Live From Las Vegas, It's the Martini Chat

Author:
Publish date:

Eric Gillin and Chris Edmonds chatted on Yahoo!, Thursday, Dec. 6, at 5 p.m. EST. For an audio transcript of the event, click here.

Eric Gillin:

It's Thursday, 5 p.m. on the East Coast, 2 p.m. on the West, and that includes Las Vegas. It's time once again for

TheStreet.com'

s Martini Chat. Good afternoon, I'm your host Eric Gillin, coming to you live from the world headquarters of

TheStreet.com

on Wall Street.

Chris Edmonds:

And live from the beautiful and bustling sports-book of the Orleans Hotel in Las Vegas, Nev., I'm Chris Edmonds, and it is a sunny and balmy 50 -- something outside and the slots and tables are even hotter.

Eric, we have quite a show on tap today as we attempt our first live remote from somewhere other than an office, and as a result we have a live audience, plenty of giveaways, and some great gaming insight. So, if you are in the area, come on down to the Orleans sports-book just off the strip in Las Vegas and say hello.

Eric Gillin:

What a rat you are. Guess nobody would really want to come visit me in my cubicle in New York. Although, they did just give me a second swivel chair, and it's 70 degrees here. Anyway, Chris, what else is on tap for the show today?

Chris Edmonds:

Eric, we'll kick off the show with a look at the Vegas economy and travel and tourism with Ted Bridges of Bridges Investment in Omaha and Rob Powers of the Las Vegas Convention and Visitors Authority. Then we'll take a look at the upcoming college ball season and more sports wagering and maybe even a craps tip or two with two experts of the trade.

Plus, our normal markets roundtable, where we'll take bets on who wins and loses in the coming weeks and into the New Year, and bets on who's next to exit the corporate world after Jerry Levin. And we'll play host to this live audience at the Orleans with plenty of giveaways and chatter. Plus, as only you can do it, Eric, a look at the latest news, but first it's time for your toast.

Eric Gillin:

On Nov. 2, Microsoft and the federal government reached a settlement in their four-year-old antitrust case. Basically, Microsoft must let computer makers use competitive software on new PCs and reveal more information about its technologies.

Case closed? Not yet. Of the states that joined the settlement, half agreed with the settlement, but nine others, along with the District of Columbia, did not. They don't want to let Microsoft off the hook so easily. The company can still bundle a good number of programs into Windows.

Tomorrow, those that rejected the settlement will announce the punishment they think is appropriate. As a result, more hearings, filings, briefs and counter-briefs most likely will take place. The confusion, and even the case, may go on. Indeed, more suits could still be filed.

But let's take a moment in this exhaustive case to toast the reluctance of those nine states and the District of Columbia to accept a settlement that doesn't do much to curb Microsoft's predatory bundling practices. So, here's to California, Massachusetts and Utah. Here's to Connecticut, Florida and Iowa. Here's to Kansas, Minnesota, West Virginia and Washington, D.C. Let's toast their endurance. Let's toast their integrity.

The legal battle began in 1997, when the Department of Justice filed a lawsuit alleging that Microsoft's packaging of its Internet Explorer browser with its Windows 95 operating system hurt rival Netscape's ability to compete. Judge Penfield Jackson heard the case; 20 state attorneys general joined in. In a preliminary hearing in November 1999, Jackson ruled Microsoft was guilty of using predatory practices, and in April 2000, the government filed its solution: a proposal to break Microsoft up into two companies.

Microsoft was on the ropes, but not yet knocked out. The company appealed, and on June 28 of this year, a federal appeals court reversed Jackson's order to split up the company.

The case was sent to District Court, where the Department of Justice and nine states decided not to press for an official ruling on whether Microsoft was guilty of monopolistic practices, but rather, they all decided to settle the case out of court.

That is, except for nine states and the District of Columbia. They continued a fight against Microsoft, and that's crucial to shaping the future not only of the software industry, but also of antitrust legislation.

Many questions still swirl around the debate. By bundling its Web browser with its operating system code, is Microsoft engaging in an innovative practice that lets all of Microsoft's software work in tandem? Or is the bundling a predatory practice that shuts out alternatives to Microsoft, like Netscape? On one hand, Microsoft's ability to bundle makes its software easier to use, which helps consumers. But on the other hand, people who don't like the Windows package have few alternatives. If a practice is good for most consumers, but bad for competition, is it ultimately good or bad? We'll never get a legal answer.

By pressing for a ruling on bundling, the government could have set a standard by which chipmakers, software companies and PC makers could conduct business. But that opportunity isn't gone forever. The issue of bundling and Microsoft's monopoly could be re-addressed at another time, from another vantage point. But will the government make an attempt?

After four years of legal wrangling, the government was still debating Windows 95. Many updates of Windows code, including Windows 98, Windows Millennium Edition and the new Windows XP, continue to bundle Microsoft's software with its operating system. And as the case drags on, AOL Time Warner has acquired Netscape to help the media giant win a battle with Microsoft over control of the Internet. Indeed, the government has yet to show that it knows how to treat a modern monopoly.

That's the greatest tragedy of the settlement. Even though the court found Microsoft's practices illegal, the government didn't come up with any solution to increase competition or level the playing field.

So, I salute the nine states and the District of Columbia generally for sticking to their guns. I can only hope that when they announce their solution tomorrow, it will be more effective in addressing the antitrust part of the antitrust case. So, cheers to them -- for now.

Eric Gillin:

Chris, can this Microsoft legal struggle ever end?

Chris Edmonds:

Eric, I think this case exemplifies more than any potentially in history the politicization of the judicial process, and it really indicates to me that the scrutiny of Microsoft isn't likely to end anytime soon, even with a complete settlement. I think we'll be talking about Microsoft and antitrust litigation into the next decade.

Remember how long it took Ma Bell and how long Ma Bell was vilified before anything substantive happened, and remember how long we have been after those tobacco companies. I think you're in for the same type of process in this case, whether its justified or not.

Eric Gillin:

Well, good point, Chris. And now, let's go back to Las Vegas.

Chris Edmonds:

Excellent Eric, back at the Orleans. To begin, we're going to talk a little bit about Sept. 11 and the impact it has had on travel and tourism in Las Vegas. With us to discuss the effect of the terror on the city that really never sleeps are Ted Bridges of Bridges Investment Counsel in Omaha, and Rob Powers, vice president of communications for the Las Vegas Convention and Visitors Authority here in the city.

I have to tell you, Eric, I have spent the last week here in the city that really doesn't ever sleep, but it seems that it's sleeping right now. Crowds are thin, and show tickets are easy to come by. Frankly, dinner reservations are almost not required.

Clearly the terror and the slowdown in the economy have had an impact on Vegas as a destination.

Rob, let me begin with you. Give us your take on how Vegas was impacted by the Sept. 11 terror and how your tourism business has responded.

Rob Powers:

Well, of course any economy such as ours, which is based almost exclusively on tourism and conventions, probably felt the effects more deeply than those economies that are not dependent on tourism and attracting visitors. Obviously in the immediate wake of the Sept. 11 attacks, we saw a perceptive decline, after people could get out. Actually, the first few days no one could go anywhere, so the town was as crowded as it was before. But we started to see the numbers climb back up probably about two weeks or so after Sept. 11. One of our advantages is that our single biggest market is Southern California, and it is a 90% drive-in market. So we've been, in the immediate future of the attacks, less affected than those destinations that rely more heavily on air traffic.

We pulled all of our advertising on Sept. 11 nationally because we just didn't feel it was appropriate to be sending a "come to Las Vegas and have fun" message. About three weeks later, after a lot of research and testing of peoples' opinions about certain messages and what was palatable and what would be acceptable, we went back on the air. We've been using a previously unreleased Frank Sinatra song called "It's time for you." We just dug it out of somewhere, dusted it off, and the lyrics fit perfectly with the times. "It's time to get out again, time to get out of that cage," etc. So we've seen the numbers rebound; the occupancy level now is near 90% on weekends, which is close to normal. The downside is that the revenue isn't what it was because the room rates are lower. Midweek is still a little soft, but we're making progress.

Eric Gillin:

Rob, this is Eric Gillin in New York. You mentioned the promotions and advertising. What new kinds of promotions are hotels and casinos offering to attract more tourists? Are they good enough to entice the tourist over the holiday and into the beginning of the year? Are you seeing a national discounting?

Rob Powers:

Well we are, if I could just get in a plug. The Web site for the Convention Authority is

Vegas Freedom. We instituted a hot deals icon on that, and people can click on that and link to specific hotels. You know, there are all kinds of incentives. The room rates are lower than they would normally be this time of year. Many hotels are offering two-for-one meal coupons, two-for-one show tickets and a variety of other such incentives.

Eric Gillin:

That sounds great.

Rob Powers:

Really, it's ironic because in many ways right now, there's never been a better time to come here. Chris mentioned people who might have been here in the past and maybe couldn't get into a restaurant or a hotel or a specific show. These people are now finding that it's much easier. There's a lot of value out there.

Eric Gillin:

Also with us is Barry Lieberman, the general counsel of Coast Casinos, our host here at the Orleans. Barry, what I want to ask you, as a practitioner in the business, what are you seeing in your business? How has it been affected, and how has it rebounded?

Barry Lieberman :

Well it's interesting that the Orleans and our other properties with the exception of the Barbary Coast and the Strip are locals' property. We really haven't been impacted as much as the strip hotels because the locals are still coming here and going to the movie theaters, going to the restaurants, and gambling, of course. We are here from the sports-book, and you can see there is a pretty decent crowd for the middle of the week here watching horse racing; tonight there will be sporting events on TV. The locals' properties tend to do a lot better than the strip in this kind of environment.

Chris Edmonds:

The ninth race in the fair grounds, by the way, is just under way, and the No. 2 horse appears to be up front. Ted Bridges from Omaha, are you there?

Ted Bridges:

Chris, I'm here.

Chris Edmonds:

It's good to have you with us. Tell me a little bit about this situation from an investment perspective. I know your fund owns Harrah's. Tell me from an investment perspective how you're viewing the hotel and gaming stocks right now.

Ted Bridges:

Chris, it's really interesting. If you didn't know much about the differentiation between the companies, you'd look at the stock price performance since Sept. 21 and think they were all kind of the same company. Going back and looking at a wide range of hotel and gaming properties, all the stocks have virtually recovered all that they've lost since Sept. 21. But interestingly enough, the financial performance has been much more varied.

Chris Edmonds:

Do me a favor, Ted, and help me handicap some of these stocks, if you would. As an investor, where do I want to put my money today? Conversely, do you see any risk of failure in any of those hotel or casino companies out there, not necessarily just related to Vegas?

Ted Bridges:

Good question, Chris. As you mentioned, we do own Harrah's, and we own it for two reasons. One is, if you rank the group by multiples, maybe even multiple relative to growth rate, I think Harrah's stacks up well. P/E on the next years' earnings is under 20 times. The other reason is the company has performed well historically. There have been bumps along the way, but the company has been pretty good at getting good financial results, bottom line. The stock actually had a pretty decent rally. It turns around $33 or $34, and the all time high is $38. And in the wake of the Sept. 11 action, it got down to $22, so really it's had about a 50% move from the low 20s to the mid 30s.

If you look at a high-end property like Four Seasons, it's also had a pretty significant bounce off of its lows, but the estimates for next year's earnings has come down quite a bit. The events of Sept. 11 or just a broader macroeconomic event could cause it to stay soft. A company like Four Seasons that really is on the high end of the spectrum has more risk going forward. I'd either wait to see a lower price or maybe steer clear of it altogether.

Chris Edmonds:

I know the convention business has seen a lot of impact from Sept. 11. Many people have either canceled or postponed. Is this more a postponement or a total cancellation, and what are you seeing in terms of convention bookings going into next year?

Ted Bridges:

Well, of course there were many cancellations and postponements following Sept. 11. For us, the silver lining is that all of that business was very close in cancellations. It was business that was within about six weeks of the terrorist attacks, so in a way it was understandable. Obviously there was such a veil of uncertainty hanging over the country at that time. A lot of people felt more comfortable close to home. There was another silver lining in all of that and that was our major trade shows. Comdex, which was down from last year, still brought in 125,000 people. The automotive markets show went forward and virtually had the same attendance as last year, about 70,000. A consumer electronics show is coming in here in about a month. That's about 100,000, and they are committed. So although there were the expected cancellations, they were close in. Our major businesses announced that they were still coming here.

As far as new bookings, we've booked more than 32 new pieces of business since Sept. 11.

Ted Bridges:

We are opening an expansion of our convention center in a month. The convention industry here has a very bright future. That's why you have seen so much construction.

Eric Gillin:

Rob, you mentioned that there are going to be quite a bit of people continuing to come to Vegas, and between the amount of money collected there,the amount of electricity to keep the place humming, and the millions of visitors densely packing the area, it seems the sheer excesses of Vegas would make it an opportune target for terrorism. What has the city done to prepare for that awful possibility?

Rob Powers:

Well, of course there's generally a heightened sense of security that exists throughout the city. I guess you could make the argument in particular that we would be a target, but honestly, you could make that argument with just about any city in the United States. You could make the argument that a midwestern city would be ripe because it's in the heartland of America, and that might strike a psychological blow, etc. Law enforcement authorities obviously have been working very closely on the state, local and federal levels. I think Las Vegas is perceived as a safe destination. We did extensive research after Sept. 11 to find out what people around the country were thinking and what might prevent them from coming here. Two things stood out for us. Number one is the vast majority of respondents we talked to said they perceived Las Vegas to be a safe destination. That's traditionally been one of our strengths. Secondly, they said that Vegas was a good place to come because it would be a three or four day getaway. It's not a place where people come to for one or two weeks. When people were ready to travel again, they were ready to escape and get away from everything they had been bombarded with, and in that respect, we kind of fit the bill.

Chris Edmonds:

Barry, back to your knowledge of your properties and your competitors, what have you noticed in terms of the mood of the clientele, both the out of town visitors and, more importantly, the locals? Has the mood, the amount of money gambled, or the amount of money wagered changed at all for locals or for those out-of-town gamblers?

Barry Lieberman:

I can speak for the locals. The locals are still gambling just about at the same level as they gambled before Sept. 11. Now, one of the problems is that you can't travel a whole lot or people don't want to travel a whole lot and want to stay at home a little bit more. So in that respect, we benefit from increased traffic, from people not leaving or going other places.

On the strip, I think Rob will tell you that high rollers from foreign countries have definitely slowed their travel down. That's been a big problem for some of the big entities, and I think that's reflected in the earnings.

Chris Edmonds:

Rob, let me ask you about that. There clearly is a large international contingent that comes to Las Vegas. How has that travel changed?

Rob Powers:

It's changed fairly significantly. It's no secret that in general, international travel to the United States has softened considerably since Sept. 11. As Barry said, there are about 250 so called "whales" in the world, and these are the very high rollers who will come in and gamble several million dollars over a two- or three-day period. And of course that significantly affects the bottom line of a property for a month, one person coming in and gambling $10 million or so. That has fallen off, no question about it. Everyone recognizes that in terms of the high roller market overseas and the general leisure travel market from overseas, it's going to take some time. It's not a matter of snapping your fingers and having business the way it was on Sept. 10. We're in a recovery process, no doubt about it.

Chris Edmonds:

Ted, let me get back to you for a minute. I did want to talk about one hotel issue, and that's the rumored talks between Six Continents, the owner of Inter-Continental and Holiday Inn. Do you think there is any possibility that Barry Sternlicht would sell out at this point?

Ted Bridges:

Good question, Chris. At first blush you kind of look at it and say pretty strong personality, the guys built a pretty big enterprise, maybe not. The flipside is that the stock has struggled, and you don't know what the constituency of shareholders is behind that. The stock has traded up a little bit on the news, but it doesn't appear to me that there is a lot of arbitrage money that's come in. The move in stocks has been pretty muted.

Eric Gillin:

One question that I had for Rob, very quickly, is about the Arab gambling presence in the Strip. Have you had any signs of that diminishing? Have there been any unfortunate incidents where Arabs may have been targeted?

Rob Powers:

The answer to the latter question is no, none that I know of at all and none that have been reported. But sure, some of the big money we've been talking about traditionally comes from the Middle East, and from the Far East as well, and that has been impacted.

Eric Gillin:

I have one last question about Las Vegas. I am interested in Las Vegas immediately after the attacks. Did the vibe immediately diminish? Chris mentioned the town being a little bit sleepy, and throughout the show we seemed to say it's not quite the same as it used to be. What was Las Vegas like during September, and what is it like now?

Rob Powers:

Immediately afterward, we were like everyone else. We were all glued to our TV sets and walking around in kind of a stunned daze. We were obviously impacted by the fact that all air travel was suspended. So everyone who came here by air, if they didn't rent a car, was here. One of the things people like most about Vegas is it is totally about escapism, and it's a fantasyland. If you're inside, sometimes you don't know if it is 11 at night or 11 in the morning.

Sure, there was definitely a pall all over the city. Both people who live here such as myself and people who were visiting here, we were just absolutely stunned.

Eric Gillin:

Where were you when the events of Sept. 11 happened? I know it was early in the morning. Were you at a casino, or were you at home?

Rob Powers:

I don't gamble more than 10 or 12 times a week, on average. I was actually on my way back from the grocery store and was listening to NPR. I heard someone talking about the sickening site of not seeing the World Trade Center tower there anymore. Of course I couldn't believe it. I went home, watched CNN, and talked to a couple of my colleagues and my friends. I showered and dressed because I knew what the implications were going to be for us as a tourist destination. I heard that air travel was suspended. Everyone will remember where they were when they first heard. That's what I was doing. After that, it was about 12 weeks of just nonstop pandemonium. It became a travel and tourism story after that, and everyone wants know how Vegas is doing when the topic is travel and tourism. We probably fielded 500 or so media calls since Sept. 11, and it's been quite an experience.

Chris Edmonds:

Hey Barry, I bet you were right here in the Orleans Sports Book betting on some Tokyo rodeo or something. Where were you?

Barry Lieberman:

It was 5:47 in the morning, and I was in my office at 5:30 that morning, and the first inkling I had of it was in the columnist conversation section of

RealMoney.com

when Todd Harrison wrote "there's been a blast at the World Trade Center".

Barry Lieberman:

I turned on the TV right after that.

Chris Edmonds:

That's amazing.

Well this has been a fascinating discussion gentlemen, and I appreciate you all being here. We will definitely revisit the future of Vegas tourism in a coming show. Rob, I appreciate you coming down. Barry, I appreciate you being here. Barry, you are sticking around, and Ted, you are sticking around. But thanks to Rob Powers, the vice president of communications at the Las Vegas Convention and Visitors Authority. Barry Lieberman and Ted Bridges who will be back with us shortly.

Hey Eric, what a week on the street. I haven't paid a lot of attention, but with all the news headlines from today and tomorrow, here's my good friend live from New York and Wall Street.

Eric Gillin:

Well, we don't always know where we are. When we last left last week's episode, the stock market was doing pretty well. It was briskly stepping into higher territory. In the last five sessions, the stock market has gone from that leisurely trot to full-out gallop. But like a 300-pound man in the fourth inning of a pickup softball game, it was time to take a breather today. Stocks pulled back late in the afternoon, with the Dow Jones Industrial Average closing off 16 points to 10,0098. The Nasdaq rallied late to gain 7 points to 2054, and the S&P 500 dropped 3 points to 1167.

One reason for today's pause in the action was probably due to tougher-than-expected economic data. According to data from the U.S. Labor Department, 475,000 people submitted jobless claims during the week ended Dec. 1. That's higher than the 460,000 initial jobless claims expected, on average, from Wall Street. Still, this week's initial jobless claims data are much better than last week's, when 493,000 claims were filed. Also, third-quarter productivity growth was revised down to 1.5% from 2.7%--well below the consensus estimate.

On the retail front, a slew of companies announced same store sales for the month of November. Leading the pack was Wal-Mart, which reported a 4.3% rise in same-store sales, while forecasting a 4% to 6% increase in December.

The Gap reported a 25% decline in same-store sales for November and warned that if current trends continue, well, the fourth-quarter could be a real stinker--considerably worse than the third quarter's six-cent per-share loss. Ann Taylor said same-store sales rose 0.8% in November, while Radio Shack reported a 3% decline in same-store sales in November. Here's some free advice for Radio Shack: Time for a name change. Neither word is helping much. Radio hasn't been cutting edge since FDR was in office, and I don't really like buying computers and cell phones from a shack. Try Computer Shed.

And on the war front, numerous media outlets are reporting that the Taliban's spiritual leader, Mullah Mohammed Omar, is getting ready to hand over Kandahar, their last major stronghold in Afghanistan. And that is the news, Chris.

Chris Edmonds:

We're going to talk a little gambling here. We have two great guests, one you've heard from today already. Barry Lieberman, the general counsel of Coast Casinos, and also with us is Bert Osborne, the corporate sports book director for Coast Casinos, which owns the Orleans, which owns the Gold Coast and the Barbary Coast, three of my favorite places to come in Vegas.

Let me ask you first about college football and the BCS. Everyone thought as we add more pieces to the BCS puzzle or formula that it would become clear. And then in the last three weeks, all heck has broken loose. Upset after upset, and we don't even know who is going to the Rose Bowl. Does the BCS serve a purpose?

Barry Lieberman:

It serves a purpose, but not one best suited for the fans. The true fans want to see a playoff. This is a bunch of baloney to enrich the pockets of the big conferences.

Chris Edmonds:

Bert, you are shaking your head.

Bert Osborne:

I agree. This NCAA are dinosaurs in a sense. The fans definitely want something like this. They want a bowl championship game.

Chris Edmonds:

Ted, as a Lincoln, Nebraska, person, you've got to have an opinion on this.

Ted Bridges:

This year, the shoe is on the other foot forNE. If NE makes it to the Rose Bowl, that's the worst nightmare. Clearly it points out the need of a playoff system.I don't think it would be too much of a hardship to go to a 16-team playoff.

Eric Gillin:

Joey Harrington, the Nike-sponsored potentialHeisman-winning Quarterback from Oregon, told

ESPN

that he thinks the BCS system doesn't work. His point was that Oregon should be ranked third, ahead of Colorado, because the Ducks have only lost once, to No. 9 Stanford. Colorado has lost twice. What does the gambling world think of the BCS? Would casinos prefer, say, an eight-team playoff?

Bert Osborne:

It makes it nice for the Bowl season. We don't have all the games on New Years Day now the way they stretch it out. From a betting standpoint, we're putting two teams up on the board, and they're going to bet them.

Eric Gillin:

So it doesn't matter if it's a playoff or if it's a BCS regular standard bowl?

Bert Osborne:

No, in a situation where they highlight two teams like that, it rivals a first round wild card game in the NFL -- if you want to equate it to some kind of money bet.

Chris Edmonds:

Let's focus on some of the bowl matchups we know now. Let's start with one of the Jan. 1 bowls - the Gator bowl in Jacksonville. Virginia Tech and Florida State? Barry what do you say?

Barry Lieberman:

The numbers have not come out yet, but I think Virginia Tech over Florida State a 6 1/2 favorite over Virginia Tech.

Bert Osborne:

I have no opinion. You can't get caught up too early. You can make projections, you can do these things, but what happens? I bet this game lasts 6 1/2. You don't want to get too involved in this stuff too early. For me, I got to get through the NFL this weekend. That's where I'm pointing my interest to.

Eric Gillin:

The BCS bowl pairings will be announced this coming Saturday, and by all rights, it looks like Miami will face Tennessee for the national championship, that is, unless the Vols don't lose this weekend against No. 20 LSU. You think Miami will win it all this year? They didn't look so hot against Boston College a while back. They kind of got murdered.

Barry Lieberman:

Miami is probably the best team, and they're going to be a favorite if they match up with Tennessee and over Nebraska.

Chris Edmonds:

Bert, let me ask you about the intermeeting game that can change a lot of things, and that's the FCC championship in my home town of Atlanta this weekend. LSU vs. Tenn. What gives there?

Bert Osborne:

Tennessee coming in put out a lot of effort last week. They beat them once in nine years? These are young kids. It's a tough thing. LSU played well.I believe this was a real live dog here. They're going to win outright.

Chris Edmonds:

If they win that game outright, what happens to the Rose Bowl?

Bert Osborne:

Cornhuskers will be playing for the national championship.

Chris Edmonds:

Ted, do you think Nebraska deserves to be in the Rose Bowl?

Ted Bridges:

I go back to saying if it's not a playoff at the end of the season, you have to look at how everyone played for the season. I like the concept of LSU as the dog, because it's very hard at the top of the B1 level to beat a team twice in one season.

Barry Lieberman:

I'm going to disagree with both of them. I agree with Bert that this is a tough spot for Tennessee. They've come in off an emotionally incredibly high game. They played their best game of the season when they beat Florida. But one thing I like about the Tennessee team is that they are getting healthy just at the right time, at the end of the year. They've been banged up all year. LSU has severe problems in their secondary effort. They allow a lot of completions. I'll be on Tennessee this week. The lines about 6 1/2 right now, I'll wait for it to go down to 6. The popular opinion is Bert's so I should be able to by the end of the week.

Eric Gillin:

Have you looked at any of the non-Jan. 1 bowls? Do any of those matchups intrigue you at all?

Ted Bridges:

One of the bowls that's interesting is here in Vegas. In the Las Vegas Bowl, Utah is playing USC and that's a competitive game. I suspect we'll get some people from Los Angeles to watch it. Usually it's the Jan. 1 games that are the ones you really like.

Chris Edmonds:

Barry, let me ask about the lovely Silicon Valley classic. We have way too many bowl games with way too many weird names. The Silicon Valley classic played on New Years Eve in Spartan Stadium in San Jose, that's a burner between Michigan State and Fresno. I've got to tell you, this Fresno team started off red-hot then lost to Idaho, then someone else and someone else. Can they play with Michigan State?

Barry Lieberman:

They'll be the favorite over Michigan State in that game.David Carr, I thought it was a crime that he was not nominated for the Heisman because this kid is going to be the highest Quarter Back drafted by the NFL this year. He's got a lot of tools and will shred the MI State defense. They've got a bunch of 4th stringers and freshman. Fresno State is not only going to be able to play with Michigan State, but they are going to beat them.

Eric Gillin:

What about Syracuse? They are playing a bowl game, what do you think of them?

Bert Osborne:

They are playing Kansas State and Tucson. It's on natural grass, their preferred surface. They've been good at home and not on the road and this is on the road, so don't be so optimistic.

Eric Gillin:

What do you think of Dwight Feeney the linebacker?

Bert Osborne:

Great player, but if you put two guys on a defensive player, you can slow them down and stop them. Kansas State will do what they have to do to keep them away from their quarterback.

Eric Gillin:

Do you think he's an NFL guy?

Bert Osborne:

Yes, I think so. Definitely, he's got the quickness to be in the NFL.

Eric Gillin:

Speaking of the NFL, I think Chris has got some NFL questions.

Chris Edmonds:

Let's talk about the NFL. There is a lot of charity this year in the NFC. Who do you like?

Bert Osborne:

They used to say, the road to the Super Bowl leads through Pittsburgh, now the road leads through St. Louis. The San Francisco team is going to be a live dog. This team is back. This kid Jeff Garcia is phenomenal. Looking at the AFC you have Oakland, and of course Pittsburgh. They are back in the hunt. Of course, you have Kordell Stewart. They've pared down their playbook. That's off the top.

Chris Edmonds:

Barry, any thoughts?

Barry Lieberman:

I'm with Bert. St. Louis is going to emerge. Oakland hasn't looked good, but they have the talent to get there.

Chris Edmonds:

What about long shots? Is there anyone that can be a spoiler here?

Bert Osborne:

I thought Green Bay would be the team this year. Withthis kid as quarterback, they're capable of anything. It's a tough road when you get to December/January. Home field advantage means so much in the playoffs, especially when a cold weather team hosts a warm weather one.

Eric Gillin:

How bad was Minnesota?

Bert Osborne:

They played Carolina the first game. This team can't win ontheir own. They gave up 48 points to both teams.

Barry Lieberman:

I wish I could get a $75 million contract and only play on

Monday Night Football

!

Chris Edmonds:

Let's talk about college hoops for a minute guys. Is Ball State for real?

Barry Lieberman:

There's no question Ball State is for real. They hungwith Duke. They're capable and will be very dangerous come March.

Bert Osborne:

I look at it like the NBA. The Lakers. The Blue Devils.There's no chance. The type of players they bring in - these kids don't seem to leave school. This Duke program, it just seems that they build that camaraderie there and it keeps going.

Eric Gillin:

Is Arizona for real?

Barry Lieberman:

Arizona: the book's still open. The team has melded together and my opinion of the coach has gone up considerably. He took some new players and melded this team nicely. I agree with Bert. Duke stands head and shoulders and is going to be at least a 5, 6, 7 points over the other teams.

Chris Edmonds:

Who else do you like in the Final Four?

Bert Osborne:

Look at this Illinois team. This team's not bad. He'll have them ready when it's tournament time.

Chris Edmonds:

Ted, all you need to know is three words -- rock, chalk,Jayhawk.

Ted Bridges:

I like the Jayhawks, though their postseason performance has been dismal the last five-10 years.

Barry Lieberman:

They're OK this year, but I don't think they will be a favoritefor that Final Four.

Eric Gillin:

I know you guys have trashed my Syracuse alma mater's football team, but their basketball team is doing pretty good. What do you think of that team?

Barry Lieberman:

They've shown early that they're to be reckoned with. They'recompetitive and play an aggressive defense.

Bert Osborne:

One of you mentioned the programs like at Duke where they don't lose the kids early to the draft. Does that make your tops harder?

Barry Lieberman:

We're given a line that might work with the consensus that day.Early games, they can move 3-4 points at a time. It's like watching the stock market. You're just chasing numbers across the board.

Bert Osborne:

You have to keep the spread pretty wide to cover your self for the risk.

Barry Lieberman:

Here we don't have the luxury of keeping the spread wide. Early in the season the players have an advantage, especially those with specific knowledge. Most of the line moves early in the season seem to be sharp moves. The first week, we had the games up, that was a surprise. I thought college basketball would be tough this year, but we'veturned it around.

Ted Bridges:

I always consider if I can get through to January, I'm in decentshape and am going to have a decent basketball season.

Chris Edmonds:

Your four Final Four teams?

Barry Lieberman:

Duke. Illinois. Syracuse. Kansas.

Eric Gillin:

Lastly, and this is something I've never understood, Las Vegas lines are created by offsetting risk, right? So that means odds adjust as people wager. For instance, in the Rahman vs. Lewis fight, Rahman's odds to win got better as the fight got closer. Can someonetake advantage and use the hysteria and hype to their advantage?

Barry Lieberman:

It's like the stock market. The intelligence money is sometimes right and sometimes wrong. The public has opinions. The big betters are on favorites and the small ones throw it in on the underdog. The big money was coming in on Rahman, and that was wrong.

Eric Gillin:

One last question: Mike Tyson?

Bert Osborne:

How can we turn this down? It's turned into a circus! You have to love it! You want Tyson! It's amazing, the public loves this guy!

Chris Edmonds:

This is amazing. We are going to move our show to Vegas! No one has anything like this.

Chris Edmonds:

Now its time for that part of the show that is unpredictable, insightful and always offers a surprise or two: our Markets Roundtable. With us today are Tony Dwyer, chief markets strategist at Kirlin Securities in New York, and Ted Bridges of Bridges Investment Counsel in Omaha. And our good friend Barry Lieberman has hung around to handicap Ted and Tony's picks.

Eric Gillin:

Why did Gerald Levin step down, and how does it affect AOL Time Warner going forward? If you don't feel capable of answering that specifically, what was the market's reaction?

Tony Dwyer:

I don't have a reaction. The market didn't react that dramatically, so I'll defer to Ted.

Ted Bridges:

Just another step in the long saga that started two years ago. If you sold every tech and media stock in January 2000, you'd probably be ahead of the game. I just view it as one more step in the ongoing evolution of that company. You have to give AOL credit as the one company who managed to buy some real assets.

Chris Edmonds:

Ted, this rally that we've seen since the bottom right afterSeptember 11: Did we really think we'd see Dow 10,000 and Nasdaq 2000? Can we sustain this?

Ted Bridges:

I don't think in the short run we can. In the next two, three, or even four months it will become a bit problematic. You've come so far so fast. The Nasdaq is up over 40% since the Sept. 21 lull. The S&P's probably up around 20%. The second thing is you still have about one more quarter, which is going to be fourth-quarter earnings of 2001 comparing against fourth quarter earnings of 2000, and the comparisons are going to be pretty tough. I'm more constructive looking out six to 12 months from here than three months from here.

Tony Dwyer:

I agree with Ted. I wrote a column for

TheStreet.com

about it. There is a lot of short covering going on. It's liquidity vs. fundamental reality. The interesting thing is that right now you are buying a dream. The dream is that the Fed is going to work and lead to a very significant V-shaped recovery. That works until you actually get the real numbers. For the next three to six months, it's just a dream.

Chris Edmonds:

Barry, you've spent a lot of time watching and handicapping the market. What do you think we're doing here?

Barry Lieberman:

I have, and I'm pulling some money off the table. I agree that it's liquidity driven. Tony predicted this a few months ago, and he's right. People who started putting money in have made money. It's time to take a little of that off the table. Yesterday's closing encouraged a whole lot of people to dump money in. I don't want to be too far ahead of the curve.

Chris Edmonds:

Ted, let me ask you about your positioning, sector-wise. What do you do now? Where are you putting your money to work?

Ted Bridges:

Good question. We're lightening up on the beaten up technology stocks that have 50, 60, 70, maybe 100% moves in the last 90 days or less. We love the franchises for the next three to five years, but the stocks are way ahead. The money is better positioned in places that haven't moved, places where you see decent values. Some of the financials still fit in that bill. They've lagged since the Sept. 21 lull. I still like Capital One. The place where I'm least constructive is anything that's held the fort defensively over the last 12 months such as utilities and food stocks. Time is on the side of the investor. The low rates will show some sort of recoverage.

Chris Edmonds:

Tony, any thoughts?

Tony Dwyer:

I wouldn't be aggressive and sell. I'd raise stock prices on all technology stocks. I would wait and go into the beverage stocks, the drug stocks, and the energy stocks. Energy stocks are a cyclical play. Oil prices move over the long term with economic demand. Look at a Coca-Cola. You can buy it at the lowest you've bought it since the crash of 1987, at a 20% premium. A lot of the consumer names have not had the move. When you get the rotation out of tech with the reality of the economy -- it's not going to the sidelines, it's going defensive -- beverage and drug stocks.

Chris Edmonds:

Tony, I know we've had this conversation earlier about the energy needs, and maybe this might be the beginning of a longer-term trendline up. Fundamentally, these production cuts that Russia has announced, and now OPEC saying that they will keep production lower as long as they have to in order to support prices probably is more rhetoric than it is action. In the past, the action has not followed the rhetoric. I'm not sure that's going to lead to much except maybe a $22 oil price short term and then mid-teen oil prices come January or February. Any thoughts on that?

Tony Dwyer:

It depends on what the economy does. OPEC hasn't mattered for a long time. Oil priced go up with demand, not with the economic demand, not supply issues. That's what's going to drive oil prices. We don't need a V-shaped recovery, just a steady recovery, and that's possible.

Chris Edmonds:

Ted, any thoughts?

Ted Bridges:

I agree with Tony. Energy has been beaten up. A lot of the stocks look like tech stocks. If you have a constructive stance, energy should pick up.

Eric Gillin:

I have an energy question. It's 70 degrees in New York today! How has the warm weather in the northeast affected gas prices and energy prices overall? Is it going to hurt these companies?

Chris Edmonds:

Clearly, heating oil and natural gas prices will feel the pressure as long as weather remains moderate to warm, and we don't begin to see bigger draws on natural gas reserves. Until that happens, there's going to be pressure on gas prices, and we're going to stay in the low 2s and maybe even test that $2 mark again, but that doesn't have an effect on crude oil. Crude is really trading in on the news of what OPEC and what Russia are doing and what could happen in the next stage of our war on terrorism.

Tony Dwyer:

It's a good point that there is a difference between gas and oil prices and gas and oil stocks. You look at when the semiconductor and technology stocks bottomed, there was a glut in supply, and prices were crazy. There was no demand. That's when they bottomed. Energy seems to be in the same place. What do you think about that?

Chris Edmonds:

You're right. Energy stocks will tend to follow the commodity prices, but they may lag. We're beginning to see a little of that right now. The energy stocks are beginning to look more attractive because people are thinking we've hit the bottom. Ted, any thoughts on that?

Ted Bridges:

I'd concur. The warmer weather will make it tough for the natural gas guys.

Chris Edmonds:

Let's get out with predictions. Dow and Nasdaq, where do you think they'll be by Dec. 31?

Barry Lieberman:

In 30 days, it will be slightly higher than it is - maybe about 10,200. The Nasdaq will be around 2100.

Tony Dwyer:

Plus or minus 5% from here.

Ted Bridges:

Nebraska 27, Miami 13.

Chris Edmonds:

Great insight. Thanks to Tony Dwyer, chief market strategist at Kirlin Securities, Ted Bridges of Bridges Investment Counsel, and Barry Lieberman.

Eric Gillin:

Next week another great show, we'll take a look at the holiday shopping season and help you get ready for the holidays and the New Year with our look at the best stock picks for your Christmas stocking. And, of course, we'll take a look at the markets, have all the latest news, and a special announcement about some exciting changes to our show as we begin a new year.

Until then, thanks to all of our guests, and Chris, thanks for rubbing in the Vegas thing. May you lose all your money on the dice tonight.

Chris Edmonds:

No money to be lost, man, I'm off to see Wayne Newton again. A special thanks to the folks at the Orleans, especially my pal Barry Lieberman for setting this up and getting us out in the crowd. Next week, back in Atlanta. See you then.

Eric Gillin:

About the shows, Chris. Two words: Crazy Legs.