>> tom: liberty media turns a page with a billion dollar bid for barnes and noble, sending the bookseller's shares up 30%. but some analysts think liberty's paying too much. >> the market thought this was an $800 million dollar company yesterday and today it's worth a billion. i just don't see it. >> suzanne: with the shift to digital media gaining ground, many say liberty is betting on the nook-- barnes & noble's e- reader. you're watching "nightly business report" for friday, may 20. 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

captioning sponsored by wpbt >> tom: good evening and thanks for joining us. susie gharib is off tonight. i'm joined by my colleague suzanne pratt. wall street welcomes a new chapter in barnes and noble's search for a buyer. since august the bookstore has been looking for a buyer and it found one in liberty media. suzanne, the buyout offer sent barnes and noble shares up 30%. >> suzanne: tom, now everyone wants to know what liberty's c.e.o. john malone sees in the deal. many analysts think he's focused on the nook-- barnes and noble's e-book reader. a new version of the nook is due out next week.

>> tom: liberty media has been known for seemingly unconventional deals in the past. it owns the atlanta braves, major league baseball team; a technology company that can locate mobile phone signals for security purposes, called true position but the billion-dollar offer to buy a book store has many wondering about this deal. >> is this a good deal for liberty media? >> it can't be. you have a case where booksteers it's a dying media. and just as amazon this week, they reported that digital book sales are outselling their print book sales, the same thing is going to happen to barnes & noble. obviously barnes & noble has a lot of business with the nook and other areas but the business will not be worth as much three, five years from now. >> tom: what about the nook business? that's the four-letter word here. that's what everybody is

pointing to, that it's the million-dollar business, is it? >> it's an industry still in flux. we still don't know what's going to happen. we have a case where what will happen five, 10 years from now. will publishers take over? five, 10 after, that will writers takes over. and owning the distribution isn't enough right now sdplom talk a look at the fundamentals for barnes & noble, in terms of where its revenues come from, or at least came from in the last fiscal year, three-fourths coming from the old school bookstores. you have b.n..com, the online presence with 10% and 14%, still a decent chunk, from b. and n. college. we will look at a bar chart where sales are growing. you look at stores, sales growth is down. you look at colleges, sales growth is down. it's only. >> when the stores start to fade

b.n..com is like burlesque without cleavage sdplo liberty media has a heck of a meade why platform to promote the nook and promote barnes & noble, if it upons to keep the brand around. >> that's true but i never saw them movie satellite radio receivers through home shopping. >> tom: liberty media capital, meantime, which is where barnes & noble would live if this deal gets done has had a nice stock run. look at the stock chart, clearly more than doubled over the past 12 hongz. down slightly today. does this make you sell shares if you own them? >> i loved liberty capital until about 8:30 this morning. it's a great company, selling at discount, a lot due to sirius radio, with a $6 billion stake in the company. now you get barnes & noble where there will be uncertainty, will it be a that starts losing money? what will malone do with it?

it's trading at less of a discount. it's still mildly attractive. do you own liberty media or barnes & noble? >> i don't, and i won't own it now. >> joining me is director of research at the yankee >> suzanne: today's deal comes as e-readers and tablet p.c.'s like the ipad are shifting the media landscape. joining me now for a look at growing business of e-books is carl howe, director of research at the yankee group. carl, welcome to the program. >> it's a pressure to be with you. >> you were probably listening to the interview before us, talking about how big a business the business of e-books is. what are we talking about? how big is it? >> the business of books is actually a much bigger business than people think. just this year, we're look at about $1.4 billion worth of sales in e-books. and we see that growing to about $3billion in the next two years. so if barnes & noble were to get a small piece of that, about a

third, they could actually make back in revenue what's being spent on it today. >> of course $600 million question here is do we think that e-books are going to ultimately replace old-fashioned book they say still like to read? >> well, the funny thing is i think-- i don't think you're going to see real bookstores go away any time soon. this is not a case where new media replaces old media, but it's a place where we're going to have both of them working together. let's face it-- you can't really take your nook to the beach and expect it to survive the sun and surf. >> we know that amazon says e-books are way outselling traditional books. what is the future, do you think of the traditional book market in this country? can these two things coexist? >> i think we have to see them as complementary products. i mean, the-- there are going to be a lot of people, like yourself, who don't want to see the paper book go away, and, quite frankly, if you're a researcher, an educational

institution, you really need the ability to spread out books across the table and not just look at one page of one book. that said, a lot of people want to be mobile. they want to be able to read books on their phones. they want to be able to read books on their ipads. and as a result, you're going to have this e-book phenomenon that's going to grow like gang busters, about doubling in the next two years. >> ask what about the future of e-readers like nook and kindle verses things like the ipad? are the tablets going to be the death, ultimately, of the kindle >> well, tablets are an even bigger market than e-readers, looking at about $5 billion this year just in the united states, about $17 billion around the world last year. this is going to be a huge market. and the great thing about e-books is they work on either medium. you can put them on a dedicated e-reader like the kindle or the nook, but you can also run that

e-reader software on a tablet. in some sense, no matter how e-book readers and tablets shake out, e-books are still a winner. they're going to grow. >> all right, carl, thanks for joining us. i'm going to still read my hard copy on the train on the way home tonight, thank you. >> it's a good plan. >> carl howe of the yankee group. >> tom: here are the stories in tonight's n.b.r. newswheel: fresh worries about greece's debt crisis pressured u.s. stocks. the dow fell 93 points, the nasdaq lost 20, the s&p 500 was down 10. big board volume just over a billion shares. nasdaq at 1.7 billion shares. another down week for the major averages, the dow was down in three sessions for an overall loss of 83 points. the nasdaq had a net weekly loss of 25 points. the s&p 500 lost 4.5 points on the week. fitch ratings today downgraded greece's credit rating farther into junk territory. it's concerned about the challenge facing the debt ridden

nation. and more trouble on the flood swollen mississippi: two grain barges broke loose and sank south of baton rouge, louisiana. that closed five miles of one of the nation's busiest commercial waterways. still ahead, with the job growth still stuck in the mud the nation's new college grads face an uncertain future. >> suzanne: if you want to know how the economy is faring, it pays to think small as is small businesses. they account for 99.7% of all u.s. firms and how they're doing is a great measure of the economy's performance. and, now president obama is looking to small businesses to play a new role in the nation's recovery erika miller explains. >> reporter: a.r.c. athletics is a small personal training and rehab facility in harlem and one of the nation's small business success stories. through networking and referrals, owner gene schafer

has been able to bulk up his business. >> i've been in the neighborhood six years. when we first started out we were seeing 17 people a month. and now we see 17-20 people a day. >> reporter: small businesses-- like arc athletics-- have been the muscle of job creation the past 15 years, generating more than 60% of new positions. but now president obama is counting on small firms to help achieve his goal of doubling u.s. exports within the next five years. while that may not be in schafer's business's plan right now... karen mills the head of the small business administration says many small firms are eager to expand into fast-growing emerging markets. >> right now small businesses are only about 30% of exports. but we know that there is tremendous opportunity. and that's because we have terrific small businesses who that have access to the internet.. and the made in america brand is very hot in other countries. >> reporter: another advantage

is the weaker dollar, which makes the price of u.s. goods and services cheaper to foreign buyers and therefore more appealing. but it's clear that small firms that want to expand overseas still face big hurdles. one is access to financing, even though the lending environment has been steadily improving the past few years. t.d. bank's jay desmarteau sees other common problems. >> we have a trade finance team that is getting a lot more requests to provide advice on how to ship overseas getting requests on larger exporters that small businesses can sell into as a supplier. >> reporter: whether the sales growth is here or abroad, economists hope it will lead to more hiring in the u.s.. while arc athletics doesn't export, it wants to do it's part to help the economy. if business continues to improve, schafer hopes to open a second location. >> we could go a little bit south of where we are and we could go all the way to the top of manhattan and even to the bronx with our facilities. >> reporter: it may only be a

few miles, but every small business has its dream of conquering new frontiers. erika miller, "nightly business report," new york. >> tom: we saw some selling pressure move back into the stock market to end this week, and while the financial sector led the selling, it was really stocks on the front lines with the consumers retails that saw some big moves. let's get you updated with tonight's market focus.

the week came to a weak ending with the major indices finishing lower. retail stocks saw lots of selling, even with the buyout bid for bookstore barnes and noble. let's start with the market reaction in barnes and noble to that purchase offer from liberty media. the offer is $17 per share. the market thinking it could go higher with today's 30% jump, taking it well over $17. this is the highest price for the stock since the firm suspended its dividend back in february. other retailers took a big hit. j.c. penney fell almost 5% as volume more than doubled. lee and wrangler jeans maker v.f. corp., fell more than 4.5% on strong volume. shirt maker philips van-heusen dropped alomst 5% again on

heavier than usual volume. the market talk centered around worries about the cost of cotton. cotton futures were flat today and they have been trending lower since early april, but that was only after hitting post-civil war highs this spring. gap's fiscal first-quarter aeropostale inc.'s fiscal first- quarter profit dropped 64% on weak growth in sales and margins as the teen apparel retailer issued a much lower-than- expected forecast for the current quarter. inc. needham cut its stock-investment rating on american eagle to hold in the wake of aeropostale's woes and sharp growth at abercrombie. fellow teen retailer abercrombie & fitch co. also traded lower, gap's fiscal first-quarter profit slid 23% as the casual- apparel retailer posted lower same-store sales across all business segments and a lower

gross margin due to cost pressures. foot locker inc.'s fiscal first- quarter profit jumped 74%, easily topping analysts' linkedin down a fraction and that's tonight's market focus.

>> suzanne: college students across the country will be graduating this weekend. and they might be relieved to learn many companies plan to hire more entry-level workers this year than last. while the job market is improving, many grads are finding it's still tough to get work. anna olson reports. >> reporter: newly minted american university alum ed levandoski heard the horror stories about grads who were out of work. that's why he's applied for 80 jobs since february. >> there's always still that fear in the back of your mind that you'll be walking across the stage at graduation without any idea what's going on. >> reporter: his hard work paid off when he landed a position at a corporate research firm in virginia. >> i feel very relieved.

it's something that's very interesting for me, and i'm looking forward to this realm of work. >> reporter: katherine stahl helped him get that job. she's the director of the career center at american. she says more employers are posting jobs on the school's website this year, and more students are being hired. >> we're very much happier than we thought we might be at this point. those students who are preparing are landing, which is very good news. >> reporter: according to the national association of colleges and employers, companies plan to hire nearly 20% more grads than last year. the strongest job prospects are in industries like oil and gas extraction, pharmaceuticals, electronics, and finance. accounting firm ernst and young is taking on 2,700 grads this year, 500 more than last year. and more grads than many of its competitors. recruitment director dan black says it's because business is back. >> we feel pretty confident that what we're hearing from our clients, what we're hearing from the market is that there is a

demand for services that maybe had been a little bit lacking over the course of the last couple of years. >> reporter: despite the surge in hiring, there still may not be enough jobs to go around. this year's grads are competing with 2009 and 2010 alums for positions, many of them still haven't found full-time work. economist heidi shierholz says the labor market is picking up, but not nearly to pre-recession levels. >> even the class of 2011 is entering into extremely dire circumstances. we are still in a real crisis in the labor market. >> reporter: and some sectors like federal and local government are still shedding jobs. >> the hiring of new teachers, the hiring of other state and local government administrators, which may have been good employers for new college grads, it's just not happening. >> reporter: so as they finish their formal education, grads across the country may now learn some tough lessons in the labor market. anna olson, "nightly business report," washington.

>> tom: here's what we're watching for next week: our friday market monitor guest will be mark skousen, editor of forecast and strategies. we'll see earnings from retailers big lots, tiffany and zale. in monday's beyond the scoreboard, the rise and fall of professional athletes. from lebron james to tiger woods. how success is measured in marketability for them and their sponsors. >> suarez: the head of tokyo electric power is stepping down, as he takes responsibility for his company's part in japan's nuclear crisis. his resignation comes on the same day that tepco posted a $15 billion loss. it's the biggest annual loss ever for a japanese company. tepco also warned about its ability to survive, as it faces billions of dollars in liabilities following the march earthquake. >> tom: the unemployment rate in most states is dropping. 46 states had lower unemployment rates in april compared to a year ago, according to a labor department report out today. and only eight states registered unemployment rates at 10% or higher.

nevada had the highest jobless rate in the country and 12.5%. the lowest was in north dakota and 3.3%.

>> tom: it's been two and a half months since a trio of disasters hit japan: the earthquake, tsunami and subsequent nuclear crisis. the japanese economy has shrunk, but tonight's market monitor sees opportunity for investors. jeff everett is founder and portfolio manager at everkey global partners. always nice to see you, jeff, welcome back. >> thank you. >> tom: why japan? why now? >> well, recoveries take time. a lot of people it's probably the most contrarian investment theme in the world. many people recall the bubble, and it's 20 years of comes pregz and we have seen japanese exporters generate cash flow, earnings growth and that's what investors are looking are. >> tom: is this a different turn on the global growth scenario? a lot of folks say look outside the u.s. for growth but buy u.s. companies. you're looking outside japan but buying japanese companies?

>> the reason the strokz so cheap is because they are listed in japan. if they were listed on another exchange they would probably be 100% more expensive than they are today. >> tom: this is a play on global growth, not domestic japanese growth? >> that's correct. >> why not? >> we're as uncertain as you are-- as many people are about domestic growth. there are a number of factors that are very interesting right now. the japanese banking system appears more solid than it has in years. in fact, at the end of march, they've repaid, the japanese banking system, 99% of what was loned to them by the government to rescue that system. they're healthier than we've seen in a long time. we've seen political changes that could be positive. there could be some change. but it's still too early to bet on the domestic japanese economy. >> tom: your first japanese idea trades here in the u.s., certainly a major exporter. household name for electronic goods, canon, cag the ticker

symbol. had a nice run up until the end of the laf year. since then down some. what are your expectation here? >> we still own it. it's one of our larger positions. canon represents what we have seen in the export sector. very cash rich. jaepgs exporters have been known to have extraordinary amounts of cash on the balance sheet right now. despite that, very good profitability and seeing very good growth. canon over last year, this year, and next year is expected to generate 40% earnings growth. that's extraordinary for a company that has a low, double-digit price/earnings ratio. >> tom: you like japanese commodities broker. the pink sheet ticker symbol is itocy. what are your expectations? >> our expectation are that the investors haven't sniffed this out yet. investors were enamored with the glenncore i.p.o., which occurred two days ago.

>> tom: when was a switzerland based company. >> that's right. if you took two of our japanese trading companies and add them together, we would be paying less than you paid for glenncore, and getting more than twice the net income. >> tom: all right, looking for valuation. >> very, very undervalued. >> tom: finally you like microsoft obviously not a japanese company but a play on global growth or look for dividend? >> everything we have said is contrarian so why shift now? microsoft is one of the most peculiar stock evaluations i have seen in a long time. investors are very corporated about tablet, very concerned about the consumer window business. if you put pen to paper and take out 75% of the revenues from the consumer windows business, you're only taking 50 to 75 cents off of a $2.75 earnings per share number. you still have an exception sale cheap stock with some businesses growing exceptionally well. >> tom: all right, still looking at valuation there. let's look at the three previous

picks you had in august. china mobile, shares down 15.5%. a russian company, off by 4% and pursant. do you still like all three? >> we still like all three. >> tom: you own all six that we mentioned. >> that's correct. >> all right, jeff, nice to see you. jeff everett, with everkey global partners. >> suzanne: that's "nightly business report" for friday, may 20. i'm suzanne pratt. goodnight, everyone and have a great weekend-- you, too, tom. >> tom: good night, suzanne. i'm tom hudson goodnight everyone. we hope to see all of you again next week. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you.

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