this is "nightly business report" with tyler mathisen and susie gharib. >> apple tops the targets but does it have a revolutionary product in the pipeline that will wow investors and consumers? >> battle ground stock. herbalife shares have the best day ever after bill ackman failed to deliver what is being called a death blow. >> two courts issued different rulings on a central component of the president's health care law. subsidized premiums. >> all that and more tonight on "nightly business report" for tuesday, july 22nd. good evening, everyone. i'm sue herrera filling in for susie gharib. >> and i'm tyler mathisen. welcome, everyone. stocks rose today and got a boost from positive earnings,

strong economic data and easing worries about the global economy and how it might be affected by international conflict. add it up and it was enough for the s&p 500 to reach a fresh high before pulling back ending two points away from a historic close. after the closing bell, attention turned to the latest quarterly earnings from the tech bellwether and the most valuable public traded company on the planet, apple. apple made $1.28 a share excludeing items and that topped wall street estimates by a nickel but revenue was slightly lower than forecast despite selling 35 million iphones, 13 million ipads and nearly 4.5 million mac computers. they ended up 1%. julia boorstin has more on apple's earnings. what did you see snp. >> well, tyler, for apple, it's

about the number of devices it sold. iphone sales grew 13% to 35.2 million showing apple is keeping ahead of rivals and thriving in brazil, russia, india and china where tim cook says shares rose. it's a different story for the number of tablets. it declined to 13.2 million and is down also from 14.6 million in the year ago quarter. growth is expected to continue to struggle this quarter with the company projecting revenue that's lower than wall street expectations. the june quarter is traditionally apple's quietest ahead of fall product announcements and now the focus is really turning to what new products apple has in store. with eager anticipation for new iphones, as well as wearables. sue, maybe we'll see a watch. >> it could be, julia. we'll come back to you in a moment, so sit tight. stay right there. in the meantime, with apple solid results out, analysts and

investors are focused on apple's future and the game-changing products in the pipeline at a time when ceo tim cook is putting his stamp on the new apple. josh lipton has more. >> reporter: there is a lot of excitement about apple's next generation of products expected to be in stores this fall. from the iphone 6 to the apple i watch, the company is poised for a big fourth quarter. >> we expect the iphone 6, 5.5 inch, we go to china a lot, that will be important in asia, as well as elsewhere in the world but especially asia and china and the i watch is a fall watch. i think those are two very exciti exciting products. >> reporter: as tim cook steps out of the shadow of steve jobs, he's making apple his own. he's been at the helm for nearly three years and insiders are putting his performance in context. the company's income statement is one way.

under his watch, the annual revenue has jumped 60% and profits by 40%. apple stock since august 2011 is up about 75%, besting the s&p 500 but lagging the nasdaq. beyond basic stock performance and financial met tricks, cook is making changes at apple that is having a big impact on the company's leadership and culture. >> i think he's a little more deliberate. he's a little more data driven. steve jobs is more of a visionary. had a great gut and created a phenomenal company and now tim cook has to carry that on and what does tim cook always say? he says our north star is creating great product. he kept that culture and i think that's very, very important. that's the most important thing he's done. >> reporter: cook is comfortable welcoming big personalities. dr. dre and jimmy ivene are

employees. angela, former ceo is leading operations. he's turning old foes into friends with a new partnership with ibm bringing business apps to iphones and ipads. at the end of the day apple will be judged on whether it continues to make and sell fantastic products. when i speak to tim cook, he's clearly excited about the pipeline and we'll soon find out if investors and consumers are equally enthusiastic. josh lipton, "nightly business report", california. well, apple was not the only tech giant out with earnings this evening. revenues rose for microsoft in the fourth quarter, even though profits fell. that was mostly due to cost associated with absorbing nokia's hand set business that it acquired in april. the software company made 58 cent as share, excludeing items, a 2 cent miss on the forecast number. revenue, though, up from a year

earlier topping $23 billion and that one comfortably beat wall street estimates. shares were a little change in after hours trading, as you see on that graphic there. back with us again, julia boorstin in la. what one key take away do you see there with microsoft, julia? >> microsoft lost related to nokia that dragged earnings. the job cuts of up to 18,000 employees that it announced last week, about 14% of the work force will result in pretax charges of up to $1.6 billion over the next four quarters. but ceo says this is all part of the plan as the company pivots from a focus on software to selling online services, apps and devices. nedella says the move to the cloud is paying off. commercial cloud revenue is doubling again this year to a 4.4 billion-dollar annual run

rate. back over to you. >> julia, boorstin, thank you, sue. stocks ended higher getting help from strong earnings and existing home sales rising better than expected 2.5% in june and consumer inflation staying in check last month up just 3/10ths of one percent. the dow was up 61 points, the nasdaq up 31 and the s&p added nearly ten closing just two points away from another all-time high. not all earnings reports delighted investors today. mixed numbers from top commercial brand names are revealing a lot to investors about the changing tastes and resources of u.s. consumers. sarah eisen has more. >> reporter: the big consumer company results say more about the major shift in consumer tastes. according to the ceo of the organic food company. >> healthy eating is spreading across the world today. >> reporter: mcdonalds for instance is hurting as consumers stay away from fast food.

sales falling 1.5% during the quarter in the u.s. and down 3.5% in june alone. analysts say it says much more about mcdonalds losing touch with its consumer than about the overall economy. mcdonalds has been introducing menu items like egg whiete mcmuffins and snack wraps. chipotle leaping 17% as it increased menu prices for the first time in three years. the take away, fresh food is in. chipotle is known for antibiotic free meats, organic produce, in other words, it's on trend. another example of changing consumer attitudes, coke missing the mark on sales because north america and many parts of the world soda is not growing. diet consumption is declining and juices are seeing slow in growth. instead, consumers are reaching for sparkling water, away from

artificial sweeteners like diet soda. it caught a lot of the biggest names in the industry off guard. >> i look at big food companies where they didn't see the trends moving to and not only natural organ organic, taking sugar out, salt, no additives, stabilizers. >> reporter: campbells soups struggling is playing catchup. launching rhundreds of new products like v 8 protein shakes and bars, organic soups, smoo smoothies and more. while the economic environment is tough, the shift in taste and perception what is healthy matters more and separate pg the winners from the losers this earnings"nightly business repor i'm sarah eisen. why the much hiked attack against herbalifeed to and big

earningsed to. . shares of herbalife had the best day ever today. shares shot up 25% despite a billionaire investor promising to deliver a quote death blow today in the long-time battle against the company. trouble is, that didn't happen. kate kelly has the story. bill ackman took another big swing at herbalife today and seems to have missed.

the nutrition companies sells shakes and encourages better diet and fitness through organized clubs sent shares of the stock way up as bill ackman who runs the hedge fund described it as a criminal fraud that tar getzs the poor. in a 3.5 hour presentation, he spent $50 million and hiring a team of resedgers to go undercover at herbalife clubs from queens new york to chile. he said they targeted low income people, many in the latino community and costs $3,000 before they become product sellers. something they achieved through required attendance and forced purchases of products. >> when you run out of countries, you have to go deeper and deeper when and when you run out of middle class people, you

go after people that make $2 a day. >> reporter: the presentation seemed to have the opposite of the intended effect driving the stock to a six-year high. the reason? the investors were expecting a bigger and less nuanknenuanced revolution. the chief financial officer said that ackman misunderstood the nutritional club. >> i'm not worried about the substance of what he has. there is no doubt he's missing the real analysis, research. there is very propaganda based. i'm not sure he completely understands clubs but we'll listen. what he's missing is that fund me mentally we have millions of customers that loved product. >> reporter: the nutritional supplement company remains a closely watched market battle ground. for "nightly business report", i'm kate kelly, in new york. >> a lot of investors may not know it but there is a good

chance that many of them have money invest in stock. here is a list of the big mutual funds with significant investments in the vitamin sumpment company. virginia college american fundamental is a state-run 529 college savings mutual fund and an insurance fund only available through a variable annuity. it was a positive day for shares of verizon, which ended the session higher. the largest u.s. wireless company reported nearly 6% rise in quarterly revenue and earnings per share of 91 cents. but the sector this year has been lagging behind the broader market, morgan brennan explains why and whether these stocks are now a good deal for investors. >> reporter: despite perceived safety and high-paying evidents, the telecom sector is under performing. so far this year, the sector gained 4.5% while the s&p 500 is up seven.

analysts say telecom is trading at the biggest evaluation discount in more than a decade. >> there are a lot of concerns going on with a broader industry with respect to competition, with respect to some of the transactions that are taking place in the marketplace and so that's adding an additional layer in terms of overall concern that's keeping valuations where they are today relative to the market. >> reporter: but key trends could make some telecom companies more attractive to investors, and they were apparent in verizon's earnings. first, the growing popularity of tablets. in verizon's second quarter, the number of people that signed up for a plan quadrupled offsetting declines in smart phone subscriptions, which is a market harder to grow with 80% of american adults already owning a smart phone. second, the return of wire line revenue. although small, verizon posted the first increase in the land line business in seven years. analysts say companies like at&t

which reports tomorrow and frontier communications could start to see similar results as plain old telephone service is replaced by broad band. >> right now is verizon and t-mobile. >> reporter: another area to watch, cell towers. as more carriers promise faster speeds, companies providing i a infrastructure could benefit. american power, a stock that hit an all-time high just earlier today. for "nightly business report", i'm morgan brennan. well, if you have a smart phone you've likely seen a ton of adds on it and now, you should expect to see a whole lot more of them. a report predicts avenues from ads on smart phones will out strip those from newspapers, magazines and radio this year for the first time ever. >> we begin tonight's market focus with earnings from three big components, dupont saw shares fall as lower sales in

the agricultural business weighed on the earnings and revenue. the chemical and agricultural company did increase the quarterly dividend but that did not impress investors. shares down a fraction at 64. 95. travelers beat forecast. the insurance company's results were impacted by catastrophe losses higher than the previous year because of wind and hailstorms and sent shares to 91.ever -- 91.61. the engine business in particular saw a sluggish performance. that despite a rise in earnings and news that the company raised the lower end of its 2014 earnings forecast. still, the shares fell nearly 2% to $110.86. comcast second quarter earnings topped estimates and reduced the rate of people

disconnecting the video services. the media giant said it saw strong momentum. that sent the shares up 1.5% to $54. $54.63. comcast is the parent company of cnbc, that produces this program. all u.s. airlines are beg not to fly to tel aviv for the next 24 hours. germany's luftanza and air france suspended flights. before that was announced, delta divert add plane headed to tel aviv with 290 persons aboard. they went to paris to avoid the conflict zone. so high will the escalating violence in places like tel aviv and ukraine impact the aviation insurance industry? with a loss of malaysia airlines flight 17, many are asking who pays when these acts of

aggression happen? our guest joins us now with answers. robert, welcome, it's a pleasure to have you here. >> glad to be here. >> let's start with are the airlines required to carry insurance against these different types of acts of terrorism or aggression or to simply just safeguard the fleet? >> absolutely all commercial aircraft are required to carry insurance, and typically, they will carry insurance that covers the aircraft itself and required to carry coverage that protects them against liability losses in the event people are injured or killed in accidents. those could be accidents that involve a crash on the ground or the sorts of accidents we've seen recently, whether mh-370 disappearing off the coast of australia or most recently, the shooting down of mh-17 over the ukraine. >> would malaysia airlines already have been paid for the loss of those two aircraft in

the amounts to probably 90 to $100 million? >> a boeing 777 is typically insured for hull coverage for about $100 million. they have certainly been paid in the event of the mh-370 that disappeared in march. the most recent event occurred a few days ago but payment hasnd authorized on the hull of the aircraft. i don't know if the payment has been chance if he wetransferred >> do they pay out per passenger, and does that preclude lawsuits or not? >> there are international agreements that govern how much carriers have to pay in the event an individual is killed in an airline accident to the survivors, to the members of the family, and in this case, it's known as a montreal agreement and that is approximately $175,000 per passenger. so malaysia will begin these

payouts, basically close to immediately to the family members of those lost on this flight. ultimately, the costs for the most part are born by the insurers of the airline, however, and there are a multitude of insurers that would take part. >> who writes this kind of insurance and is it likely in light of these tragedies that premiums for this kind of coverage will go up? >> right, aviation insurance is written in a different way than you and i might insure cars or homes where we take out a policy with an individual insurer. an aircraft, commercial aircraft is written through groups of insurers that ban together to provide coverage in the event we have losses just like these, which can be very expensive, hundreds of millions of dollars, even billions of dollars per event. so they ban together, and they ban together for different types of losses, and that's basically how the entire global marketplace works. what will the impact be?

we have had an accumulation of events recently. back to the flight that trashed and the flight 370 in march and m malaysia 17, you combine that with the loss or damage of a number of aircraft by attacks in the tripoli airport in libya, in pakistan and a few other events here and there and what you have is some pressure on the marketplace and yes, at the end of the day lossesf this magnitude could impact the cost of aviation insurance on a global scale. >> robert, thank you for joining us. we appreciate it. >> my pleasure. coming up, two conflicting legal rulings on a key provision of the new health care law and what that could mean for millions of americans but first, more earnings results from some big corporate names, take a look.

a huge auto recall to tell you about. chrysler recalling nearly 800 thousand older-model jeep commanders and jeep grand cherokees over an ignition switch problems where contact between the driver's knee and ignition key can turn the engine off. the auto taker is aware of 100 complaints, one accident and no injuries related to that problem. >> a pair of conflicting federal appeals court rulings today both over the legality of subsidies given to low and middle class earners living in states on the healthcare.gov website.

josh earnest says nobody will lose their subsidy. >> right now there are millions of americans across the country receiving tax credits as a result of the affordable care act that's making health care more affordable for them and while this ruling is interesting to legal they aoriests, it has impact on tax credits right now. >> bertha coombs joins us with more. let's start with what the courts did today. >> the issue here is whether we're talking about the letter of the law or the spirit of the law. so the appeals court in the dc district, in the dc circuit said the letter of the law and the affordable care act says that these federal subsidies can only be awarded to people who buy their aca plans on state built exchanges. if you look at a map, that's only about 14 states, the district of colombia, dc, the rest of the map are states like

which are on the federal exchange. that's what we're talking about here. you go over next door in virginia and the fourth circuit court of appeal says no, the spirit of the law is what is intendnded. they said it's kin to saying hey, get me a pizza for lunch, you don't care where it comes from, if you get the pizza, that's the important thing. >> how does this get resolve snd does the supreme court become the final arbator of this? >> the obama administration is going to appeal to the full dc circuit because it was a 2-1 decision by the panel. so now they will go before nine judges. if the nine judges agree with the majority on the panel, then it will likely go to the supreme court because you have two

different circuits disagreeing and the supreme court will need to resolve it. it is not going to happen quickly. a lot of analysts say this will take a long time. >> if you expect to get or are entitled to a subsidy now, you will get it no matter what. if the supreme court decided, would it gut the law? >> it would gut the law in that a person could say look, i can't afford this coverage -- >> without a subsidy. >> ultimately congress could change the wording of the law itself but a lot after analysts say not with standing political issues, both sides would find that a dangerous issue because it opens everything up. >> there is not a political appetite for that. >> interesting day. thank you very much. let's look at the shares of some of the biggest health insurers and how they closed today. all more higher, et that and united health care up more than 1%. finally tonight, they say that there are 8 million stories in the naked city and in the new york, it turns out one in every

25 involve as millionaire. a study says about 4% of the big apple's residents are worth at least a million bucks and the firm defines a millionaire with someone with net assets of more than a million dollars, not including their primary residence. that counts us out, buddy. >> that's right. the big apple. >> maybe the big apple, but we're not in that club, exactly. that does it for "nightly business report" for tonight. i'm sue herrera thanks for joining us. >> i'm tyler mathisen. have a good night everybody. we hope to see you back here tomorrow night.

>> the following kqed production was produced in high definition. [ ♪music ] >> lily cai's choreography combines with the contemporary with the traditional for her chinese dance company. >> lily cai: this is a heavy piece. i do not want people to feel so depressed. i still want to have some beauty there, hope and beauty. >> mike henderson left missouri to become a painter. that's what he's been doing and teaching for the past four decades. >> mike henderson: i want them to be right on the edge of imagery and chaos. >> and in her 80s, june schwarcz is still working and still building an otherwise astounding reputation with her enamel art. >> june schwarcz: i do like subtle things. >> this time on spark. [ ♪music ]