>> susie: a tentative deal to cut greece's debt helps u.s. stocks turn positive. we talk with a top political analyst about what breakthroughs in greece mean for global investors. >> i'm erika miller in times square. coming up, i'll tell you what's driving the nasdaq composite to an 11-year high. >> tom: the iphone and its competitors are certainly helping fuel that growth, but for sprint and its rivals, offering the iphone comes at a cost. it's "nightly business report for wednesday," february 8. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:

captioning sponsored by wpbt >> susie: good evening everyone. greece could be close to signing off on a debt deal with european policymakers. if the deal happens, greece will get a new round of badly needed emergency funds. we'll have more on that in a moment. but tom, the news gave a lift to u.s. stocks in the final hour of trading. >> tom: susie, stocks bobbed in and out of negative territory all day, but investors were encouraged by news about greece. by the close, all the major averages were up. the dow rose five points, the nasdaq gained 11 and the s&p edged up two. >> susie: but the nasdaq was in the spotlight.

today's gains bring the composite up 11% for the year, more than double the dow average. erika miller takes a look at what's fueling the power surge in tech stocks. >> reporter: in the heart of times square, you'll find the nasdaq market site. this monument to growth and technology firms debuted in 2000, during the height of the dot-com bubble. now its best-known index is trading at levels last seen that year. but clearly, a lot has changed. >> global technology companies have become much better businesses-- more efficient, better supply chain, better management. you know, we had issues with options backdating, we had issues with the way companies were run in terms of inventory management. all of that's gone now. >> reporter: the proof is in the latest earnings reports. a whopping 77% of tech firms are beating expectations and by an average of about 10%. tech is expected be the best- performing sector in the fourth quarter with a 12% earnings gain. that's double the forecast for the overall market.

ironically, a weak economy is one of the factors powering the tech boom. many companies are hesitant to add to payrolls, so they are spending their money on technology to boost productivity of their existing workforce. and wall street is upbeat about technology for another reason: the upcoming arrival of microsoft's window's 8 software later this year. >> we think that a lot of corporations have pushed off upgrades for a number of years at this point, so we think that windows 8 being released this year is-- whether this year or next year-- going to usher in a pretty significant upgrade cycle. >> reporter: increasing investment in technology is not just a u.s. trend. sales are booming in china and other emerging markets, where mobile phones and tablets are in hot demand. >> we've basically tapped, let's call it 600 million people in bric countries which didn't used to have access or the ability to use technology-- they're now buying iphones and android

phones and they are on facebook. >> reporter: that's part of the reason the fund's top holdings are apple, google and baidu-- a chinese web services company. an 11-year high for the nasdaq sounds great, but not everyone is celebrating. for investors who have been holding these stocks for over a decade, it means they're finally back to break even. erika miller, "nightly business report," new york. >> tom: one of the tech stocks helping fuel the nasdaq rally is cisco. earnings were better than expected, coming in four cents ahead of estimates as revenues and profit margins both were up. grady burkett is an analyst at morningstar. he joins us tonight from chicago. what do you make of this earnings report after some difficulty that cisco had over the past several years? >> this was a very good report for cisco, on the top line they grew 11%, their services

revenue and product revenue grew more than 10% in the quarter. year over year. so that shows balance and strength. they had strong balance across their products, so you did see very strong growth from some of their emerging product segments, for instance data center and collaboration, even their security portfolio which has been weak was strong this quarter. and you also saw good operating expense control. so you're right, you really saw a quarter where they beat out expectations, i think they beat most analyst expectations and it was a very solid quarter for the company. >> tom: sounds like you're pretty impressed with this report. april of last year when the c.e.o. sent a memo to employees, said a lot of things including this, we have disappointed our verdicts and have confused our employees, that was april of last year. should investors be satisfied now after seeing this turn around? >> if you look at the execution, the execution has been fairly solid.

they, all the data that we're seeing suggests that they've either maintained or gained share in most of their core markets, so routers, switches and some of the core newer segment that they operate in, i think the one area that investors are going to be focused on now even more so is what they are going to do with their cash balance. so i think capital allocation will come increasingly in focus. but from an operational standpoint, investors should be satisfied. >> tom: let me ask you about that cash as we take a look at the price chart the last 12 months and i'll note from the low in august we're up 50%. it did announce a dividend increase tonight, now paying 8 cents per share at tonight's price around 20.5 dollars, yield clouds to 1.5%. do you think it will pour back any money in buybacks, for instance? >> well, actually the company we saw it decelerate on its buybacks this quarter from last quarter. the average buyback price was higher this quarter than last so, we would like to see the

company shift from buybacks toward dividends as its share price converges to what would be the intrinsic value of the company. so we think this two be a good strategy. now, we don't think the company is there yet. we would like to see a higher dividend payout and the investors we speak with would like to as well so, we think this is a step towards a longer path toward more return of capital via dividends. >> tom: do you own any cisco shares yourself? >> i do not. >> tom: grady burkett, an analyst at morningstar, thank you, sir. >> susie: still ahead, the iphone. it's the smartphone everyone wants, but for sprint and its rivals, selling apples comes at a cost. more now on that breakthrough in talks in greece and what it all means for businesses and investors around the world. joining us with some thoughts? ian bremmer, president and founder of the eurasia group, a leading political and economic consulting firm in new york. ian, nice to have you with us. >> good evening to you.

>> susie: well, it sounds like greece is getting a closer to agreeing to some tough austerity measures that european policy makers have fwn demanding. they're still haggling on pensions and a few details. what is your take on the situation right now? >> well, my take is that there's still capacity on the part of both the germans, the european central bank and the greeks to muddle through. we're not in d-day yet. the deal hasn't fallen apart, there's no structured defought yet, but that day is coming, it coming in part because the strong austerity that is being imposed by the core europeans on the greeks. this new greek government that comes in with early elections will absolutely not continue. so we're going to have a reprieve for a short period of time, and then we're going to go right back into crisis around greece. >> susie: so greece is still in crisis mode, even though it's promising these reforms, and i guess reted to that, a lot of people are concerned that if it makes these proms,

can it e keep them. >> the answer is no, it's probably can't enforce them, and the new government coming in again which will likely be a coalition government led by the new democracy party will probably not even want to enforce them. so then you're going to -- greece's government has already lost any shred of good will with the international lending community. so the pressure is growing, and when finally austerity measures just run their course and the greeks say no more, that's it, then we reach the moment of truth. that's when the germans and the e. c. b., the international lenders have to say fine, we will write this check, but only if you effectively give away a large piece of your own fix al sovereignty. that's what the fiscal compact is all about, that's the important structural negotiations happening across the entire euro zone while this sort of smaller issue of individual greek bailouts is playing. >> susie: you know, american

businesses and investors have been waiting for some kind of deal, supg kind of agreement whether it's about greece or the other countrys in europe that are in trouble because they want to find some stability in europe. are you saying that this latest chapter is not going to bring that stability, you keep talking about crisis mode? >> well, yes and no. i think that what the american c.e.o.s have been concerned about, i was just in davos a couple weeks ago, i met with a lot of them and their concerns were the 5%, the 1 so% that the euro zone just impleads, just fragments in the course of the next year or two. and i think from seeing chancellor merkel speaking there, from seeing the each c. b. senior officials that most of those c.e.o.s believe that there is enough time to forestall the kind of sort of disaster scenario were keeping many of them from making new investments. combine that with better numbers from the united states, i think the c.e.o.s are

feeling a little better, but long-term the euro zone is still fairly stagnant, and you haven't fixed the underlying competitiveness issues that will create a lot of social instability across the european periphery. >> susie: looking ahead, there has been a lot of talk about a restructuring of the euro zone. what shape do you think that's going to take? and is there a roll for greece in they restructuring? >> i think there is a role for greece. but there's not much role for greek fiscal sovereignty. you're going to see something that increasingly looks like a two track euro zone where certain countries that do benefit from significant bailouts, they have no capacity to pay off, and will need some sort of transfers that come from the core, they're just not going to be allowed to have decision making over their own domestic economic space in the way they have historically. so that's not convergent, it's divergent. and the question is over the long term, will the populations of these countries tolerate that. this is not just a matter of

different states in america, we're talking about different countries with different national sentiment. >> susie: okay, ian, we have to leave it there. hope you can come back and we can talk more about this as new situations develop. but thank you so much for coming on tonight. >> fingers are crossed, susie. >> susie: absolutely. we've been speaking with ian bremmer, president and founder of the eurasia group. >> tom: buyers should take a breather after coming out of the gates fast this year. tonight's "street critique" guest thinks a pause is in order for the stock rally. he's michael farr, author of "the arrogance cycle." >> fizz it, pause, they sound a lot alike, tom, but we are up some 22% since september 30, and i'm always cautious when i see enthusiasm building right along with market gains. marketing making new highs and everybody was to put more

money in. that's always a sign for caution. and i think it's due for a bit of a pause. >> tom: wouldn't you prefer a pause as opposed to a fizzle, meaning that we mark time at these multi month highs as opposed to lose some ground from what we've gained? >> not necessarily. to have something of a pullback in here wouldn't bother me too much. it reminds people that they've got to be a little more serious with the money they're spending. >> tom: that's right, risk does come with reward hopefully at times. you like shares of medtronic, the medical device manufacturer, has had one of those nice ralies since the august low at $40.50 per share. what do you expect out of it? >> i think the stocks is pretty good. 45% of its sales are international. it has a 2.4% dividend, earnings growth i think of around 12% at 11 times earnings with an aging population and all that medtronic does to keep everybody healthier for longer term pace makers, i think it's a good stock for the long-term and i like the price.

>> tom: we're all getting older except for you, farr. >> look at the hair, come on. >> tom: staples meantime, spls, in all seriousness, this office supply retailer has been trunking a long here in the low teens for six months, it hasn't participated in the rally. is that what draws you to it? >> a little bit yes, you gotta hit him where they ain't. this stock hasn't performed as well as the others in office retail space, but at 2.7% dividend when you look at your money markets and everything else it's a cheap stock and a great company, i think you're going to make some money here, might be a while, but there's money to be made in staples, i believe. >> tom: of course it's a much lower priced issue. back on january 11 you liked danaher, the industrial and equipment manufacturer, it up nicely, it 52 and change. would you put new money to work? >> i would. where i don't own these i might wait a little bit on price. our average hold is about four years, i'm not a big trader.

so i'm old school. >> tom: yes, you are. we got a viewer question send to us from jerry. if one owns a foreign stock and receives income from dividends and or capital gains, what are the tax implications? i know you're not a tax attorney, but what's your investors keep in mind if owning foreign paying dividend stocks? >> i asked sheldon cohen who is our in-house council, former i.r.s. commissioner, so i think he's probably pretty good on this one. americans pay taxes on their income and dividends and everything worldwide. if you have to pay tax in another country, you get credit for it here. so if you pay 10% here, you just pay the difference here, if you pay the whole thing there, you get credit here. do you have to may the tax no matter what, there's no getting around it. >> tom: it does show up, the i.r.s. alwayss that hair hand out of do you own the three stocks we mentioned? >> i do, i own them and we own them in the touch stone capital appreciation fun for which we are the sole manager. >> tom: all right. get us your questions at street critique at nbr.com. more questions next week and our guest this evening on

street critique is michael farr. thanks michael. >> thank you. tom. >> susie: i guess you could describe today as a little nervousness and anxiousness about what's going on in greece and that will carry over into tomorrow and probably a lot about the topic you were discussing earlier on cisco, good news there. so earnings here and worries there. >> tom: earns here and europe over there, have to find that balance here. so let's get folks updated with tonight's market focus. the major stock indices inched higher on earnings news as there's still no new deal on greece government spending. the s&p 500 swung from a morning gain to a midday loss to end the session up three points. this is its highest close since july. the financial and technology sectors led the way higher, with industrials coming in a distant

third. bank of america led the dow higher, up more than 3.5% on almost twice its usual volume. this is its highest close since august. other financial gainers include hartford financial, up 7.5% after acknowledging it has considered breaking itself into pieces. its largest shareholder, hedge fund investor john paulson, has been pushing aggressively for the company to boost value. derivatives-trading exchange intercontinental jumped 6% thanks to a strong profit growth outlook. we mentioned the cisco earnings earlier, and shares were up in after hours, but during the regular session computer sciences was the tech to watch. shares jumped almost 19% on huge volume. shares shot up after reporting a big jump in future business. still, company management is cautious, noting weaker government spending. the company still faces a securities and exchange commission accounting investigation.

after the bell tonight, we saw the first results from groupon since its initial public offering in november. the online group coupon company lost two cents per share while analysts were expecting a profit of three cents per share. still, revenue almost tripled. shares came into the report with a 1.6% gain but lost 11% of this closing price after its fourth- quarter results. that put the stock below $22 per share. visa stock closed the session at a new high and looks to add to it if the after-hours buying holds. shares were up another 3% from this closing number after strong earnings. profits were up thanks to shoppers using their plastic more, both in the form of credit and debit card swipes. earnings were four cents better than anticipated. both visa and mastercard face new government limits on the fees it charges stores to accept their cards. if you want to know how worries

about europe could affect u.s. companies, look at mcdonald's. while january sales at restaurants open for at least a year were up, a key sign of growth, sales in europe were slower. and europe is mcdonald's biggest source of revenue. u.s. same-store sales were up almost 8% while european sales were up about half that. shares fell a fraction even though the sales growth numbers were better than anticipated. shares are just below their all- time high. we saw a big demand for new stock today from casino caesars entertainment. the company runs the caesar's harrah's and horseshoe brand casinos in the u.s. the stock priced at $9 dollars per share, under the ticker c-z- r. it closed tonight over $15, clocking a first day gain of over 70%. some analysts note the small number of shares sold help support demand for the stock today. and finally, two semiconductor makers have ended four years of and that's tonight's "market focus."

>> tom: selling loads of iphones certainly helped drive more customers to sprint, but it didn't lead to profits. sprint continued to lose money in the fourth quarter, although a little less money than feared. sprint lost 35 cents per share last quarter even as revenues were up 5%. the iphone has been a runaway success for apple and has driven up sales at any wireless carrier selling the smartphone, but it comes at a cost for the carriers. sprint sold 1.8 million of these in the last three months of the year, and 40% of those buying

one were new sprint customers. pretty impressive numbers. but sprint spent $1.7 billion dollars to attract those iphone buyers. in exchange for getting them to subscribe to two year plans, sprint, like other carriers selling iphones, cuts the price of the device. but in doing so, it still has to make up the difference and pay apple. >> increasing portion of smartphones and iphones in general are going to customers who already have those phones. in that case in particular, a carrier is looking at a subsidy- - in the case of the iphone-- of $400, or even more than that in sprint's case, and the only benefit they're getting is locking customers in for another two-year contract. >> reporter: james ratcliffe at barclays estimates the carriers don't make up that subsidy they pay to apple until month 16 of a 24-month subscription. still, he thinks it's worth it. the iphone is awfully important to the carriers. more than half the smartphones verizon sold last quarter were iphones. 78% of the smartphones sold through at&t in the fourth quarter were iphones. this helps explain how the companies see wireless revenues

increase, but with some concern. >> i think you should be a little concerned about how a significant apportion of that growth is essentially transferred out of the company and how little of the value of smartphones are creating for consumers is actually being captured by the carrier. investors worried about those issues and sprint's losses. sprint shares fell about 2% today and are down 45% in the past year. >> susie: here's what we're watching for tomorrow: we'll see the latest numbers on new jobless benefit claims. more earnings on tap: dunkin brands, linkedin, pepsico and philip morris international. also tomorrow, one woman's journey to homeownership and how the financial crisis has made the process a rocky road. toyota is moving production of its highlander hybrid sport utility vehicle to the u.s. the move will add 400 jobs to an indiana plant that makes regular

highlanders and the sienna minivan. the cost? $400 million. the shift helps toyota with its goal of making the u.s. a major export hub. those highlander hybrids will start rolling off american assembly lines by mid 2013. >> tom: you may be able to fly through airport security a little faster at 28 major airports, if you're qualified. the transportation security administration is expanding a sped-up check-in for frequent fliers to 28 airports. there's no cost to eligible passengers and they'll no longer have to take off shoes and belts before boarding flights. in exchange, those travelers have to give up more personal information. the pre-check program will be in 35 cities by the end of the year.

>> tom: california and new york, two key holdout states for a multi state mortgage setment we reported on last night are expected to join the deal, and smoothing the way for an announcement possibly soon as tomorrow. according to reuters, florida with its large distressed housing market is also close to joining this settlement that results civil government lawsuits over faulty foreclosures and services misconduct, the so-called robo signing issue. we'll have more tomorrow. finally tonight, if you ever thought that your doctor wasn't giving you the straight

dope, you could be right. more than half the doctors in a new survey admit they've described a patient's prognosis in a way they knew was too rosy, and nearly two in ten say they hadn't fully disclosed medical mistakes for fear of being sued. and one in ten say they've told a patient something in the past year that wasn't true. the lead researcher on the study says doctors didn't set out to be dishonest with their patients. instead, she believes the untruths were meant to give people hope. >> susie: boy, a difficult situation, i guess gives new meaning to good bedside manner. >> tom: certainly does. that is "nightly business report" for this wednesday, february 8. we'll have more on the foreclosure deal tomorrow. i'm tom hudson. good night. have a great evening, susie. >> susie: thank you, tom. thanks for watching, we hope to see all of you again tomorrow night.

"nightly business report" is made possible by: captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org