The initiative is meant to beat congressional critics to the punch on IRS reform proposals.
Peter Barnes reports from Washington.
The administration announced proposals to fix the IRS that will put the Treasury Department
more in charge of the troubled agency.
Continuing improvements in the quality of service that we all as ordinary citizens receive
from banks, from brokers, from credit card companies have brought ever more sharply into
focus the IRS's problems in the customer service area.
At the IRS and at Treasury there is a recognition that we can do better.
The IRS has been under heavy fire on Capitol Hill for botching a three and a half billion
dollar upgrade of its computer systems.
Other critics simply want to gut the current tax code, replace it with a flat tax and close
the agency down.
In June a special bipartisan commission will announce its recommendations for reforming
the IRS.
The Treasury Department's announcement beats the panel to the punch and lays down the administration's
marker in the debate.
The message is clear.
It is time for change.
Administration plan would put a Treasury led management board in charge of fixing the agency's
computers, put a management professional, not a tax expert, in charge of the service,
speed up hiring of top managers, outsource more work to private sector subcontractors
and streamline the 9400 page tax code.
A member of the bipartisan commission welcomed the announcement saying the panel will make
some similar proposals.
But he said it wants IRS oversight by an independent outside board, not one operated within Treasury.
We want to make sure that the IRS is nonpartisan, immune from political pressure and we think
of the days when Nixon had an enemies list.
The enemies list was meaning the IRS investigate and harass taxpayers.
Another member of the bipartisan commission is president of the union which represents
nearly 100,000 IRS workers, some of whom could lose their jobs to outsourcing.
It's foolish.
I think that taxpayers are not interested in having the private sector know their most
private financial information.
Peter Barnes, CNBC Business News, Washington.
Another legal setback for the tobacco industry, the US Supreme Court has ruled that Florida's
court case against the nation's cigarette makers can go ahead.
It turned down industry arguments that the law unfairly seeks to stack the deck against
tobacco companies.
Florida is one of 20 states that has sued the industry in an attempt to get reimbursed
for Medicaid costs.
Tobacco stocks down today, Philip Morris off 1 and 5 eighths, RJR down 1 and 1 eighth and
Lowe's off 1 and 5 eighths.
Shares of Advanta getting pummeled today, finishing down 8 and a half at 31 and 7 eighths.
That company warning it expects to report a loss of 44 cents a share in its first quarter.
That is well below forecast.
That due to losses from delinquencies in its credit card businesses.
Chief Operating Officer David Brooks resigning as a result.
And the other credit card issuers were also down on the day.
MBNA down 2, First USA down 5 eighths and Capital One Financial down 1 and 5 eighths.
Treasury prices were lower from the get go today.
Fed Governor Edward Kelly said on Friday that the Federal Reserve could lose credibility
if it didn't raise interest rates at the end of the month.
Later San Francisco Fed President Robert Perry speaking in Germany said the Fed must curb
inflation pressures before they emerge.
But he tempered those comments by saying that there are few signs of wage inflation.
As a result the long bond came off its lows, finishing down 6 ticks, the yield at 6.95%.
The rebound in the bond market helping stocks to shrug off earlier losses.
The Dow falling as many as 80 points before rallying in the last half hour of trading.
Leading the way back was Boeing up more than 3 points.
IBM the big loser down 4 and an eighth at 139 and a half.
After falling more than 6 points early on today.
And not helping matters early on as well was billionaire investor Warren Buffett.
In a letter to his Berkshire Hathaway shareholders Buffett saying that he thinks the stock market
is overvalued.
But he does remain bullish on McDonalds.
Berkshire Hathaway increasing its ownership to 30 million shares from 9 million last year.
McDonalds gained 2 and a quarter to 46 and 3 eighths.
Merck also on the upside by 2 and 3 quarters to 91 and 1 eighth.
Its Angina drug under development was shown in two studies released today to reduce the
risks of heart attacks when used with other drugs.
Here's a look at the final numbers for you from Wall Street.
The Dow up 20.02, 69.5548.
NYSE Composite Average up.67 on 494.4 million shares changing hands.
Breath of the Market was negative 835 stocks unchanged.
Average share gained 7 cents.
New highs 49.63 new lows.
The transports up 13 and a quarter.
The utilities up just about a half a point.
NASDAQ got hit very hard down 13 and a half points on 535.2 million shares changing hands.
S&P up 254, Russell 2000 up rather off 3 and 2 thirds and the Amex off about 4 and a quarter
points.
And Maria Barduramo has been following the market and joins us live from the New York
Stock Exchange with more.
Maria, big rebound today.
It sure was Sue.
The bank stocks were among the most notable in fact to turn.
Citicorp finished the day up 2 and an eighth.
Chase Manhattan up 2 and 3 eighths.
The company has an important analyst meeting tomorrow and analysts say that should support
Chase Manhattan shares even further.
News Bank up an eighth of a point.
JP Morgan also up 1 and 3 quarters.
The banking index finished up 1 and 2 thirds points.
It had been down sharply early on.
And the drug index also rebounded having been down earlier but finished up a strong eight
points.
As for the technology stocks and mixed performance there although mostly down by the closing
bell, still a partial rebound for some by the close.
Barini and Associates out in Connecticut, a firm which tracks program activity, said
the rebound was due to a late day buy program.
Traders told me that the buy on the dip mentality really remains down here on Wall Street.
So as soon as stocks get to levels seen as bargains, people just jump back in considering
we still don't have confirmation on an interest rate hike and even a quarter of percentage
point hike probably would be seen as a positive because it would lift the uncertain cloud
that remains with regards to interest rates.
Back to you Sue.
Thanks Maria.
Maria Bartiromo live from the New York Stock Exchange.
Well as you know there are four new component stocks in the Dow Jones Industrial Average.
The four ending the day mixed as you can see here.
Now the people who manage the 100 year old index want to bring the average more in line
with the growing industries of technology, healthcare and finance.
But as CNBC's Tim Tindall reports, critics say some significant sectors of the economy
are still not represented and the changes could increase the Dow's volatility.
The first makeover of the Dow industrials in nearly six years comes as the index has
soared to new heights, rising 75 percent over the past two years.
The changes are designed to make the Dow more reflective of the economy to get rid of some
underperforming stocks as well.
Added to the index are healthcare products giant Johnson & Johnson, the travelers group
of financial services firm, computer maker Hewlett Packard and the retailer Walmart.
Removed were Bethlehem Steel, the media company Westinghouse, Texaco the energy giant and
old line retailer Woolworth.
The basic manufacturing side of the economy like steel is obviously much less important.
Steel and autos used to be the real bellwethers of the economy and today it's services, information,
technology.
While most money managers say the changes to the Dow industrials are at best long overdue,
investors here at this fidelity center in midtown Manhattan are split.
Some welcoming the changes as a recognition of blue chip quality while others say the
Dow components mean very little to their personal investment decisions.
The Dow doesn't really affect me, I'm just investing in my mutual funds, conservative
stocks.
If money is recognized and is considered worthy of being added then that's certainly something
that will highlight my choice.
It affects the way I feel about the market every day but I buy stocks on their fundamental
basis.
While money managers generally don't feel the changes are significant, some experts
say with the addition of higher priced growth issues the Dow could be hit harder during
a downturn since the undervalued stocks are no longer there to provide support and some
market newsletter editors believe it may be worth taking a new look at some of the stocks
being removed.
Over the long history, deleted stocks have generally done better.
It's one of the interesting observations you can make on the Dow and one of the reasons
that our system tends to work, you have these seemingly more abundant companies which nonetheless
are among the most economically important resourceful companies in the world.
But even with the addition of more technology companies like Hewlett Packard, some critics
of the changes say by excluding Nasdaq stocks like Microsoft and Intel, the new Dow 30 isn't
really an accurate reflection of the economy.
Tim Tindall, CNBC Business News, New York.
Has a billionaire investor's Midas touch turned to bronze?
That story and more when market rep returns don't go away.
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CNBC presents the motion picture thriller Hollywood 8.
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A white knight for ADT.
Tyco International is saying it will buy the electronic security system provider for $5.6
billion in stock.
That works out to about $29 a share.
Tyco is a leading maker of fire protection systems.
It says it expects the deal to add 20 cents a share to its 1998 fiscal earnings.
ADT has already received an offer worth $22.50 from Western Resources that it rejected as
being inadequate.
Western holds a stake in ADT already.
It says it is studying the new offer.
Shares of ADT up 3 and 7 ace, 25 and 5 ace.
Tyco down 2.
And Western Resources up 7 ace on the session.
HF Amundsen is raising its hostile bid for Great Western to $6.73 billion, topping the
friendly offer by rival Washington Mutual.
The new Amundsen offer would be worth $48.30 to Great Western shareholders, which is about
$3 a share more than Washington Mutual's $6.3 billion bid.
Great Western says it still opposes the Amundsen offer.
For its part, Washington Mutual says it will not raise its bid.
Shares of Great Western today down a quarter.
Amundsen was off a half.
Washington Mutual up three quarters.
Rupert Murdoch expanding his empire.
His News Corp reaching agreement to buy marketing company Heritage Media for about $750 million
in stock plus debt, or $20.50 a share.
News Corp says it will sell Heritage's radio and TV broadcast properties and keep its marketing
services operation.
Heritage finishing today's trading session up 5 and 7 ace at 18, while News Corp lost
3 ace to 20 and a half.
Billionaire John Kluge has made himself rich through savvy investments in everything from
TV stations to cellular phones, but his newest company, Metro Media International, has not
done well in the latest bull market.
The now investors are pushing him to give up his long-term strategy and instead split
up the company.
What's a billionaire to do?
CNBC's Greg Miles reports.
Billionaire John Kluge has become one of the world's wealthiest men by turning a simple
formula into an art.
Buy assets cheap, hold for the long-term and sell high.
Kluge has turned his American TV stations, radio properties, cellular phone assets and
even sports teams into a fortune valued at $7 billion.
Many investors have gotten very, very rich along with him.
But is John Kluge losing his touch?
Today Kluge, age 81, is facing unusual skepticism from Wall Street.
His new company, Metro Media International, has seen its stock plunge in the past year.
The entertainment and telecommunications company has completely missed the bull market.
In order to get proper valuation on this stock, they have to simplify their strategy and focus
their outlook.
Today, this company looks like a hodgepodge of John Kluge's personal assets.
That has prompted Moran and other Wall Streeters to insist that Metro Media sell or spin off
its entertainment assets and use that money to grow its overseas telecommunications business.
Kluge apparently is listening.
The entrepreneur and his highly regarded heir apparent, Stuart Sibotnik, is considering
several big moves to boost Metro Media's share price.
The most likely option?
One Kluge associate told CNBC, I expect entertainment to be sold sometime this year.
Kluge is just getting too much pressure from Wall Street and shareholders.
Today, Metro Media sells for around $10 a share.
But some analysts estimate it could command $25 a share and quickly if the entertainment
unit were sold.
The heated talk about Metro Media's stock price reflects Wall Street's clash with Kluge's
and Sibotnik's historic long-term view of investments.
When Mr. Kluge brought the company public as it's currently configured, the strategy
announced to the street was basically this is a long-term commitment to build.
And unfortunately, investors forget the long-term and only think about what's going to happen
in the next quarter.
But Kluge may have to wait to sell the entertainment unit, which includes once troubled Orion Pictures,
a giant but aging film library, and an independent film studio.
The big problem?
Experts say that simply too many other movie properties are on the block and Kluge is unlikely
to get the $650 million price tag he reportedly wants.
After all, Kluge's entire company sells for around $650 million in the market today.
It may take years for Metro Media to harvest profits, but experts agreed that the key lies
in the overseas telecommunications business.
It includes telecom, cable, and TV properties across Russia and Eastern Europe, with Kluge
buying dozens of licenses at cheap prices, giving Metro Media exclusive rights to rich
city markets.
Clearly, there's no reason to expect that you wouldn't have a, you know, 10 times the
asset value five years from now that you presently have.
Already, Kluge has operations in more than a dozen countries and license rights to ultimately
serve millions of customers, properties which experts say could easily grow to more than
$1 billion in value.
It could take years to prove whether this venture is successful, but Kluge's reputation
as a genius is powerful.
So given his age, many investors may decide that this is one last chance to rake in profits.
Greg Miles, CNBC Business News, New York.
Shares of Metro Media finish the session up three-eighths today at nine and 13 sixteenths.
Well, wouldn't you know it, a special St. Patrick's Day edition of Taking Stock with
three of my favorite people, Walter Murphy, Bernadette Murphy, John Murphy, and you.
That would make four.
We have a favorite Irish people.
That's right.
That's in Taking Stock.
But next, Ford says goodbye to some longtime models and temporarily shuts production of
its best-selling car, and we'll tell you all about it when we come back.
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Tonight on Rivera Live, yet another alleged confession by Timothy McVeigh, but the judge
in the Oklahoma City bombing trial refuses to grant a delay.
Can Timothy McVeigh get a fair trial?
Plus, why are convicts being set free in Florida?
Thank you, Rivera Live.
Texaco is facing another racial discrimination lawsuit.
A class action case has been filed in U.S. District Court in New York on behalf of African
Americans who applied for employment at the company.
In December, Texaco settled a racial discrimination suit against salaried African American employees,
but the settlement did not cover those minorities who had applied for positions but were never
hired.
No comment from Texaco.
Texaco finished the session up one half at 101 and three quarters.
On this St. Patrick's Day, you may be interested to know that 80% of Ireland's foreign investment
comes from the U.S.
And in the last two years, U.S. firms have been flocking to Ireland.
Pharmaceuticals, investment and manufacturing firms are all crowding in, but high-tech
companies have led the migration.
CNBC's Tom Costello reports now from Dublin.
These are the idyllic images most of us associate with Ireland, a place of extraordinary beauty
where life seems to meander at its own leisurely pace.
But this is also a place where some of America's fastest growing companies have staked a claim.
476 U.S. companies now operate here.
They employ a staggering 27% of Ireland's manufacturing workforce and rack up $15 billion
in exports a year, 30% of the country's total.
Why have they come?
Well, the two crucial selling points we have are number one, our tax rate, and number two,
our workforce.
In addition to grants and subsidies, Ireland offers companies a maximum tax rate of 10%.
Other EU nations offer tax rates of 35% and higher.
Membership in the EU means companies have access to the entire European marketplace,
and Irish students are encouraged to study subjects that will make them attractive employees.
Right now, a quarter of the population is in school.
And they're able to step into what you can see here is a pretty high-tech environment
and do very well for us.
Hewlett-Packard makes inkjet cartridges here, its largest such plant in the world, and it's
expanding.
It plans to employ 2,000 people within three years, the same true at Motorola and IBM.
Intel now has 3,000 people here, while 3Com's hoping its $110 million expansion will help
it keep pace with demand.
The company chose Ireland over other European countries largely because Ireland's social
and labor laws allow for flexibility.
This plant here operates seven days a week, 24 hours a day, so we do require and expect
quite a flexible response from the workforce to peaks and troughs with demand.
This Irish-EU-American partnership has produced an average rate of return on manufacturing
investment of 25%, four times the EU and world average.
Companies here say that more than makes up for the one negative they contend with, the
fact that Ireland is an island and everything must be shipped back out.
150 years ago during the Great Irish Famine, many people here saw America as the promised
island.
Today, many U.S. companies migrating to the Emerald Isle see Ireland in much the same
way.
Tom Costello, CNBC Business News, Dublin.
President Clinton has given a labor mediator two more days to reach a labor agreement between
AMR and its pilots.
White House spokesman Mike McCurry says Mr. Clinton acted in response to a letter from
Emergency Board Chairman Robert Harris.
It said the two sides were in intensive talks and needed the time to increase the chances
of settlement.
Mr. Clinton will now wait until Wednesday to announce ways to prevent a strike.
Shares of AMR finish the session up 5-8 at 86 and 3-8.
Rockwell International says it plans to spin off its $3.1 billion automotive parts business
to shareholders.
This in order to focus on its semiconductor automation and aviation businesses.
The automotive business based in Troy, Michigan has about 16,000 employees worldwide.
Last December Rockwell sold its aerospace and defense units to Boeing for $3.2 billion.
Rockwell today finishing up a quarter at 68 and 1-8.
Meantime Quaker Oats saying it may be forced to devalue its troubled Snapple beverage line
this year.
In its annual report it says that because of the disappointing performance of the unit
it may have to take that action.
It is estimated that Snapple was worth $1.7 billion at the end of the year, the same that
it paid for it in 1994.
Snapple's sales however fell 8% last year and lost more than $100 million.
Sales of Quaker Oats up a half at 37 and 3-8.
You're watching Market Wrap on CNBC.
and I'm Mike.
Tonight on Equal Time, there are political odd couple, liberal Jerry Brown and conservative
Laura Ingraham debate campaign fundraising, then on Hardball with Chris Matthews.
Is the press giving the president a fair shake?
Find out tonight starting at 8 p.m. on CNBC.
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Market Wrap continues now.
It is half past the hour.
Welcome back.
I'm Sue Herrera.
And I'm Ted David.
Call it the luck of the Irish.
Early in the session, plenty of green.
And we'll see you next time.