this is "nightly business report." with tyler mathisen and sue herera. growing pain. sales growth slows at walmart and it's not going to get better any time soon. so when can investors expect the company's turnaround efforts to pay off? hospital hacks. medical records held hostage. and they're worth a lot to e ople who operate in underground economy. a home all their own. we'll visit a company that's turning its employees into homeowners. the third part of our series "bridges the divide" tonight on "nightly business report" for thursday, februa good evening. i'm sharon epperson in for sue herera. >> i'm tyler mathisen. walmart continues to struggle. the world's largest retailer

reported slowing sales growth and said that won't change much this year. profit at the dow component continued to come under pressure as a result of multi-billion dollar investments in worker wages and e-commerce. investors were hoping to see those investments start to pay off in better results. apparently it hasn't happened yet. and that weighed on the stock which fell 3%, making walmart the worst-performing member of the dow blue chip index today. morgan brennan has more on walmart's gloomy outlook. >> reporter: as walmart continues to bank on a turnaround, it played out in holiday season earnings. investors disappointed after key sales metrics fell short of estimates. u.s. comparable store sales grew modestly, marking the sixth straight quarterly increase. nonetheless were weaker than expected. >> comp sales .6, street was looking for 1%, that was a disappointment. traffic growth slowed down a

little bit. traffic growth was about .7. this is a de-escalation. so the fixation is on comp store sales and that top line number. they also guided this a little bit light. that's what investor fears are all around in terms of the stock weakness. >> walmart also forecast sales for this year would be relatively flat due to store closings and the stronger dollar's continued impact. in october it had said net sales would increase annually 3% to 4% over theers in years. e-commerce growth slowed during the holiday season, rising just 8% versus previous years of double-digit gains. good price deflation weighed on results. more of that offsetting positives associated with low gas prices. no secret this will be a year of growing pains. the company's in the midst of an attempted turnaround that involves heavy investment. including $1.5 billion for labor as it raises starting wages and updates its paid time off

policy. >> they're doing a lot of the right moves now to do the investment spending. and, you know, cleaning up the stores, more labor and hours in the stores, paying people a little bit better, improving the website. doing all the things you need to do to have the better infrastructure. >> the company raised its annual dividend by 2%, mark the 43rd year of consecutive increases. before today's slide shares of walmart had rallied 8% for the year, verses a 6% drop for the s&p 500. investors had flocked to the stock as a defensive play as recession fears began to emerge. as the company invests heavily to stoke profits amid a number of head winds analysts caution the safest way to approach this big box behemoth may be with an eye to 2017. >> what does this mean for walmart stock and should you own it? ken perkins is retail analyst at morning star, thanks for joining us. a lot of folks may already own walmart and of course a lot of folks shop at walmart. can walmart make a comeback here

particularly with the picture and the outlook for net sales being flat for this year? >> by think so. but we think that if you're going to own walmart you have to have a patient attitude and long-term time horizon. investments that the company is making are the right moves but when you've put $3 billion into wages and several billion dollars into e-commerce initiatives those things don't change overnight. looking quarter to quarter for walmart's sales to tick up i think is just inappropriate probably for a business this size. >> what's working for walmart and what's not? >> i think that's the interesting question is because you look at all the negative things that people are looking at with this quarter. the international markets being struggling. the banner struggling, amazon growing. you look at the company, a very defensive company, and total sales excluding foreign currencies still increased about 2% for the year. traffic is increased for five quarrels now. so the brand, as much as people are concerned about it, is not in disarray.

things are slowing but if you're looking at a very volatile market environment, you're getting a pretty defensive company at a fairly reasonable valuation. i think that's where over the next couple of years, if walmart really turns its business around, investors could realize some upside with pretty good downside protection. >> does that mean investors who don't already own walmart should jump in now? you say it's a long-term play, is there another time you should wade in here or get it right now? >> we do think the shares are still undervalued. ity what will really take it to the level of the $75 mark, which is our fair value, would be if the e-commerce and comp source sales trends really pick up. we were admittedly much more bull and ish optimistic on the shares trading in the low 50s after they initially announced wage compresses. overall we still see upside. when you look around the investment universe there are few companies that are trading at this sort of valuation that also have the defensive nature that walmart has. i think that's why we like it.

over near term but more so over the long-term. >> thanks so much. ken perkins with morning star. even if you don't own individual shares of walmart you may own it in your mutual funds. according to morning star the top fund holders of the stock are as you might expect some of the big index funds. the vanguard total stock market fund, the vanguard 500 index fund, which represents the s&p 500, and one that's not an indexer, dodge and cox stock fund. tyler, declines in walmart were offset by big gains in shares of ibm. the stock rising 5% on an analyst upgrade. and a multi-billion dollar acquisition are morgan stanley raised its rating on the stock to overweight from equal weight saying the company's transition to a cloud-based business was underappreciated. and as part of that transition, ibm is acquiring truvan health analytics for over $2.5 billion, its fourth major health data-related deal this past year. the gains in ibm were not

enough to lift the major indexes today. they flip-flopped around the unchanged mark all day. by close that three-day win streak was a thing of the past. energy, financials, led to declines today. the dow jones industrial average off 40. 16,413 was the close there. nasdaq lost 46 points. 4487 was the finish. that's more than 1%. s&p fell 9 points. as for oil, the commodity gave up most of its gains on a rise in invep tors in the u.s. and after an official from saudi arabia was reported as saying his country was not prepared to cut production. domestic crude settled higher by 11 cents. now to a big story out of california. where medical records were held hostage. a los angeles hospital was hacked. crippling the center systems and blocking access to digital records. this happened as physicians continued to treat patients. bertha coombs has more on the attack and how this was resolved.

>> reporter: hollywood presbyterian hospital says it has no choid but to pay ransom demands after its computer system was taken hostage, paralyzed by hackers since february 5th. while officials say there's no evidence patient information was compromised the hospital had to resort to using paper files and sending people elsewhere. >> one of the things that makes health care environments so vulnerable to ransomware attacks you may have a radiology department talking to the laboratory, talking back to the doctors down in e.r., and all these different groups have to interact. to do that you often have to create risk scenarios in the network that allow hackers, once they've gotten through the initial firewall of the hospital or health care organization that they can move around. >> hollywood presbyterian has been working with fbi but said it paid off the unknown hacker 40 big ones, estimated value $17,000, because it was the quickest way to get its system back. >> the encryption is

unbreakable. so in order to prevent this from getting onto machines you have of to good security in place. that's layered security. good security on all your end points. and training your end users, they may not -- they may be fool the now and then, but if you can stop them from getting fooled every time you're going to have a lot less trouble. >> in 2015 there were over 260 health care breaches, just over half involving hacking or theft of files. there's no hard data on rans ransomware attacks. cyber security experts say most attackers target smaller organizations and individuals whose security is more vulnerable with demands for payments of less than $1,000. with the hospital headline-grabbing ransom payment the stakes may be rising. >> there's the hardline hoarse say, you never negotiate with criminals. there's certainly a lot of truth to that, but unfortunately the people who are attacked by ransomware are often left without any leverage. they don't have any choice but

to pay this ransom to get their data back. >> the only defense, they say, is prevention with strong security. bertha coombs, nightly business report. >> how much are your medical records worth on the black market? among other questions, joining us to discuss this is mahmoud sirjan, ceo of radar, a privacy and security incident response management company. mahmoud, welcome, good to have you with us. i hardly know where to begin here. but in the case of the presbyterian hospital out in los angeles, patient records were not compromised? what were they after? were they simply after a ransom payment? >> first of all, thank you for having me. >> glad to have you. >> we understand that every day, health care organizations are under attack. incidents are happening all the time. and the motive of these attackers can vary. and this case obviously was hopefully purely financial. but their motives can go

further. and they could get access to a treasure trove of information in a health care institution, where you have personal information, you have financial information, you have health care and insurance information, all of them really combine to provide tremendous value in the black market. so the motivations are very big to attack these health care institutions where they're very vulnerable. >> we've seen a rise in the incidence of medical identity theft. there are protections consumers need to take. what about the health care organizations? what protections and processes are in plams to protect patients' information? >> health care organizations in general have been a little bit further behind some of the other industries like financial and retail because they have been attacked for much longer and they have erected better security measures. fraud and criminals always go after where defense is lower. but many organizations in the health care industry have begun to really shore up their defenses.

the areas of compromise are really both within the systems and all the electronic data that's moved around. but also within just the employees and vendors and what is called business associates within these organizations. so there are many areas of vulnerability. these organizations have to have a good risk assessment, the ability to respond to incidents as they occur. so it's really -- they have to have a good program in place. >> i'm curious. i mean, what are the identity thieves really after here? it's hard for me to believe that they care very much about my cholesterol or my blood pressure or what procedure's been done to me per se. is it more that these medical places are such rich targets because everything is there under one roof, from your social security number to your insurance carrier to your home address, what? >> absolutely. you hit it on the nail. it's one place. it's almost like coming to a mall where you can collect any type of information that could have or offer value in the wrong

hands. so you mentioned all of those factors that make health care institutions very vulnerable to these attacks. what you have to keep in mind is also the patients. i mean, all of us should be concerned about this. because at some point in our lives we become patients and customers of these institutions. >> indeed we do. >> and one of the risks that often gets overlooked is the risk to, if that information is used in a way that pollutes our medical records, then we actually can have life and death situations where the wrong medication may be administered or the wrong patient may be given the wrong type of information and data. this is a serious issue we all should be very concerned about. >> thank you very much for your insights, mahmoud sirjan with radar. still ahead, a new report shows something we don't hear that often and that's that the skies were a little friendlier last year than usual.

you know that set top box on top of your tv? take a look at it, it may change soon. the government has apparently taken the first step to opening up the set top box to more competition. right now you generally rent them from your cable provider which according to a report costs more consumers more than $200 annually. today the federal communications commission voted 3-2 to begin the process of crafting rules that would let consumers own their boxes. something pay tv companies oppose. >> law mandates it. technology allows it. the industry at one time proposed something similar to it.

and consumers deserve a break and a choice. >> comcast and at&t called the new rules unneeded because of advances in internet and app-based technology. comcast is the parent company of cnbc which produces this program. if you fly a lot this will come as welcome news. a new report from the department of transportation shows air travel in the u.s. actually improved last year. in fact, airlines had their highest percentage of on-time arrivals since 2012. but as phil lebeau reports it was a good year for all but one carrier in particular. >> reporter: with a record number of people flying in the u.s. last year the vast majority of them arrived at their destination on time. overall, almost 4 of every 5 flights in 2015 were on schedule. the highest on-time arrival rate since 2012. it's a testament to airlines and airports doing a better job

handling storms and last-minute disruptions to schedules. the report also shows airlines have improved how they deal with customers. for example, there was a lower percentage of luggage lost or mishandled. perhaps because people are checking fewer bags and carrying more on board. and despite airlines flying more planes with every seat sold, there was a drop in the number of passengers bumped from oversold flights. last year hawaiian airlines had the best on-time arrival rate, followed by alaska and delta. spirit had the worst on-time arrival rate, behind frontier and envoy. for spirit, a low-cost carrier that charges passengers a variety of fees, including for checked bags, last year was a rough one. spirit's complaint rate was substantially higher than the rest of the industry. spirit's performance shows the growing pains that come from aggressively adding more flights and more destinations, which is

what the airline did last year. that gross is expected to be more measured in the future. phil lebeau, "nightly business report," chicago. coca-cola raises its quarterly dividend and that is where we begin "market focus." the sodamaker announced it would increase its dividend 6% to 35 cents which would be paid out to shareholders april 1. april fools day. it's no joke. this marks the 54th consecutive year the company has hiked its dividends. shares of coke up fractionally to 43.61. caterpillar said its three-month machine sales fell sharply. the company's energy and transport retail sales down 39% while overall world retail sales fell 15% for the three months ending in january. an analyst from axiom capital predicts the company will cut earnings estimates several times this year. cat shares lost more than 1.5% to 66.12.

cabela's posted better than expected earnings in its latest quarter. thanks in part to a strong focus on core merchandise categories and an increase in online retail inventory visibility. revenue also beat, despite what the company calls a negative weather impact on fall and winter apparel. cabela's also said there's no decision on whether to sell all or part of the company. shares fell about 4% to 42.30. chip equipmentmaker applied materials saw a drop in first-quarter profit but they were still strong enough to beat wall street targets. revenues fell 4% but that was good enough as well. the company issued a strong outlook for the second quarter. shares rose in extended hours after the close to tick higher for the day to close at 17.17. fashion retailer nordstrom missed forecasts on both its top and bottom line due to heavy discounts because of the unseasonably warm winter. the luxury department store also issued a down beat outlook for 2016. shares initially fell sharply on

the news in after-hours trading but closed the regular session up nearly 1%. to 52.72. the zika virus, which the world health organization calls a public health emergency, could cost the latin american region $3.5 billion this year. according to the world bank, countries that depend on tourism could be especially hard hit. the organization said it is making $150 million available immediately to help fight the virus. and there is a u.s. company that is also playing a part in the fight. sc johnson, best known for household products like pledge and scrubbing bubbles, is becoming a critical player in the global effort to combat the virus. mary thompson has more from the company's waxville plant in mt. pleasant, wisconsin. >> reporter: thousands of miles from the epicenter of the zika virus, near the icy shores of lake michigan, wisconsin-based sc johnson is producing a key tool to battle the

mosquito-borne illness. >> the most important thing is to really prevent the bite. >> reporter: the prevention provided by sc johnson's off! and other repellents. to meet the spike in demand the family-opened firm began boosting production two months ago at some south american plants. >> what i can tell you is that in brazil and argentina, we're running about 900% of normal. so a huge increase there. >> reporter: declared a public health emergency by the w.h.o., the zika virus is suspected of causing a sharp increase in brazilian babies born with microcephaly, abnormally small leds. the fifth generation of johnsons to run the company conducts daily meetings to track the progress of the virus and demand for on for off! . which is picking up in home. >> we're seeing an increase for demand in the united states, 40% of what would be normal at this

time of year. >> reporter: while there are no reports of zika being contracted through mosquito bites here in the u.s., consumers will need to protect themselves as the weather warms up. >> i think people should be prepared. don't wait until it's summertime and the mosquitos are biting in full force. >> reporter: that's why this plant in wisconsin is now producing pallets 24/7 to stay ahead of demand. but this also requires a consistent flow of key ingredients for its repellents like deet. >> we have five or six suppliers around the world. and each and every one of them is beginning to ramp up their capacity now to help. >> reporter: a global effort to fight what health officials fear could become a worldwide problem. from mt. pleasant, wisconsin, i'm mary thompson for "nightly business report." coming up, we'll visit a unique company where your paycheck can include home ownership.

as our "bridging the divide" series continues. the home ownership rate in america sits at the lowest level in half a century, around 64%. for african-americans even lower, less than 42%. this as rents rise in small and large cities alike. tonight we continue our series on efforts to bridge the economic divide with a look at one company in cleveland that's taking action. diana olick shows us how it's building its workforce and community through an innovative program that turns employees into homeowners. >> reporter: a dream and a prayer that went unanswered for grandparents tim and charla coleman for half a century.

until now. >> i was out of work for about a year. and i was looking for a job. >> reporter: tim found one at a unique cleveland cooperative. founded in 2009, evergreen is a worker-owned and operated business that runs a commercial laundry and a greenhouse. the business also helps the employee owners become homeowners. >> that came along a few years after we started. part of our challenge then and today, to some extent, is as we are hiring from these cleveland neighborhoods, oftentimes one of the barriers to employment is just stable housing. >> reporter: so with some help from the county on taxes and the local housing authority, which had homes available through an existing program, evergreen offered employees a five-year plan to home ownership. >> after some financial training and some qualifications, our eligible employees are able to

purchase a home that they then pay for via payroll deduction. >> reporter: from charlotte's paycheck at evergreen's greenhouse and tim's at the laundry. >> it's become a neighborhood. that's in your neighborhood where you came from. >> reporter: together they're paying for and living in this house right in the neighborhood where they work. >> one thing i like about it, it come out of your check before you even see it. so that builds your credit up too. >> reporter: affordable housing has reached a crisis level. more than 11 million americans spend more than half their incomes on rents. >> it is kind of astounding given the importance of housing. we go back to the housing act of 1948. a decent home and a suitable living environment for all americans was a national goal. we have not achieved that. yet we're not talking about it. >> reporter: cleveland is ranked the most affordable urban housing market in america. homes here are very cheap and there are still thousands of

abandoned properties left over from the foreclosure crisis. that's why this program works so well here. the question is, would it work as well in a pricier city? >> if you were to attempt to do this somewhere else, you would either, a, need more funding up front to catalyze it like we did, or more time. more time. maybe you pay for it in eight years instead of five. >> reporter: mhe'd like to see the program work in other cities and he's had plenty of interest. but for now -- >> my son, my daughter -- >> reporter: at least it's working for the koln mays who have always loved their community and now finally have a real stake in it. a home all their own. for "nightly business report," i'm diana olick in cleveland. >> evergreen says detroit, new orleans, and baltimore have all expressed interest in bringing the program to their cities. and tomorrow the final part of of our series will look at the efforts to close the wealth gap between blacks and whites with a look at how some financial adviser groups are working to bring more blacks into the

profession and share more insights about saving and investing with arm arm communities. >> interesting how using payroll deduction really helps. >> it really helps. >> you really don't feel like you're writing that check every month. >> and you've started the discipline. that's really what it takes. that's "nightly business report" for tonight. i'm sharon epperson. thanks so much for watching. >> thanks from me as well, i'm tyler mathisen. have a great evening, everybody. we'll see you tomorrow.

man: it's like holy mother of comfort food.ion. kastner: throw it down. it's noodle crack. patel: you have to be ready for the heart attack on a platter. crowell: okay, i'm the bacon guy. man: oh, i just did a jig every time i dipped into it. man #2: it just completely blew my mind. woman: it felt like i had a mouthful of raw vegetables and dry dough. sbrocco: oh, please. i want the dessert first! [ laughs ] i told him he had to wait.