puzzle. we know the job numbers were awful, the worst in nearly 30 years. and yet, even with such a dismal job market, americans were enthusiastic shoppers. retail sales rebounded by the most in more than a decade. you would think high joblessness would temper household spending, but it didn't, and it's worthwhile pondering why. there is new evidence the u.s.

has a thriving underground economy. by underground economy, i'm not talking about illicit activity, like selling stolen goods or drugs. it's largely legal work, where millions of unemployed find income by doing handyman work, selling stuff at flea markets, or computer repairs. given the job-destroying recession we just had, it is believed a record number of americans were driven into the shadowy underground. by some estimates, the size of the underground economy has swollen from $350 billion a decade ago to $1.5 trillion now, or more than 10% of g.d.p. while transactions here are off the books and deprive the government of needed revenues, they can serve an important source of stimulus during periods of economic weakness, and may be an important reason why we had this odd combination of high unemployment and robust consumer spending. i'm bernard baumohl. >> susie: that's "nightly business report" for thursday, january 27. good night, everyone, and good night to you, too, tom. >> tom: good night, susie. i'm tom hudson.

good night, everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org