captiong sponsored by wpbt >>aul: signs of stabilization in the housing market ght a fire under stos. home sales head higher f a third straight month, helpinto pushhe blue chips above 9,000 to a new high for the year >> suzanne: but a late day earnings disapintment from microsoft could rail the rally torrow. the software gia misses the mark as les drop sharply. >> paul: fd motor is driving ahead with its turnarod plan, cuing debt and boosting market share. but c.e.o. alan mully tells us his american rivals n't have a leg up just because th're gettina helping hand from uncle sam. >> i le to go shopping. >> suzanne: meet olivi she's one of mlions of kids hiing stores in search of new duds and school suppes. that has retailersiscounting

like never before to cash on the back tschool bonanza. >> pl: i'm paul kangas. >> sanne: and i'm suzanne pratt. sie gharib is off tonight. this is "nightly business report" for thursday, ju 23. "nightly business repo" is made poible by:

thisrogram was made possible by contributions tyour pbs station from viewers le you. thank you. >> suzanne: go evening, everyo. miosoft turned in ugly numbers after the belloday. disappointg wall street and raising big quesons about the stk market rally. the software giant ened 34 cents a she in its fiscal fourth quarter, two peies shy of estimates, and f sharply from aear ago. but the revenunumbers were the st disappointing, coming in $11 billion for the quarter. that's more th a billion short of expectations. ining us now is scott gurvey our new york bureachief and resint tech expert. sct, you've been on the microsoft conferenceall. what happened tohe revenue numbers? >> the call is actlly still going . there's no denyi that the revenue just simply falls off

for micsoft in is quarter and for the ye. a few things to be noted, they did defer some of the revenue from an upgrade progr for ndows 7. at actuallymounts to the 2 cents they're talkinabout, but again, the renue numbers -- a this is for the tire year because it's at the d of the fiscal year arejust bad across the board. we madup a little chart here to show you at the bottom line was. windows, the windows operating syem which is called the client businessdown 13%. they did have an increase in serverand tools but the on-line business down. officethat's the office product, that's flat. and the entertainment and devices, that's the zos and the xboxs, down 6%. no on the conference call, the cfo explains that basical crosoft is a function -- microft's renues are a function on what is going on in the ecomy. pc sales, we know, have been going down. people ar't upgrading couters or repcing computers. because of that, t revenue

suffered aoss the board. >>uzanne: wt about guidance? is microso giving a clue as to what their expecstatio station --xpectations are for the rest of the year? >> c chris lytle is slightly optimistic thahe was when he met us a quarter a but he sees for the next two quarters, the rest the lendar year, sees things being prett much flat. he looks toome sort of an imovement after the 1st ofhe year microsoft has tw important products coming up. they have the ndow 7 operating system which ships in the fourth quarter of this ar, fourth calendar quarter and the ve office 2010,he new office suite, that'l ship in the first half of next year. he says he sees the first half of ne year a slight imovement in pc shipments and that really is still t key for microsoft as it is r so man other peop in this business. will the increase of pcsales occur? if it does, microsoft has a ros prospect. ift does not,he reven remains flat. >> suzanne: lattoday, we got

rd the yahoo! board is looki to d a research deal with microsof any clue as what they might talng about? >> tt question didn't come up yet. reporters don't get to ask questions during these cal. these ar forhe wall street analys. it hadn't come up yet. myake on this stuff, you know, microsoft say tech compa in computer sofare but i think yahoo!s kind an advertising company. ogle is an advertising compa company. amazonas reported today as a retailer. it's thesame story as we've se all across these earnings reports. if the economy is sluggish, revenue isoing to be down. everything as mr. lytle even said is pendent upon the macro onomic situation for the country. >> suzanne: we havto leave it there. thank yofor joining us, scott. ne york bureau chief scott gurvey. >>aul: ahead of those microsoft results, stocks ralliesharply, thanks to a three-peator existing home sales. june sal of previously owned homes rose 3.6%,heir third

straight monthly advan. and for the first me in months, it not just foreclosures that arselling. we continue our "reviving t economy" coverage, steanie dhue reports, stabilization may have final come to the housing market. >> rorter: lower home prices, low interest rates, anthe first-time homebuyer tax cret werehe spark for buyers. and they weren't just bung distressed properts. only a third were reclosures or sho sales, where nearly half we at the beginning of thyear. national assiation of realtors economist lawrenceun says that's a positivsign. >> i thi this is part of the consumer is regaininconfidence about the housing rket, many perceivinghat the bottom has been reaed or that it will soon breached and therefore buyers are cominback to the mark. >> reporter: whilehere are still a lot of for sale gns out there, the gluof homes is dryi up. >> i'd like to see it wn to seven mont supply and at that

level we wl see broad, national price stabilizaon. >>eporter: while the pace of home sales has picd up, prices remain under pressure the national median pricwas almost182,000 last month, 15% lower than a year ago. economist mark zandi think stable prices are still a wa off. it's clear that the housing market is past its worst, th housindemand is improving, that cstruction has hit bottom, the lasthing we need to see is annd to the price declinesnd i think we're still six nine months away from that. job loss, tight credit and higher mortgage tes could push that teframe further out. zandi expects another ve of foreclosuresnd short sales lar this year and into early next. >>hat remains the most significant reat to the housing rket if the foreclosure crisis doenot soon abate, then pric will continue to decline and thearket and the rest of economy will bat risk. >> reporter: once thmarket does indeed stabilize, economists cautionot to expect too much.

they see prices remaining at for the next coue of years. stephanie dhue, "nightly business report," waington. >> paul: wall streetpened with a rollicki rally amid a flurry of better than eected results from at&t, 3m, hershey and ey to nama few. addi to bullish enthusiasm was that surprise jump in ne existing home sales. an hr into trading the dow posted a 119 point gn at the 9,000 level with the nasdaup 27 points. that me above dow 9,000 triggered a lot of b orders which catapued the blue chips just over 200 points untilome late sellingrimmed the closing gain. thdow still ended up 188.03 at 9,069.29, an eight monthigh. the nasdaq jumped 47.22 to 1,973.60, its elfth straight gain. the s&p 50rallied 22.22 to 976.29.

in the bond marketthe 10 year note fell 31/3to 95-19/32 putting the yield 3.67%. >> suzan: shares of ford motor shifteinto overdrive today, gaing almost 10% as the tomaker posted better-than- expected second quarteresults. excludg special items ford lost just 21 cents ahare. wall seet had expected a far biggeross, more than double that amount. diane eastabrook spo with ford c.e.o. an mulally today and began by asking him if increed productionhis quarter suggests stronger sales for the rainder of theear.

>> yesit does and tw main reasons, diane, one is tt we believe that economicctivity inhe united states will start to incase in the thirduarter and th fourth quarterut in additiono that, fd is continng to also incase i market share basedn the stngth of our new product so based both of ose perimeters, we have givenuidance so we're going to irease our producon. >> you talked about improving market sharen the secon quarter, who did you grab market are from? >> wl, it's very interesting. it's reay from everybody, from our competors here in t united stes and als from our panese competitors. i think, again, it's a rea stament to the strength of o new product family. >>alk a little bit abo you products. you're briing out a number of products over the next 18 months what do you real think are going to be th big sellers? what dyou think is going to renate wi csumers?

>> we're staing to see that ready. the fsta -- our smaller vecle -- is off ta phenomenal start in europend in china and comes into e united states next year. and thpeople that are reviing that vehicle now think it's going to be a real winner in the united states andof course, we move up to the focus size which has already established as a popular car. then theusion which i 41 miles to theallon, 8 les to the gallon better than tota camry and then, course, the new taurus wch is named many already as the caof the year. plus you add to that, you know, the traditional product tt everody has loved from ford, the new mustang, the new escape, the edge, th flex, thexplorer thexpedition, the f-series, of course, the number one vehicle in the united states for 34 years, but that real eeper, i think, will be t new transit connect, our van, our ckage van which is a phenomenal packe with significantly

improved fuel mileage d capability. . >> one of the things found intesting in your report,ou talkedbout the average tranction price th ford was up or the rest of the industry industry. is that because you re offering few incentives? does tha say anythingat all about the market here the united state >> ectly, dia. and it's absolutely right that not only has our market shar been going up t also our concessions have beeness. and threason is that the consumers are ally valuing the packages that we're providing. i ink it's the combination of being best in class and quality. i think you s that announcement today. you know, worldwide, best in fuel efficiency. the be in safety and the best value. so the consumers are really vong with the purchase cisions that the value the rd products. >> you've been lookingfor some months nowor a buyer for volv where are you inhat searc

might we see somethg in ts quarter or the next quarter? >> we do have volvo held for sale. they're doing a great job not only on their product line b also on their ct, quality and oductivity. we'r progressing with the potential buyers. >> ok. you are stil competing wh a cole of companies that have government ownership. they've restructured in bankruptcy. you ill have a little bit of de out there. do y think that puts yout a competitive disadvantage aall with genera motors and chrysler? >>o, i don't think so, diane, beuse, you know, clearly, we're very supportive of the u.s. government helpi chrysler and g. temporarily which theye done. they clearly don't want to be in the car busiss longer term. and so we have our captive finance compy, ford motor credit. we have a great product le. we see no indications in the markplace that we're at a disadvantage so i think the mo important thing we do is to stay absolutely focused on our product plan, our productivi and also over ti a we've been ing, ctinually improving our

balance sht and you might he noted that, you know, we went to thequity markets and raised $1.6 billion in the secd quarter. also reduced our debt by 10.1 billion dollars. soyou know, we have a really strong plan and we get ba to profitabity, we'll continue to improve our balance sheet. >> mr. mulally, thank you so much for joing me. >> you're welce, diane. thank u. >> suzanne: myuest has been ford ceo alan mulally. >> suzanne: ading senate democrats are putting the brks on health care reform sayi they will not voten a bill before the augusrecess. senate majoritleader harry id says a vote in his chambe won't co until the fall. it's blow to president obama whwanted the house and senate to pass bis in the next week and get a final measure to h desk by the end the year. speaki in cleveland today, the president acknowledgedhe senate won't me his deadline. t he says that's okay and wants lawmakers to kp moving forward spite the delay.

>> paul: n let's take a look at some stocks in the news tonight.

>> paul: and tse are the stocks. >> suzanne: 's the middle of mmer. but storesre already pulling out all the stops to boo their back to school sales. is considered a major test for consumer snding, and an early edictor for the holiday season. as eka miller explains, the recessn has changed the rules for back to schoolhopping. >> oh,his one! actually, thisne! this o!" >> repter: while most kids are focused on vacation, or mp, five-year-ololivia anton is ady to shop. >> and look mom, i gothese! reporter: she has come to o navy looki for cool clothes.

her mother cistina wants them be practical and a good val as well. >> the are two for 28. >> reporter:ike many families, the antonslan to spend less this back to school seas than last. the average americ family expects to sll out about $550 r back to school needs. that's abo $50 less than last year but, christina bieves she's getting more bang for r buck. you got a lot of ims today, how much did y spend in total? >> $184. we really did well. mean, we did all of our back to school shopng and we have everything that weeed. >> repter: the back to school shopping season is being wched closely-- to seeust how tough it is to get csumers to spend. many retailers are hing low prices will encourage rents to buy more than st bare necessities. ma stores started promotions earlier th usual, including staples. the company'president mike miles sayshe weak economy is forcing unprecented discounts. >> wve reduced prices on more products this year thawe have in prior years. so every year at back tochool,

we ruce prices at some of the key school supplie this yeawe've reduced prices on 250 of those key hool >> reporter: stapl is not the onlytore practically givin away merchandiseo lure customers. analyst brian sozzie of wa street strategies thinks the drastic markdowns willarry through to the holiday sson. >> the consumer s become trained. they're alst like pavlovian dogs. they want the discount and they're not gog to buy the merchandise if thedon't get the scounts. but that doesn't necessaly mean prot margins will suffer, thanks to costuts. >> aopostale has actually worked their sply chain pretty rd. so, they'rgetting some great deals on their frics, their dyesetc. >> reporr: but for now, retailers are counng on their secret ally the fight for back to schoolales: kids. it's often tough for parts to sano, especially when it comes to a new pty dress. >> when i saw e blue dress i was rely, really... i was really exced, because i saw that one online and liked it and i told my mom hopet's

ere. >> reporter: she g the matching ses too. erika miller, "nightly busins report," new yk >> paul: tomorro our friday market mitor guest is frank cochrane, present of investment timing nsultants. >> suzannefederal agents have broken up a huge money laundering and crime rin arreing dozens of new jersey politicians and religious leaders. among the accused: t mayors of hoboken, seccus, and ridgield. the fe say the bust ends a ten year probe of briberand influence peddng. that had bece ingrained in the state's politicaculture. >> paul: management shakeup at general motors. leavinthe firm are its g.m. north amican president and global manufacturing hea a new boaris also in the works withome directors named by g.m.'s largest shareholds. the u.s. and canadia governments. the moves are part of a larg

plan to make g.m. pritable ain, as a smaller, more efficient automaker. >> sanne: an independent federal reserve versus a ctral bank that is more tranarent. tonight's "twoays to play" has

two takes on t issue. here's kev depew of "minyanville" d "minyanvil's" kevin depew. >> federal resve chairman ben bernanke was on catol hill earliethis week, mainly to discuss the econy, but also to stop a misguided legistive proposal from xas representative ronaul to audit the central bank. here's the thi, the fed isn't some secreti, nefarious orgazation. it's already audit. its balae sheet is published every week. and maet watchers pore over the minutes of every fed meeting. so what bernanke rigly opposes is congrsional medaling in monetary policy. is critical for the fed to maintaints independence, far away fropoliticians. >> in order to understand wh the federal reserve so oppod to transparency, you have to go back and coider what gives t fed its power in the first place. if someo offers to give you a weird piece of paper forour watch, y'd probably laugh. but if hundrs of millions people are sehow convinced to cept that weird paper, well, then it's game on. the auority of the federal resee basically exists because exists, and any threat to i undermes the weird circular logic eping the confidence game afloat.

would be like that time whe you were kid and you first fired out how to load a pez dispenser. it ruined everythi. >>aul: recapping today's market action: the dowloses above 9,000 with a gaiof 188 ints. the nasdaq adds another 47. to learn more about the sties in tight's broadcast, to watch our reaming video and to take part in r daily blog, go to "nightly business reporton pbs.org. you can al email us at nbr@s.org. >> suzan: that's "nightly business report" for thursda july 23. i'suzanne pratt. gonight everyone and good night to you, ul. >> pl: goodnight, suzanne. i'm paul kangas shing all of you e best of good buys. "nightly businesreport" is ma possible by:

this program was me possible byontributions to your pbs station from viewers likyou. thank you. captioningponsored by wpbt captioned by media accessroup at wgbh cess.wgbh.org

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