he's david garrity princal at g.v.a. resrch david welcomback to n.b.r. >> thank y, paul. goodevening. >> paul: before weet into technolo. what's your opion on the mark and the economy in general? >>n the market we're ov weight uities we thk the centl banks are supportive an the equitie ll behe class at out performs. divided opiniohow strong the econy will be andthe market will continue tobenefit. paul: so you're a bull at the moment >> yes, sir. >>aul: we saw big technology names this ek. how do you feel the sectoris going ovell. >> we're seeing strong expen control anthough revenue ha't been as robusts analysts hope for aswe start to see growth unfold such as ndows 7 fr microsoftwe think there's nice verage for investors to look rward to. >> paul: speing of microsoft it posts results tomorr. at are you expecting? >>e're looking for 36 cents versus 4cents a year agoand thbig storyis the interduction of windo second in the second half. >> paul: we're been hearing with the ogle-microsoft competitn. how do you feeit's moving out? >> t competition fro google in 2010 going to

he's david garrity, principal at g.v.a. research. >> paul: i'm paul kangas. >> suzanne: and i'm suzanne pratt. susie gharib is off tonight. this is nightly business report for wednesday, july 22. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. >> suzanne: good evening everyone. president obama will tell the nation tonight that health care reform is central to repairing the economy. if it fails, the president warns your insurance premiums and out of pocket costs will skyrocket. health care reform is bogging down in congress, and tonight's news conference is part of an effort to get it back on track. but as darren gersh reports, the key unanswered question is still how to control costs. >> reporter: with negotiations over health care reform in intensive care, house democrats like xavier becerra stressed the need to cut costs in a system everyone agrees is inefficient. >> in a two and a half trillion dollar system, you should b

he's david garrity princip at g.v.a. reseah david welcome ck to n.b.r. >> thank youpaul. good evening. >> paul: before we g into technology what's your opinn on the marketnd the economyn general? >> othe market we're over ight eqties we thin the centrabanks are supportive and the equities wi be t class th out performs. divided opinion w strong the onomy will be and the market will continue to benefi >> paul: so you're bull at the mont. >> yes, si >> paul: we saw big technology names this week. how do you feel the sect is going verall. >> we're seeing strong eense controand though reven hasn't been as robust as analysts hope for as we start to see growth unfold such as windows 7 from microsoft think there's nice lerage for investors to look foard to. >> paul:peaking of microsoft it posts results torrow. what are you expecting? >> we're looking for36 cents vers 46 cents a yr ago and the big story is the interduction of wdows second in the second half. >> paul: we're been hearingwith e gole-microsoft competitio how do you feel 's moving out? >> theompetition from google in 2

david garrity says that it is like one soccer team gets to shoot on a bigger bowl progress where in basketball, if you made your who pay little bit shorter because you cannot drop as high as the other team. >> this is an expert in competitive sues who predicted this controversy over what not to wear. >> it seemed like there would be some waves made with that pierre >> these are ways that some say could sink the sport. >> michael phelps''s coach threatens to boycott further meet if it is not banned. michael phelps still has the 100-meter butterfly and they really on his agenda in rome. >> a swimsuit controversy. >> absolutely. >> it could happen. stay with us. there's more ahead. >> the contest results ariane, thank you to your votes. sandra shaw is heading to new york. >> some thunderstorms have been quite severe. we will keep an eye on that and check the seven-day forecast coming up next. [unintelligible] >> a woman said that she felt what she was living in the twilight zone. police kept demanding what she called 911 when she said she did not. >> returned to be a prank and a dangerous one at

. >> paul: tomorrow, strt critique gst david garrity ins us for an update on tech earnings. >> suzanne: the's a new leader freddie mac, the mortgage gians third c.e.o. this year. former putnam invements chairman charl "ed" haldeman habeen named chief executive officer. his predecessor, john kosken will returas freddie's non- executive chairman of e board. haldan is expected to begin his new job next month, afr the compy releases second quarter results. >> pl: it looks like cost cutting mos are perking up results at starbucks. late today, the coffee giant said it earned $15million or 24-cen a share in its third quarter. thateat expectations by a nickel and revsed a loss from year-ago. starbucks shares ended the d at $14.69 a are, but jumped 9% in after hours trading. euquu >> suzanne: here's a look at what's happening torrow. >> suzanne: tonight's "of mual interestcommentary has a list hot funds to avoid! here's john waoner, mutual fundolumnist at "usaoday." >> you can find plen of information on what mutual fds you should buy but day, were going to eliminate the positive and accentuate

david garrity is gba research principal, and we're talking about google and ibm here. google with a revenue number of $4.07 billion on earnings of 5.36, that looks like a good number. >> it is a good number. as we went through the course of the second quarter you saw that search query volumes were growing very strongly but the main question was how well was pricing on keywords holding up. we've seen a 14% decline year over year. in the first quarter we don't have the numbers yet in terms of the details but it certainly looks promising with respect to the second quarter. what's more important to look at going forward is we start to see signs from advertising agencies that search ad budgets for the second half of the year are going to be opening up. and what the company was able to do on the bottom line in terms of margin improvement, 5.36 versus the expectations, shows that they're actually doing a very good job of converting. >> the most important question here for some investors is what do you do with the stock? we're talking about a stock that's come all the way down

let's bring in david garrity and talk about microsoft and am zone. i don't know, david. maybe for microsoft stock itself, they said negative things. but for tech, it seemed all positive. >> well, for tech, it's very difficult when you see a street miss a number by $1.25 billion. but in the case of microsoft, i think people are very much set up to look at what microsoft is going to do in the second half of the year with windows 7 introduction, they're looking forward to the first half of 2010 with the next update with respect to office. look across the technology. look at the way the average says about the installed people bate base that's out there now. we are in a situation where given a moderate economic recovery, you have a decent shot here at seeing ender rise situation coming back despite the miss here if terms of the revenue line. nike row soft's struggles with the different are still well known, right? >> this was the first glimmer of optimism about the overall economy in how long? >> they've never said anything positive. a lot of times, investors don't forever on