this is "nightly business report." with tyler mathisen and sue herera. big blue bruised. netflix retreats. as old tech and new tech issue earnings report cards for investors. talks collapse. no oil teal in doha but crude prices didn't crumble as much as expected and there's a surprising reason why. fighting zika. the drugmakers developing vaccines to help combat the newest public health concerns. the first of a three-part series on "nightly business report" for monday, april 18th. >> good evening and welcome. the dow topped 18,000 for the first time since july. but we begin tonight with a look at old tech and new tech in today's economy.

ibm and netflix, both reported earnings today after the bell and the two companies have one thing in common -- investors are disappointed. first netflix. shares falling and falling hard initially in after-hours trading. the video streaming service says it won't add as many subscribers this quarter as expected. the reason, price increases. and on the other hand, the numbers for the most recent quarter weren't bad. not bad at all. in fact, the company earned 6 cents a share, doubling expectations of 3 cents a share. revenue a little shy of estimates but up 24% from the prior year. it was, however, the subscriber forecast that got shareholders' attention and pressured the stock, as you see there. julia boorstin has more now on netflix's results. >> the key factor driving netflix lower, its second quarter projection which fell far short of expectations. the company says it expects to.5 million new subscribers compared

to wall street expectations it would add over 4 million new. with lower than expected subscriber numbers comes a lower earnings projection for q2. some of those expected subscriber additions may have come early. netflix added more subscribers in q1 than anticipated. in q2 netflix doesn't have any new launches in new countries and those launches drive new subscriber additions. >> thank you, julia. now to dow component ibm which recorded its 16th quarterly drop in revenue despite beating expectations. big blue was also hurt by muted i.t. spending amoyd global economic uncertainty. here are the numbers. ibm earned $2.35 a share. that's much better than the $2.09 expected. revenue also topped expectations, coming in at $18.68 billion. a more than 4% decline from a year ago. initial pop gave way to drop in

after hours trading but ibm's cfo says there's a lot that's working. >> in the first quarter we had good progress in transforming our business. you could see that in our data, for instance in growing the strategic imperatives, double digit again. so we see that the investments we're making are certainly paying off, they're driving growth. >> jocelyn ton has more on ibm's quarter. >> reporter: $4 billion. that was one big number in ipm's report. that is revenue for ibm's so-called cognitive solutions segment, excluding software related to integrated cloud platforms and hardware. revenue there was down about 2%. and that is credit contractual since the segment represents about 20% of overall revenue. and david grossman does point out that adjusted for currency, that segment's revenues were marginally higher and that, grossman says, could be a sign that this segment is

stabilizing. still, for investors, stabilizing does not look good enough. for now, especially since that stock surging 30% since the market bottom in february. for "nightly business report," i'm josh lipton in san francisco. on wall street the dow jones indust closed above 18,000 for the first time since last summer as we mentioned at the top of the broadcast. why? mostly because of a gain in consumer discretionary and health care stocks. stocks shrugged off the negative news out of the energy sector today. more on that in just a moment. by the closing bell the blue chip dow index gained 106 points to finish at 18,004. nasdaq rose 21. the s&p 500 added 13. as for oil, prices settled lower by more than 1%. but they will weigh off the lows of the day. action in today's oil market was anything but calm. there was a lot of hope and a lot of disappointment after marathon talks between some of

the world's biggest oil producers ended this weekend without a deal for a freeze on output. we've reported last week that such an agreement would be difficult to achieve, and as brian sullivan reports from doha, it was likely longstanding tensions that got in the way. >> reporter: saudi arabia's oil minister was all smiles as he entered sunday's big meeting in doha, qatar. then the bottom dropped out. 11 of 13 opec members, along with russia and other major oil-producing nations, gathered along the persian gulf to try and agree on a deal that would limit their total oil output with an eye towards stabilizing prices. as the meeting dragged on with no deal, an environment one participant told us was "very tense," hopes faded. after about 12 hours of negotiation the qatari oil minister came out to tell the horde of reporters no deal was struck. >> the meeting concluded that we

all need time for fair eer consultations and from thousand till june meeting in opec. >> reporter: it appears ultimately, longstanding tensions between saudi arabia and iran may have skulgted any chance for that deal. iran chose not to attend the summit, hinting that they viewed it as unfair other opec members are trying to limit their own output at high levels while essentially forcing iran to cap production well below what that nation is capable of producing. despite iran's absence, those in doha were still optimistic a deal could be struck. however, nigeria's oil minister told us iran's absence was a key reason any deal failed. >> in the absence of iran, unless iran could obligate to go with the general pack, it was not effective. so we went back and forth, trying to work alignment.

but unless you had everybody in the ballpark, it doesn't matter what we agree. >> reporter: he added there is no other special meeting planned between now and the next official opec meeting on june 2nd in austria which all leaves saudi arabia, iran, and the other major oil-producing nations of the world free to pump out as much oil as they can, leaving the globe it will oversupplied and oil prices vulnerable. for "nightly business report," i'm brian sullivan in doha, qatar. >> the failure of producers po agree was partly offset at least for today by a strike in kuwait by oil workers there. the nation's output was cut in half today, helping support oil prices. hadley gamble in kuwait has more on the worker demand. >> reporter: a second day of strikes by oil and gas workers in kuwait served to offset much of the price depression following failed talks between opec and non-opec producers over

the weekend in doha. but that bounce in prices could be short-lived. kuwaiti production was slashed by 60% on sunday as thousands of unionized workers refused to come into work. kuwaiti officials now say they plan to return production to normal levels in the coming days in spi of kuwait's 13,000-strong oil and gas union are protesting cuts to wages and benefits as the oil-producing sovereign looks to tighten its budget. while many expat workers remain on the job, the kuwaiti government is taking a hard line with the strikers, threatening to bring in more workers from abroad to fill in the gaps, as well as take legal action. an official statement released earlier today even charged union members with threatening national security. but even if the protests are short-lived, it's clear the country's main source of income was easily put at risk and that can't be anything other than a cautionary tale for other gulf oil producers like saudi arabia,

the uae, as well as bahrain. for nbr in kuwait, i'm hadley gamble. saudi arabia is the world's largest exporter of cruit and its relationship with the u.s. has always been complicated. now it may be more so. saudi arabia is threatening to sell hundreds of billions of dollars in american assets if congress passes a bill that would allow victims of terror attacks in the u.s. to sue foreign governments if found responsible. at issue here are documents about the 9/11 attacks which are still sealed and which many believe could implicate the saudis. david malpass joins us. good to see you, welcome. >> hi, sue. >> let's start first of all with the economic implications. saudi arabia's threatening to sell off an enormous trove of u.s. securities, among other assets. what would be the implications if they started to do that unwinding process? >> i think it would be negative. i know people are saying, oh,

well, it just would be money moving around. but it's unusual given the size of the saudi assets. they hold a lot of u.s. treasuries. it's been characterized as blackmail or a threat. but really what i think they're saying is that if these issues are settled in u.s. courts and that opens us up to litigation, we'll have to move our assets away. >> they would be worried, i assume, of a court -- about a court order that would freeze their holdings of u.s. treasury securities so they're basically saying, if they -- if congress passes this the law that would potentially allow them to be sued in u.s. courts about 9/11 responsibility, they want to sell now and ask questions later, right? >> hi, tyler. yes, i think that doesn't mean they sell instantly but they have to follow the court proceedings or legislation and

if there start being court proceedings they don't want to be exposed to that. we've seen how far-reaching the u.s. court mandates can be and that's i think what they're worried about. at the heart of this issue is the foreign policy with saudi arabia. i think that's very important. and this is taking it in another negative direction. >> so what in additions to be done at this point, david? first of all, do you think it will come to a court order? do you think it will go that far? or n? >> well, we don't know if the legislation will pass and we don't know then if a court would take this up. so those are imponderables. what we know, i gather, is there are 28 pages of documents that the government hasn't released. so the key variable in all of this is how does the administration handle it? will they get in front of it and try to make clear what their position is and what they want to do about the problem? you know, there's a core problem at the heart of this which is

the concern that many have that saudis -- some in saudi arabia have been funding radical islam. and the administration really hasn't had a policy on that. so it's i think high time for them to develop a policy and then include this 28 pages in that policy. >> all right, david. we'll leave it there, thank you very much. david mal-pass. amazon has been in the payments game for nearly a decade without much success. it has a plan to change all that. the supreme court rejected a challenge to google's digital library of millions of books.

authors had complained that the project makes it difficult for them to market their work and that it amounted to copyright infringement on a mass scale. an appeals court decision stands that the project was fair use of the authors' work. the supreme court is also hearing arguments on the white house's plan to defer deportation of more than 4 million illegal immigrants. the business community is watching this case closely and as hampton pearson reports, the court is divided. >> reporter: at the supreme court today, hundreds of mostly pro-immigration demonstrators gathered outside while a divided supreme court heard a challenge to president obama's immigration program that would authorize work permits for about 5 million undocumented immigrants as well as temporary protection from deportation. texas is leading a challenge by 26 states and the house of representatives to a decision by the department of homeland security to put those programs

in place. the states say it's a power grab by the federal government. >> this case has always been about the separation of powers. and it transforms unlawful conduct into lawful conduct. i think if the executive, the president, has the power to do that, i think that should trouble every american. >> reporter: the court is divided. conservative justice anthony kennedy said for the administration to take action ahead of dprels is just upside down. among the liberal justices, ruth bader ginsburg noted the government doesn't have the resources to deport an estimated 11 million people living in the country illegally, so the government must set priorities. >> congress has been silent on this issue and we can't have a flood gate of suits by states across the country at the end of the day simply because there is a cost. >> reporter: after 90 minutes of oral arguments and based on questions from chief justice john roberts, it appears the door might be slightly open for a win for the obama

administration if there are changes in the current program. for "nightly business report," i'm hampton pearson at the supreme court. morgan stanley's quarterly profit gets cut in half. that's where we begin "market focus." the firm saw trading revenue fall across multiple divisions as market volatility hit the company's bottom line. late last year, morgan announced a series of layoffs in its debt trading unit as part of a larger cost-cutting initiative. shares of the bank down fractionally to 25.73. sales at hasbro rose 16% last quarter and the company largely has disney to thank. the company cited strong sales of "star wars" products as well as its "frozen" and disney princess line which helped lift sales more than 40% in the company's segment aimed at girls. shares of hasbro up more than 5% to 87.18. today is the deadline for potential suitors of yahoo! to submit their bids for its core business.

"the wall street journal report"ing vls leading the pack. value hue extended its original deadline by a week so firms could get their proposals together. now many appeared to have dropped out. shares up fractionally, verizon ending at 51.73, yahoo! at 36.52. the bempl and snack giant pepsico reporting mixed results as the company missed revenue expectations but cliffed on profit. the company cited strong sales in the united states which helped to offset some weakness abroad. shares of pepsico down fractionally to 103.72. shares of energy transfer equity soaring after the law firm handling its $14 billion proposed acquisition of rival williams said it might not be able to produce a required tax document as part of the takeover proceedings. potentially snagging the deal. energy transfer equity shares ending the day up more than 10% to 9.85. investors were not so kind to williams company, that stock

ended down, 16.68. illumina gave a preview of its enings with the company saying it expects to fall short of analyst expectations. in the release the ceo cited slowing sales of t-sequencing products as well as slowed growth in europe. shares of the company ended in the green at 178.13 but initially fell more than 15% in after hours trading. cy vant, district attorney, had harsh words for apple and other tech companies when it comes to encryption calling it an issue of victims' rights and pressed congress to pass legislation requiring tech companies give law enforcement access to information on encrypted phones. >> apple has told us it has moved to this device default encryption to protect its customers. what i want to ask is for apple to be as interested in protecting its customers who are the victims of crime, many whom

are represented by the groups here today. who at apple is going to speak for them? who at google is going to speak for them? >> vance says his office currently has 230 locked phones involved in cases. there's paypal, there's square, there's apple pay, visa, mastercard, google wallet. did you know amazon is also a player in the fast-growing mobile payments industry? not a big one though. but it wants to be. how it plans to grow in this highly competitive spa >> reporter: amazon's conquered retail reading video content and shipping logistics, now the everything store is setting its sights on payments. a new strategy to strike partnerships that make amazon the cashier for other retailers' websites. the first deal is an unlikely match for the site that gets you diapers in an hour. high fashion hub mode deoperandi

where customers spent thousands in one sitting let customers sync with their account. amazon gets the standard transaction fee but they expect the fashion startup to find it invaluable. >> for mode de, to tap into new customers, not in single percentage but significantly lifting their business. >> reporter: amazon's own retail prowess has made it a payment player by default. last year it processed ar estimated $225 billion in transactions. infrastructure it figures it can put to use. >> it's a similar concept to what they're doing with cloud. theys. they have all these data centers with all this capacity that they could sell to other businesses. they're trying to do the same thing with payment. >> reporter: doing so required going up against paypal, visa, and other incumbents who don't have some of the same issues with retailers that amazon does. >> every retailer or practically every retailer now sees amazon as a competitor.

and so opening up to amazon and using their payment system to a retailer is like opening a kimono and saying, look at what i'm selling, when i'm selling, who i'm selling to. >> reporter: they acknowledge that fact and that it's shaped the strategy somewhat. >> for the very larger merchants they may see the rivalry with amazon, and taels fine. i'm focusing our energy on merchants who want to create great customer experiences. with those we have phenomenal opportunities. >> reporter: less than 8% of amazon's 304 million customers have used its own payments platform and gotier wants to carriage that. while not everything amazon touches turns to gold, the company's not losing sight of your wallet. coming up, the fight against zika. tonight the first in a three-part series examines vaccines in development and the drugmakers beh.

here's what to watch tomorrow. a handful of dow components report including goldman sachs, johnson & johnson, united health care, intel. housing starts, building permits, both indications of future building activity, they are due out. and a house committee will hold a hearing on encryption and the debate over privacy versus national security. that's what to watch tuesday. ceo elizabeth holmes says she's devastated that she didn't catch and fix the issues surrounding her lab earlier. in an interview with maria shriver on nbc's "today" show, her first since regulators proposed banning her startup for

at least two years, she says she holds herself responsible. >> i'm the founder and ceo of this company. anything that happens in this company is my responsibility, thaild. we stopped testing and have taken the approach of saying, let's rebuild this entire laboratory from scratch. so that we can ensure it never happens again. >> the regulator's move comes after the company failed to fix a problem at a california lab, according to a letter from the centers for medicaid and medicare services obtained by "the wall street journal." holmes founded the company in 2003 to make blood tests more convenient, comfortable, and less expensive. it's valued at $9 billion. the outgoing ceo of val lant pharmaceuticals was deposed by a senate committee. michael pearson arrived on capitol hill to be questioned in advance of his scheduled testimony at an april 27th hearing. the hearing is the panel's third focused on price spikes in decades-old prescription drugs.

the zika seizures is now spreading in more than 40 countries. and it's connected to alarming neurological effects, most notably in unborn babies. as the warmer months approach in the u.s., how is the pharmaceutical industry pitching in in the fight against zika? meg terrell in the first of a three-part series takes a look at vaccines. >> reporter: dr. gary nabel has a lot of experience when it comes to vaccine development. >> from my past experience in vaccines, what i learned was that you really need to be way ahead of the curve. >> reporter: he's chief scientific officer of french pharmaceutical giant sanafee. he spent more than a decade leading the national institutes of health vaccine research center. >> it causes you to pull the trigger and really launch a vaccine program when is you see that there are serious public health effects. >> reporter: the zika virus qualifies. it's spreading actively via

mosquitos through central and south america, as well as the caribbean. and the threat it poses to reg nant women and unborn babies has health authorities on the hunt for a vaccine. >> we have about five or six candidates lined up to go into vaccine development. >> reporter: sanafee is among drugmakers working on the problem and it may have a leg up. the company has a vaccine for the dengue virus already on the market. that's in the same class of viruses as zika. >> we realized very quickly that it would -- we could take advantage of our existing technology and our existing knowledge, we could essentially do a similar type of thing. >> reporter: even accelerated timelines mean years in vaccine development. dr. anthony fouchy, director of the national institute of allergy and infectious diseases, says the most advanced zika vaccine candidate is likely to enter testing this year. >> we're making it up to go into a human phase one trial, which is a very early trial, to

determine safety and whether it induces a good response. we'll likely do that starting sometime in the fourth quarter of 2016, probably by the end of september. that will take a few months into 2017 to see if it's safe and that it induces the kind of response we want and whether or not we can go to the next stage of testing. all of that is already in progress. >> reporter: a key question for the pharmaceutical industry is economics. sanafee's dr. nabel says in some cases certain vaccines don't get developed because of market figure. companies developing vaccines for ebola, for example, don't expect major profits. they and other experts say our system needs to change to become more proactive in anticipating emerging public health threats and creating incentives for earlier vaccine development. tomorrow meg will look at the potential drugs for zika in development at the world's biggest technology company

gilead. before we go, take a look at the rally on wall street this day. the dow gained 106 points, catapulting it back above 18,000 at the chose for the first time since july. nasdaq rose 21. the s&p 500 added 13. as for oil, prices settled lower by more than 1% off the lows of the day. an oil worker strike in kuwait set the lack of a production deal in doha. it so is nice to have you back. >> nice to be back. >> you were very much missed. that's it for "nightly business report." i'm sue herera, thanks for joining us. >> i'm tyler mathisen. have a great evening, we'll see you here tomorrow.

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