>> announcer: this is "nightly business report" with sue herera and bill griffeth. bruised apple. the company reports its first holiday quarter profit and revenue decline in a decade, putting its flagship iphone in focus. chapter 11. pg&e officially files for bankruptcy, triggering one of the ilargest, somewhat unusual corporate reorganizations in year phone scams. how robo callers tried to cash erin when the gent was partially shut down, and why it may continue. those stories and much more tonight on "niretly business rt" for tuesday, january 29th. in good ev everyone, and welcome. it's the quarter that apple warned about. the company reported its firstd ho quarter drop in earnings

and revenue in more than a decade. weak iphone sales and slowing demand in china reduced revenue. its out look isn't great either. apple says its revenue forenhe cu quarter will fall short of wall street expectations. here are the numbers. applearned $4.18 a share, one cent better than estimates. revenue fell from a year ago to $84 billion. but investors are taking the results in stride, sending the stock i initially highern after-hours jotrading. lipton has more on apple's quarter. >> 0.$19 billion was one big number in apple's latest earnings report. first the revenue that it generated from its services division, the app store, apple music, appleay wasp 19%. apple indicated it would be in that range when the company preannounced results earlier this month. there was a metric apple gave.'r they giving services gross margins. this is a new performance metric

they're offering investors. that came in at .8% so much higher than the ovanall co investors focusedery hard on that services division because it is faster growing and now they have greater insight into how profitable it is as well. for "nightly business report," i'm josh lipton, cupertino, california. let's turn now to angelo no and get more on apple's earnings. a senior tech analyst at cfra research. good to see you,inhanks for jous tonight. >> thanks for having me. >> tim cook wants everybody to believe that services can make up for a shortfall in the hardware division. are you convinced that that's the case? >> well, i think it's actually going to be clectively from services and non-iphone businesses. when you actually look at the power of the non-iphone business this quarter, it grew about 19%. you know, w see thats an enormous positive.

if you look at ipad revenue, this is the highest number we've seen in three years. so yes, we think the growt story here for apple will continue to be services. do buy into that thesis. at the end of the day we think it's a lotore than jus services. it's wearables as well as other non-iphone type revenue. >> are wall street's expectations still too high for apple at this point? meanim cook has been very upfront about the situation between the u.s. and china and how it has affected his business. that has not yet been resolved. so what are the street's expectations in your view, and are they realistic? >> well, it's interesting because looking at the results here, it doe look like the poor results were really contained in china. china looks like it dropped about 27% on a year-over-year basis. the positive ict welly saw a growth in areas like the americas. that kind of tells you that consumers are actually willing to pay for these higher priced

devices outside of china. we think that's a very positive. th when we look at the actual guidance that was given herear r the quarter, we do think the numbers probably have to come down slightly, but that being said, we think itfi tely alleviates a worst case type of scenario. >> before you s, theck is down sharply since last summer on these lowered expectations for the lo-term vestor. do you like apple? >> we continue to recommend the stock. we do have a buy recommendation. my target price is$195. >> very good. angelo zino with cfra search. thanks for joining us tonight. >> all right, thanks for having me. on wall street, stocks struggled to find direction, even with the release of a mber of big earnings reports and ahead of u.s./china trade talks and a fed decision. so there's a lot in the mix. the dow jones industrial averag added 51 points to 24,579. the nasdaq fell 57 and the s&p 500 was down pfizer was the best

performing dow component today after the cpany reported better-tha ha earnings and cited strength in severalci mes. pfizer's forecast was pretty much in line with expectations and that stock rose more than3% in trade today. 3m and verizon gave downbeat forecasts. m pointed to weaker demand in china and verizon says it sees no increase in its profits in 2019. shares of 3m were hdaher but verizon fell. and now that we're about a quarter of the way through earnings season, believe it or not, some new trends are starting to take shape.sa bob has details for us. >> let's be honest, the earnings guidance has been lousy the last 24 hours, yet the stock market iappears to be taking all in stride. so what's going on? we had pfizer, we had 3m, lockheed martin, harley cut theirthey all profit forecast. some cited tariffs, some cited risingaw material cost some

cited slower growing growth. some others provided 2019 guidance that was in line or a little better, so not all bad, but it looks le the market sniffed out these lower estimates when we had all that turmoilceack in deer. a lot of this has been priced in already. all right, that's a little bit of good news. we've got 130 companies reporting so far. that's a quarter of the way through earnings season. here's the major trends so far. first, fewer companies are sting earnings and revenues beats than usual for the fourth quarter. that's not good. guidance is trending lower for the full year 2019, so full-year growth estimates for the s&p 500 have come down since early october and are now in the low single digits, so down to aut 5% from about 10% growth at the start of october. this is for2019. there's a debate over how much earnings growth will slow down. someie b we'll be entering an earnings recession this year. that would be two straight quarters of e negativenings

growth. others sayarnings will hold up in the low single digits. the one thing the market can't wish away is a slowing global economy. a number of firms have alluded to this and other big names, including whirlpool, ak steel and 3m have also referenced higher costs eating into margins. if you want to change the market sentiment, what we need now is a pickup in global activity. for "nightly business report," i'm bob pisani a stock exchange. and now to the federal reserve, which as we mentioned started its two-day policy akmeeting. that it a good time to survey economists, money managers and strategists about the economy and the market. steve liesman rounds up the >> the chance of r the next 12 months forecast by respondents to the cnbc fed survey spiked tots highest level in three years amid growing worries about global economic weakness, fed rate hikes, the market sell-off, trade tensions and t government shutdown effects. the recession probability rose to 26%, the third straight

increase. it's above the22% average for the past eight years, and it was last this hanh inuary 2016. that followed another bout of market volatility. then uncertainty t prompted the fed to hold off on rate hikes and that's the expectation now. the 46 respondents to the january survey believe the fed will now hike just once in 2019, down fm the forecast of two in the december survey. and just 48% of resndents believe the fed will hike in 2020. 37% believe the fed actually cut rates. 100% actually expect no rateke hi from the january meeting. respondents forecast modest stock gains of just 4% in each of the next two years, bringing the s&p 500 up to 2846 by 2020. the survey showed two schools of thought on the outlook. one sees ano weaker u.s. e as unavoidable, in part due to global economic weakness and waning government stimulus. the other believes washington has caused many of the problems and with trade andon immigra deals and a bit of stability

could enclosuclear the way for r economic growth and healthy market gains. for "nightly business report," i'mte sve liesman. time to take a look at some of today's upgrades and downgrades. egin with another dow component, american express was upgraded to ovweight from neutral at atlantic equities. the analyst cited the stock'9% valuationield in its the stock price is now $128 and that stock rose a fraction today to $100.96. blackrock was upgrade to buy. the analyst cited blackrock's industry leading organic growth. price target $468 and shares rose slightly to $407.62. nvidia was downgraded to underperform from buy at needham. the analyst cites the potential for further decline i demand in some of nvidia's key businesses, like gaming and da centers. we told you about the revenue warning the company issued yesterday. the price target of $225 was

removed with no new price target added. the stock fellbout 4.5% to $131.60. square was downgraded from underperform to market perform at raymond james.na thest cites a lack of growth opportunities as well as square's move into baniking. the price target is $56. the stock dropped 6% to $58.56. as expected, pg&e has filed for bankruptcy. californiaargest utility is seeking chapter 11 protection as liabilities continue to mount from the state's most recent deadly wildfires. now, when a company files for bankrucy, its shares usually lose all value and the stock price falls to near zero. as you c see, that's not what happened today. in fact, pg&e shares rose by 16%. as aditi roy reports, that in part is why this corporate reorganization is not typical. >> pg&e's bankruptcy f aing comess the utility faces tens of billions of dollars in

potential liabilities. for northern californiare wilds in 2017 and 2018. reaction to the filing was swift. california assemblyman chris holden, who chairs the utilities and energy commtee, said it was always my hope to see pg&e not find itself in a position ere they would file for bankruptcy. experts say pg&e will likely have 120 days to come up with reorganization plan. creditors are expected to identify themselves. other skeholders include regulators, wildfire victims and rate payers. all of these groups will likely contest the utility's plan and the whole process could take months, if notar while pg&e filed for bankruptcy in 2001, analysts say thisli is different because of the uncertainty of the wildfiret liabs. >> here i think what makes the situation radically diffent in my mind is that the company will likely have to raise priceso in

order recover damages, primarily legal damages arising out of wildfire claims. >> and that has already led to outrzee. of activists spoke out about pg&e at a regulatory meeting leading up to the bankruptcy fiveng. >> they lready been through this before, and they just reorganized, come out and continue i tolict pain and debt on the people of california. >> pg&e has put profits over safety over and over again with no consequences. >> as all the parties, which include major institutional shareholders like blacock, vanguard and t rowe price, some analysts say it's too early to tell how thell make out. >> i think right now i have more questions than answers.k i tht's just way too early to try and make a guess as to what the equity value that's going to be left over in the bankruptcy. >> after the lastg&e

bankruptcy, most parties were stock pricend the went up. while analysts say those factors cod have contributed to th stock price going up today, it's unclear how shareholders will make out this time arod. expertsay it all depends on the appetite of lawmakers to get involved. so far stateffials are staying tight-lipped. for "nightly business report," i'm aditi roy, san francisco. still ahead, mortgage market overhaul. are changes in store for fannie toe and freddie mac? they have turned ash cows for the go

apple has disabled a group chat facetime fction that users said allowed eavesdropping. users calling another iphone, ipad or mac computer could hear audio even if the receiver did not accept the call. in a statement today, apple says it is aware of the iss and has identified a fix that will be released later this. we high-level trade talks between the u.s. and china are set to resume tomorrow. the hope is that the two countries can diffuse the escalating trade war, but the meetings begin just days after the justice department filed those charges c againstnese telecom company huawei, a development w told you about yesterday. the u.s. alleges that huawei stole conondential informati and violated u.s. sanctns that prohibited sales to iran. as eunice eun reports, beijing

is not happy. >> chinese officials are slamming the u.s. indictment, with the minister recalling t move unfair and immoral. the foreign ministry accusing the u.s. of unreasonable suppression of chinese companies. the ministry also urged the u.s. to drop the arres warrant for the huawei cfo. the u.s.t justice departm unveiled two indictments, the first a 13-count indictment filed in new york alleging that huawei misled banke u and. authorities to continue to do business in iran, dpite u.s. sanctions. the u.s. believes the cfo orchestrated the scheme. th second 10-count indictment charges two huawei affiliate with attempting to steal robotic technology from u.s. carrier t-mobile and says huawei offered bonuses to employees whoin ob confidential information from rival companies. huawei issued a statement saying it's disappointed to leath of charges. it denies that it or its subs aiary oriliate have

committed any of the asserted violations of u.s. law and is not aware of a wrongdoing of miss mong. as it turns out, the indictments came the same day that the vice emier arrived in washington for trade talks. u.s. commerce secretary wilbur ro say the two events are unrelated, but the chinese have been viewing the targeng o huawei as political, so many people here believe this should cast a shadow over the negotiations. for "nightly business report," i'munice eun in beijing. gamestop isn't playing games. that's where we begin tonight's market focus. the retailer says it is no longer looking to sell the company. the board determined that there's not enough available financing on terms that a buyer would want, so the company is struggling to sell physical games to customers who can now purchase those and download them at home. the stock dropped 27% to $11.28. poltie group reported its

worst quarterly fall since 2013. ey said the outlook for the spring selling season is so uncertain the company is forced to spend heavily on buyer incentives. they reported better-than-expected earnings and revenue in the most recent quarter. tock climbed gradually throughout the day, enclosi clo fraction. brinker international who chones chili's a maggianos reported an increas in les. margins are coming under pressure because of higher wage renting and maintenance expenses. shares fell more than 10% to $42.36. xerox reported better-than-expected earnings but revenue came in a little short. its strategic initiatives will help boost earnings above expectations this year. the company has beendimplifying an streamlining its business in a move to try and improve returns. the stock rose 11% today to

ebay reported better-than-expected earnings and revenue with the company issuing its first-ever dividend. it also increased its share buyback program. the ceo said he is confidentn the company's future growth prospects. all of that sent the stock adgher than lower in the after-hours g. shares fell in the regular session to mortgage giants fannie mae and freddie mac could be getting an overhaul the trump administration could announce plans as early as next monthero end gent control of the two companies. but says that it will work with congress developing a policy for housing finance reform. mark sandie joins us to discuss what that could mean for the market and the housing market in particular. he's the chief econoith moody's analytics. always good to have you here, mark, welcome back. >> thanks, sue. >> what do you anticipate the administration's plan will look like? and what are fan efannie and going to look like at the end of

this? >> i think they're going to work with congre b. congress hn trying to solve this problem since the financial crisis ten years ago. it's t last major problem since the crisis that has not been resolved, so it's a very thorny, particularly difficult issue. congress needs to be involved and i think the administration at the end of the day will get them involved and try to figure out how to privatize fannie and freddie in a way to preserve all the things they do, provide mortgage credit, low interest rates and t underserved communities but also do it in a way that gets taxpayers out of shouldering the risks involved in that. okay, that's what i'ms about. ey have been in conservatorship for a decade now. everybody is trying to come up with a solution even you and a few other economists a few years to came up with a solution combine fannie and freddie into a single entive. ever understood what the hesitation is to get this thing off the iground. simply the worry of how much the government and taxpayers will be on the hoo

should they need to be bailed out again if there's another financial isis? >> yeah, great question. here's the thing, bill, there's a lot of stakeholders involved here. these are among the largest financial institutions on the. plan they're key to the housing marketed and therefore by extension to the u.s. economy and global economy, so we have to get this right. you can't screw it up. you've got the mortgage industry, you've got the housing industry, progressive groups that are rightfully worried about mortgage credit to underserved groups. you've got conservative groups e concerned about the government's backstop here. should taxpayers be taking the risk here. so there's a lot of people involved, a lot of moving parts. if you mess this up, you mess up the u.s. economy, the global >>onomy, so you have to get it right. was going to ask you about that. specifically the housing econtay. as we to see these plans unveiled and debated, could it have a chilling effect on the housing market? >> well, i mean we havebe t

careful. i don't think the administration or congress would go down a path that would be disruptive to the mortgage market, thas why it's taking so long, but it is important. il half, nearly half of all single f residential mortgages made todayad areby fan fannie mae and freddie mac, so it's a big de. i'm confident that the administration and congress will work together and make sure that they get this right, because if they don't, it would be big problem. >> mark, as always, thank you. mark is with moody's analytics. >> thank you. and coming up, the new scheme used by robo callers during the shutdown, and maybe even beyond. as you are no doubt well aware by now, fmer starbuc

ceo howard schultz is seriously thinking about mounting an in tpendent bid f presidency. since his announcement, though, the other night, some groups havehreatened to boycott the coffee chain. our andrew ross sorkin zked mr. schu if he is concerned about uce impact his candidacy would have on the sta brand. >> are you worried by the way about potential boycotts for starbucks? >> no. i think starbucks is serving about 100 million people a week world. the about 70 million in the u.s. you 'vknow, got great faith in the american people. i don't think they'll boycott starbucks. >> so far investors don't seem concerned either.to the has been relatively flat over the past two trading sessions. consumer confiannce falls to 18-month low. according to the conference board, americans are less optimistic about their future, in part because of the partial government shdown and the volatile financial markets. however, overall reading is stillri hislly high,

indicating consumers think the economy is doing fine.he is evidence now that robo callers tried to capitalizt on the rec government shutdown. approximately 5 billion robo calls are made every mont while that number has been consistent, the context is reanging. our a day takes a look at these highly trained scammers who can adjust their schemes on a dime. >> just daysnto the shutdown and calls were already rolling in. according to alex, the ceo of th robo call stopping app. the most used call, a warning about irs debt. >> hello, i have an important update regarding your irs tax debt. the recent government shutdown has affected your standing with the irs. although so irs are down, billing and collections remain active so give me a call back at this number. >> it's already scary the irs is calling you. it's me scary when the government shutdown is saying

maybe your payment didn't get through to the irs. >> and he says it worked. you mail estimates 1 million plus.ot that ca about 3% to 5% actually called the number back. >> so fraction of those people are going to get scammed, and o it's going for real money. >> here's another call used during the asutdown. >> ictually calling because in lieu of the government shutdown, back federal taxes are now being dismissed as just an unstababope rate. we can take advantageatf the sin and help you clear up your federal back taxes and state taxest you may be facing. >> and if consumers turn to the government websites to file a complaint oroin the do not call registry, here's what they got. the agencies who oversee the issue, both unavailable. >> the real impact for all ofis s the long-term enforcement. had the goverwnent shut stayed shut down for a long time, the fcc isn't chasing the bad ys. >> the fcc directed us to its

now functioning website, which says the agency working to stop illegal robo calls and has launched several initiatives. the ftc tells us bause of the government shutdown, the ftc was not funded andould noteceive complaints from consumers. but we are open and very much wanteople toeport such calls to the ftc at donotcall.gov. but it's not just the shutdown. robo callers are standing by ready to jump. >> these guys are really responding to current events where they can. >> so what's next, assuming the government stays open. >> i fulo expect start seeing, hey, the government is back open, we can reduce your ta debt as a scam. >> for "nightly business report," i'm andreaday. and in fact he predicts we will see even more robo calls now that the government has opened, simply because it has worked before. calls way, he says most come from india, but in order to sound more convincing or

professional, the scammers book voice-over talent onlineth from united states. and before we go, let's take a final look at the day on wall the dow added 51 points, the nasdaq fell 57 and the s&p 500 was down 3. and that is "nightly business report" for tonight. i'm sue herera, thanks for >> i bill griffeth. have a great evening

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