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In The Money

Strong Week for Techs; Forbes Billionaire List Reveals Richest of the Rich; Callaway Golf Looks to Score on Wall Street

Aired June 16, 2000 - 11:00 a.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

BILL TUCKER, CNN ANCHOR: It's been a strong week for the tech sector, but will investors continue to devour these new economy stocks? or will the purging begin?

BILL HEMMER, CNN ANCHOR: Then, brutal weather conditions across the country, record-breaking heat in the West, helping to fan those fast-moving fires in Colorado. And a dry, thirsty landscape in the Southeast. Is there relief in sight?

TERRY KEENAN, CNN ANCHOR: And later, they've got billions and billions. You know their names, but who's the richest of them all?

TUCKER: You're 300 yards out, standing deep in the rough, sometimes you just gotta reach out to Big Bertha. Coming up, Callaway Golf is our "Stock of the Day."

ANNOUNCER: From CNN and CNNfn, this is IN THE MONEY with Terry Keenan, Bill Tucker and Daryn Kagan.

KEENAN: And good morning, everyone, and welcome to IN THE MONEY for this Friday.

We begin with a couple of stories that hit very close to home: cars, houses and computers.

TUCKER: Yes, gas prices continue to rise. But what's the government going to do about it? What should they do about it? We'll have a live report.

Also, according to an early morning report, housing starts fell last month and Internet messaging could be even faster.

KEENAN: And we'll have all of those stories in just a moment. But first, let's bring you up to speed on what's going on on Wall Street this morning. We have the Dow currently down 73 points, monthly and quarterly expirations of futures and option, making for a busy day of trading on the New York Stock Exchange. Financial stocks are the culprit again today. We have J.P. Morgan, American Express and Citigroup all solidly to the downside.

But the Nasdaq holding on to a slim gain and Qualcomm, which was hammered yesterday, rebounding a bit today, up 4 1/2. TUCKER: Well, President Clinton said today that he is frustrated with the wallet-emptying gas prices in Chicago and Milwaukee. In an interview with NBC's "Today" show, the president said he is concerned about gasoline prices, which have hit 10-year highs at the moment. But says, at this time, it is unclear if there is any price gouging.

So what is causing the rise in prices? Fred Katayama is down in Washington with some of the answers.

Fred, good morning.

FRED KATAYAMA, CNN CORRESPONDENT: Good morning, Bill.

Well, gas prices keep rocketing higher, a gallon of regular unleaded gas sets motorists back $1.59 in Los Angeles, $1.61 here in Washington, and $2.33 in Chicago, the highest nationwide. The Midwest is being hit the hardest and cab drivers and motorists are fuming. And so Illinois Governor George Ryan is calling on the Environmental Protection Agency to suspend its new cleaner gas rules that he says have fueled the higher prices. The EPA's new regulations for reformulated gas, analysts estimate, add three to seven cents a gallon. The agency says it is reviewing Ryan's request.

And just less than an hour ago, Senator Charles Schumer addressed this topic on the floor.

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER (D), NEW YORK: I appreciate attempts by Secretary Richardson to cajole OPEC into increasing production, but it hasn't worked and it is time for the U.S. to play a little hardball.

(END VIDEO CLIP)

KATAYAMA: Oil analysts say pipeline problems in the Midwest have further tightened the gas supply, and President Clinton this week asked the Transportation Department to look into those supply problem. One solution pitched in the past is loosening restrictions on truckers' hours so more gas can be hauled into the region.

Oil experts say other factors driving up prices nationwide, include the spike in crude oil prices, which makes up almost half of the total cost of gas, the summer driving season, and the reluctance of some refiners to produce cleaner gas because they fear they would infringe on a patent held by Unocal.

This week, the Federal Trade Commission began looked into whether anti-competitive practices, such as price fixing and collusion, are contributing to higher prices -- Bill.

TUCKER: And Fred, while prices are high, we probably ought to put them in some sort of context, they have been higher in the past; right?

KATAYAMA: Well, right, Bill. In fact, despite the recent spike, when you adjust it for inflation, a gallon of gas today still costs 95 cents less than it did when prices peaked in 1981. And compared to other consumer products, the rise in gas hasn't been too bad.

Let's take a look at some of these other prices. You will notice that gasoline has risen 35.2 percent since 1982, that is more than the increase in electricity at 27 percent, but you know a lot less than the price of a bowl of Frosted Flake. I mean, cereal has gone up a whopping 226 percent, and tobacco more than 287 percent.

Should keep in mind, the source of these numbers are the -- is the American Petroleum Institute, and they also supplies these numbers as for what you would pay for a gallon of say, Coca-Cola, more so than a gallon of gasoline, $1.87 for a gallon of Coke compared to $1.48, that is the average nationwide for a gallon of gas. Hey, it is going to cost you even more to clean up your breath, Scope costs $19.68, which you will probably need after you take that vat of Jack Daniels at $98.41 a gallon.

Bill, so, when you compare it to all that, gas isn't that bad.

TUCKER: And that explains why I haven't bought any Jack Daniels in a while. Fred, thank you very much.

KATAYAMA: Neither have I, Bill.

TUCKER: All right, with gasoline prices rising the way they are, how long would you wait for a tank of free gas? Well, some people waited eight hours. That's how long motorists in Milwaukee, yesterday, waited, a radio station sponsoring a day-long pass at the pumps. By day's end, nearly 1,200 drivers lined up for a tankful of gasoline.

KEENAN: Well, the housing report released this morning indicates the efforts by the Federal Reserve to slow the rate of growth in the economy may be working. Housing starts fell nearly four percent last month, to 1.59 million units. While the number of new building permits issued also fell, it dropped 4.3 percent. The figures may indicate that recent interest rate hikes have cooled the economy and effectively put the brakes on inflation, something that will hamper expansion.

Well, Xerox warns that its second-quarter earnings will copy first-quarter results and that warning is raising concerns for some on Wall Street, causing a lot of pain for Xerox investors.

Let's bring in Susan Lisovicz at the New York Stock Exchange for the details.

And with this stock, Susan, when it rains it pours.

SUSAN LISOVICZ, CNN CORRESPONDENT: Well, that's exactly right, because this is the third profit warning in four quarters and investors do not easily forget that, nor do they forgive. Xerox, right now, the second most actively traded issue on the Big Board, it's getting hammered, down more than four.

What's happening at Xerox is that, among other things, it's realigned its sales force, that has hurt its customer relations and sales of some of its highest margin items. And it also says there are problems in Mexico, sort of a vague attribution to problems there, but apparently its management shake-up, just last month, where its top -- its CEO was replaced, not helping, not right now.

Jabil Circuit, a different story for Jabil. It makes circuit boards that are used in PCs as well as automotive companies and telecom companies. It came out, after the bell, in line with expectations, yet that stock getting hammered today, down more than two. A lot of techs on the Big Board are weaker today. although Jabil has gotten some favorable comments from Prudential. It's upgraded the stock to strong buy from accumulate and Bear Stearns has reiterated buy rating on that stock.

And then another story, also very company-specific. Lehman Brothers blowing away the Street with its estimates coming in at $2.78 a diluted share. The Street had expected $2.49. Financials across the board are getting hurt, and now Lehmans, we're seeing some weakness in that stock as well.

There have been a lot of concerns about what higher interest rates will do to companies, such as financials, investment banks, yesterday a large regional bank issued a warning for the entire year. And we're still seeing weakness in that sector, including Lehman, which had its second best quarter ever.

Back to you, Terry.

KEENAN: OK, thank you, Susan, Susan Lisovicz.

My next guest says today's economic numbers are further evidence the Federal Reserve's fight against inflation is doing the trick. But he says that we are concentrating too much on the Fed. Instead, investors should be worried about corporate earnings, this, of course, timely in light of today's warning by Xerox.

Joining me now, Gregg Hymowitz, money manager with Entrust Capital.

And Gregg, welcome back.

GREGG HYMOWITZ, MONEY MANAGER, ENTRUST CAPITAL: Thanks.

KEENAN: So we're too fixated on the Fed, is that because they are done raising rates?

HYMOWITZ: No, not only -- maybe they are done, maybe they are not done. But the bottom line is: No one's ever really made that much money trying to bet which way the Fed is going. I guess you could do that in the bond markets.

But as far as equity investing goes, you really have to focus on the companies. I don't -- I think there is very few money managers sitting around their offices in the morning, trying to figure which way the Fed is going. Most people figure that that's something that you're never going to be able to predict to any degree of certainty, and therefore it makes more sense to focus on your companies; focus how well various companies are doing and what the earnings forecasts are going to be for those companies.

KEENAN: So we're coming up to the close of the second quarter, how do things look?

HYMOWITZ: Well, earnings have been relatively strong, although you clearly see in the economic numbers have come out recently, economically sensitive stocks and economically sensitive sectors, housing and the related sectors, are clearly experiencing difficulty. Even in the industrial production number yesterday, the real strength in industrial production, the other day, was really in the semiconductors.

So technology sector continues to grow, particularly some areas of technology, where companies need to employ technology for either defensive or offensive reasons. But other areas, economically sensitive areas, clearly seem to be coming under pressure.

KEENAN: You know, so that raises the question, perhaps the Fed has done too much to try to slow down the economy and we could tip the balance into a recession, is that a concern of yours at all?

HYMOWITZ: Absolutely, and also further to that point, you have to also think that the last 50 basis points, probably the last 75 basis-point increase, isn't even factored in yet. There's definitely a lag effect for these increases to seep their way into the economy and the last 50, I think, most people would argue are definitely not in.

Once those get factored in, it may get a little scary, what those economic numbers may turn out to be.

KEENAN: The half percentage point that we just got in May.

HYMOWITZ: Absolutely.

KEENAN: What are some stocks then that you would be buying here, or would you be staying on the sidelines?

HYMOWITZ: No, I think that, given, you know -- again, I use the industrial production number sort of as a microcosm of what kind of names you want to own. And I think there are certain areas that are still doing very well. The infrastructure area in the technology is doing very well. There we own this company called Aspect Communications. It's sort of an infrastructure play into the new technology, into the new economy paradigm.

Select financial: If you think that interest rates, possibly, are towards the end of the increases, the savings and loans tend to do very well coming out of an interest rate-raising cycle. So there we own Golden State Bank Corp, the second largest thrift in the country.

So you have to pick your spots and you have to really focus on the companies. My only bottom line is, don't spend a lot of time for the average investor out there trying to figure out which way Alan Greenspan's going to move next.

KEENAN: OK, good advice. Thanks Gregg.

HYMOWITZ: Sure.

KEENAN: Gregg Hymowitz.

TUCKER: Well, in response to an antitrust investigation, America Online has submitted a proposal to the Federal Trade Commission to allow access to its instant messaging software to its competition.

With more on that story, CNN's Bruce Francis joins us now.

Hello, Bruce. And first of all, is the company characterizing this as a response to an investigation by the government?

BRUCE FRANCIS, CNN CORRESPONDENT: No, really, the way they're looking at this is there was a deadline for proposals to be submitted to an Internet standards body, and that is exactly what they've done here.

Competitors this morning, Bill, are telling me, well, you know, this is just an outline. It's all in the code. Let's see what AOL comes up with.

Let's take a step backwards and really take a look at what AOL Instant Messenger is. I'm going to message someone, Adam Levine, from IN THE MONEY. Now, I've set up my "Buddy List" here, as you can see. Adam is online. I'm going to say, hey Adam. And you can see that my name comes up there. Actually, it says "he Adam" because I am a notoriously bad typist. And Adam sends me a message right back.

This is a message system that is very widely used on the Net: 91 million people use it. It's Free to use, but it is not now interoperable with other forms of Internet messaging.

And there are competitors out there. This is we're going to go back to the Web, and this is the interface for a company called Odigo. And you can see over here on the right part of your screen, this area, that's what their interface looks like. It is a lot more sophisticated, much more visual than AOL's Instant Messenger service.

And you can't -- but right now, you cannot actually come in and message AOL Instant Messenger users from Odigo. They've been going back and forth battling, trying to get in and trying to make them interoperable. AOL keeps blocking them at every turn, and AOL says they will continue to do that until this new standard is actually accepted.

AOL considers this hacking. AOL's line on this is that, well, you know, you expose AOL members to maybe getting spam, which is unwanted, unsolicited kind of junk e-mail, and there are security issues. Those are issues that competitors play down. They just say that AOL wants to keep all the marbles for themselves -- Terry, Bill.

TUCKER: All right, Bruce, thanks.

Let's bring in Andy Serwer, actually. Andy's sitting over on the set here. Let's get him involved in the discussion.

Where do you weigh in on this, Andy?

ANDY SERWER, EDITOR-AT-LARGE, "FORTUNE" MAGAZINE: Well, a couple quick points, you guys. First of all, we want to thank Steve Case for watching IN THE MONEY because obviously he got the idea to open up instant messaging, or it looks like he's moving it that way, because we were just talking about that a couple days ago.

Second point, you know, I think we see AOL moving much quicker here in response to government pressure than the Time Warner half of the new company when they got in trouble with Disney. So kudos to AOL for being responsive there.

And third of all, I just used instant messaging for the first time. I know I'm a little behind the eight ball. We got 90 million people using it. But it really is like stepping off a Greyhound bus and getting on an F-16 jet fighter when you go from regular old e- mail. And I know, Bill, you're a user. So it's a heck of a technology and a lot of people are using it.

TUCKER: I'm a user, but more importantly, there are millions of teenagers...

KEENAN: Your kids are users.

TUCKER: Exactly right.

SERWER: Right, but it's going to be a business applications soon, and that's the real future of this technology.

KEENAN: Quick response from AOL another sign of how worried AOL and Time Warner are about getting this deal done?

SERWER: Absolutely. I mean, you know, the FTC is -- they did confirm they were studying this, and I think that AOL did the right thing and they're moving to opening it up. They -- the critics say they haven't done it fast enough, but I think they're definitely heading in that direction.

KEENAN: OK, thanks Andy. See you a bit later in the program.

SERWER: OK.

KEENAN: Well, all it takes now is a click of a mouse to seal a deal. And an 87-0 vote, the Senate has given the same legal power to cyberspace signatures as a pen-and-paper document. This will allow businesses to complete multimillion-dollar deals more easily and will allow consumers to obtain mortgages and car loans without ever setting foot in an office. The House overwhelmingly approved the bill on Wednesday and President Clinton has already voiced strong support for the measure.

Yesterday, we talked to Credit Suisse First Boston's Todd Raker about companies that work in this field. And here are some of the stocks that he suggested looking at: VeriSign was one them; Baltimore Technologies; Entrust Technologies; and Tumbleweed, which specializes in secure document transfer. And you can see a mixed showing for those stocks today.

TUCKER: Coming up on IN THE MONEY: How rich is too rich? Well, we will show you the latest list of billionaires.

(COMMERCIAL BREAK)

TUCKER: All right, this morning's "Wake-Up Call" salutes George Washington. It seems he's eager to make an appearance on the new $1 coin. A golden dollar has been discovered that is sending coin collectors on a treasure hunt. The coin has a double stamp: one side has George's winning smile, while the other has the back of Sacagawea. The one coin is expected to fetch $100,000. The discovery is particularly ironic because the mint in Philly had pushed a $40 million ad-campaign touting how happy George is not to be gracing the front of the new dollar coin.

KEENAN: Go figure.

OK, time now to check in on some other stories making headlines this morning. And for that we go to Bill Hemmer in Atlanta. He is sitting in for Daryn Kagan.

Hi there, Bill.

HEMMER: Hey Terry, hey, Bill, pretty nice return on that dollar, huh? Not bad.

We're watching a story this morning out of Indiana. Two fugitives from Mississippi state prison now back in custody. John Woolard and Roy Harper escaped from Mississippi's Parchment Penitentiary back in May. Harper was caught in a car wash in St. John, Indiana earlier today. Woolard was captured minutes ago after officers staked out a rural area near the town about 30 miles south of Chicago.

Now, Woolard and Harper broke out of the Parchment Penitentiary in May.

Patrick Elmwood (ph) now, from our affiliate WFLD out of Chicago, with more now on their flight from justice.

(BEGIN VIDEOTAPE)

MICHAEL DEMIK: I climbed on top that mailbox, and popped the door open, hoisted myself up there, within me and you, maybe a one foot distance of the man with the gun.

PATRICK ELMWOOD, WFLD REPORTER (voice-over): Michael Demik says he is lucky to be alive after coming face to face with John Woolard and Roy Harper. He says, he and a friend went out to his barn last night when they noticed it was locked. They thought something was wrong, so they decided to take a closer look. That's when they saw the two fugitives. UNIDENTIFIED MALE: I took off running, my kid behind a tree. I ran down the road. I got to Route 55 in a mile right here and all of a sudden I heard some tires screech. I turned around. They were in my van going down the road.

ELMWOOD: The FBI released these photos of the pair. They're pictures the men took of each other in the days following their escape from a Mississippi prison.

(END VIDEOTAPE)

HEMMER: Again, that story, Patrick Elmwood, our affiliate out of Chicago, WFLD. Again, both men now back in custody.

Now to news from the weather. All across the country, the intensity of that drought in the Southeastern part of the country has been upgraded to "exceptional." That's the government's highest drought category.

Some farmers in the state of Georgia watching their crops go to waste in the fields, and rainfall has been at least 30 percent below average for the past six months. Atlanta and surrounding counties are on an outdoor watering ban. And parts of the Midwest also are parched at this time. We could use the rain.

From Colorado, lower winds, higher humidity and cooler temperatures expected to help firefighters there battling two major blazes. The wildfires are a long way from contained then, but more than 17,000 acres so far have burned and hundreds have been forced from their homes. Together, Colorado's High Meadow and Bobcat fires have damaged or destroyed more than 50 homes and other buildings. This would be the first relief in the weather for fire crews in days.

A cooling trend expected to continue today in Northern California, following this week's record heat wave, specifically in the San Francisco Bay area. At least eight people now confirmed dead as a result of those triple-digit temperatures. The "Oakland Tribune" is reporting there may be more on the way. Hundreds have fallen ill in the sweltering conditions. The hot weather eased a bit yesterday, although electrical problems did persist. Thousands still remain without power this morning.

That's a quick update on the news from Atlanta.

Now back to New York, more with Bill and Terry on this Friday in the markets.

TUCKER: All right, Bill, thanks.

KEENAN: Thanks, Bill.

Well, what do members of royal families, princes, dictators, high-tech CEOs and Wall Street value investors all have in common? If you guessed money, you're right. Money and those who have a lot of it are the subject of "Forbes" magazine's next issue. It's the list of the 200 richest working people in the world. The volatility in the Nasdaq this year was responsible for some last-minute changes, but 50 Americans and another 150 billionaires from around the world made the cut. Topping the list in this year's rundown: Bill Gates, who is worth about $60 billion. Now, that's down from almost $100 billion last year. Not very far behind, breathing right down his neck, Larry Ellison, the CEO of Oracle, now with $55 billion dollars. And behind them, the co-founder of Microsoft, Paul Allen and investment guru Warren Buffett, who had a rough year. Sharing the fifth place are the German Albrecht family in the retail business, along with Prince Alwaleed of Saudi Arabia and S. Robson Walton, each worth about $20 billion a piece.

Joining me now, Kerry Dolan, who is an editor with "Forbes" magazine, and helped compile this list.

And Kerry, welcome.

KERRY DOLAN, EDITOR, "FORBES": Thank you.

KEENAN: What was the biggest surprise this year?

DOLAN: Well, it was really tricky to try and keep track of these guys, because as you mentioned, the Nasdaq and the volatility of stock prices were pushing people's networths way up and then way down. And so we didn't really know until the last minute who -- where the rankings were going to fall.

KEENAN: I mean, there are several executives who really were instant billionaires and then fell precipitously earlier in the year, such as Jay Walker of priceline.com, for one.

DOLAN: Right, Jay Walker was on our list last year. We had -- in this 200 that we do -- just so people in the audience aren't confused -- we list 50 of -- the 50 of these people are the richest Americans. And so there may be some Americans who are actually up there in the ranks of the rest of the 200, but they're going to be in our "Forbes" 400 richest American's issue in the fall.

But Jay Walker was $10 billion dollars last year, and so he made this top 50 richest Americans, and now he's back down to 2.8, and so he didn't make our cutoff.

KEENAN: What else did you learn from this list? I mean, one thing that's interesting is many of these fortunes were built in technology, and were built in the last 20 years or so.

DOLAN: Yes, five of the top 10 richest guys on our list have fortunes from technology. And about a quarter of the 200 altogether are pure technology fortunes. And the other things is, a lot of the fortunes are kind of old-economy fortunes, but people are moving in to adding an Internet component to the fortunes that they have, you know, banking or cement, even.

KEENAN: What other countries have made the list with 50 Americans? DOLAN: Well, we've got, beside the 50 Americans, people from all over the world. This year, first time we've had a billionaire from Egypt. And the first time we've had a billionaire from Norway. Other interesting changes: more new billionaires in India and a lot more new billionaires in Japan, which is kind of odd given that their economy is in the dumps.

KEENAN: Yes, perhaps a sign of a turnaround.

Any women make the cut?

DOLAN: We only had four women make the top 200, and they have all either inherited their fortunes from their fathers or their husbands, but they're still working, they're active. They're, you know, we've got people like Abby Johnson from Fidelity and Jacqueline Mars from the Mars family, the candy makers, are the American women on the list.

KEENAN: OK, thank you very much, Kerry.

DOLAN: Thank you.

KEENAN: We appreciate it.

DOLAN: All right.

KEENAN: Kerry Dolan, of "Forbes."

TUCKER: All right, irons, drivers and putters, oh my. This company is in the business of filling your golf bag.

Coming up, Callaway Golf is our "Stock of the Day."

(COMMERCIAL BREAK)

KEENAN: OK, there you see the Nasdaq market site. We have turned lower, down about 12 points. Apple Computer to the down side, off 2 1/2.

TUCKER: All right, in sports, the first round of the U.S. Open is expected to resume at this hour. Play had been postponed about halfway through yesterday because of fog. Golfer Tiger Woods was the shining star, despite the weather. He set a record on the Pebble Beach course after firing a 6-under 65 without any bogeys. It was the lowest U.S. Open score for a round ever shot at Pebble Beach. Woods will try to extend that one stroke lead today. Sounds like lots of folks were shooting it well.

Well, the world's top golfers are teeing up at the U.S. open this weekend, and in many cases, the driver of choice will be the Callaway Golf club. Since 1982, Callaway and its golf clubs and now balls have been fixtures along the PGA Tour, and this year will be no exception. As a public company, Callaway's stock has fared well, peaking near $21 a share just last month. And that makes Callaway Golf our "Stock of the Day."

(BEGIN VIDEOTAPE)

TUCKER (voice-over): The dashing duffer who created Callaway Golf built his company on these steel magnolias. The popular Big Bertha drivers and woods account for 60 percent of Callaway's sales. The company also manufactures irons, Odyssey brand putters, and now golf balls.

Last year, the company brought in $715 million on sales of 5 1/2 million golf clubs, that is more than its next three competitors combined. After spending $170 million to build its ball factory, Callaway expects sales of its golf balls to reach $50 to $70 million this year.

Keeping management's eye on the ball will be crucial for Callaway. A slowing U.S. market and the Asian economic crisis derailed its growth back in 1998. Sales fell dramatically, and Callaway was forced to slice 700 jobs and prices on its clubs.

But the company has since staged an impressive comeback, recently beating the Street's earnings estimate by 69 percent in the latest quarter. All of this has landed Callaway's stock back on the fairway. Shares are up 59 percent since hitting a near-term low of $11 back in February, thanks in part to a $100 million stock buyback.

(END VIDEOTAPE)

TUCKER: All right, and there you see Callaway Gold trading a sixteenth at 17 1/2.

For more, we are joined now by Joseph Yurman. He is the leisure products analyst, what a great job to have, at Bear Stearns here in New York.

And Joe, welcome for being on IN THE MONEY.

JOSEPH YURMAN, BEAR STEARNS: Thanks, Bill.

TUCKER: Let's start with the fact that you are kind of lukewarm on them because, if I read your research right, you think they have peaked out in terms of price.

YURMAN: Short-term I'd put it. Longer term we definitely believe that they are the category killer, their brand alone kind of sets them apart. Shorter term, however, we felt that the stock got a little bit over its heels. They announced a share buyback on May 4, and we kind of viewed that as the catalyst for the up move.

So when it hit 20 we didn't see any visible growth drivers in place. So we decided to adopt kind of a wait-and-see attitude.

TUCKER: This is kind of an off-the-wall question, but I started wondering if Tiger Woods might represent the biggest threat to them because he endorses other products that compete against Callaway Golf, and if he begins doing well, does that hurt Callaway?

YURMAN: Well, shot 6-under yesterday, but I think any golfer knows that he could probably hit 6-under with a rock. We really kind of break that into two different tranches. You have the consumer who will just pretty much go out and buy anything with a brand name, and we think that Nike has the potential to share -- steal some share in that case. However, your really avid golf is pretty loyal to their products, Callaway clubs, Footjoy shoes. So we really see a bifurcated market there, and don't necessarily think that it is going to spell doom for Callaway in any stretch.

TUCKER: All right, Joe, thank you very much. Joseph Yurman, he is the leisure products analyst at Bear Stearn, thanks for being on IN THE MONEY.

YURMAN: Thanks, Bill.

KEENAN: OK, you have now heard everything about Callaway Golf. Go to the bottom of our Web page and cast your vote.

Now, you told us what you thought about Heinz, the maker of tuna and ketchup was yesterday's "Stock of the Day." Fifty-five percent of you voted to buy the stock, not enough to include it our portfolio. That means that Heinz gets a thumbs down, and we are not going to add any to our portfolio.

TUCKER: All right, let's follow up on a story we talked about earlier this month. A Boston-based financier has bought a piece of Boston Celtics history. Bob Sager bid more than $330,000 for 16 panels of the famed Boston Garden's parquet floor, including the part with the famous leprechaun logo on it. The floor was built during World War II for $11,000. That parquet floor carried the Celtics through 16 NBA championship. Sections of it are being auctioned off on-line, but not that one anymore.

KEENAN: No. And still to come on IN THE MONEY: Want a cheaper way to a create your own customized portfolio? We'll tell you how to get more bang for your buck.

(COMMERCIAL BREAK)

HEMMER: I'm Bill Hemmer, live at the CNN Center in Atlanta. We interrupt IN THE MONEY to bring you George W. Bush live in Canton, Ohio for a quick question-and-answer session here.

(JOINED IN PROGRESS)

GOV. GEORGE W. BUSH (R), PRESIDENTIAL CANDIDATE: ... since the passage of the 1995 Safe Schools Act. You heard me during the discussion talk about how the Passages School here reminds me some of the alternative school systems we've got in place in Texas. And I'm pleased to say it's working.

It's very important for our classrooms to be safe and secure for -- so children can learn, but it's also important that there be alternative settings for children to learn. And that's what we did in the state of the Texas and the results bear out a good, constructive program. I want to thank the teachers for recognizing the progress being made, and I want to thank them for their hard work in the state of Texas and around the country.

I'll be glad to answer questions.

QUESTION: Governor, what could you do as president to help schools like this physically...

(CROSSTALK)

BUSH: Free up money. I've got -- I can't remember the exact number -- $12 billion of additional increase in money over the next five years. Fund character education programs. Free up the Century 21 program, so mentoring programs and faith-based programs can access the money to provide character education for children after school.

But the really best thing to do is to provide maximum flexibility so districts and states can design programs to conform to their specific needs.

QUESTION: Governor, yesterday the vice president was challenged on high gas prices. It's now well over $2 a gallon around here.

BUSH: Yes.

QUESTION: Anything...

(CROSSTALK)

BUSH: Well, you know, I think the thing -- I think the administration is doing the right thing to look at the cause of higher gas prices. As I understand, this is an aberration, that most states don't have the, you know, the high price that for some reason Ohio does. I'd like to know the causes before I make a reaction to it.

I do know that there's very little energy policy coming out of the current administration. I find it amazing that the vice president, on the one hand, you know, goes to the state of Washington and Oregon, for example, and won't tell us whether or not the administration will breach dams, which is a part of the source for energy in America, and on the other hand, you know, talks about the need to be independent for energy. There's some contradictions within the administration about energy policy.

I think we ought to be exploring in ANWR. I think we ought to not be destroying dams in eastern Oregon and eastern Washington. These are sources of good clean energy, and we're energy deficient obviously today. I think the -- we need to be working with our friends in OPEC to make sure that the price of crude oil, which doesn't rise to continue to force the price of gasoline up, particularly as the summer season comes -- is upon us.

QUESTION: Governor, polls -- there's been some slight dip in the polls lately on the support for the death penalty, and there's growing concerns about the number of convicts that may be being sentenced to death wrongfully. As governor of a state that leads the country in capital punishment, do you think that this could hurt you in the election?

BUSH: You mean taking a principled stand and not letting polls and focus groups determine what I believe? No, I think people appreciate a leader who makes a stand based upon principle. And the principle that I support is that if the death penalty is fairly administered, and there's no question about innocence or guilty and it's -- then I think people ought to be held accountable for their decisions they make. And I think society would be a safer place for it.

QUESTION: There's been questions raised about the man who's going to be executed next Thursday. Do you have any doubt in your mind that he's guilty?

BUSH: I'm going to make -- I'm going to wait for the Board of Pardons and Paroles to decide, to make their recommendation. I'm going to treat this case like every other case.

QUESTION: Governor, has there been anything done in the last few months that's given you any reason to reassess, even if you still feel the same way, your position on the death penalty? Does the situation in Illinois, some of the reporting that's been done about the representation of the people who are on death row in Texas, have you had any pause or any -- a moment to go back and re-examine your position in light of this even if you still feel the same way about it? Or do you just remain confident that you know enough about the issue and...

(CROSSTALK)

BUSH: Well, I know enough about each case that I analyze. I take each case very seriously. I look at the facts of each case. I'm fully briefed by a staff of lawyers that have analyzed the case. And I'm confident we have not put to death somebody who didn't -- was innocent.

And secondly, the reports about, you know, certain cases being thrown out on appeal, it shows the system is working.

And obviously the DNA issue's an interesting issue. There was some doubt in my mind as to the guilt of a particular person that just came up on death row, and we gave him a 30-day reprieve so that we could make sure as to whether or not the man committed the rape of the 12-year-old stepdaughter. He was guilty of the murder of the 12-year- old stepdaughter.

And in my state of Texas, in order to be put to death -- it's a capital-murder state, you have to be convicted of two offenses. And the fundamental question is, did he rape the young girl? The DNA proved he murdered the young girl. And I felt like it was important for us to answer that question.

QUESTION: The teachers union just did a survey, and the number one thing they're all afraid of is the violence in the classroom, not having control over students and not being backed by the system to have that control. What types of things do you think that you would offer to teachers in public schools where this has been...

BUSH: Well, one, the understanding that the threats of a lawsuit oftentimes prevent teachers from maintaining discipline in the classroom, and I think there needs to be a federal liability law that says to teachers and principles who enforce reasonable standards of behavior and discipline in the classrooms you can't be sued under civil rights statutes; and secondly is to provide flexibility with federal money coming down so that the states, if they feel like the need to develop an alternative school system, have got flexibility to do so.

But it's up to the states to make these determinations. This is a state issue as far as I'm concerned. The federal government can fund schools. As you notice, I talked about -- I mean, fund programs. But we've got to trust the people of Ohio to chart the path to excellence.

QUESTION: Have you had a chance to look at Al Gore's tax cut proposals? What do you think about them?

BUSH: Really risky. No, just kidding. I have not yet.

Somebody told me -- I think I read where, you know, they were running a series of focus groups, and so he made a decision to expand his vision on tax cutting because of focus groups.

Surely, America doesn't want a focus group-driven presidency. America wants somebody that makes decisions based upon what's right.

And what's right is sharing some of the surplus with the people who pay the bills. If you're a family of four in the state of Ohio, under my plan you get a 50 percent cut; and you make $50,000 a year, you get a 50 percent cut in your federal income taxes. There's some principles in my plan that I think are every important.

The federal government should take no more than a third of anybody's check -- that we ought to drop the bottom rate from 15 percent to 10 percent, because the marginal tax rates on people who are on the outskirts of poverty is hire than someone who's successful in society, and that's not fair. And I believe we ought to eliminate the death tax.

These are principled positions I've taken. I've taken them ever since the campaign began. And I don't need a poll or focus group to tell me what to believe.

QUESTION: Do you use focus groups, though, in...

(CROSSTALK)

BUSH: I don't need a poll or focus group to tell me what to believe.

QUESTION: But you use them in your campaign. BUSH: Maybe we are. If they do, they haven't bought the diagnosis to me.

It's like this -- somebody said, "Did you poll the Social Security issue?" And the answer is, absolutely not. I'm doing the right thing on Social Security. And if the American people don't like my position, then they've got an alternative for -- to be the president. But I believe it's right to give younger workers the opportunity to invest some of their payroll taxes in the private sector, otherwise we won't have a Social Security system. We won't have it conformed to the way it is today. It's going to require either a massive tax increase or a major benefit reduction.

And so, you know, they make test ads in front of focus groups. But I don't run a focus group, Robert, to tell me what to say and what to believe, and whether or not to expand my tax relief package or not.

QUESTION: Governor, with respect to Governor Taft...

BUSH: He's a fine American.

QUESTION: ... as you get closer to the Keystone State (inaudible) as a potential vice president. Where do you stand on that?

BUSH: This is a vice-presidency question? It's kind of an inside joke. It's all Candy (ph) seems to be able to talk about these day, in all due respect.

And by the way, I love you in yellow.

See, this is the way I try to avoid to answer your question.

The list? I'm still going through the process. I'm making progress. I talk to Dick Cheney on a regular basis. I'm not going to tell you what I talk to him about except it's the vice-presidency. And Tom Ridge is a good friend of mine. I like him a lot, and he's under consideration.

QUESTION: Is there a short list that you might have or that Candy (ph) may have as far as potential nominees?

BUSH: There is a list.

QUESTION: Is Governor Ridge on it?

BUSH: He's being considered, yes.

QUESTION: Governor, is Governor Taft on the list?

BUSH: He took himself off.

STAFF: Last question.

(CROSSTALK)

BUSH: Two.

QUESTION: (OFF-MIKE)

BUSH: As you know, I used the tax cut to do such that. I mean, for example, education savings accounts is an integral part of my tax relief package. And refundable tax credits for working uninsured are an integral part of my package. Or allowing non-itemizers to deduct charitable gifts is a part of my package.

But I also believe that in order to have a tax relief package that encourages and stimulates economic growth, there ought to be a cut across the board as well. Everybody who pays taxes ought to get tax relief.

So there's obviously a difference of opinion. He wants to target all his tax cuts; I want to give universal relief as well as, you know, encourage families to save for education purposes or to help the working uninsured.

QUESTION: Could I just ask you, would the surplus -- apparently there are numbers coming out that show the surplus is a lot bigger than people thought. Do you envision any changes in your plans to make anything larger or smaller? What would you do...

(CROSSTALK)

BUSH: In a tax-relief package?

QUESTION: In any of the packages that you advance...

(CROSSTALK)

BUSH: Yes, I can't imagine the tax relief package changing much. I told you this is going to be -- the plan I laid out in the primaries is the plan I was going to campaign on in the fall election. I'm not one of these people that are kind of trying to chase public opinion.

But we'll see, in terms of other things. I mean, if not, the money can go to debt repayment.

Last question.

QUESTION: On the adequacy of counsel question, if an innocent person has an inadequate lawyer and spends years either on death row or in prison before an appellate court lets him go, does the system not work against him? I mean, is that really the system working when an inadequate lawyer...

BUSH: It's a very hypothetical. Do you have a case in mind?

QUESTION: The fellow who had his lawyer sleep through the trial.

BUSH: Is there a question of his innocence and guilt? You said if an innocent person...

(CROSSTALK) BUSH: Well...

QUESTION: ... one, say, someone who -- I mean...

BUSH: If you're suggesting should a guilty person languish on death row, if that's fair, I don't think that is. And that's why, as you know, we passed a law to speed up the process, to make sure that the innocence and guilt and the full access to the courts were granted as quickly as possible.

But the man you're talking about, I'm not so sure I...

QUESTION: I didn't have him specifically in mind.

BUSH: OK.

QUESTION: I'm talking about the general issue of -- there is a question about at least a third of the lawyers who handle death row cases...

BUSH: In Texas?

QUESTION: (OFF-MIKE)

BUSH: Well, Archie (ph), I think we better find out the facts before we speculate out loud. The only thing I can tell you is, every case that I've reviewed, I've been comfortable with the innocence or guilt of the person that I've looked at. And I do not believe we've put a guilty -- I mean, an innocent person to death in the state of Texas.

Last question.

QUESTION: (OFF-MIKE)

BUSH: Next to last question.

I'll let you know after the pardons and parole board.

QUESTION: Governor, there's been some talk you're going to have a committee to go over the vice presidential prospects. Do you think it's going to be much more of personal decision...

(CROSSTALK)

BUSH: Yes, there's no committees.

QUESTION: Is it you and Mr. Cheney?

BUSH: Yes, somebody said we're running focus groups to determine who the vice president ought to be. Forget it, it's not happening. This decision process is about how I make decisions.

BUSH: And I'm a good decider, I know how to make decisions.

QUESTION: (OFF-MIKE) BUSH: Because it's going to be my vice president, and, again, I don't need a committee to figure out who is best to be the vice president. And I'm going to take my time, and I'm going to decide, and I'll make a good decision. And I haven't decided yet.

My body language would probably be different if I decided. You'll be able to detect it right off the bat. And then you'll be saying, you've decided but you won't tell. And nor have I decided when I'm going to announce. I'm going to take my time and make a very thorough decision.

Well, it's always a pleasure. See you later.

HEMMER: And with the developing press briefing out of Canton, Ohio with George W. Bush, we now join in progress IN THE MONEY live in New York. Here's Bill and Terry.

(JOINED IN PROGRESS)

TUCKER: ... trading higher, up 7 1/2 points. Chip stocks looking very good today. One in particular, Rambus; Rambus trading $25 a share higher in the market.

KEENAN: And this weekend, sons and daughters across the country will take time out to honor their dads for Father's Day. Hopefully some of those dads will get to relax and enjoy it. A new study shows that new fathers put in more hours on the job after their first child is born, especially if they have a son. Researchers aren't sure why. One theory is that parents see their roles differently, according to their children's gender.

TUCKER: Well, even in these days of casual dress, nothing says "Happy Father's Day" like a necktie. So as a service to our viewers, we created the IN THE MONEY tie index. It is a completely unscientific poll of neckwear prices around the country. Using all the journalism skills we could muster, our intrepid producers called retailers around the country and asked them, what's the most expensive Ralph Lauren tie you sell? We told you this was unscientific. The most expensive was right here in New York, of course. Where's the cheapest? Washington, at $80, though Miami wasn't far behind at $94 a tie.

And, Terry, we estimate the margin of error on this is plus or minus about $50.

(LAUGHTER)

KEENAN: Yes right, but not surprising that the most expensive ties are here in New York City where, of course, you and Andy get your ties.

TUCKER: Exactly. And so with that, that sounds like a segue into Andy Serwer.

Once again, Andy, welcome back, wearing a Father's Day tie, I might add. SERWER: Right, yes. Well, thank you. This tie, I got to tell you, did not cost me $185. This tie was made by my daughter last year in her nursery school and I got it for free, and I think it's pretty styling. What do you all think?

TUCKER: I like it.

SERWER: Yes?

KEENAN: I think it's pretty nice.

TUCKER: Looks like a Jerry Garcia kind of thing.

KEENAN: Why didn't you wear it in the beginning of the show?

SERWER: Well, you know, you're right. Maybe it didn't go so well with the stripes, Terry. You know about that stuff better than I do. But, anyway, so I decided to try it out today.

TUCKER: Excellent.

KEENAN: And you also wanted to talk about a very famous CEO and his father.

SERWER: And his father, yes. It's kind of an interesting story. I recently went down to West Virginia with John Chambers, the CEO of Cisco, of course, to visit his ancestral home to visit his parents. There he is with his mom and dad. That's John, of course, in the middle and his dad and his mom are right there with him.

And an interesting story: John is very close to his father and he told a story about when he was a young boy fishing with his dad in the streams of West Virginia. Fly fishing can be kind of treacherous, of course, and he slipped and fell. And he was going down the stream and possibly drowning and his father said, hang onto that fishing pole, hang onto that fishing pole. So he hung onto the pole really tight and his father was able to run downstream and actually pull him out.

And he couldn't figure out why his dad told him to hang onto the rod until later on in life, and he realized his dad was telling him that so he wouldn't panic, to have him concentrate on the rod. And Chambers said he really learned how to trust his dad based on that experience. And trust has become such a big part of his life, and he uses it in business a lot. This is a guy who does not view contracts as important as a handshake.

So trust is something that John Chambers, the CEO of Cisco, learned from if his dad. And it's kind of a nice story today because it's Father's Day.

TUCKER: That's a great story, actually. That's tremendous.

You're not the only one who brought Father's Day presents in: Mark Collins, the director here, brought his in. His daughter made him a tie as well. KEENAN: Oh.

SERWER: There you go.

TUCKER: I don't think this is one you can quite wear along with a cup. And I was going to bring one in. Andy, you would have loved it. It was a candle holder made out of beans.

SERWER: I love those.

TUCKER: Yes, pasta portrait kind of deal, but I left it sitting on the dresser at home.

SERWER: Your kids are going to kill you. But I like the color.

What do you think of the color scheme of that, Terry?

KEENAN: I think it's coming back in.

SERWER: Right.

KEENAN: Tie-dye is back in.

SERWER: Right, exactly.

KEENAN: OK, that's going to do it for today. Happy Father's Day to both of you.

TUCKER: Thanks.

KEENAN: And don't forget to join us on Monday. We'll find out how you can become an armchair millionaire. We'll get some tips and some common sense on saving without budgeting the fun out of your life.

TUCKER: That does it for today's edition of IN THE MONEY. Have a great weekend, everyone.

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