this is "nightly business report" with tyler mathison and susie gharib brought to you in part by -- >> the street.com is an independent source for stock market analysis. cramer's action alerts plus home service is home to his multimillion dollar portfolio. you can learn more at the street.com/nrv. deep holiday discounts hurt more than they help. can the retailer get itself back on track? inside intel. earnings miss. revenues beat. but what's the most important take away for investors? critical condition. california suffering from an extreme drought. now farmers are making tough decisions that could impact the

price you'll pay for things like beef and lettuce. all that and more tonight on "nightly business report" for thursday, january 16th. good evening, everyone. a mississiperable day for invesn best. the world's largest electronics retailer didn't live up to its name when it comes to its stock. it plunged almost 30% today. investors dumped the shares after the company reported it had poor sales during the holiday shopping season, saying it suffered from heavy competition and deep discountsing. hot-selling products were in short supply. smartphone sales were slow. and with so many people shopping online, fewer people came into its stores. sales fell nearly 1% instead of rising. courtney reagan spoke with best buy's ceo and has more on what's next for the struggling retailer. >> reporter: best buy shares gained a staggering 240% in 2013. as wall street began to put stock nuts turn around strategy.

but today best buy shed more than $3.5 billion in market cap value after revealing a bummer of a holiday season. sales at best buy's u.s. stores open at least a year fell 0.9% compared to the year prior. wall street had forecast same store sales growth. analysts remained resolute in his commitment to the longer-term turn around strategy. >> it's hit a speed bump. and we don't want to minimize it. because frankly we care people about our month-to-month performance. but our sense is that it doesn't change the overall story. it doesn't change the long-term perspective. it doesn't change the priorities and the trajectory. >> reporter: in order to compete in the most promotional holiday season in years, best buy joined rivals and cut prices to get shoppers into the stores. on the phone this morning, jolie told me this holiday promotional environment was extreme but it didn't create industry demand.

he also said he didn't think anyone expected mobile sales to fall, but it happened. >> finding products here a little more pricier than others. i'll go home and look for it on amazon or e-bay. >> i look online, go to the store, then i come back and purchase it online if i can't get a bargain in the store. >> electronics category in general has been tough. target had said that, too. even though amazon probably did take a little bit of share, i'm not so sure yet that they'll come out and say they had gangbuster electronics sales. >> reporter: but electronics are the pillar of their product offering. one analyst saying today's report is a stark reminder of an availabilities in the company's business model. david strausser thinks it's just a mark of a tough environment. and suggests buying on the dip. gaining share is good but marking prices lower and lower

compresses margins, cuts into profit, and frustrates investors. for "nightly business report" i'm courtney reagan. earnings after the closing bell this evening from dow component intel, even with shrinking sales of personal computers, net income at the world's top chipmaker last quarter rose 6% to more than $2.5 billion. and revenue was slightly higher than expected. but intel did miss forecasts on earnings per share by a penny at 51 cents a share. as for the stock, shares fell initially on that report. we have a reporter from the nasdaq exchange with more on intel. good evening. what's the most important take away you see in intel's latest quarterly profit report? >> reporter: well, tyler, intel is not expecting a big jump in sales this year. i think it's one of the big key take aways. intel's revenue guidance for 2014 came in lower than street expectations. there have been ongoing concerns about intel adapting to the shift in the marketplace from pcs to smartphone and tablet

demand. although intel's management did mention that there were signs of stabilization in the p.c. segment and financial growth from a year ago. it's also putting more focus on supplying chips to the growing smartphone and tablet markets. intel said it plans to sell 40 million chips for tablets in 2014. the big question is will this all result in bigger sales for intel. >> sima modi reporting from nasdaq for us tonight. joining us now to talk more about intel and what to expect from other tech companies when they report their earnings next week is kim forrest, senior equity analyst at for the pitt capital group. what was your take on intel? you just heard the report. do you agree? >> i do. i was surprised to see they beat on earnings. that hasn't happened in awhile. they also had very good margins. and i think most of the penny miss was in the below the

operating line, probably in taxes, and maybe a little bit of spending and r and d. but i don't think it was that big of a deal, the earnings miss. and it was a good mix of revenue from pcs, the server group, and even newer chips that are going into tablets. >> has intel been nimble enough in adjusting to a new environment? >> no. and they were punished accordingly. a couple of years ago when it was pretty clear that the consumer pc market was going to crater in favor of more mobile devices, it took them a very long time to come out with products and technologies that were exciting enough to be included in design plans of the makers of tablets and phones. however, i believe they have done really great in trying to catch up. they have some really great technology. and i think that we're going to see in 2014 more design wins that intel's going to be able to

report. >> kim, we have a number of other tech companies that are reporting over the next couple of days. and a lot of people have been saying that these tech earnings are going to be really good. but the companies reporting next week have some of their own problems to deal with. i'm going to talk first about microsoft reporting on january 23rd. we know they're in the ceo search, they're changing their windows 8 operating system reportedly to windows 9. what can we expect microsoft to tell us next week? >> well, i think the big focus next week is going to be on x-box sales. because that was just in this last quarter. it was a new product for them. and even though the number of people that are interested in owning a console is probably down, i still think that they have a great market share in their core market. and are going to be able to report some pretty good numbers. the ceo search is incredibly important, and an update would be nice, but i don't think that

will be forthcoming. and again, pc sales and how it's impacting them in the long run, that's always the focus as well. >> give me a quick thought on ibm also reporting next week. how's big blue likely to do? >> big blue, i think they are strong in the u.s. still. but the big question mark over ibm for us is china. china has really been an area of growth for them. and i think everybody who is selling big complex machinery and big complex systems in china, there's a question mark over those numbers at this time as the one regime transitions to another. so it's going to be an interesting time for them. >> all right. it's an interesting week coming up. thank you so much for getting us ready for it. thanks a lot, kim. >> thanks for having me. >> kim forrest with for the pitt capital group. two-day rally in the market hitting the pause button today with the financial sector a model selloff after disappointing bank earnings

before the bell. big selloffs throughout the day at best bae. after two days of double-digit gains. the dow fell 65 points today, the nasdaq ended 3 points higher and the s & p 500 retreated from yesterday's all-time high closing down a modest 2 points today. american express was another high profile financial company that delivered a disappointing earnings report today. after the market close, the credit card giant said it earned $1.25 a share. that was a penny below analysts estimates. still, profits of the company more than doubled thanks to higher consumer spending over the holidays. revenues also rose, but they came in a bit below forecast. goldman sachs reported earnings earlier today beating estimates. but company saw its net income take a tumble. shares of the newest member of the dow fell 2% today after reporting that profits fell 21% last quarter. mostly on a decline in bond trading revenue. united health care was another dow component out with

earnings. quarterly profits rose 15% as more people enrolled in its insurance plans. but unh said implementing the new health law and private medicare funding cuts will eat into 2014 profits. the stock was the biggest decliner in the dow today, falling nearly 3%. and some other big financial firms reported today with mixed results. profits at citi group rose 21% as expenses declined and it set aside less money for bad loans. net income at pnc shot up 46%, mostly by originating more loans especially in commercial real estate. and black rock the world's largest money manager had higher profits on more money coming into its exchange-traded funds. and it was a mixed finish for all three stocks today. two up, pnc and black rock, one down, citi group by about 4%. still ahead on "nightly business report," last year was the driest on record for california. now farms are being forced to make some tough decisions. and that could mean higher food prices for you.

we don't note full extent of what transpired. but what we do know was there was mall wear installed on our point of sale registers. that much we've established. we removed that malware so we could provide a safe and secure shopping environment. this investigation is ongoing. and it's going to take some time before we really understand the full extent of what's happened. >> well, now we do know at least a little bit more. in a 16-page report prepared by the government and sent to target and other retailers, it described the malware hackers used to get ahold of customer data. according to security

intelligence firm eyesight which helped to document, the code enabling the breach was written in russian. but that does not mean it necessarily originated there or was deployed by russian nationals. the report also said it was a fairly widespread targeting of retailers that use those point of sale systems. but as of now, we don't know whether other retailers were similarly breached. a court ruling today could mean another big financial blow for the bankrupt city of detroit. a federal judge rejected a deal to get the city out of a financially disastrous agreement thought made with two banks back in 2009 in order to pay some pension debts. but paying $165 million to end so-called interest rate swap agreements with ubs and bank of america's merrill lynch unit was determined to be too high a price for the bankrupt city. just two weeks to go before ben bernanke's second term as chairman of the federal reserve

ends, and in his final scheduled public appearance as head of the fed, bernanke reflected on his eight dramatic years at the central bank and said the fed should give the economy the stimulus it needs during this tough recovery, even fit puts financial stability at risk. >> we're watching this very vigilantly. we've developed tremendous additional capacity for doing that. but at this point, we don't think that -- i think i can speak for my colleagues in this -- we don't think that financial stability concerns should at this point detract from the need for monetary policy accommodation. >> very interesting there. bernanke also recalled to the bookings institution in washington, d.c. what he called those very intense periods during the financial crisis, periods that he likened to trying to keep a car from going over a bridge after a collision. it may be a tough year ahead

for your grocery bills. that's because california where so much of the nation's food is grown and cattle are raised just wrapped up the driest year in its history. jane wells has more on what that drought may mean for your dinner table and your wallet. >> we've just had zero rain. >> reporter: stop me if you've heard this one. it looks like drought in california. this time, though, they say it's really bad. >> we don't just need a normal rainfall. we need above normal to get back to zero. we're so far behind. >> reporter: 2013 was the driest year on record in the golden state, going back 160 years. in a place where 38 million people compete with the nation's largest farm economy. justin greer says this time of year there's usually a few inches of grass. instead, he's paying high prices for hay and shipping cattle at lighter weights, meaning less beef on each animal and officially higher prices. beef has already been expensive due to droughts in texas. >> beef isn't and has never

wanted to be the low-cost protein alternative. we want to be the best protein alternative. but with everything there's a breaking point. >> reporter: what's causing all this dryness? i mean, high fire danger in january is unheard of. there is a very large, very stubborn high pressure system off the west coast causing this. it's four miles high and 2,000 miles long. farmer mark borba has so little water available he's letting a third of his land go to dust this year. this is where most of the nation's fresh vegetables are grown, things like lettuce. expect let lettuce and higher prices for it in the short term. >> our populations have gone from 16 million people to 38 million people, and we've not built a new reservoir to capture the abundance of our snow pack and rainfall. if you can't predict where you're headed, you better kind of gather up your acorns and find out how to survive. >> reporter: governor jerry brown has yet to officially declare a state of drought, which would allow some water to be reallocated. he may be holding out for rain.

none is forecast. for "nightly business report," jane wells, los angeles. news that chinese officials are investigating new skins sent shares of that budy nose diving. shares were halted a few times because of excessive movement after chinese officials said they would investigate accusations that the u.s.-based company is of rating an illegal pyramid scheme in china. the stock plunged more than 26% to $84.80. via coy viacom declared -- the giant will return that cash to shareholders on april 1st. despite that, shares of both stock classes were down slightly today. class a shares closed at $85.14. b shares closed at $84.94. united continental will furlough about 685 of its junior

flight ated ants as part of a plan to cut costs. the fur lows are a new addition to the a money-saving plan united announced last year which aimed to save $2 billion annually because the original cuts failed to attract enough workers for voluntary fur lows and job sharing. despite that shares there were up 1.5% today to 47.21. cec entertainment, this is the parent of chucky cheese, will be bought by apollo global. the fund will pay about $1.3 billion for the restaurant chain. both stocks up after the buyout news broke. apollo rose slightly and kec popped 13% to 54.7 56r78g9 her she is and 3d systems have a sweet deal in the works. they're coming together to develop a 3d printer that cranks out chocolate. there's no news as to when this magical device will be on the market or how much it will cost,

but just the idea of it sent shares of hersehy up. i helped present the morning star mutual fund manager of the year awards. you can read about the winners at morning star.com. as part of the proceedings i sat down with scott burns, morning star's global head of fund research, and asked him how the fund business, which of course touches tens of millions of americans, is changing in 2014. >> there's a couple interesting trend that are happening right now. in the u.s. there's clearly a shift happening from active management to passive management. so we're seeing the growth of things, etfs. vanguard is quickly becoming the world's largest asset manager and replacing names like fed fidelity. multiassets groups are becoming very large. 2014 will be a real banner year

for some of of newer up type strategies. >> so passive investing which is basically another way of saying index funds and dts is one trend. alternatives what are we talk about here when we say alternatives? is this a case of mutual funds wanting to be hedge fund? >> it is that to a certain extent. and a lot of it is strategies that were formally only available in hedge fund moving into the mutual funder or etf vehicles. alternative if you ask five people you might get five different answers. our answer is, alternative to equity and fixed income most simply. so we think are the things that are off the style box. >> like what? >> a commodity fund would be alternative. a fund that is market neutral. so to be on the starbucks you have to have market exposure. other funds we don't consider alternatives very popular, multiasset solutions where you're all over the starbucks but not off it. so alternatives are really interesting growing. >> so if someone comes to me and says, i think you need an alternative fund in your

portfolio, tyler or george or whoever, and it's going to be managed futures, what's the smart question for me to ask in that case? because if this is a trend, it's going to come into people's living rooms this year >> it is. and i think the first question is alternative to what. that's a question we do a lot of work on. if something is going to go in, what is going to come out. so if we're going to add managed futures what is the risk we're looking to reduce, the turn we're looking to reduce up alternatives while a very nice umbrella there's a lot of diversity inside alternatives. alternative to what. then also what is this return that i'm getting. >> are they as a class necessarily riskier than stock or bond funds? >> no. and i think that's the interesting kind of misclassification that happens out there. the reality is if alternatives are happening correctly, the more risk averse you are the more alternatives you actually want in the portfolio. alternatives are meant to take risk out. now, that's where hedge funds got their start. they were hedging. what happened in the financial crisis was that hedge funds took

a lot of leverage, bought a lot of ill liquid things. weren't risk reducers, they were kind of return chasers. so waste happening in the mutual fund and etf base is a much lower risk profile sort of strategy. >> has the business cut the baloney too thin in etfs? they used to be market matchers. now there are all kinds of etfs for left-handed oboe players and so forth. >> i think those really nichy ones are take it too far. there's not a lot of of money in them. they're still products that are bought and not sold. but there is a need the next generation of etfs are coming. we think of it as strategy beta. active manager in a box. a lot of just very interesting things are happening in that where you can get that alpha the costs are a lot lower. so that's something that's another big -- >> scott burns of morning star, thank you very much. >> thank you, tyler.

burns emphasizes that most mutual funds are sold, not bought. and because of that he says it's vitally important for you the buy for understand exactly what's in a fund you're considering such as an alternatives fund, and then how it fits with others in your portfolio. coming up, a fully loaded. why some home buyers want a lot more than just walls and a title when choosing a new house. we told you yesterday about a small group of amazon.com employees in delaware voting on whether to unionize. they voted no by a margin of 21-6. there's a new trend in selling luxury homes.

homes that come fully furnished and loaded with just about anything you can think of and more. but with price tags to match. diana olis takes us on a tour. >> reporter: this brand-new $36 million beverly hills home has everything you could possibly need. correction, everything you need if you're really f lirkz thy rich. >> toothbrushes, putters for the putting green. all the linens, all the towels. you're getting the convenience factor. walking into neiman marcus and sax and saying i know what i want and i'm done. >> reporter: it is the very latest in high-end home selling. well beyond staging the home but stocking it with high-end products that match the quality of the home itself. the booze is ready to pour in the bar. the wine cellar fully stocked. if you prefer privacy -- >> the house is done to the nines. i mean, my mandate here was

perfection by the owner. and i think we achieved it or as close as we could to it. >> reporter: expensive art everywhere. picture frames waiting for your photos. designer cutlery in the kitchen and books on the coffee table. it's precisely what many of today's toniest buyers want. >> it's the new billionaire. that young billionaire that just doesn't have time to go through all of those things but rather concentrate on business, on what they're doing. >> reporter: but make no mistake. it's really catering to the international buyer whose cash can demand truly limitless luxury. >> international buyer, whether chinese, russian, london, anybody from there that wants immediate satisfaction that doesn't want to go through the trouble of hiring a designer, figuring out what to do, what colors. >> reporter: it is all figured out and figured into the sale price. turn key with an emphasis on extravagance. >> granted we're showing you the highest of the high-end homes. but developers say this trend will trickle down to the lower

ranges. by lower i'm talking the 2 to $10 million range. now, we've already seen this in the vacation home arena. but this new focus on the very high end should have those same high-end retailers vooiing for a space in this market. for "nightly business report," i'm diana olick. >> wow. finally tonight, fortune magazine is out with its annual list of 100 best companies to work for. here are the top three. in third place, the boston consulting group the corporate strategist known for a rigorous recruitment process. second place software developer sas which offers unlimited sick time, subsidized montessori childcare center and health care center open to families and all employees. for the fifth time, google. the biggest draw, every employee ace stockholder and google shares are now worth more than $1100 a piece. that's nice. but i keep thinking about those homes that diana showed us. >> yeah. >> i'm drooling. >> the google guys could afford that. >> they could.

that's "nightly business report" for tonight. i'm susie gaharib. >> i'm tie will yler mathison. we'll see you tomorrow night. >> "nightly business report" has been brought to you in part by -- funded by jim cramer, the street.com is an independent source for stock market analysis. cramer's action alerts plus service is home to his multimillion dollar portfolio. you can learn more at the street.com/nvr. how go you know if you or

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