<Show: NIGHTLY BUSINESS REPORT> <Date: April 22, 2013> <Time: 18:30:00> <Tran: 042201cb.

118> <Type: SHOW> <Head: NIGHTLY BUSINESS REPORT for April 22, 2013, PBS> <Sect: News; International> <Byline: Susie Gharib, Tyler Mathisen, Diana Olick, Hampton Pearson, Eamon Javers, Paul LeBeau> <Guest: Douglas Oberhelman, Steve DelBianco, David Quam> <Spec: Business; Netflix (NASDAQ:NFLX); Caterpillar (NYSE:CAT); Consumers; Economy; Housing; Real Estate> <Time: 18:30:00>

ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Susie Gharib, brought to on you by --

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TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: A big win for Netflix (NASDAQ:NFLX), the stock soaring more than 20 percent after hours on a

strong earnings report.

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: But a big miss for Caterpillars. The bellwether fall short of estimates and tonight, the CEO tells us what the results say about the health of the global economy.

MATHISEN: And cracked foundation? Is the shortage of homes for sale creating a speed bump on the economy`s road to recovery/

All that and more coming up on NIGHTLY BUSINESS REPORT for Monday, April 22nd.

Good evening, everyone.

Susie, it was a strong earning report late in the day for Netflix (NASDAQ:NFLX). But it wasn`t that way earlier today.

GHARIB: That`s right. Welcome back, first of all.

MATHISEN: Thank you very much.

GHARIB: Great to have you.

But that`s where we begin the program -- our top story: earnings and the economy, and conflicting signals about the shape of the business

landscape. First, Netflix (NASDAQ:NFLX), a stunning earnings report after the market closed, boosting the stock by more than 25 percent in afterhours. The streaming video company is pulling in millions of subscribers, thanks to the new strategy of rolling out original movies.

Quarterly earnings, the analysts estimate by 11 cents a share.

MATHISEN: By contrast, disappointing numbers from Caterpillar (NYSE:CAT). Quarterly earnings there plunged 45 percent and it issued a gloomy outlook for the rest of the year, because of weak demand for its bulldozers and excavators. Caterpillar (NYSE:CAT), considered a bellwether for the global economy, and so, investors pay attention when the company says it expects slow growth in 2013. More on that in just a moment.

Also today, some discouraging numbers on housing. Sales of existing homes fell in March. Economists had expected them to rise and a miss could be a sign that the housing market recovery is not as strong as previously thought.

Diana Olick reports.

(BEGIN VIDEOTAPE)

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): Like everything else in spring, the number of homes for sale is supposed to

grow. But that is not happening. Listings are down 17 percent from a year ago, according to a new report from the realtors. Listings usually increase by 100,000 from February to March, but they grew by just a third of that this year.

Investors have bought most of the distress homes and potential sellers are still underwater on their mortgages or worried about finding a move up home themselves. Supplies are down across the nation -- in Minneapolis, Houston, Charlotte, to name a few.

That has made the competition tough for buyers.

LEAH WILSON, HOME BUYER: We`ve put in over 30 offers and we were outbid in each of them.

OLICK: Leah Wilson Jacobs has been searching for a home in Atlanta since December.

WILSON: Two years ago, I went in and people couldn`t get their asking price. And now, it`s really tough to even ask, asking price. Now, you have to bid over.

OLICK: Low supply has caused prices to soar higher and faster than most expected. Gains hit the double digits in February, up just over 10 percent from a year ago, according to Core Logic. Ironically, that, too,

is adding to the lack of supply.

RICHARD SMITH, CEO REALOGY HOLDINGS: If I`m underwater in my equity and now, suddenly, I`m not, but I`m up 5 percent and the market around me is appreciating 6 percent, 7 percent, 8 percent, 9 percent, 10 percent, why don`t I wait? Let me wait and perhaps get a 10 percent return on my investment, not a 5 percent return.

OLICK (on camera): Not only are buyers desperate, so too are real estate agents. Some homeowners are finding these in their mailboxes, cards from agents saying, what would it take to get you to sell?

(voice-over): One of the top real estate Web sites, Zillow, has a new feature called "Make Me Move (NASDAQ:MOVE)." Potential sellers can float a price that would get them to move without actually formally listing the home.

Meanwhile, the realtors are begging the builders, claiming the market needs housing starts to jump 50 percent to meet demand. But the builders have their own supply issue: lack of land, labor and material. That will keep sales and listings low for the foreseeable future.

For NIGHTLY BUSINESS REPORT, I`m Diana Olick in Washington.

(END VIDEOTAPE)

GHARIB: More details now on those Caterpillar (NYSE:CAT) earnings. Caterpillar (NYSE:CAT) reported a first quarter profit of $1.31 a share. That was 9 cents below analyst estimates. Revenues also came in below expectations, down 17 percent to $13.2 billion. Now, both misses are blamed on a global slump in mining.

Caterpillar (NYSE:CAT) slashed earnings estimates for 2013 because of a big slow down in new mining project. The company also said that it would resume a share buyback for the first time in five years.

When I talked with CEO Doug Oberhelman earlier today, I asked him about the key factors for the revisions in Caterpillar`s outlook.

(BEGIN VIDEOTAPE)

DOUGLAS OBERHELMAN, CATERPILLAR CEO: We obviously adjusted our outlook for 2013. We brought the top line down about $5 billion and that`s really done around our mining business which has slowed significantly and is continuing to slow. But I do feel the mining business could be at or near a floor. So I feel a little better about that and we just held our bottom line at about $7 a share.

GHARIB: So, Doug, tell us about the mining business is -- how long is this slump going to last? Is this a temporary rough patch?

OBERHELMAN: I do think the mining rough patch is temporary. But the definition of temporary is something that I cannot define. Something that`s very interesting that we are watching closely, our traditional mining truck business here at Caterpillars, the trucks that we made, the off highway trucks, the huge 100 to 400-ton trucks that we built for decades is off 50 percent from its peak. With our acquisition out of Bucyrus, those products that came in to us a couple of years ago production are only down about 15 percent.

So, thankfully, we have that acquisition. There`s a lot of mining still going on in the world. It`s a big expansion projects that have slowed. So, while mining is occurring every day, as it always has, our after-market business is doing fairly well.

And as we look forward, the economy continues to grow, which we think it will. Construction continues to grow, which we think it will. Mining has to follow at some point. And it will. It`s just a question of the temporary definition you mentioned.

GHARIB: What about U.S. construction? We hear all the time about how the housing sector is recovering. How much of an improvement are you seeing?

OBERHELMAN: The housing business is recovering. In fact, we are

calling for about 1.1 million in starts that`s still way below the peak of a few years ago, but it`s almost tripled what it was at the bottom, in 2000 -- say, 2009 and 2010. And we are seeing and it feeling it from our customers every single day.

And it`s fairly widespread. I was in Florida not long ago. Our Miami people were talking about a big boom in condo construction there. I was in Arizona a couple of weeks ago and you can see new subdivisions albeit small and not the scale of what we saw in the peak in the early 2000s, it`s coming.

GHARIB: Tell us about China. What are your customers telling you there in terms of businesses? We are getting so many mixed reports about a slow down?

OBERHELMAN: I think mixed is probably the way to look at that. We have some pockets that are doing well. Overall, they brought, the Chinese authorities have brought the growth rate down, which is very healthy. I was not too excited about a 7.7 percent growth rate in the first quarter at all. That`s still very good growth rate. There`s a lot of things they are trying correct from the bubble they had there in the last five years.

But, overall, we`re optimistic. Our inventories have come down significantly in China, and we had a couple of good months to -- in terms of our sales to constructors and customers. And our second quarter should

look a lot better inside China. So, a bit -- just a bit more optimistic in China, at least in our business.

GHARIB: So, Doug, you announced today a stock buyback program. Tell us why. And is there any price level that you`re expecting Caterpillar (NYSE:CAT) stock to be, let`s say, next year?

OBERHELMAN: Now that our balance sheet is much stronger than it was. We have quit a bit of cash in our -- on our books and with the price of the stock and the multiples, we thought it was just an opportune time to do it. So, we announce that today, about a billion dollars we`ll contribute under the plan that`s outstanding.

And, really, it`s really around the strength of our balance sheet, absolutely. We can take it and we felt it would be a good time to do so.

(END VIDEOTAPE)

GHARIB: And that stock buyback announcement might be one reason that Caterpillar (NYSE:CAT) shares soar today, up almost 3 percent, you see there, to $82.71. >

MATHISEN: Well, Susie, while Caterpillars may be seeing blue skies ahead, if you fly, you may be seeing red. Airports all across the country may be experiencing big delays as air traffic controllers are furloughed to

save money -- the impact of those federal budget cuts from the so-called sequester.

Hampton Pearson has more now on how those cuts could change your travel plans right now and through the summer.

(BEGIN VIDEOTAPE)

HAMPTON PEARSON, NIGHT BUSINESS REPORT CORRESPONDENT (voiceover): Both New York`s LaGuardia Airport and LAX in Los Angeles, featured major delays in the first 48 hours of fewer air traffic controllers on duty nationwide. The new normal for the FAA because of government-mandated budget cuts. For the next six months, 15,000 air traffic controllers will be furloughed, losing at least a day`s pay every two weeks.

Passengers are being told to expect delays, just as the summer travel season moves in to high gear.

UNIDENTIFIED MALE: Traveling is stressful enough, and when you don`t know how long it will take you to get through the line, you have to add extra time that you wish you didn`t have to, to get from point A to point B.

UNIDENTIFIED MALE: I`m not doing anything but I do believe that if you want to prove a point, aggravate the average American.

PEARSON: Airline industry experts say delays are just the beginning of what could be a nightmare for airline travelers.

MIKE BOYD, BOYD GROUP: Your delay in LaGuardia means you`re going to miss your connection in Chicago. So, it`s the whole system. Omaha is going to hit. Lincoln is going to get hit. Everyone is going to get hit.

PEARSON: The major airlines claim about a quarter of the 27,000 commercial flights per day could be impacted. Their trade association is suing the FAA to halt the budget cuts.

NICK CALIO, AIRLINES FOR AMERICA CEO: The FAA has and should have exercised the discretion not to furlough air traffic controllers who never in the history have been furloughed before during any budget sequestration, any shutdown of the FAA, or anything like that.

PEARSON (on camera): Even the White House admits this was never supposed to happen. Press Secretary Jay Carney noting today, that`s why Secretary LaHood asked Congress to replace these dumb cuts.

At Reagan National Airport, I`m Hampton Pearson for NIGHTLY BUSINESS REPORT.

(END VIDEOTAPE)

GHARIB: Flying may be more difficult these days but there`s good news for drivers. Prices at the pump are down 11 cents a gallon over the last two weeks, and according to the Lundberg Survey, could fall by another 20 cents as we get closer to Memorial Day.

Gasoline prices are falling because of rising supplies of crude oil and lower than expected demand.

MATHISEN: Demand for shares was higher on Wall Street today. Stocks ended up with modest gains after last week, enduring the biggest weekly loss in five months.

The leading sectors were energy as crude oil rose more than $1 a barrel. And technology, ahead of those after the bell earnings due from Netflix (NASDAQ:NFLX) and Texas Instruments (NYSE:TXN).

The Dow ended the day 19 points higher, the NASDAQ was up 27, and the S&P 500 added 7.

GHARIB: Well, the price of gold also rebounded today, surging nearly $26 to $1,421 announced. But last week, as the price of gold was falling, investors pulled $2.7 billion out of gold exchanged traded funds, according to the Lipper Fund.

Now, Lipper says that most of that money was invested in international stock.

MATHISEN: Turning now to "Market Focus".

Texas Instruments (NYSE:TXN) reported after the close that revenues and profits were higher last quarter than Wall Street forecasts. More important, it said sales and profit may beat those expectations again this quarter. Shares had gained more than 1.5 percent before the close and were up an additional percent or so on the earnings news after the bell.

Microsoft (NASDAQ:MSFT) was the biggest Dow gainer today on CNBC`s report that an activist hedge fund is taking a $2 billion stake in the company. Other investors welcomed that news, bidding up Microsoft (NASDAQ:MSFT) up more than 3.5 percent.

GHARIB: Energy was the best performing sector and Halliburton (NYSE:HAL) the top performer. The company said it`s close to settling claims from the Deepwater Horizon explosion. It`s set aside $1 billion for settlement cost. That reserve however resulted in a quarterly loss for the company. But aside from that, Halliburton`s operations reported strong earnings and the investors were pleased to see progress in resolving claims from that 2010 explosion.

Halliburton (NYSE:HAL) shares surged almost 6 percent, to $39.

MATHISEN: Shares for General Electric (NYSE:GE) near the bottom of the blue chips. JPMorgan (NYSE:JPM) downgraded the stock by 2 notches, from overweight to neutral, following G.E.`s caution about its industrial businesses. G.E. shares were down almost 2 percent today.

And coming up: is the end of tax-free online shopping near? We`ll present both sides of a hot debate that could impact your money.

But, first, a look at how the international markets closed today.

(MUSIC)

GHARIB: When you buy items over the Internet, do you pay taxes on them? Apparently, a lot of us don`t. Now, there`s some new legislation moving forward in the Senate that`s aimed at making sure everyone pays up no matter what state they live in. And a vote could come this week.

Eamon Javers is with us now from Washington with more of this very controversial legislation.

So, Eamon, who is behind this move on collecting more sales tax?

EAMON JAVERS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Well, it`s a good question. It`s something the retail industry has wanted to do for

more than a decade, make sure Internet vendors collect sales tax for products sold online.

Now, today, at the United States Senate is taking up a bill that would allow states to collect sales taxes from us of state companies.

(BEGIN VIDEOTAPE)

DAVID FRENCH, NATIONAL RETAIL FEDERATION: There are some items where consumers are price sensitive and online retailers who do not collect sales taxes can under sometimes undercut the prices of brick and mortar retailers from charge by 10 percent just because of this situation.

JAVERS (voice-over): And that ends up for big money for hard hit state budgets, which has captured the attention of lawmakers here in Washington.

SEN. NELSON ROCKEFELLER (D), WEST VIRGINIA: My state loses $103 million last year alone. That is a pretty big chunk of our budget. That sounds silly to California. On the other hand, California loses about $4 billion plus.

JAVERS: Amazon (NASDAQ:AMZN), the nation`s leading online retailer, supports the bill, preferring the simplicity of one national standard. But eBay (NASDAQ:EBAY) and others are criticizing the measure, arguing that mom

and pop vendors who used online sale sites just aren`t equipped to the collect sales taxes in jurisdictions across the country.

Today, a new opponent came out against the bill, the financial services industry, who said it fears this could be a backdoor to a financial transaction tax.

KENNETH BENSTEN, SIFMA: We don`t know that for a fact, but the fact that the way this bill is drafted opens up the question that it could apply to services and could apply potentially to electronic trades and discount trades done electronically. It raises a concern that we think Congress should spend time looking at before establishing a mechanism that would allow the states to do that.

(END VIDEOTAPE)

JAVERS: White House Spokesman Jay Carney today said that the president supports the measure and he noted the bipartisan support for the idea, the bill titled the Marketplace Fairness Act was introduced by Wyoming Republican Senator Mike Enzi.

Back to you

MATHISEN: Eamon, thank you very much.

We`ve got two opposing points of view on this topic.

David Quam is a director of federal relations for the National Governors Association, and Steve DelBianco is executive director for NetChoice Coalition, an advocacy group that protects online commerce.

Steve, let me begin with you. Why do you oppose this legislation?

STEVE DELBIANCO, NETCHOICE EXECUTIVE DIRECTOR: Yes, fairness has lost all meaning in this town. I mean, how can it be fair when you`re going to force businesses in all 50 states to face audits, tax demands from tax collectors in 46 different states, where those businesses had no presence at all. It`s really becoming a burden and a barrier on businesses that want to reach customers all around the country.

MATHISEN: David Quam, what`s your response?

DAVID QUAM, NATIONAL GOVERNORS ASSOCIATION: I think Steve`s version of fair is a little bit off. Fair is when your corner store competes fairly with some electronic commerce seller from another state who is competing for the same customer. Both should have to collect sales taxes, both should be allowed to compete on an even ground. That`s what`s fair.

MATHISEN: Steve, back to you, with a follow.

DELBIANCO: Yes?

MATHISEN: Why do companies such as Amazon (NASDAQ:AMZN) and Walmart find themselves both supporting this when they do a lot of online commerce?

DELBIANCO: Yes, that`s easy because it`s ridiculous to say that the Internet doesn`t subject itself to sales taxes. Nineteen of the top 20 retailers already collect for all the states that have a sales tax and Amazon (NASDAQ:AMZN) will be collecting for over half the U.S. population later this year under current law. You see, e-commerce is subject to sales tax, and more and more big e-retailers like Walmart, Target (NYSE:TGT) and Amazon (NASDAQ:AMZN) already have to collect.

And when you already have to collect, you`ll take any amount of simplification, because it helps a little, especially if it puts burdens on the businesses you compete with.

MATHISEN: Mr. Quam, why don`t you answer Steve there? But also answer the question that I have read, that this proposal that is in the Senate and then would have to presumably go to the House, would unfairly burden small Internet retailers, most especially in states where there are no sales taxes now, like Montana or like New Hampshire and several others?

QUAM: You know, fairness means a lot of things. And for those states without a sales tax, those companies if they are going to do online

business and do business in another state, they need to play by that state`s rules. And that includes collecting a sales tax. In the Internet age with technology, that can be done.

As far as what`s being collected online already, for those companies who are already present everywhere, they are collecting and have been collecting.

MATHISEN: That`s right.

QUAM: But electronic retail means there are not the same borders anymore. And so, your corner store who does not get an exemption from sales tax is having to competing against people who don`t have to collect. Now, every citizen is supposed to remit that new tax?

At the end of the day, this is a collection issue for states. It`s about fairness for companies in competition and making it better for consumers who can have more robust competition between retailers.

MATHISEN: Steve, what about that? What about the idea that the little guy or the online retailer has an unfair advantage in these matters? And number two, that as you pointed out just a moment ago, many of these companies are already collecting and remitting sales tax, why shouldn`t all of them do it?

DELBIANCO: Yes, you have to. Every place that you have a physical presence, you`ve got to collect. And as far as Main Street being at a disadvantage, take a look at what happened at states like Texas, Pennsylvania, New York and California when Amazon (NASDAQ:AMZN).com began collecting sales tax? You`ll notice that there wasn`t a rush of customers away from Amazon (NASDAQ:AMZN) back to the Main Street stores. Reason? Consumers don`t buy online to avoid sales tax. They buy online for better choice, better convenience and lower prices.

The Internet is here to stay. And, in fact, businesses all across the U.S. turn to the Internet to reach new customers. Those are the ones that will run head long into what David called the new borderless world. It`s borderless because the tax auditor from New York state doesn`t have to respect the New York state border anymore. He can put demand letter and audit request into businesses in Nebraska and all 50 states.

MATHISEN: David, address, if you would, the constitutional questions that arise here? There are portions of the Constitution that say that you really can`t, once they can tax Internet commerce -- excuse me, interstate commerce from another state?

QUAM: You know, the Supreme Court said in 1992, a time when we were just talking about catalogs. Nobody had heard of Facebook (NASDAQ:FB) or Yahoo (NASDAQ:YHOO), or eBay (NASDAQ:EBAY) or Amazon (NASDAQ:AMZN), that that time, state laws were too complex for everyone.

But guess what? We are in a different day and age. Everybody knows electronic commerce. The Internet is here to stay. It`s robust.

And what you have right now is because Congress has not acted, you are giving a subsidy to online retailer that isn`t needed. They`re robust. What we need to do is treat everyone the same. If you`re going to look for customers in a state that has a sales tax, you should collect and remit, just like everybody else in that state passes.

MATHISEN: Steve, you got the first word, David got the last. Thank you both for joining us tonight.

QUAM: All right.

MATHISEN: We appreciate it.

UNIDENTIFIED MALE: Thank you so much.

GHARIB: And still ahead, tonight, as China`s auto market grows, is demand for luxury cars about to shift into high gear?

But, first, let`s look at how commodities, treasuries and currencies fared today.

(MUSIC)

MATHISEN: China is the world`s biggest market for auto sales, and with its growing middle class may soon become the biggest market for luxury car sales. And automakers have taken notice.

Now, upscale brands are pushing hard to appeal to the growing masses of Chinese luxury car buyers. And as Phil LeBeau tells us, it`s paying off.

(BEGIN VIDEOTAPE)

PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT: If you believe image is everything, then you`ll understand why China and Shanghai specifically had become a primary focus tore luxury automakers. It is also the reason why China has become the number one market in the world for luxury brands like Land Rover.

Thanks to this dealership in Shanghai, Land Rover sales in this country jumped a staggering 71 percent last year.

RALF SPETH, JAGUAR LAND ROVER: We are convinced that we can do even better in the future.

LEBEAU: Even better than 71 percent annual sales growth?

SPETH: Seventy-one percent was outstanding. We will not have it every year, but under the program we offer for the Chinese customers, I`m quite sure that we can continue to write a success story.

LEBEAU (voice-over): In China, German luxury dominates the market. With more than 70 percent of the high-end vehicles being sold here being Audi, Mercedes or BMW models.

DIETER ZETSCHE, HEAD OF MERCEDES-BENZ CARS: It continues to be breathtaking, you know? When you even think back like 5 years, it`s a different country. And even when you come three times, four times a year, every time you come, you have the impression it`s different from the last time I was here -- new buildings, new construction, new airports. It`s amazing.

LEBEAU: BMW chose the Shanghai auto show to unveil is new X-4, the small CUV will be sold in China, but will be built at the BMW plant in Spartanburg, South Carolina. It`s all about feeding the zooming Chinese luxury auto market that will pass the U.S. by 2016 and dwarf it by the end of the decade, with sales topping 3 million annually.

MICHAEL ROBINET, IHS (NYSE:IHS) AUTOMOTIVE: The market in California ebbs and flows like any other market. But I think China is really looked at and earmarked as the luxury growth market for the next decade.

LEBEAU (on camera): As for G.M. and Ford, China`s luxury auto boom has so far been a missed opportunity, but wonder trying to turn around, G.M. is enjoying success with Cadillac sales as they are adding dealerships here. And next year, Ford will be bringing the Lincoln brand to China to begin sales over here in Asia.

In Shanghai, Phil LeBeau, NIGHTLY BUSINESS REPORT.

(END VIDEOTAPE)

GHARIB: It will be interesting to see how the Lincoln does there. It`s been struggling so much here. But aren`t those numbers amazing?

MATHISEN: They really are. And having been there a year ago, you see not only those German brands, which is so dominant. But you see a very large portion of Rolls Royces. I think in a per capita basis, in Hong Kong, which is, of course, not a part of mainland China, Hong Kong has the highest level of --

GHARIB: They want to make a splash.

MATHISEN: -- and Rolls buyers.

But it`s really something over there.

GHARIB: Well, that`s it for us tonight, NIGHTLY BUSINESS REPORT. I`m Susie Gharib. Thanks so much for watching.

MATHISEN: And from me as well. I`m Tyler Mathisen, thanks so much for joining us. Have a great evening. We hope to see you right back here tomorrow night.

END

Nightly Business Report transcripts and video are available on-line post broadcast at http://nbr.com. The program is transcribed by CQRC Transcriptions, LLC. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Nightly Business Report, or CNBC, Inc. Information presented on Nightly Business Report is not and should not be considered as investment advice. (c) 2013 CNBC, Inc.

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