>> tom: more players than ever before-- still, shares of social game maker zynga get hit late today. did the maker of farmville and words with friends live up to the hype in its first quarter as a publicly traded company? >> susie: and these rocks did better than the dow and gold over the past decade-- diamonds. they may be a girl's best friend, but should you consider diamonds an investment? it's "nightly business report" fotuesday, february 14. this is "nightly business report" with susie gharib and tom hudson.

"nightly business report" is made possible by: captioning sponsored by wpbt >> tom: good evening and thanks for joining us. not much love on wall street on this valentine's day. a disappointing report about retail sales, susie, led to a choppy day of trading in stocks. >> susie: tom, investors have been feeling encouraged by a steady stream of reports showing an improvement in the economy. but today's retail sales were not as strong as expected. u.s. retail sales increased only four-tenths of a percent in january, half what economists were expecting. a sharp drop in car sales was a

major factor. the major stock averages were down most of the day, but by the close, the dow rose four points, the nasdaq added a fraction, and the s&p fell a point. joining us now with more, scott wren, senior equity strategist at wells fargo advisors. >> susie: nice to have you with us. >> hi, susie, thanks. >> susie: so there's been concern about economic growth after seeing today's numbers. should that be a concern? >> well, i think some people are a little overly enthused about what gdp might be this year. in my opinion i think you're probably looking at something around 2.2%. that's our official projection. i think that many people from that gdp number of kn+2.8 made mistake of extrapolating through 2012 and i think we'll be in a modest growth environment this year. >> susie: looking at the retail factor we got interesting

reaction from two different retail stars. michael kors on some strong earnings the stock was up 27%. and then looking at another one, gap, up almost 3% today on a buy recommendation from citigroup. though they serve different consumers do they tell us anything about consumer attitudes about spending? >> well, i think really, susie, for the high-end consumers and companies that cater to high-end they have been outperformers for three years. they had price increase and input increases last year. cotton was highly priced. these guys have been able to pass along the prices and stick so though cotton's plummeted in price they've been able to keep high prices with consumers. other low-end types of retailers have not been so lucky but what

i think is going to happen is they will benefit from the lower cotton prices. unemployment is improving. the economy is at least people are more confident we're not going have a double-dip i think that's beeelp as well. >> susie: and how are you factoring what's going on in europe and in greece into your stock market recommendations and your investment strategy, are you finding that what's going on in greece is a separate story or is it impacting your recommendation. >> i think it impacts our recommendations in a couple of different ways. one is it causes uncertainty and that as we saw for most of last year causes a lot of volatility and in europe they're in a slow-growth environment and a would argue outside of germany europe's probably in a recession. i think they'll be flat growth maybe they have a mild recession. we're not counting on much from europe at all and of course if there's not much growth there

there's not much growth and demand from the united states and for the most part for most retail investors it causes fear and uncertainty and makes them very hesitant to get into this market. >> susie: that was certainly the case today. scott, thanks for coming on the programming. we appreciate it. >> thanks, susie. >> susie: and we've been speaking with scott wren the senior equity strategist. >> tom: the first earnings report as a public company from zynga showed the strength of online social games. the maker of farmville and words with friends earned a nickel per share before accounting for stock compensation costs. that was two cents better than estimates. revenue, active users, and how much money those players are spending every day online all saw double-digit increases. michael pachter is an analyst with wedbush morgan securities. he joins us from los angeles. >> tom: better than a passing grade for the first report cart from zynga?

>> i think so. i think the earnings number may have troubled people in the after market because they were roughly flat. only up a little tiny bit and i think people were look for more but i think the company did a good job explaining this is any entertainment business not an internet business and their revenues are going to be tied to the success of their game. i think they're guidance probably relieved a lot of people and talking around 20% top-line growth and high 30% earnings growth. so solid, solid growth prospects and they say it's going to come in the back half of next year. so i think we probably are going to see the impact of these late 2011 game watches in the second half of 2012. >> tom: we know from the facebook filing for it's initial offering 14% come from zynga.

how reliant is facebook on zynga? >> 93%. pretty reliant. and that's not going to go away. i think these guys are -- they have a sim biotic relationship and i think actually facebook has seen more user growth and usage growth from zynga than vice versa. i think zynga is the reason 100,000 people go to facebook. i think facebook relies on them not only for users and revenues. i think this relationship continues for a long time. >> tom: let's bring it back to zynga, znga the ticker symbol and mentioned volatility the close and moved after the regular session up from a $10 stock price ipo and now $14 and change and up 6% in after-hours action. any evaluation after the big jump over the past several

weeks. >> great question. the current share price suggests 32, 33 multiple on next year's earnings. that's a big number. in order to pay $14 have you to believe these guys are going to grow earnings 35% a year for several years. i think i'm going to come down on that side. i think that's likely. they've been hiring like crazy playing all these games. i'm a high level on every one of them. i see what they're doing. i see how they change the games every single day. they're giving me more opportunities to spend money and giving me incentive to bring my friends in. i think it keeps going. >> tom: we have to keep it flip knew you were on farmville every day. we'll tell the bosses that as well it's research. do you own shares your self? >> not permitted to. >> tom: thank you, sir. >> susie: just one day after issuing his 2013 budget, president obama is urging congress to renew the payroll tax cut without haste.

it expires at the end of the month. if that happens, the typical american family will shell out nearly $1,000 more in taxes this year, or about $40 a paycheck. the president's also insisting that an extension of jobless benefits for the long-term unemployed be included in the legislation. >> congress needs to extend that tax cut, along with vital insurance lifelines for folks who have lost their jobs during this recession, and they need to do it now, without drama and without delay. no ideological sideshows to gum up the works, no self-inflicted wounds. just pass this middle-class tax cut. pass the extension of unemployment insurance. do it before it's too late, and i will sign it right away. >> susie: just yesterday, house republicans dropped plans to require spending cuts to pay for the $100 billion cost of extending the payroll tax cut. but they said cuts will still be needed to pay for extending

long-term jobless benefits. >> reporter: i'm erika miller at one of manhattan's fanciest jewelry stores. coming up this valentine's day-- why diamonds can be a portfolio's best friend. >> tom: boeing's order book just got bigger. the airplane-maker today finalized itbiggest commercial jet order ever. it comes from indonesian carrier lion air. lion has signed on for 230 boeing 737 planes worth an estimated $22.4 billion. it also has the right to buy another 150 planes. lion's current fleet has just 76 planes; most are boeing 737s. >> susie: when your products are on kitchen tables all over the world, you're sure to know a little bit about how the global economy is affecting people. for mccormick and company c.e.o. alan wilson, that insight is vitato success. he told washington bureau chief darren gersh today that he expects a better year ahead, but still an uncertain one.

>> it's basic kitchen table economics. when the outlook is iffy, families eat at home. it's an opportunity for spice companies like mccormick but it doesn't leave much room for fat. >> some analysts say it's hard to raise prices. consumers are still strapped. what's the business condition. >> the consumers are strapped and with the rise in commodity cost overs the last couple of years the consumers have been some what stressed with that and so we've been very conscious of making sure that we're very responsible in the price increases we've taken. >> the spice trade has always been a global business and gives them a view into europe which is low and emerging markets with latin america and eastern asia which are holding up well though some are nervous. we hear china may be slowing down, forever, it never seems to happen. is this finally -- are you

seeing signs of china slowing down. >> our business isn't seeing signs china's slowing down partly because there's still a lot of growth for a company like ours where we're fairly new in the market. we've been in china 20 years and have new distribution we can gain and product innovation that can help us strive so even in the overall economy is slower we expect it to grow in the foreseeable future. >> it seems like analysts were disappointed with the year you're projecting. >> i wouldn't call it a disappointing year because we're still calling pretty significant sales growth, 9 to 11% and 8 to 10% earnings growth. i would say it's still a solid year and it's helped by significant acquisitions and we're seeing pressure on volume in the business but we believe

through product innovation and intergrating aa-i acquisitions be able to drive growth. >> we're finally seeing a pickup in the country and do you think it's for real. >> we've been hiring throughout the whole crisis to meet our needs. companies and businesses will hire when they have a demand. as we see demand flu fluctuate will impact us. >> many u.s. companies have horded cache cash in this recession waiting either for the worse to end for a good opportunity to come along. formccormick, that opportunity came in deals worth more than $400 million to buy a spice and mustard maker in poland and a joint in a venture with an indian spice company. >> we believe we can expand our footprint around the world and make acquisitions to drive

long-term growth. that's how we used our cash i talked to people in business and they're making investments in asia and making investments in india and making investments in latin america but continuing to invest here as well where they see the growth. >> allen wilson, ceo of mccormick. thank you very much. >> tom: they've dropped just a fraction today along with the broad market. here's the update with the market focus. u.s. stocks continue treading water, thanks to a late afternoon move off the lows of the day. the index bounced nine points in the last half-hour of trading. weighing on the market was this duo, the materials and financial sectors slipping more than 1% each. both were hurt by the disappointing retail sales figures here in the u.s. and the lack of progress in europe. among the financial stocks

taking a hit today-- bank of america. its 3% loss was the worst among dow industrial stocks. citigroup's banking analyst cut his rating to neutral, even though he's raised his price target to $8.50. shares closed just below $8. dupont has one less company interested in buying its coatings business. the chemical giant is looking to sell that division, but paint maker valspar today took itself out of the running. valspar was rewarded with a all- time high stock price, rising 4% today. the company said the dupont business was too big a bite for it. that came after better than forecast earnings and a brighter outlook for the year. meantime, yahoo is having a tough time unwinding the ownership of its asian business. shares fell almost 5%. talks between yahoo and chinese arch eine alibabare a standstill. yao has been trying to arrange a $17 billion deal for its ownership stakes in alibaba and yahoo japan in such a way as to

avoid taxes while it revamps its business. another company in transition is avon. while the firm is looking for a replacement to long-time c.e.o. andrea jung, it had a disappointing fourth quarter. before unusual charges, earnings came in well shy of estimates. revenues also fell, and the company didn't give much guidance of what to expect financially this year. after seeing some morning selling, shares wound up with in of 5%. volume quadrupled as investors try to sort out avon's future. it announced layoffs as it tries to stabilize its business, and reassured investors its dividend will be maintained. we have more on a-v-p on nbr.com under the "blogs" tab. >> direct usa. shares ended down a session one percent but e stock gains in

afterhours a action. they get 70 we mentioned zynga's earnings after the close tonight earlier. met-life also updated investors late today, reporting a big jump in earnings. after a 1% drop during the regular session, shares jumped up 3% after the close tonight, up to their highest price since august. the company expects profit growth to continue, thanks to its u.s. retirement business and international opportunities. we've been watching stocks of bulk shipping companies over the past few sessions, and they continue climbing. excel maritime was up 4% today; dryships jumped 12%; eagle bulk shot up 21.5%. these stocks had been beaten down in recent months, partly over european economic worries. and that's tonight's "market focus."

>> susie: when you think about investments, stocks and bonds probably come to mind. but diamonds have out-dazzled both of them in recent years. diamonds have been surging in value, due to higher demand and tighter supplies. but as erika miller explains, be prepared to dig deep for sparkling returns. >> what's the big deal about diamonds? >> reporter: perhaps you are in a pink mood this valentines day, or maybe you are more of a traditional white kind of gal. me, i couldn't take my eyes off

the bling in this ring. every piece of jewelry sold at leviev is one of a kind. >> whether it's a 15-carat "d" flawless, a 50-carat "d" flawless, or a 100-carat "d" flawless, these stones are incredibly rare, due to their size, due to their color, due to their cut. and especially when the three are combined, it makes them even more rare. >> reporter: of course, you'll have to pay accordingly, sometimes upwards of $20 million an item. let's face it, only a small percentage of the population can afford to shop here. but many of the customers who buy these precious stones see them as more than something beautiful to wear-- they're also an investment. five-carat diamonds have surged about 65% in the past decade. that's more than the dow jones industrial average and most commodities. >> diamond prices have done very well over the past decade, because we've seen a tremendous expansion in india and china and other developing countries. yesterday's suppliers have

become tomorrow's consumers. >> reporter: so, although gold may have been the sparkling investment of the past decade, some think diamonds could outshine the yellow metal in the coming years. b.m.o. capital markets predicts the price of rough, uncut diamonds will rise by 9% this year, with smaller gains the next several years. unfortunately, diamonds are not an easy investment. there's aren't any mutual funds or e.t.f.s that invest solely in diamonds. unlike gold, they are not traded on a commodities exchange. and a word of caution before you run out and buy diamonds at your local jeweler: >> one should not buy diamonds as an investment unless they know how they are going to resell them, because the bid ask price is huge. a consumer or regular investor who is not in the diamond industry-- buying a diamond as an investment is a bad idea. >> reporter: but that isn't stopping the ultra-rich from shelling out millions for beautiful jewelry. quite the opposite. leviev says political and economic turmoil often increases

the appeal of rock-hard assets. >> it's something tangible. it's something you have in your safe, in your vault, wherever that stone is. so that's something that gives our clients a sense of security. >> reporter: not to mention something extraordinarily beautiful to wear on your finger. >> ♪ what's the big deal about diamonds? what's the big deal about diamonds? >> reporter: erika miller, "nightly business rert," new york. >> tom: here's what we're watching for tomorrow: what was the federal reserve thinking? we'll find out as the central bank releases minutes from its january policy setting meeting. we'll also see the latest reports on industrial production and capacity utilization, and see earnings from cbs and comcast. then, women and welding-- how women are making new inroads on a traditionally male career path. >> susie: a mixed ruling for b.p. today, as the oil giant continues to battle shareholder claims related to its massive

gulf oil spill nearly two years ago. a u.s. federal judge ruled investors can sue british petroleum for allegedly violating u.s. securities laws. but the judge threw out investor claims that the oil giant lied about its commitment to safety ahead of the spill. b.p. shares lost over $90 billion in value in the six weeks after the spill. the suit is lead by public pension funds in new york and ohio. >> tom: we're getting a peek tonight at what warren's buying. billionaire investor warren buffett's berkshire hathaway disclosed its portfolio holdings in an s.e.c. filing. as of the end of the fourth quarter, the company bought stock in davita, which provides dialysis services, and liberty media. berkshire also increased its stakes in coca-cola, cvs caremark, directv, general dynamics, intel, visa, and wells fargo. but it cut its holdings of johnson and johnson, and

exxonmobil. >> susie: taxes, and how much politicians pay, has been a big issue in the republican presidential primary. the debate leads allan sloan looking to hire mi romney as his tax accountant. allan is senior editor at large at "fortune." >> if the presidential thing doesn't work out for mitt romney, there's a whole other career he can pursue-- retirement planner. romney has gotten what is probably the greatest retirement package in history. even though he left bain capital

in 1999, romney still gets millions a year from bain's piece of the profits that investors get from bain's buyout funds, and pays only 15% federal tax on it. in some years, less. compare that with my social security benefits. my wife and i pay 30% tax on those. that's because 85% of our benefit is taxable, and we pay 35% percent on that, thanks to the a.m.t. this all happens because, under our current tax system, income from capital, which is how romney's bain payments are treated, is much more valuable than income from work, which is how social security is treated. i have no idea if romney would make a good president. but if he wants to offer retirement advice, i'll be his first client. i'm allan sloan. >> tom: one player, one incredible break, and one heck of a winning streak add up to big profits for shareholders of madison square garden.

in tonight's beyond the scoreboard," rick horrow's take on "lin-sanity." >> reporter: lin-sanity, the meteoric rise of knicks' point guard and harvard economics graduate jeremy lin, has taken new york by storm. the knicks have won five straight since lin entered the starting lineup a week and a half ago. but as big of an impact as lin is making on the court, he's making an even bigger impact on the knicks' bottom line. shares of madison square garden, the company that owns the knicks, hit an all-time high this week. that's despite seeing fiscal second-quarter revenues fall 14% and profits drop 22%. the 52-week low for m-s-g stock came on october 4, when the nba canceled the entire preseason thanks to the lockout. it's amazing the difference a few months and a few wins can make. in terms of helping m-s-g's stock price and shareholders, lin might just be getting started. tv ratings on m-s-g network are up 52% in the four games since lin became a starter. the renewed interested in the

knicks couldn't have come at a better time for m-s-g. the company and time warner cable are embroiled in a dispute that has kept knick games off the air for cable subscribers in new york. it's just too bad lin's contract with the knicks doesn't include stock options. i'm rick horrow. >> susie: that's "nightly business report" for tuesday, february 14, valentine's day. i'm susie gharib. good night, everyone, and you, too, tom. >> tom: good night, susie. i'm tom hudson. we'll see you online and back here tomorrow night. "nightly business report" is made possible by:

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