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MONEY for October 28, 2013 - Part 2

Tue, 10/29/2013 - 3:37pm
The Associated Press

xfdfw MONEY-00

<Show: MONEY>

<Date: October 28, 2013>

<Time: 17:00:00>

<Tran: 102801cb.230>

<Type: Show>

<Head: MONEY for October 28, 2013 - Part 2>

<Sect: News; Domestic>

<Byline: Melissa Francis; Tony Sayegh; Monica Crowley; Jonathan Hoenig;

David Asman>

<Guest: Robert Kaplan, Bruce Turkel, Heather Hansen, Tom Forte, Bill

Doherty>

<Spec: Education; Economy; Business; Government; >

Does this mean that rather Bruce, rather than pitching to women that doesn't make sense for brands -- I mean, whether it's mayonnaise or a pancake butter or whatever it is, I mean, should they be pitching the center to either gender or should they try and go capture that male audience? What do you think?

TURKEL: I think before they know, they have to do a lot more research. For example, the articles I read talked about men considering themselves helpmate. Now, we can leave out the whole --

(LAUGHTER)

TURKEL: -- whether that's politically correct or not.

FRANCIS: Right.

TURKEL: But if you're a helpmate, you're going to the store and you're bringing back what your wife, girlfriend, significant other told you to bring back.

FRANCIS: Yes.

TURKEL: The question is, what happens when men start doing this as their own responsibility? And then, yes, in fact, the companies will change the way they market, the way they label, the way they package products because men do buy things differently than women do.

FRANCIS: No, absolutely. I mean, my husband does have the parenting I don't think he knows how, you know, the chips or the milk or anything gets into our house. I think he thinks there's like -- you know, maybe there's a fairy that comes --

(CROSSTALK)

FRANCIS: A funnel. Yes. Something like that that drops it off. Still, I mean, then is it a mistake? We see more and more companies, I mean, you know, trying to market directly to men. You see products out there. You think that's a mistake?

HANSEN: I do. I mean, I think if you're making yogurt and black and red packaging instead of the regular packaging that we've seen before, it's much of a mistake it's making the bick (ph) (ph) for her pens which were pink and purple and pastels.

FRANCIS: You didn't buy any of those? I see those around. No? No?

HANSEN: I mean, there may be people who that is going to sell, too, but I don't think it's the majority of either --

FRANCIS: Yes. Bruce, give me some products that you think would work? I mean, what are some things that you would -- you're always so creative. I mean, hamburger (ph) helper? How do you feel about that?

TURKEL: I think man burger helper would be huge. I think there's a lot of things you can do. I mean, you can sell Hellman's mayonnaise. How about Lay's could have potato chips. Dunkin Donuts could have bronuts. You have lots of choices.

(LAUGHTER)

TURKEL: What they shouldn't be doing, and I think it's exactly what we just heard, put a stuff in black labels because it appears more manly. That is not going to work. But looking at the differences, men buy products that say protein, for example. So, if you're selling granola bars and like Nature's Rally (ph) does, you put the word protein on it.

You will get more male buyers just like females tend to buy products that say calcium on them. There are things you can do, but to do these things thinking that men by beer and Slim Jim and stake (ph), that's a big mistake.

FRANCIS: But I don't know, Heather. Do you think that the protein thing is really about male versus female or is that about atkins (ph) and the way that we're being trained. To eat the carbs are bad. So, you look at a granola bar and you immediately think that's a carb. And instead, it's about -- I'm trying to find protein. Oh, look, this granola bar that's sweet and delicious that I want to buy is a protein.

(LAUGHTER)

HANSEN: Also, has a lot of protein.

FRANCIS: Right.

HANSEN: I think it's a combination. I think Bruce is right. There are ways to market the men. Their brains are different than us, women. And so, they think differently. They're problem solvers which may be why they like grocery shopping and making list.

FRANCIS: Yes.

HANSEN: But I don't think it's in the color or is in the packaging necessarily.

(CROSSTALK)

TURKEL: We are hunter gatherers.

FRANCIS: Right.

TURKEL: So, going to the store and bringing stuff back makes sense to us.

HANSEN: That's right.

FRANCIS: You are a hunter gatherer, but doesn't that mean that you just randomly go down the center of the aisle and you're just shoving stuff in there to sort of get out of there as quickly as possible? I mean, do men naturally sit there and read the labels and go through with as much care? Or are they just conditioned to just buy the brand that they've seen at home or as many time as they've been there?

You know, I see whisk (ph) when I -- well, I don't know. I mean, I guess then they would have to go near the washing machine, but we'll kind of --

(CROSSTALK)

TURKEL: That's a whole another issue. We're not going there.

FRANCIS: Yes. So, are the conditions to get what they've already -- they've already seen at home or do you think that there's an opportunity to attract new business, Bruce?

TURKEL: I think men like women, you do have efficiency buyers who go and take the same things off the shelves every time and get out. That's their goal. Get in, get out, nobody gets hurt. You also have people who actually enjoy looking at the different products, looking at the different labels.

Remember that part of this is because of the change in the workplace and what they call the man session means that more men are out of work and that's why they're doing this. In that case, they're going to be dollar conscious. They're going to be coupon conscious just as much or maybe more so than the women in their family because that's what they care about.

Again, it depends who the audience is. But in general, I think what you're going to find is people are concerned about buying good nutritious food that their family will eat at a reasonable prices. And I don't think that changes -- genders.

FRANCIS: I mean, do you think it's a sustainable trend? Because certainly, anecdotally, I've seen more families where you have the dads at school now and you have the dads staying at home because more women have kept their jobs through the recession and they've taken over the household. Does that stay overtime or if we ever do pull ourselves out of this recession, do you think that turns back around? What do you think, Heather?

HANSEN: I think it's sustainable. I mean, look at the same-sex marriages where you've got two men who are -- one is going to be doing the, you know, cooking and cleaning and the other is going to be doing the things outside the home. I think it is sustainable. I think that, you know, as Bruce said, it's ultimately individuals who are making these decisions.

Both men and women want their kids to eat healthy. Both men and women want their kids to have clean clothes. So, ultimately, it's going to be individual decision making with regard to the marketing here.

FRANCIS: OK. All right. We'll leave it there, guys. Thanks so much.

HANSEN: Thank you.

TURKEL: Thank you.

FRANCIS: All right. Up next, what's the color behind apple? The big numbers are out, but we're biting in for the biggest surprises. A top analyst on what you haven't heard yet. Don't move. At the end of the day, it is all about MONEY.

(COMMERCIAL BREAK)

FRANCIS: From U.S. and every corner of the globe, MONEY has been flying around the world today. First, the Spain, the country's "El Mundo" newspaper reports that our National Security agency spied on more than 60 million phone calls there in just one month last year?

Of course, this comes on the heels of allegations that our beloved NSA also pushed the boundaries, just a little, when it came to spying on France and, oh, when they took the liberty of (INAUDIBLE) German chancellor, Angela Merkel's cell phone -- is going to pay for this one big time sooner rather than later, it's my bet.

Next, over to China, a new report says the country will to pass (ph) the U.S. on business travel spending by 2016. The Global Business Travel Association says money spent on China's business travel is expected to jump 14 percent this year and 17 percent next year. Almost all of those business trips will likely see in Asia with South Korea, Korea Hong Kong, and Singapore as the top destination.

So, report says that America will be number eight on the list of top spot for Chinese business travelers.

And to landing in Italy where winemakers are dealing with sagging sales at home. Consumption is at its weakest level since 1861. Wine consumption. That is according to the main farming association (ph). The biggest blame goes to the economic downturn. It is forcing to look for more customers abroad. Right now, more than 50 percent of Italian wine is exported up from 28 percent in 2000. The biggest buyers are the U.S. and Germany. So, are they drinking less or are we drinking more?

All right. The anticipated earnings are out, but the call is still going on right now. Just moments ago, Apple exec responded to questions about its fiscal fourth quarter earnings report which beat forecast expectations. The news making waves on Wall Street. And here with the latest is top analyst, Tom Forte, from the Telsey Advisory Group. Tom, thanks for joining us. What's the most surprising thing you heard on the call, so far?

VOICE OF TOM FORTE, TELSEY ADVISORY GROUP: Sure. So, I think that if you're listening to the comments by the company, they're trying to explain why the gross margin guidance maybe wasn't as good as anticipated. It's really a combination of new product, refresh for both the smartphone and the iPad. And then also, they're differing more revenue following their decision to give away some of their software for free.

Other than that, I'm hearing that the company again intends to have potentially new products. We've been talking about the possibility for an Apple television or an iWatch. They won't commit, obviously, to the specific items, but they said they're interested in something that leverage is there. Unique skills that have hardware/software services and apps. So, I think they're keeping the door open for some of those new products.

FRANCIS: Yes. I mean, of course, they're interested on that, but what was the real vibe you've got from actually listening to it and being on the phone? I mean, was it a tease like don't be disheartened. We have these things on the horizon or did you feel like it was a real -- this is in the pipeline. It's almost here, don't worry?

FORTE: I felt like it's an affirmation. They said that they (INAUDIBLE) their comments from earlier this year the new product innovation was going to come in the fall and in calendar 2014. So, I am encouraged that we've seen the new product, so far. And hopefully, there's more to follow.

FRANCIS: You said that they had some -- you know they were doing their explanation for the margin compression. Did you buy that? Was that satisfying to you?

FORTE: Oh, yes. I do buy it. Any time that they have a significant product refresh and they have that both in the smartphones late in the September (ph) quarter and they're having now the Ipad in December quarter, there is an incremental or initial pressure on their margin.

FRANCIS: What was the most interesting question that someone else asked? What did you hear and thought, hmmm?

FORTE: You know, the other thing that really made me go, hmmm, was what they're talking about as far as their strategy on their pricing to their smartphone. They said the 5C is not intended to be their entry level device. The 4s is intended to be their entry level device. The 5C is midyear and 5S is their high-end device. I thought that was interesting and that's something I expected going in.

FRANCIS: That is surprising. So, how does that change your outlook, because enforcing (ph) the 5C, everybody was saying, oh, the "C" stands for cheap. So, what does it mean to you?

FORTE: Sure. Well, I always tried to prefer to go color rather than cheap.

FRANCIS: Right.

FORTE: But yes. I mean to me that the company is using really a combination of last generation phones, in this case, the 4S, and the newer devices, in this case, the 5C and the 5S as a way to pursue the smartphone market including the emerging market. And I do think it could be a workable strategy for Apple.

FRANCIS: You know, Carl Icahn, of course, has turned his focus to Apple now, you know, trying to demand that they return some money to shareholders. Was there anything on that front? Did you get any feeling?

FORTE: Yes. There are two things that were particularly interesting. One was that they will always be open to hearing what their shareholders suggest and that they anticipate making any kind of announcement in that regard early encounter 2014. And number two, when they talk about their cash, as you know, a fair amount of their cash is overseas, they talk about their domestic portion and how that's basically help steady given the large dividends or buybacks program.

FRANCIS: So, what does that mean to you? I mean, if they said their cash domestically has held steady, does that make you feel like they're saying it's static so we don't feel any pressure to give any back to you?

FORTE: Yes. So, it suggests to me that if they were to say that our domestic cash were to increase precipitously --

FRANCIS: Yes.

FORTE: Then, they would have more money for buying back shares to me as their way of saying that we think that with our domestic cash holding firm, that we're not sitting on 150 billion, for example to use for --

FRANCIS: Yes. It sounds like they're just laying the case for why they're going to tell Carl Icahn, you know, they're not going to do what he wants. What do you think happens in that case then?

FORTE: Well, the way I see it, you know, again, the Carl Icahn situation, I think can be a shot-term catalyst, but I'm looking longer term, and to that end, I'm more interested in seeing what these potential new products might be if they do have to watch in television in the pipeline.

FRANCIS: You're someone who watches this really closely. You know, real quick, having just been on the call and listen to everything, do you feel better or worse about the earnings report as it came out?

FORTE: I actually I was feeling pretty good when the numbers came out as far as the smartphone exceeding expectations and I thought the iPad numbers reasonable, but now that I have a better explanation on what's going on in gross margin, I feel even better.

FRANCIS: Even better. All right. Tom Forte, thank you so much. Great stuff.

FORTE: My pleasure.

FRANCIS: Coming up, cruise control or are we on our way to too big to fail? We've got a captain who says the cruise industry's wings are heading in the wrong direction. We've got it all in "Spare Change." You can never have too much MONEY.

(COMMERCIAL BREAK)

FRANCIS: It is time for some "Spare Change" now on the high seas. Today, we are talking about big ships. In fact, the cruise industry could be getting out of control. Have you noticed it? In order to keep up with all the passengers, wanting to hit the high seas which I still don't understand, some experts think the ships are getting too big to sail.

Captain Bill Doherty is one of them, and he's with us now. Now, we understand they don't really sail. This is like too big to fail like the financial industry. Before I get 500 e-mails, that was the joke we were making there. But it's not a joke, because we are talking about vessels that have gotten so big that some are now questioning and this was from "the New York Times" that it's not safe any longer. Captain, what are the potential dangers?

BILL DOHERTY, FMR NORWEGIAN CRUISE SAFETY MANAGER: There are several. I think the Costa Concordia disaster last year highlighted quite a few of them. One of them, of course, is the ability to muster all the passengers enough time to get into lifeboats before the ship sinks, so, tips (ph) over some disaster of that type happens. The second thing is once you get them in the water, who manages the rescue team?

You know, how many countries have the contingency planning and the contingency resources to rescues a disaster --

(CROSSTALK)

DOHERTY: -- 70,000 people.

FRANCIS: Yes. This has been one of the biggest concern with these enormous vessels is that they turn into their own vessel lifeboat because it's not that reasonable that you're going to be able to get thousands of people that are onboard and off and to safety in time. So, in 2010, there was this new global regulation called the safe return to port rules.

It required that new ships have sufficient redundant systems and backup systems so that no matter what they go through, they can always get back to where they started from, but a lot of vessels do not comply with this, the vast majority. Is that true and is it reasonable to think that they should all be -- they could all have enough redundant system that no matter what they can get back to safety?

DOHERTY: I think what you're asking for is the same thing they asked for in 1912 with the Titanic and claim that she was unsinkable. We don't live in a perfect world. Obviously, we'll do everything we can in the industry to make the ship safe, have sufficient redundancy in all those areas that we need to keep her afloat and keep propulsion and keep services going on.

But unfortunately, through mechanical disasters which can be tripped off by this little thing as a 10-inch -- fuse blowing or small fire in the engine room, that has a cascading effect. And before you know it, we don't have the services we need to keep that --

FRANCIS: So, you're saying that's not even reasonable. That's not even reasonable to think that it -- upward and down to see it back (ph). The other major thing is the health problem and that's where we hear about the most on these cruises and the things that makes me the most uncomfortable is the idea that you have so many more people in this confined space that viruses spread even faster. Is that a bigger danger now that these vessels are carrying more and more people?

DOHERTY: It's at least -- at least as large danger. You're talking about almost 10,000 people on some of the larger ships with cruise of upwards of 3,000 and passengers over 6,000 on some of the larger boats. That -- just the amount of human waste in debris that generates, it's a daunting task to manage within the health parameters. Obviously, we've seen with outbreaks, enterovirus on some ships, and that disaster with the Carnival Triumph in February.

FRANCIS: Yes.

DOHERTY: When things don't work, the sanitation and health goes downhill fast.

FRANCIS: So, captain, what do you think should happen? I mean, should there be limits now on how big these vessels can get, how many people can go on, or -- I mean, there'd be limits or should we go ahead and, you know, try and step up what they're doing on board to solve these problems?

DOHERTY: Well, there should be limits. Where the envelope ends, I can't really tell you with respect, but what we should be doing, we should make sure that we have properly trained crews, properly screened management, people that won't jump in the lifeboat with the first sign of disaster.

FRANCIS: And you know, I think consumers would think that we already have that in place. So, it's scared to think that we don't. Captain, thank you so much for joining us. We appreciate your time.

DOHERTY: Thank you.

FRANCIS: Up next, "Who Made Money Today?" Raking it in sure taste good when you're having it your way. We'll have the answer right after this. You can never have too much MONEY. You might have so many cruises.

(COMMERCIAL BREAK)

FRANCIS: Whether it's on Wall Street or Main Street, here's "Who Made Money Today," everyone who owns Burger King. The fast-food giant reported third quarter earnings today and trounced the street's expectations. Take that, McDonald's.

Overseas sales growth and plunging expenses helped profits soar and it's showing there is nothing as delicious as having it their way. Burger King's stock spikes more than 5.5 percent today. I'm sure that tastes pretty good, right? Look at that.

All right. Suing to make money today, music legend, Quincy Jones, the iconic producer is suing Michael Jackson's estate and Sony Music Entertainment for $10 million. Jones claims the entities improperly reedited songs in order to deprive him of royalties and production fees on some of the King of Pop's greatest hits like Billie Jean and Thriller. Jones also says he should have gotten a producer's credit on the hit "This Is It". Jackson's estate says it is saddened by the lawsuit. Yes, I bet.

And hoping to make bank with a brand new car Range Rover. It unveiled its most expensive Range Rover model ever with a staggering quarter of a million dollar price tag. Of course, you do get electrically deployable leather covered cable, wow, U.S. charging sockets, and -- there's in the backseat where you always get those in a Rover.

Plus, the whole rear consul can be lit up with 10 different colors of mood -- oh, and wait, with 18 different massage settings. As Ferris Bueller would say, "If you have the means, I highly recommend picking one up."

That's all we've got -- I hope you made MONEY today. Tomorrow is "Money Talker" on how the key to a successful marriage is a share bank account. Tune in tomorrow. Here comes "The Willis Report".

END

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