tv Real Money With Ali Velshi Al Jazeera November 7, 2013 3:30am-4:01am EST
that will take part in nix nextt year's wick a winter games. you can stay up to up-to-dah all of the stories on our website. go to aljazeera.com for more. that is al jazeera.com plus some californians are getting time to sort out their insurance options. i will talk to the man who made that at. and the search is on, why finding the next ceo to microsoft is a bigger deal than you think. i'm ail ail ali velshi, and this "real money." >> this is "real money." you are the most important part of the show. join us in the next half hour on
twitter using the handle at jj real money. i just mentioned twitter. twitter set it's ipo price at $26 a pay. but that's what the big boys will pay. regular investors get their first shot at it sometime thursday morning. and their bids will be on the women's of the market. they could pay more or pull a facebook and see their shares drop below the ipo price. it's symbol is twtr. it's valued at $14 billion. that's a lot. some would even say overvalued for a company that has not made actual money. the pros judge these things by mayoring the stock price to the company's revenue. the to come is more than 12 times what it estimates its sales to be in 2014. that's pretty high.
nor context the s&p 500 price is 1.6 sometimes sale1.6 times sal. it pushed the dow on wednesday to an all time high. whatever gain you use common sense tells us that you invest in the stock because you believe the company is going to turn a profit, hopefully one day. that day has not arrived yet for twitter. twitter brought in revenue of $422 million mostly on ads it runs on user's feeds. that sounds good but that wasn't enough to head off $134 million in losses so far this year. now analysts seem to think that twitter to turn a profit in 2015. whether you think it's a good time to get into twitter now or risky at the moment. they are making a huge splash with their pio. will you buy stock in twitter? why or why not?
no, as war len buffet says if you don't understand the business don't invest. and jeff said $1,000 investment in amazon as ipo price equals $239,000 today. a $10,000 investment today would be worth $2.3 million. you're talking about amazon by the way. tell me what you think by tweeting me or leave us a comment on facebook. i know you don't want all this stuff. what you want to know whether or not you should buy the stocks. scott kessler heads up the research team. hilly cramer serves as chief investment officer and managed more than $5 billion in private equity and publicly traded investments in her 25 years of investing. welcome to both of you. scott, we gave all this information price to sales, but my question really is people buy stocks because they think stocks are going to go up. what do you think of twitter at
$26? >> thanks for having me. we put out pipo research on twitter and we engaged in the same analysis that you highlighted looking at price to sales, price to sales to growth rates in sales. the conclusion that we arrived at is that twitter would be adequately valued at between 11 and $14 billion. you indicated that the pricing suggestion the valuation much higher than that, so the implication is that, like we said in our report, twitter could be from a valuation perspective stretched from the start. >> and that means, hillary, you made this point. that there is a price at which it's worth investing, and this could be all over the place. who knows. this thing could shoot up by $10 tomorrow, but that's not basis my viewers should be basing
their decision on whether or not to invest in twitter. >> that's right, but your point hit at the matter, this is not a profitable company. it's innovation. it's the next step up beyond facebook. it's important with its viral aspects, retweeting and all that that it does to society, however it's not worth $14 billion. twitter will drop, even facebook, zinga, linked in. they dropped after ipo. they have all been below their ipo price three months later. there is a price in which you should enter and wait for the stock to fall and understand the big picture that institutions get these shares, and some flip them and share the shares for a profit when the stock goes up the first day of trading, big mutual fund, they want to book
some profit by december 31, don't be surprised if, indeed, as you said we're going to see volatility, but in the long run if twitter can figure out how to make money and real money and be profitable and have the growth rate, then you could see twitter continue to rise. but that's yet to be scene. this is no amazon as the point you made. >> they weren't making any money either when they started. scott, $26 is what it will price at. that does not bear much of a relationship to what a guy like me would pay for it if i buy it. it might be more expensive. it might be less expensive. if you're a regular investor and you want a piece of this action, and you're not satisfied by tweeting about it, is there a number that you would say somebody should get into this? >> well, like i indicated. we have a valuation construct that we feel comfortable with. >> i'm not asking you to tell my investors to buy stocks.
i'm saying is does this make some sense from a valuation per special difficult? >> absolutely at some points. but it's fair to say from this contexts what my experience is, at i've been covering technology stocks since the late 1990, and i can tell through is a phrase that has become very popular over the last couple of years that comes to mind. that is fear of missing out. fomo. it seems given the market appreciation and all the interest in stocks people do not want to be at parties and picnics and wherever else over the weekend and hear about how their friends made all this money on twitter and they didn't. >> fear and greed. that's absolutely the case. that's the most important thing investors to do. sit on your hands and wait. wait for the entry point. the good news for twitter because it's a real company and there are 500 million tweets a
day, there is, as scott said, a value. maybe the value is $15. if the stock comes down, the investment banks that are bringing this company public will eventually start to support twitter. research analysts will come out with information. >> and then we'll be able to get a sense of its value. >> exactly, and the stocks should stabilize and start to go up. if you want in on twitter, really want in, you can get your feet wet tomorrow, but the real way to go for it is to 90% of your position just wait it out. >> and that's a good point. if you want to buy a few stocks, but don't back up the truck on things like that. but most of my viewers should not be backing up the truck on any individual stock. >> that's right, unless an investors wants yield and income. that's when you want to look at individual stocks. but even there, e tf and mutual funds , you can't get anything
today in treasuries. >> if there is a chance to make money and times are stuff tough for people, but that's the wrong way to go about it. thank you. >> thanks. >> if you're one of 113,000 californias who have blue cross blue shield you're in luck. your policy will not be canceled under obamacare. not yet. i'll talk to the man who made that happen. and finding the right ceo to make or break the company. keep it right here. >> every morning from 5 to 9am al jazeera america brings you more us and global news than any other american news channel. find out what happened and what to expect. >> start every morning, every day, 5am to 9 eastern with al jazeera america. [[voiceover]] no doubt about it, innovation changes our lives.
opening doors ... opening possibilities. taking the impossible from lab ... to life. on techknow, our scientists bring you a sneak-peak of the future, and take you behind the scenes at our evolving world. techknow - ideas, invention, life. determining using some sort of subjective interpretation of their policy as to whether or not your particular report was actually abusive, because if it doesn't contain language that specifically threatens you directly or is targeted towards you specifically, they may not consider it abuse. they may consider it offensive. and in that case they just recommend that you block that person. >> i don't want to minimise this, because i mean, there's some really horrible things that are on
line, and it's not - it's not just twitter, what has happened through social media and the anonymity of the net is that you see websites, hate-filled websites targetting all sorts of groups, popping up. there has been a huge number of those that exist as well. [[voiceover]] every day, events sweep across our country. and with them, a storm of views. how can you fully understand the impact unless you've heard angles you hadn't considered? antonio mora brings you smart conversation that challenges the status quo with unexpected opinions and a fresh outlook. including yours. (vo) al jazeera america we understand that every news
story begins and ends with people. >> the efforts are focused on rescuing stranded residents. (vo) we pursue that story beyond the headline, past the spokesperson, to the streets. >> thousands of riot police deployed across the capitol. (vo) we put all of our global resources behind every story. >> it is a scene of utter devastation. (vo) and follow it no matter where it leads, all the way to you. al jazeera america. take a new look at news. >> blue shield plans to drop 100,000 customers in california at the end of the year because their policies don't meet obamacare requirements. now under obamacare plans must include things like pediatric dental care, maternity care, a bunch of things that has to be
done . main have policies that don't meet these mandates. but dave jones stepped in this week and threatened legal action against blue shield unless customers were given more time to shop around been their plans were canceled. the insurance giant backed off giving these people until march to sort things out. joining me now is commissioner dave jones. thank you for being with us. we appreciate your time. let me know why did you this, first of all. people were going to be dropped off. they may still be dropped off. they just have a little more time now. what made you get involved? >> when we looked at blue shield's policies earlier this year we discovered they were not in compliance with law. their networks were inadequate and their rates from unreasonable. blue shield informed us they were going to leave the jurisdiction the department of insurance. when you leave you have to provide 180 days notice.
blue shield only gave 90 days and the . we required the extra 90 days. >> we know a lot of people are going to lose these policies, and they'll have to do something else under obamacare. in some cases they'll get these subsidies, but in many case many people who sure themselves on their own will pay 30% more for their insurance. in the end what will happen to those folks who were going to be thrown off their plans. >> they get to staton their current plan until march 31st. that saves 28-point million dollars. some of them are going to want to move to the exchange products where they'll enjoy a subsidy, but all of this could have been avoided. there is nothing in the federal or state law that requires the
termination of plans on decemb december 31, 2013. in fact, health insurers could have allowed their customers to renew. the whole thing could have been avoided, and frankly it should have been. >> tell me how they could have allowed their customers to renew. they can only renew for a short period of time? >> the law said new plans cannot be sold afte if they don't meete requirements. but they could be renewed. but for individuals and families they decided to dump them all out. i opposed it, the law doesn't allow me to stop it. however when i find notice violations i can follow those. and we're scrutin scrutinies
ing other companies. >> are there only two regulators. >> two. and worse than that, blue shield got the legislature to give them a special legislative loophole that allows them to pick their regulators. when we found that their policies were out of compliance, their rates were too high. they said that's all well and good. but we're leaving and going to the other regulator. and i don't have the authority to stop it. when the license company can pick who it's regulator is, that law needs ton changed. >> free marketers will argue if you get into a position where you have one regulator and you have the ability to tell insurers that their fees are too high, that messes up the market. >> in california we don't have that law either. there is no authority in state law to regulate health insurance rates. 35 other states have given their commissioners that authority, not in california. i have that authority for auto insurance, other insurance, we save consumers a lot of money,
and my term $1.2 billion for those other product lines. insurance companies are still making reasonable returns, and i think we do need to have that law for health insurance and hmo. there is a ballot on the 2014 ballot voters can pass it and that would give me additional authority to regulate rate hikes that are injuring californians and businesses. california. >> thank you, ali. >> and mike, what is your story? you were one of these guys who didn't qualify for a subsidy? you went--got onto the website and what happened? >> well, i received a letter from anthem blue cross, and it said that my policy was discontinued because it no longer qualified under the terms of the affordable care act.
at i did go on the california care website. it's very complicated. it was down for about an hour. i was able to come up with a few plans that i might qualify for. no subsidy, of course, but i wasn't able to get any kind of prices or anything like that. if i don't get a new plan by december 15th, anthem blue cross will put me on a comparable plan that does qualify, and my premium will go from 483 to $961 a month with an increase in my deductible. >> now is that for exactly what you were getting, or is that the anthem plan that will then meet the obamacare mandates with all those coverages that your may not have had? >> yes, it's an them plan that will meet the essential elements that required under the affordable care act, but the deductible goes from $3,300 per person to
$5,550 per person with an increase in the premium. >> i would assume the reason you take the catastrophic plan. you're a physician, and you know the healthcare system pretty well. >> yeah, i mean, i had that similar sort of plan for 19 years. i've had two children under that type of a plan. my son had surgery. so those are things that i could not take care of myself, but i was adequately covered by that plan. and it worked out extremely well for 19 years. >> you did try to shop for cheaper option. is there a sense that there is no cheaper option for you out there? >> it is such a complicat complicated--obviously you don't want me to go into the details but it is unbelievable complicated website and systems, and it was breaking down my six family members whether they were minors, adults, employed or unemployed and came up with four individual plans.
not one for my entire six-member family. it was ridiculous. ultimate ly i'll have to go down to my insurance agent and have him help me out. i'm in the business and i couldn't make sense out of it. >> what is the sense that it gives you of the whole thing? does it taint your view of the obamacare? >> well, you know, the system we have now is broken. there is no question about it. but there has to be a change, but the way this is happening, and the way that many of us are unable to keep our plan even though we were promised we could, it's really not the right way to go with "b about it. i was hopeful and optimistic, but i'm disappointed with how this is happening out. >> mike disano is a physician joining us from chico, california. on the hunt for a new boss.
>> okay, how many ceos of fortune 500 companies with you name? bill gates, not for more than a decade. i know you want to say steve jobs, but you can't. jamie dimon, okay, you win. i know you can probably name a lot of big public companies especially if you have any sort of investments in them, but these matter companies matter. they make products you buy and employ people. a lot of them. exhibit a, microsoft is about to get a ceo, only the third one in its 38-year history. you know the first guy. you probably know the second, steve balmer. but who is going to be the third ceo of microsoft? here are three men of five who have made it to the short list since microsoft board began looking for a replacement for steve balmer. just last night they broke the
exclusive details for the final short list. she joins me now. thank you for being with us. >> thanks for having me. >> why do we care about microsoft and who the ceo is? >> we care because microsoft is one of the largest technology companies out there. they have a shareholder activist that is looking to get a board seat. steve balmer, bill gates, and microsoft is all over every security out there. windows applications, you see service tablets. i don't know if you have a surface tablet but that's one of the items out there. >> people are talking about microsoft like it needs oh turn around, refresh or something. >> and investors that we've spoken to said that bill gates and steve balmer for the last 38 years have run microsoft as though it's a privately held company. they haven't listened to investors or spoken with investors at different events. they need to put someone in there to turn it around and make
it competitive again . >> which is why one of the first names on that list isal-mullaly. >> he averted a bailout of ford in 2009. he's completely transformed the culture there. that's the kind of thing that investors are looking for at microsoft . remember lube gersner who did the same thing at bim, he came from ma business co- >> that was my nex of all those candidates, alan mullaly is the only who has nothing to do with tech and silicon valley. >> that's right. in ford they're having to install technology in their dashboard so he clearly knows something about it, and he's friends with steve balmer. these two go back for a long time. they've close connection. there are a couple of other candidates
. >> i think investors would be reluctant to say that steven elop is the person that they want. he went left microsoft and then went to nokia. a lot of say he ran it into the ground. >> and there are internal candidates. >> there is tony bates. and there is one satya nadella. >> do we need someone who will excite microsoft again. to make it an exciting company.
>> they're looking at microsoft. they're looking at windows, and they're looking at their consumer advices. they're wondering we're going stick with this. mobility, so i think that's a big issue for the next ceo. that ceo needs to make its mark and the board is having a difficult time trying to get gates to be on board. >> i hear that. nadia, correspondent at thomson reuters. >> thank you. >> will you buy stock in twitter, and why or why not. tweet me and follow us at aj real money or leave a comment on our facebook page. if you want to see more about tonight's stories. go to our website. free advice for you. if twitter does well, you'll have other chances to buy it. for other companies that could i rocketed out of the gate and
never looked back, i've got other companies that don't. just because someone wants to sell you something doesn't mean it's right for you. if you study twitter and you understand how it's going to make money and you think it's a good value at a picker price, knock yourself out. but don't feel pressure to buy a stock because everyone is talking about it. i don't think non-professional investors like you should be fooling around in individual stocks in any meaningful way. if you want to be in on the action, tweet something and watch coverage of the first day of trading all day tomorrow. that's it for our show. on thursday, spilling the secret of taking control of your online presence. i'm ali velshi. thank you for joining us.