BYLINE: Paul Kangas, Susie Gharib, Stephanie Dhue, Suzanne Pratt, Darren Gersh

GUESTS: Doug Legatte, Alan Blinder

PAUL KANGAS, NIGHTLY BUSINESS REPORT ANCHOR: The conspiracy and fraud trial of former Enron executives Ken Lay and Jeffrey Skilling gets underway in Houston four years after the energy giant`s collapse. It`s a high- stakes case for both the defendants and the government`s crackdown against corporate corruption.

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: It`s out with the old and in with the new for the Federal Reserve tomorrow. The new? A new chairman set to replace Alan Greenspan. The old? For the 14th meeting in a row, another interest rate hike.

KANGAS: Black gold turns into cold, hard cash for ExxonMobil as it racks up its largest quarter of profits ever. The company made more than $80,000 per minute in the last three months of 2005.

GHARIB: And there`s another big player in the play to shake up Time Warner. We`ll tell you who`s waiting in the wings to take over the top spot at the media company.

KANGAS: I`m Paul Kangas.

GHARIB: And I`m Susie Gharib. This is NIGHTLY BUSINESS REPORT for Monday, January 30.

Good evening, everyone. The trial of Enron`s two top executives finally got underway in Houston today more than four years after the spectacular collapse of the energy trading company. Former Chairman Kenneth Lay and former CEO Jeffrey Skilling are charged with multiple counts of fraud and conspiracy. Late today, a jury was picked for the case, and opening arguments are expected to begin tomorrow. As Stephanie Dhue reports, this trial caps an era of high-profile corporate scandals.

STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Former Enron Chairman Ken Lay arrived to a crush of reporters at the courthouse in Houston this morning, followed by former CEO Jeffrey Skilling. To avoid conviction, the two will have to convince a jury that Enron was not the crooked "E." Lay and Skilling say Enron`s off-the-books business deals were legal, approved by the firm`s accountants and lawyers. A lawyer for one of those accountants, the now-defunct Arthur Andersen, says it could be a persuasive argument.

STANLEY BRAND, BRAND LAW GROUP: I think that argument will rise or fall on how the government and whether the government is able to simplify these transactions and these requirements and explain to the jury that they crossed a clear line.

DHUE: The prosecution charges Skilling and Lay manipulated Enron`s financial results and made misleading public statements to pump up Enron`s stock price and make themselves rich. Legal observers say the key to conviction will be making those charges easy to understand.

JACOB FRENKEL, ATTORNEY, SHULMAN, ROGERS, GANDAL PORDY & ECKER: The real challenge for the government is to not over-try the case, really to get what it needs into the record before the jury as quickly as possible, sit down and in essence force the defense to put on a response.

DHUE: In 2001, Enron was a high-flying Wall Street darling. But once its shaky finances became public, the company quickly collapsed. $60 billion in market capitalization was destroyed; thousands of employees lost their jobs and their retirement savings. Former SEC enforcement chief Stephen Cutler says Enron symbolizes the era of corporate corruption.

STEPHEN CUTLER, WILMER CUTLER PICKERING HALE AND DORR: It sort of defines, I think, an era in business the way maybe Watergate did in politics. It`s a watershed event.

DHUE: In Enron`s wake, Congress cracked down on corporate fraud, passing the Sarbanes-Oxley law. It put an end to accounting firms selling consulting services, forced CEOs to personally sign off on their companies` financial statements and increased boards of directors` independence. Observers say those reforms will forever be part of Enron`s legacy.

CUTLER: We`ve got Sarbanes-Oxley, like it or not, and we`ve had a much more stepped-up vigorous approach to enforcement, like it or not, and I don`t think those things will change significantly even if there`s an acquittal at the end of the trial.

DHUE: The judge said today the trial could take up to four months, but the Enron saga is unlikely to end there. Other Enron-related criminal and civil cases are pending, and if convicted, it`s a virtual certainty Lay or Skilling will appeal. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.

GHARIB: Meanwhile, former WorldCom Chief Bernie Ebbers asked a Federal appeals court today to overturn his conviction on nine counts of fraud and conspiracy. Ebbers was found guilty last March of masterminding the $11 billion fraud that drove WorldCom into bankruptcy. His appeal today claimed he was not allowed to call key witnesses to refute government evidence. It also questioned the length of his sentence, 25 years in prison. That sentence is five times as long as what was given to ex- WorldCom chief financial officer Scott Sullivan, who testified against Ebbers. The appeals court is likely to issue a written decision in this case later this year.

KANGAS: Tomorrow, the Federal Reserve meets to set interest rates. Policymakers are likely to raise short-term rates by 0.25 of a percentage point. Tomorrow also marks the end of Alan Greenspan`s 18 1/2-year tenure at the helm of the Fed. Suzanne Pratt reports.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: In his last meeting as Federal Reserve chairman, Alan Greenspan is widely expected to do what he has done in the previous 13 meetings: raise interest rates. The 14th straight hike would bring the Federal funds rate, or overnight bank lending rate, to 4.5 percent.

DREW MATUS, SR. MARKET ECONOMIST, LEHMAN BROTHERS: Although there is no inflation evident in the economy right now, the continuing decline in the unemployment rate and the continuing rise in capacity utilization suggests that inflation pressures are going to be there in the future. So they are trying to get ahead of that.

PRATT: The only source of suspense regarding tomorrow`s meeting is the wording of the statement accompanying the decision on rates. Some experts say policymakers will make some reference to the economy`s fourth quarter weakness, but will probably say 2006 will be better. Others say the measured language is likely to be removed. Still others say the changes will be minor so as not to upset a smooth transition in leadership to incoming Chairman Ben Bernanke.

ROBERT BRUSCA, CHIEF ECONOMIST, FACT AND OPINION ECONOMICS: If they make a bold change and Bernanke doesn`t really like it, then you could see another change, and that could cause things to look somewhat erratic. So I think conditions really argue for them to make some kind of a subtle change in the statement and not much more than that.

PRATT: Investors will undoubtedly look for clues in the statement as to the Fed`s thinking about the remainder of 2006. Many economists believe the Fed is likely to raise rates at Bernanke`s first meeting in March. It`s after that meeting when the future of monetary policy becomes hazy.

MATUS: We expect that they are going to keep raising rates to 5 percent, so that will happen at the May meeting. At that point, there should be enough resistance in the economy in terms of rates to basically slow the economy enough to kind of forestall those inflation pressures.

PRATT: If the Fed does raise interest rates tomorrow, most major banks will raise their prime lending rate as well. That would bring borrowing costs for consumers to their highest level in four and a half years. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.

KANGAS: Stocks opened slightly higher paced by record earnings from ExxonMobil, which we`ll detail shortly and reports Citigroup might seek majority control of GM`s finance unit. The Dow rose 12 points at the outset of trading, the NASDAQ up three. The early upturn was blunted by disappointing results from Schering Plough and Kodak and the market remained narrowly mixed for the rest of the day on investor caution ahead of tomorrow`s Fed policy meeting. The Dow industrial average closed down 7.29 at 10,899.92. The NASDAQ Composite was up 2.55, ending at 2306.78. Standard & Poor`s 500 up 1.48, ending at 1285.20. Over in the bond market, the 10-year note fell 4/32 to 99 24/32 putting the yield at 4.53 percent.

GHARIB: The nation`s largest oil company posted the largest quarterly earnings in U.S. history. ExxonMobil said today its fourth quarter profits surged 27 percent to a record $10.7 billion on revenues of almost $100 billion. Thanks to soaring oil prices, the oil giant earned $1.65 a share, $0.21 ahead of analyst estimates. For the full year, ExxonMobil made a record $36 billion on revenues of $371 billion. The stock surged 3 percent today, up $1.82 to $63.11. Other oil stocks also gushed higher today and joining us now to talk about the outlook for energy stocks, Doug Leggate, oil analyst at Citigroup. Hi, Doug.

DOUG LEGGATE, OIL ANALYST, CITIGROUP: Hi, Susie.

GHARIB: Well, let`s begin talking about Exxon. Do you think it can maintain this kind of earnings momentum in 2006?

LEGGATE: Well, I think the earnings momentum, really, these companies are essentially price takers to the extent that they are able to control their costs and their efficiencies, Exxon is certainly amongst the best in the sector and they demonstrated that again with this last four quarter. But obviously the outlook and the momentum depends on what the market gives them in terms of sustainable oil prices. We`re not certain oil prices are going to stay at current levels, but we don`t yet believe that the sustainable earnings power has been reflected in the share price.

GHARIB: All right. So then what is your view on Exxon`s stock? As I just mentioned, it was up 3 percent today. Is it time to take profits or not?

LEGGATE: Well, Exxon`s been something of a laggard against some of the smaller companies in the sector where there`s been some very significant operational catalysts. Clearly for the largest oil company in the world, it`s a little bit difficult on a quarter-to-quarter basis to identify those operational changes and consequently, the stock has been something of a laggard. In our view, there is good volume here for the longer term. It`s a very good defensive proxy in what we see is still a very robust outlook for energy. So we currently have a positive recommendation on the stock.

GHARIB: You told me that Amerada Hess is your favorite stock. That stock was also up sharply, 2.5 percent, up $3.73 today. Tell us why you like it.

LEGGATE: Well, Amerada Hess is first and foremost a management story in our opinion. This company is still and has been going through something of a transformation. It`s taken some years for the evidence of that, I guess, to feed through to the bottom line. We believe that 2006 is a pivotal year for Amerada Hess and we`ve seen that again with the removal of some key obstacles to this company recognizing (INAUDIBLE) its full earnings potential. Very strong volume growth, strong expiration outlook and more importantly, one of the most aggressive earnings momentum in the sector in 2006 we think will underpin strong performance (INAUDIBLE).

GHARIB: I`d like to move along and get your opinion on some of other stocks that you have on your buy recommendation list. Occidental Petroleum and also Marathon Oil. What is attractive there?

LEGGATE: Again, similar situations. These stocks are more than just a call in the oil price. They have very strong operational drivers moving them forward. Occidental has its first strategy presentation in five years taking place later in February. And we think there`s going to be some very strong momentum on oil and gas production, but also a very strong balance sheet that may see share buybacks over the next year or two. In the case of Marathon, again, a very strong management story there and a lot of latent value and some of the things that this management has put in place. We don`t yet believe this has fed through to the share price.

GHARIB: Just to wrap it up, your views on Chevron, also the stock was up a little bit today, about a half percent.

LEGGATE: I think investors may have to be a little patient with Chevron. They`ve had a tough couple of years in terms of the kind of operational performance that they`ve given the market. However, last year`s acquisition of Unocal and what we believe is a very robust production (INAUDIBLE) for the next couple years will think will underpin something of a recovery in that stock. But I think that`s probably a little longer dated than some of the smaller companies where we see more immediate catalysts.

GHARIB: All right, Doug, what about your ownership of any of these stocks or Citigroup`s role as an advisor.

LEGGATE: Personally I don`t own any of these stocks. Citigroup owns more than 1 percent of Hess and Chevron and we have acted for Marathon in the past.

GHARIB: OK, great. Thank you so much for coming on the program. We appreciate it.

LEGGATE: It`s a pleasure, thank you.

GHARIB: We`ve been speaking with Doug Leggate, oil analyst at Citigroup.

GHARIB: Kraft Foods is slimming down. Late today the company said it would cut up to 8,000 jobs or about 8 percent of its workforce. The maker of Oreos, Jell-o and a host of other major brands is being hammered by higher commodity costs and sluggish sales. Price increases haven`t been able to keep up with those higher costs and in some cases, consumers have defected from Kraft products to less expensive brands. And, Paul, some of those job cuts will come from the closing of up to 20 of Kraft`s plants.

KANGAS: Kraft is about 85 percent owned by Altria Group, Susie and Kraft stock today closed the regular trading session at $30 even. That was up $0.71 a share. Now let`s look at the rest of our stocks in the news tonight.

Big board volume leader, Time Warner (TWX) on 22.7 million shares, up $0.26. Media mogul Frank Biandi (ph) has joined Carl Icahn in his investment group in an effort to elect Time Warner directors and bring about a turnaround in the company. Mr. Biandi is also considered as potentially a new chairman and CEO.

General Electric (GE) was a $0.02 loser on the day.

And then ExxonMobil (XOM) up $1.82. You heard all about those big earnings. Those fourth quarter earnings incidentally were $0.21 above the Wall Street consensus.

Pfizer (PFE) a nickel loss.

And then Boston Scientific (BSX) down $0.73. That was fifth in volume.

Lucent Technology (LU) down $0.08.

Followed by Ford Motor Co (F) with a $0.03 gain.

Disney (DSN) edged up $0.38.

Texas Instruments (TXN) an $0.18 drop.

EMC Corp (EMC) tenth in volume, was up $0.03 a share.

Eastman Kodak (EK) down $0.62. The company narrowed its fourth quarter loss to $0.18 a share from $0.20 a year ago and that does include restructuring charges but keep in mind, it was the fifth consecutive quarterly loss for Eastman Kodak stock.

Schering-Plough (SGP) $0.51 drop there. Fourth quarter earnings of $0.07 versus a loss of $0.58 last year, but those earnings believe it or not a penny below the Wall Street estimate, so down went the stock.

Tyson Foods (TSN) off $1.10. The poultry producer had first quarter earnings of $0.11, way down from $0.14 a year ago and $0.04 below the Street consensus. The company also cut its 2006 guidance rather sharply.

USG Corp (USG), this is the old U.S. Gypsum, up nearly $16 a share. The company reported a fourth quarter loss believe it or not of almost $40 a share, but that does include the huge cost of settling its asbestos liabilities and it does pave the way for the firm to emerge from bankruptcy, hence the big gain in the stock apparently.

Omnicare (OCR) down $6.09. There were reports out that the government has made inquiries and is reviewing certain company facilities. Omnicare`s policy is not to comment on such activities, but the Stifel Nicolaus brokerage downgraded the stock from "buy" to just a "hold" rating.

Kinetic Concepts (KCI) off $3.55. Fourth quarter earnings higher, $0.64 versus $0.47 a year ago, but Standard & Poor`s downgraded the stock from "buy" to "hold" saying that there are patent litigation risks involved with this company.

Town & Country Trust (TCT) up $2.28. The Oriole partnership is going to acquire it for $36 a share in cash.

And then another energy stock, W-H Energy Services (WHQ), a nice gain of $4.14. Fourth quarter earnings jumped to $0.55, more than double last year`s $0.26 and revenues up a hefty 32 percent.

On the downside, Corn Products Intl (CPO) off $1.80. Fourth quarter earnings jumped to $0.31 versus $0.19 last year, but that was a penny below the Street estimate and the company is very cautious on its outlook.

And then Marathon Oil (MRO) up $1.51. The board of directors has approved a stock buyback of up to $2 billion.

Apple Computer (AAPL) topped the active list up $2.97. UBS is upbeat on the company`s launch of its Ibook laptops coming up in April.

Google (GOOG) down $6.67 a share.

$0.21 gain in Microsoft (MSFT).

Intel (INTC) $0.02 loss.

Sandisk (SNDK) was up $2.91. That was fifth in volume.

Amgen (AMGN) up $1.01.

Broadcom (BCOM) off $1.67.

Yahoo! (YHOO) fell $0.04.

Cisco Systems (CSCO) an $0.11 gain.

And Oracle (ORCL) was a $0.20 gainer.

A big gainer was Lowrance Electronics (LEIX) which makes navigational equipment, going to be taken over by Simrad Yachting for $37 a share.

And then finally we see Intrado (TRDO) up $2.72. It`s in wireless services and West Corp. will acquire it for $26 a share in cash.

Those are the stocks in the news tonight, Susie.

GHARIB: Thank you Paul. Well, after 18 1/2 years leading the Federal Reserve, Alan Greenspan enters the next chapter of his career at the close of business tomorrow. He plans to write a book, give speeches and do some consulting. Washington bureau chief Darren Gersh looks at the legacy of the man some call the greatest central banker in history.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Along with all the high-tech screens, Alan Greenspan kept a baseball bat in a corner of his office. The Louisville slugger was a sign of the career that might have been if the Fed chairman had been able to hit a curveball. Fortunately, he was a legend at handling whatever the economy threw at him.

LAURENCE MEYER, VICE CHAIRMAN, MACROECONOMIC ADVISERS: You can quibble over particular incidents and episodes whether the policy was perfect. But he was clearly a great chairman. Just look at the economic performance: long expansion, mild recessions, inflation right where the Fed wants it to be and that`s what they have most responsibility for.

GERSH: Meyer, a former Fed governor himself, credits Greenspan with presiding over one of the greatest economic moderations in history. Core inflation was cut in half, from 4.4 percent when Greenspan took office in 1987 to 2 percent now. Unemployment dipped from 6 percent to just under 5 percent. And through 222 months of the Greenspan era, the economy suffered through recession for just 18 of them. As important as helping the economy, Greenspan did not harm it. He was perhaps the first to recognize that productivity growth was taking off in the mid-`90s.

LYLE GRAMLEY, SENIOR ECONOMIC ADVISOR, STANFORD WASHINGTON RESEARCH: Had he not done so, the Fed would have tightened monetary policy much more aggressively than it did and choked off a lot of that investment, which created the productivity improvement from which we are still benefiting today.

GERSH: But like every good hitter, Greenspan whiffed a few. The chairman did little to head off the stock market bubble of the late `90s and now, some say, the housing bubble. He didn`t cause the excess, but critics argue Greenspan injected economic steroids, leaving the impression the Fed was willing to clean up the mess no matter what went wrong.

DEAN BAKER, CO-DIRECTOR, CENTER FOR ECONOMIC AND POLICY RESEARCH: On the one hand, he`s been willing to interpret the mandate of the Fed very broadly on some cases, but then when it comes to the financial bubbles, the stock bubble and more recently the housing bubble, he`s taken this hands- off attitude saying it`s not the responsibility, even though those bubbles cause enormous damage to the economy.

GERSH: Greenspan argues it would have been more painful if the Fed had tanked the economy to pop what may or may not be a housing bubble. With housing prices now softening, the next few years will tell whether Alan Greenspan could have done more to restrain the irrational exuberances of his time. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.

KANGAS: Tomorrow, doing the right thing for your employees.

GHARIB: After almost three months, a mechanics strike is finally over at Boeing. The aerospace giant has reached a deal with the union representing 1,500 employees at its plants in Alabama, Florida, and California. Union rank and file will vote on the agreement on Wednesday. The new contract offers lump-sum bonuses and wage increases in exchange for capping maximum medical benefits and dropping retiree medical coverage for new hires.

KANGAS: The United Auto Workers is one of three unions threatening a strike at Tower Automotive. Workers in three states have voted to authorize a walk-out at the bankrupt auto parts maker. Earlier this month, Tower filed a motion with the bankruptcy court to cancel its labor contracts. A hearing on that motion is set for February 27.

GHARIB: Here`s a look at what`s happening tomorrow. We`ll see the fourth quarter employment cost index and earnings from Altria, Google and Merck. Also tomorrow night, President Bush gives his state of the union address.

As we reported earlier in the program, tomorrow is the final day on the job for Federal Reserve Chairman Alan Greenspan. Tonight`s commentator has some thoughts on Greenspan`s tenure in office. Here`s Alan Blinder, partner in the Promontory Financial Group and former vice chair of the Federal Reserve.

ALAN BLINDER, FORMER VICE CHAIR, FEDERAL RESERVE: As many viewers of this program know, tomorrow is a momentous day in the history of the Federal Reserve, not because the Fed will announce that it is raising interest rates by another 25 basis points -- that`s been baked in the cake for months -- and not even because of the Fed`s eagerly-awaited statement, which may signal that it is finished raising rates for now, or, more likely, that it has just one more rate hike to go.

No, the big story is that tomorrow is Alan Greenspan`s last day on the job. After a remarkable 18 1/2-year run, the Fed chairman is finally hanging up his spurs and riding off into the sunset. It`s truly the end of an era. Greenspan, of course, is already a legend. Even veteran traders working in the financial markets for up to 18 years have known life under only one Fed chairman. They`ll have some major adjustments to make, as will the financial media. Ironically, Greenspan leaves office with a reputation as a dedicated inflation fighter.

In truth, inflation is down only slightly from where Paul Volcker left it in 1987. Greenspan`s real accomplishment has been virtually to banish recessions from the land. During his long tenure, we`ve had just one mild recession in 1990-1991 and an almost invisible one in 2001. That`s it, which stands in marked contrast to any other 18-year period in our history. For that I say thank you, Mr. Greenspan, for a job well done. I`m Alan Blinder.

KANGAS: Recapping today`s market action, stocks tread water as investors await tomorrow`s Fed meeting. The Dow fell seven points, while the NASDAQ Composite gained 2 1/2 points. To learn more about the stories in tonight`s broadcast, go to nbr.com.

GHARIB: And that`s NIGHTLY BUSINESS REPORT for Monday, January 30. I`m Susie Gharib. Good night, everyone. Good night to you, Paul.

KANGAS: Good night, Susie. I`m Paul Kangas, wishing all of you the best of good buys.

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by Voxant, Inc. 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 Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. c 2006 Community Television Foundation of South Florida, Inc.

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