tv Squawk on the Street CNBC April 25, 2014 9:00am-12:01pm EDT
communities? >> it's that's not the prime beach front so -- you want to be in manhattan or the hamptons. >> thank you. >> thank you both for being with us today. >> pleasure. >> is this me? i have five seconds. i'm going to choke. i can't make it. joins us tomorrow. "squawk on the street" is next. >> monday. good friday morning and welcome to "squawk on the street." i'm carl quintanilla, jim cramer, david faber at the new york stock exchange. you made it to friday but there is one more wave of earnings to get through before the weekend. we're combing through amazon, microsoft, starbucks, ford. s&p futures actually approaching the lows of the week, right around 1863. the 10-year has turned lower, 2.67, more tensions in ukraine, the ruble at a 10-day low, russia a notch above junk. one reason europe is in the red today. our road map with the halfway
point of earnings season. a good start. earnings beat for microsoft, despite falling pc sales and once again, it's all about the cloud. >> amazon reports strong sales growth. who cares about margins. customers don't blink at a price hike for prime. drum beat of new services continues. analyst notes this morning are pressuring the stocks. >> starbucks up, earnings as analysts expected. exclusive with howard schultz ceo and chairman coming up, coffee, digital payments and why lunch is next. >> ford is slipping despite strong sales. profit did miss analyst estimates. ford's margins hit by higher production costs. shares are dropping. we'll hear from bob shanks. >> first up, microsoft did beat estimates by a nickel, fiscal had third-quarter profit of 68 cents a share. company was helped by momentum in cloud services as total commercial cloud revenue more than doubled in the period and last night during his first earnings call, nadella spoke about betting on the cloud. >> we will continue to invest in
our cloud capabilities including office 365 and fast growing cloud market the. we're committed to ensure our cloud services available across all platforms that people use. we're delivering a cloud for everyone on every device. >> he said the words first, mobile first, cloud first seven times. >> seven cloud references to four windows references. this is a windows purge call. you do not hear windows unless you can -- they try to avoid it. it's almost as if he's rebranding the company right here right now. and windows is just something they don't want to talk about. they'll make plenty of money with it but they're a cloud-based company. it's like a stalinist purge. getting rid of stalin and his name is windows. >> enterprise software up 7, consumer revenue up 12, surface revenue up 50. i mean they've got some engines,
some pots boiling here. >> i have a statistic that i happen to be very -- i was going to say fond of. i happen to like amy hood, the cfo, who was marginalized on the call. she said she wanted more. xbox 1 sold over 5 million units since launch. engagement has been high. a scary fact about our country but also great for microsoft. users spending near ly five hous per day on the console. how many -- "call of duty" what do you do? do people work in this country? >> the average age of a gamer is like 40 years old. not talking kids. >> this is -- i think it's a strange fact for our country and very good for the cloud soft. microsoft. >> wow. i'm actually taking that in. five hours, average age 40. >> we know from zuckerberg that they're on facebook for five hours. >> just wait until they get the oculus glasses. that's it.
>> you're talking about 10 1/2 hours a day -- >> then going 12 hours. just going to be fully immersed in whatever you're doing. >> but how about like making, you know, a living? how about -- how do you put food on the table with 5 1/2 hours of gaming and 5 hours of facebooking? >> let's talk about the nokia acquisition, it's closing any day now. >> today? >> yeah. i think today. >> and, you know, there's a lot of shareholders there who would love and some ways i think to see nadella to say we bought it now we're selling it or just going to take a huge writeoff and move off and not spend a lot of management time on this. does not seem to be the case. 30,000 employees. >> i don't know. >> we don't know. >> we don't know. i got to tell you -- >> that would be bold and that would be a -- i mean how do you walk into the board room and face in balmer and go sorry? >> amy hood has said over and over again, bold decisions, bold decisions. i think that means nothing is off the table. >> how would you receive, as -- if they were to do that, say you
know what, forget nokia. >> this guy really is breaking with the past. he has got nothing, he is really saying, listen, steve, love you, it's a new company and we're not going to be wedded. >> he is seen as this agent of change but the office move to the ipad came in before he took the helm, but he is sort of being given that halo. >> isn't it funny tim cook chose to highlight the fact that microsoft is on ipad, but microsoft didn't highlight that. make of that. >> right. >> i think they could make a -- this could be a new broom sweeps clean. i think everything is on the table frankly. i think that's why amy hood keeps using the term bold. what would be the boldest thing in the world to do? break up the company and say nokia, it was great but -- wow. that would be something. >> doesn't sound like you're willing to take a fly on the shares based on that hold dynamic. >> i think the breakup value is terrific. i do like -- >> they're not going to break
the company up. >> all right. >> some of the parts. >> sort of dis miss nokia more than breaking the company up. >> steve ballmer who remember flirted with alan mulally for kind of a nuts and bolts guy, steve's father worked at ford, the first time -- even multiple cloud references, but sat ya uses the term ambient intelligence, i've never heard of that but i feel more intelligent and ambient. >> just when you say it. >> i feel more ambient. >> i thought that was something you do with e-sigs. >> look at that shirt. just miss that. >> two-trick pony. he called himself that. >> move on to amazon it was up after hours, reporting 23% jump in first quarter revenue. that was a big number beating street expectations. earnings in line with consensus. they had come down. analysts had come down. operating expenses up 23%. amazon well spending heavily on what else, shipping, cloud, computing, new hardware such as its fire tv set top box.
amazon forecasting that it will lose money for the current quarter. free cash flow which i like to look at. 1.49, let's call it 1. $5 billion for the quarter, $1.5 billion for the year. do a multiple to free cash flow there. still talking 30 times, 30 times. maybe a little less than 30 times. this current quarter and the guidance doesn't seem to be that friendly, perhaps, to some of the analysts that follow the company. while we saw the stock up 5, 6% after the numbers, this morning it is coming in. >> i think there's a revulsion against growth and the analysts trying to get ahead of it. raymond james goes strong by the buy, citi lowers price target, wells cuts price target, deutsch bank cuts price target. i think people are saying we saw what happened the other day with facebook where they shot the lights out and nobody liked it. we're going to get ahead of this, i think the stock these guys went kind of just said
we're done with this company spending for growth opportunity so big we don't need to show a profit. in the meantime in the conference call, there's multiple references to china and every single time it's mentioned, the cfo says, we're going to be investing heavily. now these are now investing heavily has become a sin. >> that's -- but that's what amazon does. they don't care. >> no one likes it now. >> no -- but they -- >> they don't care. >> bezos doesn't care. by the way, return on invested capital that's what he cares about. >> he does. >> take a look at that. we put that together. looking through the slides this morning. that's what he cares about. that's important to him. if he can show that and say look what we're doing here, we're investing our capital wisely overall for a return, thank you, shareholders, stay with me and they do. >> they stay with him. i think after the growth, the growth to value has finally reached its course, people will come back to this. i do want them to dominate china. i do want them to give you 45 pounds worth of goods. i do want them to take it to fedex and ups.
i like the idea that spain, italy are doing terrifically. the kindle fire, i want to get one of these killer product -- >> your point about patience, right, investor patience, an analyst report, i'm not sure which one, that has sigh in the title because this will become weary over time if it continues. >> people -- i liked the bernstein fella, amazon units, because the units continue to slow, trying to say don't worry about it, forget about it, hang with the stock. the analysts are all trying to back away because the analysts are saying, hey your know what, maybe my time of riding this growth off -- i find -- >> they got 23% revenue growth still. i mean that's where -- >> margins higher. >> that's where, you know, the bill millers of the world are going to point you to that number. >> i'm reporting the news here. i'm not giving you comment. i'm reporting the news. >> and the software as a disservice stocks, did you notice that? >> i did. >> disservice stocks, the growth stocks. i had now on last night,n-o-w,
they did plus 60% growth and the stock, the stock got killed. this service now is the fastest growing in the software and disservice category and so people are backing away. i think they'll come back. but right now, they'd rather have 12 times earnings of microsoft than they would have 40 times whatever. >> right. well, it's an infinite multiple sometimes on amazon where with facebook it's not at all and yet -- >> well doesn't matter. people saw that. look, facebook and gilead changed the equation. no one is going to do as good numbers as gilead and biotech and the growth of profit that facebook had. if that's the reaction, it's like, you know, let's go buy caterpillar. >> maybe in the face of yellen and what's going on there, that's the only thing i can come back to. >> ukraine. >> maybe ukraine. >> we have to talk ukraine. >> bigger picture of the fed maybe, maybe, slowing, pulling back. >> visa. >> starbucks.
>> fiscal second-quarter profit 56%, and also raising guidance for the full year. we are going to talk to howard schultz this hour about that and a number of other issues. raising their guidance. wouldn't comment on soda, although i'm sure we'll try to give that another go. >> yeah. i do think it was great to not hear the weather disrupted the quarter even though they had many stores that closed. as a matter of fact, as the quarter went on, it got stronger. i think that that's terrific. this is now they've said listen, we're done testing. beer and wine. >> it's going to happen. >> they said we'll go there at night now. >> europe the strongest it's been in 14 quarter, 16% growth. promised it on the show. howard's moved into social mobile. they're talking about this being monetized and sounds like monetized this year. >> this was the best call last night. >> yeah. potentially licensing their mobile payment platform would be a huge new play. >> as starbucks sending visa
desce descends. >> what's up with that. >> 100 million kalgs in russia. this conference call was amazing. guided down on every level. they did say don't worry about it. this was the first call that made me think if you're not focused on ukraine you're crazy. russia is talking about basically cutting them out. they actually talk about that. that russia is saying listen, you may have to put all of your business in russia, which is really a word on russia and ukraine. we have seen a drop off in cross-border volume and then they're talking about the idea of transaction processing going away in russia? the russians may kick them out. >> it's also a factor in the ford call today or the ford results having to idle production in that country. >> this is -- russia is a major, major negative all of a sudden. and you're talking about a competitive national payment scheme. you know what that sounds like to me? venezuela. how many times do you see
colegate today, charge venezuela. in fairness to visa, it's in influx, we don't know, whatever. i tell you it took my breath away. i didn't know it was that big the russia. now i know. >> now you do. >> holy cow. >> we're going to talk to howard schultz in a little bit. an exclusive with the ceo of nike, mark parker, whose company has been in the spotlight this week because of wearable tech of course. but up next as we said, ford shares off to a rough start. the automaker messy quarter and earnings miss. we'll break that down for you. futures are relatively weak. s&p has been the a tight range this week. 1.4% for the week and the average for the year, is 2.4%. more "squawk on the street" from post nine in a minute. e in a mis at your ford dealer think? they think about tires. and what they've been through lately. polar vortexes, road construction, and gaping potholes. so with all that behind you, you might want to make sure you're safe and in control. ford technicians are ready
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♪ happy birthday. ford reporting quarterly profit 25 cents a share, missing estimates. automotive revenue fell short of expectations. ford high looising a number of one-time factors like weather, currency, warranty costs impacting its results. phil lebeau will have an interview with robert shanks later in the show. europe's loss does shrink, but you have south american devaluation, higher shipping costs because of weather, difficult quarter. >> i look at it, though, the loss is cut 50% in europe.
europe a black hole. talking about being solidly profitable in europe next year. china has gone from nothing to a tremendous -- asia, tremendous profit contributor. u.s., i don't know, they decided weaker beginning of the quarter but they said they're going to spend -- they said they're going to earn.8. they're going to do that. they invested a lot. they have 23 new launches and they're basically doing what you want a company to do which is invest a lot. they're going to be really big -- it's a 2015 story, no the a 2014 story. >> not worried about share losses in north america? >> i didn't think it was that bad. my travel trust owns gm. gm had a better quarter than ford frankly and you know what, doesn't matter. gm is cursed because of the headlines. >> yeah. >> it doesn't matter? the stock actually i thought had -- >> it opened -- >> shown a little life. >> opened at 34.30 and then dropped down to 33 and change and still guys downgrading it. look, i think ford's okay.
did they blow -- you want to see -- in the big cycles in the 90 cycle for the autos you got those numbers that were so big like giving you these gigantic dividends. yield 3%, gm yields 3% will keep the stocks from getting hammered. >> yesterday we were talking to ann on cat. she thinks south america and brazil will be a bigger headwind in the future. ford cut their outlook on south america. >> south america is bad. other than -- >> colegate -- >> despite the world cup and olympics, that economy given what it was five years ago and everybody saying about it. >> blown opportunity. just crazy. >> when you look at the shortfalls for the oil service companies it's because petra is not spending money, valet won a gigantic decision, against brazil. everything is going wrong and you got the -- the big spend on the stadiums. venezuela, supposed to have gotten better after chavez, has gotten worse. argentina cloy sterred. latin america is bad. thank heaven for colegate
picking up good numbers there. >> we'll try to get to those later on. cramer's mad dash as we countdown to the opening bell. we'll talk about coffee, tea and profits with the chairman and ceo of starbucks, howard schultz. that's coming up this hour. take one more look at the premarket and get the final opening bell of the week in about 11 minutes. out 11 minuteso mission a for a final go. this is for real this time. step seven point two one two. verify and lock. command is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet... dragon is captured. is connecting today's leading companies to places beyond it. siemens. answers. anbe a name and not a number?tor
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a mad dash time. plug power we talked about a number of times. you're a gluten for punishment. >> plug power and the stocks represent the most speculative part of the speculative market we have. take a look, this has been a pretty good performer, hasn't it? >> only up 260% year to date. >> penny stock, penny stocks usually don't come back. penny stock, imagine this, david, within a few months of being a penny stock, morgan stanley does a 22.6 million secondary. the stock was at 6, coming at 550. why is this important? this is hydrogen fuel cells, highly speculative. i think the speculative part of the market has gotten hideous. watch this deal. we could be in for a little more rough sledding. >> highly speculative. >> it's always been, you know, a bridesmaid, never a bride. walmart -- everyone thinks this is it for fuel cells. >> it's coming. >> it's coming. >> it's coming. >> still coming like those russians. >> exactly. not the max. wait until next year.
>> you don't have to. >> now we'll see about that. >> the one stock that is allowed to spend all at once and gets rewarded for it is buydo. stock up 15s last night, come back in. always implications for alibaba and yahoo!. i've been hearing alibaba could be worth upwards of $200 billion. we should be getting an s 1, week and a half ago i said two weeks, that is probably right. perhaps see next week. very soon the s 1, we won't see alibaba until late summer, early fall. >> really? >> i was going to say it would happen before yahoo! reported its next quarter. >> no. what you will see in the s or f 1 actually a foreign filer, is information about alibaba's i think it would be their -- their last quarter of last year. it will get updated as you go along. we will be looking there to get information on alibaba and then turn back to yahoo!
>> china is -- this market is rewarding chinese companies with fabulous growth. we got to stay on that. there's a lot of chinese companies that are still very hot. i believe that alibaba can reig nate yahoo! and i think yahoo! is a great stock to own. >> really? >> yes, i do. >> i believe in marissa mayer, in what the company is going to look like after they've sold 10%. >> 10% in the offering they'll have another 14% roughly. >> big for them. buying shares back. >> they have. a lot of money . tax officiefficiency so importa >> we'll have howard schultz with us, not long from now. the opening bell really soon. so stay with us. female announcer: sleep train's interest free for 3 event is ending soon. get three years interest-free financing on beautyrest black,
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it told him what was happening on the trading floor in real time. ♪ the shell brought him great fame. ♪ but then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their trading platform. ♪ [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a...shell. get live squawks right in your trading platform with think or swim from td ameritrade. cnbc "squawk on the street" on this friday live from financial capital of the world. a lot to go through. been through amazon, starbucks, microsoft, visa, ford, the secondary. haven't touched pandora. miss by a penny. active listeners up 8 and people worried about slower user growth. >> this is -- i've been worried this is saturated.
my friend john from buzzfeed was on saying this has to be the most crowded space there is, this internet music, whether it be songs, i know you like spot fy, but the stock has been bulletproof until the market switched to value. out of growth. and this is another one of those companies people were recording a great multiple to revenues and suddenly not using multiple to revenues. >> broadcom will have a problem. 51 cents beat business a nickel but profit down 14. gross margin down. guide lower on the current quarter. >> horrendous. >> problems? >> they're horrendous executers. they keep missing and missing. it's funny in the space we are seeing hit or miss. sears logic, in relation to apple, for sound board, doing well. watch micron. lamm research on "mad money" and sounds like the companies are spending and kla tanker and not spending. it's case by case in the semi world.
be careful. texas instruments good, qualcomm not good. arm holdings not that good. revenge of the nerds. high growth ones nobody wants. >> we know what the housing data has told us all week long. a miss on new, a police miss on existing. whirl pool misses by 13 cents. they will open lower. >> electrolux was up by 3%. had a great quarter. sher wynn whims doing well. ppg saying there's spending going on on painting on homes. the housing numbers are awful so and the refi numbers seems to stock. they have considerable latin american business. >> colegate earlier on, they did match estimates, revenue in line. organic up 6.5, right? >> what's not to like, colegate. colegate is a technology company, taking share. i thought they did a better job than unilever. that kind of growth is hard to come by. again, people trying to
reevaluate stocks. procter & gamble did not have a great quarter and the stock is higher. >> with all of that we'll watch the open here. the 10-year by the way and the 30-year, the long end coming way in. >> ukraine, ukraine, ukraine. stay focused. listen to the visa conference call. you will come back and say they're doing an economic work. they are fighting back. be careful. this weekend is going to be tough. i'm going to have to watch this news, ukraine. >> "washington post" called it the most dangerous event on european soil since the end of the cold war. >> people are talking about -- i don't want to get too riled up about it because there's lots of people who say this could lead to something very big. all i'm saying is that you cannot ignore it. when visa, a great company, says this is hurting us, and russia is not spending and maybe they take this back -- >> specific to putin wanting to create their own sort of payment system within the country and
remove themselves potentially from the international -- >> right. but i got to focus -- i always find when i have to focus on the duma -- >> you got a problem. >> i don't want to focus on the duma. i mean when i hit a duma i want to get a nasdaq stock nothing comes up. due ma, russian parliament, holy cow. >> the three musketeers, it depends -- >> i like that. >> right. >> down here at the big board, nyse hosting an event on the financial empowerment of women in recognition of financial capability month and at the nasdaq churchill downs ringing the bell remotely from the churchill downs, kentucky derby televised may 3rd, on nbc. >> i've been there a bunch of times. one of the great events. you have to get there. >> never been. >> once in your life get there. dress well. don't dress like a slump. >> go to the millner. >> got that word from oprah. >> we'll keep our eye on the big
ones we mentioned at the top of the show. starbucks and microsoft are going to get the benefit of the doubt today. amazon is not. >> no. and amazon, we -- remember we want growth. like charlie the tuna, we don't want tuna with good taste. we want good tasting tuna, profits. you know who has profits is vf corp, north face, eric wiseman, raising numbers. interesting because macy's is a very big client of theirs and macy's did not raise numbers. this is share take, vf corp a company to watch, a good company. >> we're going to talk to howard schultz. burger king did beat by a penny. revenue did decline. u.s. comps on burger king, 0.1, nowhere near what mcdonald's did in the u.s. for the first quarter. >> i don't know. that group has gotten hard to figure. mcdonald's is a nerd. i talked about the revenge of the nerds on "mad money." that stock seems to be going through 100 at the same time that chipotle lost 100. i don't know. that industry is -- value value value. and we know that when you just
talked about the bonds you should be thinking of mcdonald's as a bond market equivalent. not a utility. utility stocks way too strong. american electric power, way too strong. those have become the new growth stocks and they have no growth. be careful. >> you still got an incredibly low interest rates and you have people out of growth and/or people who are looking for where they put their money and there's still dividends. buy this why not. >> domestic. you don't see -- american electric power is not building power plants in russia. >> right. >> we mentioned whirl pool and housing weakness. masco the worst performer on the s&p, down 9%. >> intermitt the executions. again some of these things come down to who's able to execute. masco way too hit or miss. they have to go back to the drawing board there. come on, this is kitchen and bath. they have a very big european business but kitchen and bath shouldn't be doing that badly. home depot is not doing that badly. they own a lot of -- and i mean -- masco, do better.
>> finally we should get on the record, under armour going to be added to the s&p, replacing beam around april 30th and the naviant a spinoff will be a new s&p component. some call it vindication for ua. >> ua was getting killed last night and one of the reasons before it got added kevin plank literally on the conference call said the thing you're never supposed to say, we're going to spend more on marketing. i know we have nike on later today. we're going to -- the subtext i am going to beat nike. remember they're a small company versus nike. but he's spending spending. no one wants to hear that right now. they don't want -- remember they turned on growth, david. they turned on growth. >> and look to your point, amazon is down almost 7.5% after being up after the numbers themselves, the top line up 23%. >> don't want that. >> it may revisit that $300 level again. it wasn't far from that not that long ago as it has come down over 22%, roughly 22% this year. >> we want companies that are
spending with the instant payback. and we don't want the fireeyes just so you know. i pick fireeye because it's been cut in half. looking for a lot of companies that have been cut in half here because i think they're precedent for this particular segment of software as a disservice. >> as a disservice. >> that's a security company. >> yes. >> but this is called sad, sa s-a-a-d it was sass. software is a disservice. >> we're going to take that public. >> visa making it tough for the dow. bob pisani is on the floor. >> we're having an interesting phenomenon. a lot of companies coming in equalling analyst expectations or many cases beating expectations. they might trade up briefly and then fade away. amazon this morning, down about 5% in the preopen. i mean they were basically in line but i think a lot of disappointment about the fact that they're still not able to really get the -- their earnings up that much and there you see it down 8% right now. that's the big loser. we've seen a pattern this week. companies will come out and beat
and they'll trade briefly up and then they'll just fade quickly. let me put up a few that had this happen this week. netflix, traded up, faded after the earnings came out. facebook did the same thing. electionen, gilead, celgene, all beat, briefly traded up and faded. you can see a mixed picture for that group today. those were the leaders this week and faded. here's the sector leaders this week. this looks like january, folks. airlines, pharmaceutical, biotech, gold minerminers, this january. back to the beginning of the year here. nasdaq 100 also the big leader up about 1.6%. meantime look at the global markets. you can see, all of them down about 1%. a lot of uncertainty out there. europe down 1% as well as asia right now. very mixed picture among the housing and material names. want to point out what happened with whirlpool the mixed picture there. the earnings miss, revenues beat here, stock downs about 2%p. look where it mixed europe up
8%, north american sales up 4%. here's where the problems were. latin america down 2% and asia down 11%. it is amazing to me, david, that the company was able to affirm their guidance $12 to $12.50 for the year with that grind of weakness in latin america and asia. that's what they did only down about 1%. guys, back to you. >> yeah. we were talking about latin america earlier. thank you very much, bob pisani. did want to come back to what was one of the biggest stories for me, being allergan and valeant. we're at the beginning of what will be a fascinating battle and it does appear to be shaping up that way. as i reported a number of times, allergan does have time here. the annual meeting is only a week or so away. i think it's the 6th of may. they will have a shareholder proposal that management supports they put in the proxy to actually allow you to act by written consent to call a special meeting with 25%. amazing to me that allergan, which had been a approached by valeant a year and a half ago, actually making it easier for shareholders potentially to act.
one interesting part of this. another, of course, is that allergan will have some time here regardless. it is huddling with its advisors, goldman sachs in there, i believe bank of america, merrill lynch. question is what they will do. i will tell you one thing they will start to do. try to sew questions about valeant's valuation, valeant's strategy, valeant stock price. that could be a key to this battle. raising questions. well are they really finding a new way to do things? is it really about the acumen of mike pearson and his great background that has enabled him to figure out which parts of r and d are productive and which aren't or an advantage tax rate out of bermuda and a lot of sin gernis but also -- synergies but the need to constantly keep rolling up companies. is he a true new genius of this time or is he more akin to -- >> charlie -- >> wall street construction like bernie ebbers. >> oh, no. don't ever use that term.
i saw once an interview with bernie ebbers at a gym right before -- it was your interview. >> on the streets of brook haven. >> that's right. >> no way, shape, or form do i mean to equate anything like worldcom and valeant in the sense of anything having to it with accounting but the question of having to do the next deal and the smartest guys in the room to use a different -- >> yes. >> reference. >> maybe rjr. >> all of this talk about tax inversions will continue. what is allergan going to be able to do. goo could a white knight step in here. it will be tough to compete with valeant and the low tax rate and synergies which are significant here, extraordinarily so, to come up with a higher number. do they pursue a tax inversion of their own? that's why you keep hearing shire's name. i don't think there's anything going on in that. or jazz. this is driving strategic decisions in pharma and otherwise. the need to want to invert, get out of u.s. tax jurisdiction. jim, this you a story you and i
have talked about so often and will be talking a lot more about them. >> the president, we're talking about the president, ways and means committee, senate finance, they have got to address this. wake up, guys. stop focusing on adventurism and hating each other, get together and change the tax law. this is insanity. we're going to ireland. >> finally the ackman outrage which is just -- why couldn't i have thought of that. >> every hedge fund will use that window of opportunity. >> why couldn't i have thought of that. put up $3 billion in capital with little risk. there he is. gray hair, blue eyes, very nice. to the bond pits. rick santelli is at the cme group in chicago. >> good morning. i know everybody, of course, is continuing to talk about the great return on the long end. and all the impacts of the ukraine and there's some impact. i tell you what, you would be hard pressed to say say it's dramatic. look at a two-day chart, pretty orderly. we're slightly below yesterday's low yields. open this chart up to early february, and i'm sorry, i
don't see ukraine jumping out of that chart. we're basically visiting the bottom of a range we've visited many times before. as a matter of fact, with the curve flattening look at a year to date of 5s. do you see anything in there that looks safetyish? it's in germany's backyard. it's really europe's problem. here is the euro versus the dollar. year to date, don't really see it showing up there. i think it's preventing sellers from coming in. that's for sure. but it doesn't seem to be having a proactive impact. back to you. >> rick, we'll talk to you soon. rick santelli in chicago. when we come back, a live and exclusive interview with howard schultz, chairman and ceo of starbucks in a moment. we needed 30 new hires for our call center.
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if you experience a sudden decrease or loss in vision or hearing. this is the age of taking action. viagra. talk to your doctor. if your doctor decides viagra is right for you, you can fill your prescription at your pharmacy. or, check out viagra home delivery, a convenient place to fill your prescription online and have it shipped at no additional cost straight to your door. viagra home delivery. get started at viagra.com. starbucks reported earnings in line with estimates and we have to talk about this. tons of things to talk about. exclusive interview howard schultz chairman and ceo of starbucks, welcome back, how have you been? >> thanks jim. doing very well. >> let's get right to it. a quarter i did not hear the
weather caused you to miss it. i heard things got better throughout the quarter. i also heard that europe 6%, best in 14 quarters. give us a sense on how the quarter actually broke through the last few months? >> well, first of all, i've got to laugh a little bit. all these qsr guys complaining about weather throughout the quarter, the mail must get delivered and make mess think they have a doppler in their office. that's not what we're here for. the mail has to be delivered, we have to serve our customers and despite the weather, no excuse whatsoever 6% comp in the u.s. was a stunning number. i think the big news coming out of the quarter, though, was the significant transformation in europe that we promised over a year ago and the continuing success and momentum throughout the asia pack and specifically china. we also talked a lot about the fact that what really drove comps was food attachment and we're really seeing the success of the acquisition of lava and look at the fixed assets of
starbucks we think we can establish another food day part at lunch and go after evening which we've been talking about. this is an ongoing story about the relevancy of the equity of the starbucks experience and brand and the fact we're still in the early stages. we also talk a lot about the fact that we've uncovered a lot of growth and opportunity in other significant real estate formats i think that will bode well for the future. net net a great quarter for the company and we're just getting started. >> i also like the fact you're talking about hand crafted soda. use the term, i love it, theater of a hand crafted beverage, why do you need -- you don't need a soda stream if you're going hand crafted beverages, do you? >> well, i think, you know, what we've learned over the years that one of the secret sauces of starbucks is customization. our customers can customize their beverage and that's one of the competitive advantages we have. we tested hand crafted natural
preservative-free sodas last summer in three markets in the u.s. and in asia. it exceeded expectations. we'll bring that to 3,000 stores starting this summer and we're focused on fis yo and we think we have a big opportunity in addition to the success of the beverage, also another day part, afternoon refreshment and again we're looking at opportunities to extend complimentary beverages beyond the coffee peak time during the morning and this will bode well for the summer as the hot weather comes. on tuesday we introduced oprah chai throughout starbucks and tee vanna stores. it will be an opportunity to set the tone for the beginning of the reinvention of the tea category which i said publicly is a $90 billion global category that we think is right for innovation and can do for tea what we've done for coffee. >> going to do it for beer? you decided we're moving forward with the rollout of the program
in 1,000 stores. beer and wine coming up in the evening? >> i think we've had great success testing it and as troy said in the call, the test is over. we're going to bring beer and wine to select stores. we recognize that it's not for every store, but in the stores that we did test it, not only did we get incre mentality in that category but the fixed asset to the company, the stores are open anyway and people are coming in for other things besides beer and wine. we think there's upside in our ability to take the average unit volume from a 1.3 million, significantly up in the future and i think the challenge for us candidly is make sure we do this in a way that is thoughtful not to dilute the integrity of what we're here to do which is our core coffee business. >> away from your core but something you're involved with, monetization of your mobile system. you, quote, quoting you, major tech companies and retailers have recently begin inquiring about whether or not starbucks would be willing to license our
technology. you are saying this could be a significant driver of long-term value and talked about monetization. is this a 2014 initiative? >> well, i'm not going to frame, you know, when we're doing this other than than say re wiwe areg to make something significant happen. let me frame the opportunity. it's very clear to us that a pure play bricks and mortar consumer brand retailer cannot stay narrowly focused on the four walls of their stores. if you want to be relevant today you have to create a level of engagement, social, kijal, mobile, card loyalty and starbucks has done that better than anyone else almost in the world evidenced by the over 5 million transactions we're doing on mobile phones which is significantly higher than anyone else. as a result of that, it's clear to us that we have an opportunity to extend that platform beyond the ecosystem of starbucks. but what's really interesting the underlining success of the
program is the fact that we are providing loyalty in the form of stars. and we've coined the phrase, stars as currency. we've also seen that stars as currency is working in the grocery store having people buy our packaged coffee. we believe we can extend the stars as currency and mobile platform of starbucks outside of our stores. whether we do it in partnership with a tech company or we extend it and actually license or white label it to other retailers, we have not yet decided. but we are in discussions, serious discussions with a number of players. we have a lot of cards to play here. we're going to be very thoughtful and disciplined and i do believe that over time, this is going to be a significant driver of new revenue, new profit and will be a significant complimentary core to the business an starbucks will be in a business that is not traditionally skewed towards being a conventional consumer brand, based on the fact that we are in the lead position in mobile payment.
>> all right. i would be remiss if i didn't talk about raw costs. they're going up around the world, both dairy but more importantly coffee. you mentioned only 10% of operating costs. 40% locked in 2015. would you lock in right now $2 prices for the rest of 2015, and get a blended average well below or going to let it ride and roll the dice on 2015 coffee prices? >> well we're constantly monitoring, obviously, the coffee market and whenever we can trying to make spot buys. but i think the real story here is whatever coffee prices do, starbucks has demonstrated over -- for 40 years now and we've seen this many times, we can navigate through the cyclical chains of any commodity, dairy or coffee and i think we're in a very good position. i'm not worried about that. i think if push came to shove we have some pricing power but we're in a good position. we've locked in coffee now for a year and it's not going to be a
problem for us whatsoever. >> all right. howard, congratulations on an absolutely terrific quarter. howard schultz, the man behind the starbucks. >> all people want to talk about on twitter is alcohol. starbucks happy hour here we come. >> i have to tell you. it's going to be hand crafted beer like -- i did not get a soda stream endorsement so you know. >> you tried. >> i tried. i didn't get that. >> when we come back we'll get breaking news on consumer sentiment. don't go away. don't go away.y ] make it happen with fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. drivers, tgo!our marks. it's chaos out there. but the m-class sees in your blind spot...
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switch to comcast business internet and get two wifi networks included. comcast business built for business. all right. we are expecting april final for university of michigan sentiment survey. 84.1. now remember, the mid april look was 82.6. so 84.1 really zooms up and by far the highest level of the year. as a matter of fact, the best level since july of last year which we had an 85.1 reit. what was fascinating about that, was that was the highest read since july of '07. a nice powerful look on the final read for michigan. probably demonstrating some of the upside in stocks that seems to rub off on the sentiment numbers. carl, back to you. >> all right. rick, thanks so much. market flash pmi services was a
miss. and job creation was two year e low. >> not crazy about this market. >> time for stop trading. >> one of the stocks hit hard is bank of america. i think this is a mistake. one people think if there is something at jpmorgan like a $13 billion settlement that somehow will be so bad. no, that's actually what bank of america has been telling people basically. we have may have to pay that amount and still raise a lot of money. i don't think there's a deal on the horizon. i really don't. i think that bank of america is not going down there, i don't think brian moynihan is going to down to chief holder saying here's my checkbook, how much do i write. they're more of a battler, they feel they've written the check. i wish they would write the darn check, the stock would go higher not lower because the norm aized earnings power is very high. it's murky and do not expect anything imminent but it would be well within reason the number you hear for the stock go higher not lower if they did rigwrite t check. >> friday edition of "mad money." >> trying to focus on private
companies because i hate the software is a disservice stock right now and drug companies and unless i have a metal bender like a snap on or united reynolds i don't feel very confident right now. i like head and shoulders shampoo and steel. all right. you hear me? >> private companies. >> private companies. >> private companies can't be shorted. that's also good. watch fireeye because it does not have the eye of the tiger. it has the eye of the bear. >> we'll see you tonight, jim. >> russian bear. >> 6:00 p.m. eastern time. the ceo of nike, mark parker, will join us. we'll talk about world cup, south america, a lot more and pulitzer-prize winning columnist jim stewart of the "new york times," the paradox between google and amazon. the dow is down 112. don't go away. tomorrow. quick look at the weather. nice day, beautiful tomorrow. tomorrow is full of promise. we can come back tomorrrow.
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i hate when my computer gets grouchy. it's probably due to lack of sleep. set your computers to hibernate after 30 minutes. the rest will do it some good, and save energy. the more you know. ♪ welcome back to "squawk on the street." our road map begins with technology. microsoft reporting an earnings beat despite falling pc sales as the company's success depended on the cloud. >> amazon falling sharply again despite strong sales growth. find out how you should be playing the stock. >> former congressman barney frank spent more than three
decades in congress and now taking on the tribeca film festival, live at post nine with details. >> i wonder if he has a beard in the film. shares of microsoft are higher this morning following quarterly results that beat the street. shares of microsoft by the way up 8% since satya nadella took over as ceo back in february. here's what he had to say during his first earnings conference call as ceo. >> i sum up this quarter in two words, execution and transition. we delivered solid financial results and we took several steps to reorient microsoft. >> let's bring in robert, a managing director and research analyst with stern. looked like a solid quarter for mr. nadella's first in charge. how much credit does he deserve for it? >> i think obviously he has -- takes some credit for it. i think clearly the execution point that he talked about is under his tutelage and i think
really as we talk about the transition in his words going forward is going to be the key for the stock. obviously estimates were guided down slightly for the next quarter, the june quarter, which is their fiscal fourth quarter. and that obviously was usually the strongest seasonal quarter for the company. so they're clearly in a transition mode and it's going to take a little bit of while before they can actually turn estimates going forward higher. >> yeah. when you look at the financials, the numbers behind some of these, i mean they were impressive and the cloud is really the story here. i mean we've seen so many false starts from microsoft, robert, lately when it comes to consum r r facing technology. is the cloud the winning ticket into the cloud will help them as you transition from let's say an ipad with office products such as power point, excel, word. you stay within those applications to be productive as a knowledge worker. that's going to help them and i
think being open for microsoft is key. the question is, on the opposite side, what does that do to their own hardware whether it's a surface tablet, what does that mean for the stores that they're opening and how quickly they can kind of solidify the strategy. i think last night in the conference call we had a lot more questions regarding the consumer side than we had answers. >> it's interesting. it looks like the cloud is helping them in the shift to mobile. are microsoft's legacy cash cows under appreciated by wall street? >> well, i think that's actually been the most positive side that wall street does appreciate. i think when we look at the cash flow side of the business, it comes traditionally from the enterprise side and when you're printing a 1.2 billion in cash flow a month, the company has a lot of options from a balance sheet perspective. i think when we're seeing a lot of the high beta software names coming under pressure, people are searching more for value where companies can control their own balance sheet and do
more capital allocation. microsoft clearly has a lot of options available to itself. >> yeah. when it comes to strategy, he made it pretty clear microsoft wants to make windows available on a wider range of devices. is there any opportunity here for them, robert, to cut into market share from ios and android? >> well, i think if you just move beyond the windows platform consumer piece, i think the strategy for microsoft is clear and that's going to be offering more applications. so it's going to be excel, word, office, et cetera. maybe not worrying so much about the underpinning of the operating system as it relates to the consumer portion. they're definitely going to maintain that stronghold when it comes to the enterprise business and that's to -- back to your point about the cash flow and the cash cow side of the business. >> yeah. just finally here, we did see the closing of nokia. microsoft's acquisition. what does satya nadella do with
that? >> it's tough because i think it's going to be, you know, management didn't talk about it on the call last night. and i think, you know, what we're going to see is lower gross margins for the business. i think the integration probably is going to take definitely a couple quarters and they're going to move that segment into their device and consumer hardware segment and report it separately so there's going to be a little bit of a change for analysts and investors to analyze the numbers but i think ultimately it's probably a tough, tough integration. >> all right. thanks very much for the perspective, robert. watching shares of microsoft on the move. a lot to look forward to from the new ceo. good to see you, robert. >> thank you. shares of amazon are being hammered again this morning. earnings were broadly in line with consensus but operating expenses rose 23% as amazon spent heavily on shipping, cloud computing and new hardware such as its fire tv set top box. mark ma haney an analyst at rbc capital markets and joins us
now. welcome to the program. >> good morning. >> look, we can get involved in the detail of amazon. the argument on many of these issues will be as they have always been, but something very dramatic has changed now, hasn't it? we were nudging 400 bucks a share at the start of the year on amazon we're now down to 300. we've lost $45 billion of market cap. is the market changing its ya attitude to amazon? >> i think the market has done two things. it's changing its attitude towards growth momentum stocks and a lot of internet stocks fall into that basket and changed towards amazon that amazon is increasingly pushing out profitability, the market wants profitability sooner not getting it from amazon, getting the revenue it wants but not the profitability hence the sell off in the stock. >> some places jeff bezos should not be, for example, china. international has got a lot, $60 million, well behind his chinese peers alibaba but they continue
to invest. a point you say that's not profitable territory? >> china may well be the riskiest in vestment the compan is taking. amazon's market share in that market is probably low single digit percent and well entrenched competitors. most of the other bets however that amazon is making and has made i think will pay off well or have paid off well. at the top of the list has to be cloud computing. you know, you just talked about that with the prior company microsoft. amazon's whipping in this category and got the lowest cost treasu structure. done the right thing in that area and paying off. >> mark, it's david faber. they don't tell us how much growth they're having. we have to look at the other line in the supplemental revenue highlights. $1.2 billion, most of that in north america assume by amazon web services. back to this construct that investment perception may be changing. i mean, is it something you think is going to be for the
long term? we've seen it occasionally in the past and then amazon does something that gets everybody back on board thinking about great revenue growth and believing that they can continue to deliver eventually on that profitability goal. >> you know, david, you set up the question right. the market waxes and wanes on the desire, the need for amazon to show profitability, near term. my guess is that once again, somewhere later on this year or maybe even as far away as next year they'll get a little more leeway in the market for profitability. but there are a couple key points. two in particular. this company did show mid single digit operating markets for years. they've proven they can run this business at reasonable retail margins. there is an identifiable source of margin expansion in their business model. they've doubled their fulfillment centers from 50 to 100 worldwide. we're about two or three quarters from seeing leverage in that line and it's the biggest source of leverage you're going to see at this company.
that's why we think margins rise next year. >> how should we go about judging it the way jeff bezos wants to or bottom line earnings. he wants to talk about return on invested capital and free cash flow. >> that's how we look at all the stocks. it's expensive on those metrics but you can value it on those metrics. this thing trading with a 3 to 4% free cash flow yield. traditional retailers you'll get them and look at 5 to 6% free cash flow yields. wait a second, the growth here is dramatically higher. you have 30% core growth in their consumer packaged goods business and fashion and apparel and if you add in the web services and we think that growth is sustainable so people should be willing to pay a higher multiple. we like amazon's stock here. stock is cheaper in our books. we're buyers of the stock right here. >> you've lowered the price target, mark, from 425 to 400. where does the catalyst come from to send the stock to 400 as things stand at the moment
having lost so much ground? >> yeah. i think two things. one, you know, simon keep in mind this stock has been -- we are consolidating valuation gains from last year. the stock is still nicely outperformed over the last one three and five years. for the stock to go higher from here that revenue growth needs to stay exactly where it is and going to have to do at least 20% top line growth and probably closer to 25% and we're going to need to see those margins improve. i think that's the back half of the year story. maybe is pushed out as far as the first half of next year. that's what the market is going to want. >> thank you very much for your time. have a great weekend. mark ma haney at rbc. >> markets under pressure. dow down almost triple digits. a lot is visa. you'll hear comments today about the price weighted index and visa a $200 weighted stock. jim will join us live at post nine, his take on the markets and more when "squawk on the street" continues. street" conti.
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all three indices in the red this morning. dow down almost 100, s&p 1870 close to the lows of the week after a number of bellwether names including amazon, ford fell following their quarterly results. joing us to talk about amazon in particular, jim stewart. good to have you back. >> good to be here. >> our question, is the leash on bezos and his big spending ways getting shorter, tighter? >> well today's market reaction
looks like it finally is. and this has been such a fascinating stock for so long. i think people forget that amazon has been around for 20 years. basically never delivering any profits. growing, growing, growing, but where the holy grail it's just always over the next hill. this time they said even next quarter they expect a loss. 20 years in. i can't think of another stock that has gotten a honeymoon that lasted that long. and this plunge today makes me wonder if people are running out of patience. >> why would it be happening now, if, in fact, that's what's happening? >> i think a couple things. this new initiative they may go into the delivery system, oh, my god, that's another super high fixed cost, low margin business, just like retailing. where are the profits ever going to come from? least that would give me pause. >> it comes almost me too. they're going to launch a smartphone apparently according to some. >> another super competitive, low margin, it really has people scratching their head like where are the profits going to come
from? at some point -- i mean look at walmart. walmart, which it's often compared to has geographic economies of scales. mow know plus in their local markets. where does amazon dominate the way walmart does, nowhere i can find. >> i don't know about that. amazon is used by hundreds of millions of people every day around the world, i believe. >> it does. but it only has something like 2% of the global retail market share. it doesn't have that critical mass anywhere, yet it's global. >> it has 100 fulfillment centers. >> it's a great company and i love using it. >> many people who say listen, for time, the way to measure it is free cash flow, it's revenue growth, i should say, growth of assets and gross profit dollars. those are the correlations that actually matter in terms of the stock price and the question is whether that is going to change in a significant way and they're in trouble. >> it hasn't changed so is it now going to be the magic moment. let's face it, some day it is going to change because we all know from economics 101 that the
only thing ultimately that matters is profit. you can talk about cash flow until the cows come home and that may last for a while but ultimately they're going to have to deliver something. >> someone say john malone at tci never really delivered great profits but able to keep doing that and avoid paying taxes legally, of course, and eventually sold the company for a large amount of money to at&t. i mean, there are other people who created great value through the years without necessarily reporting a lot of bottom line profits so to speak. >> i don't think there's any danger anyone will buy amazon with a pe of 570. >> i think that's doubtful. >> look at it next to a google, for instance. it's a completely different business model, though. they get the bulk of their profit from advertising. >> and google has a dominant market position. it is managing essentially a quaysy monopoly like walmart. i think in way they're similar but google is a better play i think and yet people hold it to a high standard. by comparison it's a value play. >> can i be dull and international and change the
subject and talk -- >> nothing dull about international. >> we know from reuters, president obama was going to call around the rest of the europe peen leaders to try to get some form of feel deal on sanctions against russia. the downgrade, rise in local interest rates there. we learn from berlin angela merkel will come here thus, friday of next week. the main thing the markets worry about are sanctions and financial fallout in moscow and emerging market crisis. where do you stand on where we are and can this market remain immune? >> well, i think it is a big cloud over the market right now and let's face it, we'd have to be blind not to see what russia is doing here. it's not good. looks like they are going to play through the crimea thing and in eastern ukraine and the west will have to do something. my own guess, the steps so far have been really modest. i have a hutch all the big oil companies are still going full charge ahead with their projects there.
honestly i think they may come up with something but given the stance on the european union i don't see it being big. >> if russia invades the ukraine -- >> that's what we're looking at. >> they have to do something. >> absolutely. >> the goal whether angela merkel's country run on natural gas pumped via the ukraine they have to escalate. >> there's nothing good from the global economy. how bad and how far are they going to go. my own sense the europeans do not want to go very far. i think deep down, the truth would be told, they don't care that much about eastern ukraine. the germans don't care that much about it. >> they are part of a european union that has a large number of countries that are within that -- it's not angela merkel on her own. it's a group of people -- >> poland -- >> many are scared as to where this -- >> as well they might be. >> where putin will end up? >> i'm saying they have to do something, i agree. personally, i might do more. but everything i've seen, everything i'm hearing from
europe, talking to some germans, talking to some russian, the germans just don't have the appetite for a major confrontation either economically or politically. >> i wonder if the pressure will come from the markets and economy? now s&p taking it down to the lowest investment grade in terms of russia. worried about capital flight. that can be a serious spiraling crisis. russia is concerned, they raised interest rates again. >> who worries me it hasn't curbed russian behavior. the market reaction has been much more clear and powerful than the political reaction. >> you wrote a column it would work. >> i thought white work and i guess i -- it would work and i thought putin would be in the interest of his people. >> with all that in mind, investors gravitating to utility, safe yield, are you in that camp? >> no. i think i would ride this out. >> really? >> japanese yen don't forget, stronger. >> there's a bid for safety right now. >> jim, it's good to see you. >> good to see you. >> jim stewart of the "new york
times." >> days after the company reportedly abandoned its fuel ban business the ceo of nike will be joining us for a live exclusive interview coming up later on "squawk on the street." we'll be right back. ♪ [ banker ] sydney needed some financial guidance so she could take her dream to the next level. so we talked about her options. her valuable assets were staying. and selling her car wouldn't fly. we helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today...and tomorrow.
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in celebration of our 25th anniversary at cnbc we've created a list of the 25 most influential and transformative people in the business in the last quarter century. next week we'll reveal the list and how they ranked and we're telling their stories. here's a politician and ceo who's been called the queen of silicon valley and a member of cnbc's first 25 list. ♪ >> meg is a driven individual who is an excellent communicator, who is able to
establish a vision, execute on it, get people to follow her because she's a strong leader without taking herself too seriously. >> carefully, strategically, in the methodical way you might expect of a princeton and harvard business school grad, meg whitman has built one of the storied american business careers of the past quarter century. she held top jobs at proctor and gamble, disney, hasbro, bain and company but her ten-year run as ceo of ebay that cemented her position in the top ranks of american business builders and executives. when whitman took over the auction site in early 1998. >> it had only 30 employees and about $4 million in sales. >> the site was black and white. it had a courier font. found it hard to use and put teams together who figured out the look of ebay, the brand of ebay, made sure the site worked and didn't crash all the time. >> reporter: by the time she left as ceo in '07 she had taken
ebay public, added paypal and skype to the fold and built a business with $8 billion in revenue. >> she built it up to be one of the most successful internet companies in the world with about 15,000 employees. >> successful but not blemish-free. >> i would argue the acquisition of skype, a failed acquisition, was one of the low points on her tenure. the acquisition of paypal during her tenure was an incredible success when we look back on that. >> next, she turned to politics. she joined john mccain's 2008 presidential campaign as national co-chair and in 2010 ran unsuccessfully for california governor. she spent a reported $144 million of her own fortune in her loss to democrat jerry brown. >> i have actually talked to her about would you ever do that again? what were you thinking? i'm not sure that i got a straight answer. i think she's an incredibly ambitious person clearly and
she's somebody who just sees opportunities and tries to climb the next hill. >> for whitman the next hill turned out to be hewlett-packard. she joined the struggling company's board in early 2011 and became ceo eight months later. the queen of silicon valley was back. >> meg came in saying, i've got a five-year plan to try to turn around this company. make no mistakes hp was in dire straits. at this point about halfway through, not quite, she's made great progress in terms of stabilizing the company, in terms of turning around morale at the company n terms of the stock price, and even positioning it for a bit of growth in the future. >> meg whitman, leader, business builder, turnaround artist, living proof that there are second acts in american lives. >> i wonder if she'll go back to politics. in 2008 "the new york times" had a piece floated her name potential first female president
before hillary clinton sort of became the frontrunner. it has been an interesting ride to watch her. >> indeed. tough to run as a republican in california, that's what you'll basically hear, not just from her but anybody who's tried to do it in that state. i don't know. i think she's all about hp right now and, of course, happily we have her join us every quarter to update us on the progress that they are making at that company in terms of trying to turn it around. >> turn it around. found find out where meg what'sman and the others rank on the list of rebels, icons and leaders, next tuesday all day here on cnbc. >> as if that wasn't enough straight ahead on the show he spent 32 years serving in congress and now former representative barney frank is heading to the tribeca film festival where they have made a movie about him. he'll tell us more about that when he joins us live at post nine next. ♪ ♪
what are you waiting for? you could literally be done with the test by now. now you could have done it twice. this is awkward. go to comcastbusiness.com/ checkyourspeed. if we can't offer faster speeds or save you money we'll give you $150. comcast business built for business. dow down 108 close to session lows for the morning. it has been tough from an earnings and a macro data perspective. let's get to seema moody at the nasdaq. >> carl, we're looking at the nasdaq now at session lows down more than 1% on the day. quite a reversal from what we saw yesterday when the nasdaq was being helped by shares of
apple which gained about 8% in yesterday's trade thanks to better than expected earnings. the big downer today is amazon. shares weighing on the nasdaq after reporting earnings last night. multiple price target cuts here due to cost worries. it's outlook weighing on investor concerns. analysts writing that continued heavy investments are likely to keep amazon shares range bound in the near term. now, in other areas where we are seeing weakness, take a look at social media stocks. also under pressure today. pandora's numbers while they did beat street expectations, its guidance didn't seem to excite investors. pandora among other stocks including facebook trading to the downside on that note. take a look at chips. that's another pocket of weakness for the nasdaq. semiconductors which have really been moving to the upside over the past couple of weeks, trading to the downside here. apple again, after its 8% run, down fractionally on the day. lastly want to point out, chinese internet name baidu did
report results, sees better than expected revenue for the current quarter. core on-line search business is strengthening. we've been watching the chinese internet names very closely as we await for alibaba to file its s 1. back to you. >> and, of course, the ceo of zi lings will be on with us. in the meantime he spent 32 years serving in congress with critically four of those years as chairman of the house financial services committee during the worst financial and economic crisis in recent history. now the former congressman barney frank is heading to the tribeca film festival on sunday for the world premier of a documentary that looks at both his career and his personal life in a film called "compared to what, the improbable journey of barney frank." here's a sneak peek. >> it is a sacrifice for anyone and barney made that sacrifice. certainly he postponed happiness in order to serve the public. >> one stop i stopped and i said to him, how much time do you --
>> he's with us at post nine. you were saying in the break you haven't seen the film yet? >> no. the rules of independent filmmaking are apparently the subjects are to the allowed to see the film as an absolute protection against any undue influence. >> i hear that it came about as a very light touch initial inquiry as to whether you would be interested in doing something as you left the snous. >> yeah. i had known sheila she was a federal activist and lawyer fighting mortgage abuse, we were on the same side, and the original one, it was going to be my last year in office, my retirement, and it just grew from there. >> 100 hours of interviews. >> yeah. and a lot of effort went into it. you know, i appreciated what they did. but it just grew. i guess they didn't know where to stop. >> i'm trying to think about the title "compared to what." that strikes me as something you
say when people criticize your policy. >> compared to what is my mantra for making decisions and i derived it from one of the great philosophers of the 20th century, a man named henne youngman. back then comedy was a lot about men didn't want to get married and back and forth. he had one liner that was really quite profound and funny. how's your wife? compared to what? i mean it's very brilliant and that has been whenever making a decision it's always compared to what? >> for those of us -- for those people who know you, the viewers, from doing programs like this, cnbc, cable, congress, what will they found out in the film that surprises them about you personally? >> one thing, and actually i like doing the show. it's an exception. as you know, most tv tends to be contentious. people like to promote arguments and i have found people who have seen me in a noncontroverting
context surprised i'm not yelling. >> the softer side. >> yeah. and look, i understand the importance. ed a i said that's -- as i said one of the things i like about the show, we talk seriously but not -- i won't say who but one cable guy i was -- in one situation when he made what seemed to me an impossibly provoketive statement and i objected he said come on congressman, this is cable not c-span and given that, people get a distorted view. >> the elephant in the room is that many people that watch it or don't watch it, will do so because it will feature the personal side of your life, a gay man married a man who is 30 years your junior. in many -- and half the country is still not comfortable with that at all. in many sense i guess you are a posterchild, whether you like it or not, for a movement at the moment to have this sort of profile at this stage. >> i guess actually. i don't generally get good
responses on fox, but on the question of man in the public eye marrying someone much younger i probably get good treatment from rupert murdoch's people in that context. maybe i'll ask them to focus on that. i made the conscious decision in 1987, 27 years ago, almost to the day, another few weeks, to acknowledge publicly that i was gay. and the problem was this, the media had been very protective of gay and lesbian people and would not out us without our permission unless we were involved in some situation which reflected badly on us and which our homosexuality was a factor. as a result, the only people who were public were people who messed up. i thought that was not a good thing. so i volunteered it and i've been doing that for 27 years and i have no complaint. i think the public has responded very well. >> i hate to take this back to public policy. while at the end of this desk here, i -- i'm sure you've been following this. i would love to get your quick take. so many u.s. corporations,
particularly in the pharmaceutical area, are trying to get themselves out of u.s. tax jurisdiction. it's come up a great deal in my reporting lately. we call it tax inversions whether applied materials or the latest pharmaceutical company, do you think, a, this is a big problem, and b, is there any hope that congress is going to actually act to try to figure out what can be done here as we watch tax paying u.s. corporations disappear? >> yeah. it is a big problem and there's an additional aggravating factor as people know, american consumers pay a higher price for pharmaceuticals than almost anywhere in the world. i mean we give appropriate patent protection, but other people get these things cheaper. it is a very serious problem. and i -- i don't see much in the current congressional situation. unfortunately we have a group of people in congress who don't like higher taxes. i wish they could set aside the philosophical debate about the level of taxes and whether taxes are a good thing or not
from giving any decision on leveling taxes shouldn't they be fairly collected from everybody. i am hopeful. one of the things we did do in 2009 and '10 was to improve the collections. we've had some great progress regarding switzerland. the answer is yes, it is a serious problem and i hope at some point there will be a consensus to do something about it. >> in the meantime to the film and the premier on sunday, if one of the big hollywood film producers does turn up and likes it and wants to do a scripted drama, what actor would you like to play you? >> i've been asked that. i have not been accused of excessive discorrection. i am smart enough not to answer that question. >> kevin spacey. >> if it would get him to stop doing that outrageous sdis torting misleading "house of cards" -- that is the most misrepresented view of the american political situation
imaginable. >> highly entertaining. >> veep, hbo's show is right on. >> "the west wing" was my favorite in terms of -- >> good to see you. >> thank you. >> i hope you enjoy the film. barney frank. >> thank you. >> up next, a rough week for chip makers xilinx falling 9% after the company's quarterly results disappointed wall street. the ceo will join us for an exclusive interview after the break on "squawk on the street." s at your ford dealer think? they think about tires. and what they've been through lately. polar vortexes, road construction, and gaping potholes. so with all that behind you, you might want to make sure you're safe and in control. ford technicians are ready to find the right tires for your vehicle. get up to $120 in mail-in rebates on four select tires when you use the ford service credit card at the big tire event. see what the ford experts think about your tires. at your ford dealer.
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welcome back to "squawk on the street." check out shares of vf corp. clothing companies behind brands like north face, lee jeans, wrangler, shares up 2.5% just after session highs after the company beat on earnings and sales and boosted full year earnings forecast as well. the shares again up 2.5% today. still down, though, marginally on the year. sara, back over to you. >> yep.
guess the cold weather helps certain companies out. thanks very much, dom. have a look speaking of earnings, xilinx this week. what happened to the stock. the chipmaker missing the street on the fourth quarter earnings, but beating on revenue. the company saw growth in their communications and data center segment. what can we expect overall? from that and other segments going forward. moshe gavrielov is the ceo of xilinx and joins us for an exclusive interview on cnbc. thanks and good to see you. >> good to be here. thank you. >> clearly disappointing when it comes to earnings per share and also your revenue forecast. you saw the reaction in the stock. what went wrong? >> well, i think there's a misread on the earnings per share. we had a special one-time charge of three cents and if you take that out, then we actually beat both on the overall revenue and on the bottom line. so i think we could do a better job communicating that. with regards to forward looking,
we are anticipating 0 to 4% growth. we had a record year last year. both in terms of the revenue and our margin went up significantly by 3% overall. we are predicting 8 to 12% growth. we delivered 10% last year. >> yeah, but i just want to stop you on those forecasts because what seemed to be the concern here from analysts and from wall street is that the revenue forecasts were disappointing and seemed to indicate a slowdown in sales from aerospace and defense contractors and that chip business. >> let me explain, xilinx is a broad company. we have over 20,000 active customers who spent a whole host of applications, communications, wire and wireless, aerospace and defense, so we're very proud. sometimes one market goes up and another market goes down. what is driving our growth now
is wireless communications. about 50% of our business. we're in a virtuous product cycle and actually are leading edge technology who grew 40% quarter per quarter. i'm very confident that we will continue to deliver and we expect that the street will recognize that as we move forward. >> moshe, what is the future of semiconductors? we hear a lot about the internet of all things where door locks and swimming pools and everything will be connected and controlled via the internet on smartphones and increasingly everybody's putting their lives in the cloud. so do we actually need very complicated chips in our everyday lives or is there going to be a great dumbing down, a great commoditization of the market and are you positioned to take advantage of that? >> simon, that's an excellent question and if you look at the number of connected devices, the expectation is that it will grow and explode and by the year 2012
there will be $50 billion connected devices, seven for each man, woman and child on the face of the earth. that generates huge bandwidth requirements. those bandwidth -- those bandwidth requirements are addressed all by semiconductor devices and it's actually an opportunity, one of the reasons that our business is growing so rapidly now, is there's an upgrade to lte on wireless infrastructure that actually is driving our growth at this point in time. so i actually believe that these trends work in the favor of the semiconductor companies and that if anything, you'll see fabulous growth and commoditization will only take place where there's ultrahigh volume consumer-like cell phones, things like ha. >> i want to ask you a broader question, moshe, because you have an interesting, some unique vantage point into manufacturing and industrial production, given your broad scope of businesses.
where do you see the u.s. manufacturing sector right now? what's the outlook for 2014 and factory production? >> we definitely are seeing the beginnings of a recovery. i wouldn't say it's vibrant but it's starting to appear and after a north america business has not been growing for several years we do expect to see growth this year driven broadly, industrial applications in the second half of the year, we expect a huge boom in aerospace and defense, the programs we've won. there's a huge set of innovation which relates to cloud, so we are actually very bullish on the re-emergens of a growth in north america. >> thanks for your perspective, for joining us on those results and on the manufacturing sector. good to see you, moshe, from denver. the ceo of xilinx. >> thank you. >> when we come back an exclusive interview with the ceo of nike. we'll find out what the sports
mfs. that corporate trial by fire when every slacker gets his due. and yet, there's someone around the office who hasn't had a performance review in a while. someone whose poor performance is slowing down the entire organization. i'm looking at you phone company dsl. go to comcastbusiness.com/ checkyourspeed. if we can't offer faster speeds or save you money we'll give you $150. comcast business built for business. dow closed at session lows,
down 130 here. the nasdaq is the underperformer, down almost 1 .5%. amazon is having the worst day since the last time it reported earnings, january 31st. it's down 22% year to date. really the only thing working today is utilities. the only positive sector. we're seeing all-time highs once again in american electric power, nrg, and others, as well. >> the amazon drawdown, so to speak, the losses are forcing people to take risk off and other high-multiple stocks. back to this recurring story we've been following for the last six weeks or so. you have facebook down over 4.5% after what were strong numbers yesterday. you know the typical names. >> of course. >> they're coming after them. but amazon has led that charge, and now down, as carl said, 9.5%. >> there's also some mac macro concerns which fed in from russia. the s&p had a downgrade of russia and ukraine.
things seem to be escalating. a bid for treasuries. treasury yield 2.665. >> and a dangerous over the weekend. the fed, the ecb, earnings, does that switch monday morning to what's happening with russia given that angela merkel is coming here. investors in electrolux is having a great morning. the ceo says the economic recovery in europe has lifted profits by 19%, allowing him to cut debt byes $400 million. he says sales here in this country, which account for a third of his business, have been more stable for sometime. >> the north american market, the u.s. market in particular, has been quite strong over the last four, six, eight quarters. q1 was a little soft. mostly driven by the severe weather conditions in january and february. so given the snow and the ice and the slowdown in retail, january and february were down about 6%, 8%, appliance demand.
march rebounded quite strongly, up double digits. we're forecasting the u.s. to be up about 4% this year driven by, we think, a continuing, gradually recovery in the housing market and that's boding well for price and mix. >> we'll play you more of that interview in the europe close at 11:30, in just over half an hour's time. the markets in a midst of a strong pullback, certainly within tech. we'll have more on that after this short break. who do you work for? your boss? yourself? your parents? your family? at baird, what matters most to you... matters most to us. as an employee owned firm, our financial advisors have the freedom and resources to realize a plan to fit your family's unique needs. we'll listen. we'll talk. we'll plan. baird. why let erectile dysfunction get in your way? talk to youroctor about viagra.
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welcome back to "squawk on the street." and the last edition of the "santelli exchange." and before we get to the special guest, former commerce secretary carlos gutierrez, in the april 15th edition of "the new york times," we were notified of a change. put it on the screen. the census bureau is changing its annual survey so thoroughly it will be difficult to measure the effects of president obama's health care law in the next report due this fall, census officials say. but don't despair. read on. another paper said it is coincidental and unfortunate timing that the survey was overhauled before major provisions took effect. welcome, mr. secretary. >> thank you. >> what do you think about all of this with regard to the census bureau?
listen, one-sixth of the economy is health care. you know, i cover markets. this is important. is this something i should be concerned about? >> yeah, look, we've been doing census since 1790. so we're not new at this, and we've got some very good people in the census bureau. they're professionals. so it's very odd about this, rick, is we wouldn't run the two systems in parallel for about five years, so that you can get a trend, you can see the pattern, and you could tell whether you really have a new, better methodology or not. i don't understand why the sudden change. that's not the way these folks typically work. they usually, you know, look for patterns, look for long-term trends. so run the two systems in parallel. that's the way they should be done. it is a bit of a surprise. very odd that they would just change the methodology from one day to the other so we can no longer compare the results to the past. >> yeah, i agree. and taking it a step farther.
we all want everybody to have good health care. i understand that. but a couple of things. you know, when we reach 7 million or 8 million and we don't know how many paid, but that's the government's number, i guess what i'm always surprised about is, is why do we look at -- there's a penalty for not signing up. you know, when i pay a toll, mr. secretary, idot doesn't give me a thank you card for being generous, because you have to pay a toll. this is required. you get penalized if you don't join. there's so many upside down issues regarding this health care plan, and this seems to be the tip of the iceberg, making it difficult to interpret. can you give the final minute on what you believe we'll be looking at as this law goes on board in a larger fashion over the next several years? >> well, i mean, you know, the problem, of course, with this specific situation of the census is that we're not going to know. we're just not going to be able to compare how were we doing ten years ago to how we're doing today, because you're talking about two different methodologies, and that is a shame.
you know, adding questions to a questionnaire makes it more difficult to complete. so it's just -- it's very unfortunate. and it just sheds some light on the question of are we concealing something? so the administration is not helping itself, and, you know, we should have a separate information system for this and not continue to add. and very importantly, not use the census to make a political statement. we've been doing this for over 200 years, and that's what we've been trying to avoid. >> thank you, mr. secretary, it's always nice to hear your thoughts. carla -- carl, back to you. >> thanks a lot, rick. rick santelli in chicago. if you're just joining us this morning, here's what you missed. >> announcer: welcome to "squawk on the street." here's what's happened so far -- >> it's almost as if he's rebranding the company right here, right now, and windows is
just something that they don't want to talk about. they'll make plenty of money with it, but they're a cloud-based company. [ bell sounds ] >> we've uncovered a lot of growth and opportunity in other significant real estate formats. i think it will bode well for the future. so net-net, a great quarter for the company and we're just getting started. >> i can't think of another stock that has gotten a honeymoon that lasted that long, and this plunge today makes me wonder if people are running out of patience. >> kevin spacey. >> well, if it would get him to stop doing that outrageous, distorting "house of cards," i'd be -- welcome back to "squawk on the street." it's 11:00 a.m. here in downtown manhattan, 8:00 a.m. out west. here's what we're watching for you.
a strong debut for nadella, the first cloud first microsoft. >> but a different story at amazon. earnings in line with estimates, sales beat. why is the bottom dropping out of the stock this morning? we'll tell you. starbucks raising its forecast for the year. more coffee, more tea, more digital payments. coming up, lunch and alcohol, more with starbucks ceo and an exclusive only on cnbc. and earning blitz continues, ford profits slipping. we have an interview about the f-150, weather, and the cost of new models affecting the bottom line. and how about the ceo succession plan? that's what investors are interested in hearing from. we'll have that later. first, a check on the markets. the dow down 147 points. that despite the best consumer confidence number in about nine months. of course, there's volatility in ukraine. there was a credit downgrade in russia. of course, russian markets are slipping, as well. you see the s&p down 15 points. the nasdaq is down 65.
one of the biggest laggards on the nasdaq is the yendac, down 17%. >> a lot of things working against the bulls today. you mentioned some of the high fliers. visa is a very expensive stock on the dow, a price-weighted index. that's helping the dow, basically making the dow to get out of its own way. and the macro data, housing a miss all week long. today, it's masco, down 10%, and the pmi services, a miss. job creation in that index at a two-year low. so plenty for the bears to work with. not much for the bulls. >> two big stories, valuation and earnings. valuation is now a question of this macro data. is the market justified where it is? the data seems to have a weaker tape. >> it will be interesting to get art cashin's take on the
tensions in ukraine, the election a month away, on may 25th. for the time being, s&p cutting the rating on russia to triple-b-minus, one notch above junk as we see drills on the border and the rhetoric rising. >> he said don't understatement how quickly that can influence the markets. as we've seen today, it's will a big effect. >> joining us this morning for the "jacqusquawk feed," kara fi. >> good to see you. >> amazon first. making a drastic move to the downside. earnings hit analysts' estimates. sales beat by a margin. >> yeah. >> judged on top-line growth, on cash flow. is bezos feeling the noose tighten? >> i'm not so sure about that. i think the stock has been up a lot, and there might be some profit taking. but i think what was interesting was the revenue growth was so drastic and the reaction was different, which i thought was fascinating.
i don't say i understand wall street, but it was an interesting growth in revenue for him, which i thought was impressive. >> cara, an interesting tweet yesterday, said huge revenue, tiny profits, bad guidance, stock is up, retweet every 90 days. -- getting tired of this story and such weak guidance? do they need to see something a little more -- a tiny sliver of promise from amazon when they're spending so much money? >> i think they spent the money on the hbo deal and everything else. i don't think jeff bezos cares or has cared for 20 years. it's not every 90 days. it's been ten years that he does this. i think that wall street's surprised by this, probably surprising in a weird way. >> prime membership, of course, they say continues to go up, week over week. do think that's sustainable? >> you know, it's a really great deal. people like it. i think at some point it reaches a point. but if you get -- the reason why they're doing these deals with
hbo and others is because they've got to add things to this prime that make it prime for people to want to use it. and so, i think that they're going to have to spend to keep it going. but the more attractive it becomes the more people sign up. so we'll see how maybe they can be innovative in ways not quite so spendy, i guess. >> somebody wrote this morning, kara, amazon is basically the only company that is a large-cap company with a start-up mentality. is that fair? and is that how they're seen among others in the valley? >> i think they're seen as jeff bezos doesn't care, because he's building an empire kind of thing, and he doesn't care about anything but what's in front of him. he's been giving that message to wall street, again, for decades, know, since he started the company. the point is, does it get big enough where it throws off money? he's sort of -- so, you know, now i'm going to buy washington post, which was his own money, but a very curious person, and moves thing to thing, and it's a real war in the delivery of entertainment, and he's going up
against google, going up against netflix, going up against, apparently, yahoo! and everybody is getting into this. you really have to have, you know, your weapons to get the consumers in. you have to really grow your business and offerings and stuff. >> yeah, he does play by his own rules, no doubt about that. >> he does. he always has. >> let's talk microsoft. upbeat earnings. first quarter as ceo, the big theme cloud first. >> cloud. >> mobile first. >> yeah. >> cramer tried to argue thiskae quarter. >> i don't know about that. that's still making a ton of money. i think they want to shift the discussion, under the new regime. it was his first earnings call. i think he wants to shift the discussion into microsoft of the future, which is something ballmer did not stress enough. this was something he was working on, and this was his division. the mobile part, i'm dubious about. the cloud part is going rather well for him and microsoft.
you know, it's -- the nokia deal closes today, and so, you know, what are they going to do in mobile? how will they cope, you know, with the strength of android and apple, and where do they fit in that? that's the big question for him. >> he did try to communicate, if not overcommunicate, this underdog mentality saying the company needs courage in the face of reality. one reality is where they are in mobile. but what other struggles do you think they maybe need to be more realistic about what they can overcome? >> i think i'd be interested to see what they're going to buy. i'm going to be writing a piece about what i think they should buy. linkedin, box, those kinds of things. and the other part, will they spin off the xbox division? that's a rumor that persists. i think that will be interesting to see if they do that. >> earlier in the show, faber said why not take a writedown, a lot of dealers thought it was an ill-executed deal, and maybe you go ahead and wipe the slate clean. do you agree with that? >> i don't know if they'll do
that. that's a drastic thing for them to do. they could. what's interesting is nadella, the first thing he did was get office for ipad, which i thought was interesting. >> really? because i've seen -- i'm wondering, you know, he is seen as this agent of change, but does he get credit for that, or was it in place before? >> it was, but it didn't happen. it doesn't really matter. when you have a studio head gets fired and a hit movie comes out. he gets the credit. he announced it. took a long time. >> yeah -- >> took long enough. >> so you'd give him a good grate at least on this first earnings release? >> yeah, absolutely. you know, people will give him -- there's a period of time for him. look, marissa mayer, two years in, all of the core business will, you know, 1% rise, so he'll get a lot of time to -- by the way, microsoft is doing well. >> yes. >> so he'll get a lot of time, grace period for a long time. >> your point about windows well taken. they still make money on the old, old products. >> yeah, millions of dollars.
>> bill scoop for you guys, big departure for google. >> yeah. >> vick gondochra is leaving, highlighting the traction google has had. walk us through, it's a big company, how much does this matter? >> a lot. it's interesting, it signals something. there's a lot of talk inside google, what will happen to google plus and outside, obviously. it hasn't been the home run they thought it would be in the way they conceived it initially, as a facebook killer kind of thing. although now they're saying they never conceived it that way. but they did at the time. because vick was very aggressive, talking about facebook. you know, i think if you think of google plus as an identity system, sharing system, and part of the sign-in system, so google plus, like your google search and services, that's a better way to think about it. i'm not so sure you'll see it as the social network initially thought to be. >> kara, there's some talk about google plus becoming a platform but not a product for those -- >> oh, yeah. >> -- familiar with the silicon
valley jargon. >> yeah, ignore it, ignore it, please do, it doesn't mean anything. what it is, i think it's just the way google is rethinking -- it's a way to sign into google and use google services. i think it's just not -- it has a loyal band of users but certainly isn't the size and scope and impact that i think -- >> so basically, it's just the home page for your identity when you're using google? >> i've thought about it that way. we'll see what happens under larry page. some of the features have been successful. hangouts, photos very successful. so maybe they'll pull it apart a little bit. we'll see. we'll see. >> overall, kara, it's been such a big week for tech earnings, as we look at various metrics for growth. is the feeling in the valley that people are doing okay? >> yeah, i think -- are you kidding? they're still partying like it's 1999. we've seen some big -- there's a lot of big fundings going on. there have been big fundings. you know, they continue to invest in the companies that they think will be the winners. i mean, you know, they'll invest like crazy people until something crashes.
you know, that's the mentality here. >> right. and how much -- and how much are they watching the valuations come in? >> they're still paying them. they complain about them, but they pay them. and the venture firms -- i was at a venture firm -- a small group of people that raised just $40 million to invest in small companies. that's a lot of money. so there's plenty of money to go around, and they'll pay up for the expensive ones so -- >> kara, thank you so much. >> thank you. >> kara joining us today. when we come back, ford earnings miss analysts' estimates. it's about margin, pricing, control, power, new costs. stock down 3.5%. it's a perfect day to have bob shanks here to break it down. that up in a moment. first, rick santelli, happy friday. what's on your mind? >> happy friday is right. you know, going into weekends of late has been a dicey proposition, thank you crane.
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facebook coo sheryl sandberg in a regulatory filing has said she sold another 283,334 shares of facebook stock for around $17.8 million. this brings her total holdings of class-a common stock, again, to about 8.7 million shares. again, sheryl sandberg continuing to share some stock. again, carl, interesting news out of facebook insider selling shares. >> we are keeping an eye on that. thank you so much, dom. ford had earnings just shy of estimates. our own birthday boy, phil lebeau, is here as we wrap up earnings. happy birthday. >> it's good to be here. thank you for the birthday wishes. let's bring in bob shanks joining us from the ford headquarters. bob, an interesting earnings report today, because there are a number of moving pieces here. it gets a lot of people's attention is that, a, you didn't beat the street in terms of expectations, in part because you had a number of items in the first quarter that basically took out about $900 million. what happened?
>> you're right, phil. and happy birthday from all of us here at ford, as well. >> thank you. >> yeah, we had three things that occurred in the quarter that affected north and south america. let me hit south america first. we had some balance sheet effects from the weakening currencies there, largely around venezuela and argentina. in north america, two factors -- the harsh winter weather that disrupted operations to some extent, so premium costs we had to incur to keep production going, and the other one was warranty reserve adjustments related to field service actions. >> and this gets people wondering, you are taking on greater warranty reserves, in part because of what you've seen from the track record over the last couple of years and what you expect in the future. should people be concerned that your warranty reserves will continue to grow, let's say, over the next two, three years? >> no, i don't think necessarily. i mean, the absolute warranty reserves will grow as our volume grows, because, you know, we book reserves on a per-unit
basis, so as volume grows, you'll see it offset by improving the warranty and quality. no, this was really related to field service actions. we have seen more recalls over the last several years. we follow a model that is purely driven by data, in tact an accounting issue, and we had to increase reserves. nothing specific about the future. no specific problem. no vehicle lines. it's just getting the reserves where history tells us where they should be. >> how do you feel about the mix in north america? there's mixed commentary in the first quarter. some saying i'm liking the pricing, but i'm not crazy about the mix. they're concerned you'll see some erosion in that mix as you go into the third and fourth quarter. >> well, actually, we said that our volume would be lower for the full year. so there's nothing new about that. in terms of the mix, we did have negative mix in the quarter around series mix in options and related to the products running out as we run towards new models. for the full year, we think that will be offset by favorable
product mix, so the types of products we sell. for the full year, it won't be an issue. >> you think when you have the new f series coming out, that gives a boost -- by the time we get to the fourth quarter? >> yeah, whenever you bring out new models, you generally get a favorable impact largely around the fact that there's a lot of people that are interested in the products, so your incentives are always at the lowest livele, be over the cycle. that's a typical response. mix is usually higher in terms of series, so we'll see that with all of the new products. >> bob, one last question. asia. you brought in just under 300 million in the first quarter -- i think you made 320 million all of last year. china is really the key here in terms of the growth you're seeing in sales. you've got expanded production coming there. what are you expecting from asia, in particular china this year? >> yeah, wasn't that great? such a fabulous result after all these years of investment. we keep seeing more and more positive results from the region. we think that will continue as we go forward through the course of the year.
i don't think i would take the first quarter times four. clearly, this year is going to take us to an all-new level in terms of the contribution to the bottom line. >> bob, before we let you go, one last question. we've been following the succession plan at ford very closely. mark fields looks all but set to take alan mulally's role. what is your impression of fields? how do you feel about the way the board is outlining the succession plan? tell us about your thoughts. >> well, there's nothing new to say on succession. the company has robust succession plans for the senior leaders of the company. on a personal basis. i've worked with mark for a number of years and alan, and i'm honored to serve with both of them. >> bob shanks, cfo of ford, joining us today when they reported first quarter numbers that fell short but a number of charges in there. >> always with the big interviews, phil. thank you so much. enjoy your birthday. >> i will.
>> back to chi town. a mixed quarter for whirlpool. sales of washing machines are up. the ceo will join us for an exclusive interview. headlines this week that nike is shuttering its wearable tech business, ending its program. does this mean nike is done with wearables? we'll ask nike ceo mark parker in another exclusive interview here on cnbc. [ male announcer ] the wright brothers started in a garage. mattel started in a garage. disney started in a garage. amazon started in a garage. ♪ the ramones started in a garage. my point? some of the most innovative things in the world come out of american garages. introducing the lighter, faster cadillac cts. 2014 motor trend car of the year. ain't garages great?
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expectations. jeff is the chairman and ceo of whirlpool, and he joins us on the phone just following the company's analyst call. jeff, thanks for joining us. >> thank you. it's a pleasure to be on. >> so walk us through what happened this quarter. sales looked very good. i know you had some items that came into play for the year-ago quarter and also this quarter on a tax front. but how would you sum it up for us? >> well, i think that actually we're quite pleased with the quarter we had. we had an all-time record first quarter results. our revenues were up 6% ex-currency. we increased our operating margins globally, and we had an all-time record earnings, so we're very pleased, and we were able to reconfirm our guidance for the year, which we feel very good about. >> margins expanded to 17.3% this quarter, jeff. we often debate whether margins have peaked, whether we are beginning a cycle where cap ex will come back. what is your outlook for margins
and where you see whirlpool spending money and hiring and seeing those margins eventually start to come down? >> well, we certainly don't see the rise in the margins would come down. in fact, quite the opposite. we've set some goals for margin expansion, and we're progressing towards them. we're actually in recovery mode in most parts of the world. so, you know, it really depends on which market you're looking at. but in the case of the united states, which is our largest market, we're very bullish. we think we're still early on in the recovery. and we think we have demand recovery both in north america and in europe. we have seen some weakness in emerging markets, but that's normal for an emerging market. it's never straight up. but overall, based on where we're investing, the market recovery, the new product innovation we're bringing to the
marketplace, we're very bullish about profitable revenue growth with expanding margins. >> jeff, how much of that is due to pricing as opposed to outright demand? we've seen multiple disappointments on housing this week alone, whether it's new homes, existing homes, masco's guidance today. why is it different for you? >> the components in the united states for the demand are slightly different for us. about half of the demand comes from the replacement market. and as we've talked about before, you know, we're entering a period where we're comping over the decade-ago high, so we're seeing the replacement market coming back strongly. we're still -- we still feel very good. we still think about housing -- we believe that, you know, we've had good improvement over the last couple years off the all-time lows. we still expect a million, to a million-one housing being built this year. we strongly believe that the normal replacement rate for housing in the u.s. is 1.5 to
1.6 million homes. so we're still far to go in the recovery. there's been a lot of short-term things come up, about housing prices and things like that. >> right. >> but, you know, i think that's a great indicator that demand is exceeding supply. and i think -- >> jeff -- >> -- the housing issue is more of a supply issue than a demand issue. >> jeff, we have to go in a second. it seems you're putting more money in the kitchenaid, the stand mixers, versus the actual big washing machines, the bigger appliances that cost more for consumers. can you give us a quick answer for why you think that sector will outperform maybe traditional, larger appliances? >> yes. well, we're investing in both, but i would say on our small appliance business, we've been growing double-digit growth rates for years now. it is a global product, global demand. that's why we made the investment in greenville, ohio, to double our capacity because of the demand we see growing. >> all right. jeff fettig, chairman and ceo of
whirlpool. thank you for joining us. >> thank you. bye. european markets just set to close in a couple of minutes. we want to give you a look with simon hobbs. >> this is quite serious, as you can see. quite heavy losses in europe. we are bouncing from the lows. check out the detail on the map. germany, i think i'm right in saying, down 1.8%, 1.9% a few moments ago. it's now cut that to 1.5%. the issue for markets, the sanctions in russia. angela merkel warned putin there will be consequences to his actions. she is traveling to the united states thursday and friday to talk to obama. the white house is also talking about further sanctions. its credit conditions within russia, and it's also the effect it would have on economic activity. a lot of the fall today are the businesses that are directly exposed to what is happening in russia or have subsidiaries there. also, a lot of the high fliers are making up the bottom of the losers there. for example, air france is still up 43% so far this year.
pergo, the carmaker, still up 36%. underlying earnings today, not great overall. a very mixed picture. we've seen some of the oil refiners, some of the metal cutting tools, if we can move on, guys, there you go, earnings not great. sandvick, big cutting tool company. gucci done well. the banks are lower today. deutsche bank could be looking at selling somewhere in the region of $7 billion worth of stock in order to bolster its position. one stock that is doing well today, however, is electrolux, the swedish appliance manufacturer. you heard from whirlpool. they've had a great earnings report. the profit there over in stockholm up 19%. they're talking about europe not only stabilizing but recovering. i had an exclusive interview with the ceo today here on the floor of the nyse as he meets american investors. yes, rebounding in europe. but from a low base. take a listen.
>> pricing in europe is a little bit competitive -- certainly competitive, because the demand is down from the peak in the mid-2,000, 20%, even though it's turning off a low base. it's still a deflationary market. we need to make it on the turn of new profits. >> one more before i hand you back. alstom has been suspended from parade in paris as the french government, french regulator goes, could you please clarify the situation? is general electric going to attempt some sort of takeover, or will it be only for those -- the energy options within that? so, guys, since the market is now closed, you could get an announcement from them, clarification as to where they are with ge. but i wouldn't hold your breath. we could be -- >> yeah, i think it will be a while. thank you, simon. nike ceo mark packer is with
us after this break with nike's plans for the world cup. we'll talk about the fuel band, too. asked people a simple question: in retirement, will you outlive your money? uhhh. no, that can't happen. that's the thing, you don't know how long it has to last. everyone has retirement questions. so ameriprise created the exclusive.. confident retirement approach. now you and your ameripise advisor can get the real answers you need. well, knowing gives you confidence. start building your confident retirement today.
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welcome back to "squawk on the street." it's been a tough day for amazon. 2014 has been unforgiving for the entire discretionary sector. the worst performing sector year to date of the major groups. the s&p construction -- consumer discretionary sector taking a dive in january, recovering only to take another hit. the group down 5% for the year. six of the ten worst performing
stocks in the s&p 500 this year are of that same group. all down more than 20%, marking traditional bear market territory. best buy, the worst performer of the index, down 39%. staples, amazon, bed, bath, & beyond, followed, worst performers year to date. amazon years having a further 9.5% slide today. shares also shedding 11% after its last earnings report january 31st. best buy is now the worst performer in the s&p 500 in stark contrast from its 200% share gain in 2013, as a consumer electronic retailer undergoes a multiyear turnaround. its aggressive price cuts during the holiday season failed to spur demand. dragging best buy shares down along with it. most recently. the latest government retail sales figures flat in the face of weakness, cited for retailers, it's possible spring thaw is under way, though amazon
investors aren't feeling that spring in their step today. carl, back to you. >> no, more like a trip today, courtney. sarah eisen back at post 9 with one of the great interviews of the morning. >> we're looking forward to the world cup. rapidly approaching, less than 50 days away. the number-one most-watched sporting event in the world. that's why today nike is in madrid showcasing the latest lines of products. mark parker, we'd like to welcome him, the president and ceo of nike, for an exclusive interview here on cnbc. good to see you, mark. tell us about what you're launching today at nike in madrid. >> well, actually, we're launching our complete -- actually, line of football products, the most innovative collection of football -- or soccer as we call it in the states -- product that we've ever created. obviously, it comes at a really important time with the world cup coming up, less than two months away.
one of the highlights of today's introduction is a new shoe called the mercurial fly. it's incredibly innovative, lightweight design, meant for the fastest players in the world. in fact, here it is. incredibly lightweight. new technology. new outsole design, lightweight, full carbon-fiber, designed for the fastest players in the world. you'll see this quite a bit coming up in brazil. >> i like that it's pink. mark, are you seeing any sales bump here in anticipation of the world cup? >> yeah, actually, the world cup is always a big boost in sales, both in terms of performance product and also sportswear, or lifestyle product. we're seeing our football category continue to grow. we are the number-one football company in the world. our market share in footwear is tops in almost every country around the world. and we feel that with the
innovation that we're introducing around the world cup that that's only going to get stronger and stronger. >> i know you're very excited about it and rolling out a lot of new products today. the question that investors might have is how much of this -- how much is all of this costing? >> well, you know, we're well represented at the world cup with the more teams than anyone there. we have ten teams and hundreds of players. obviously, there is a price attached to that. but it's a really important way for us to connect to the sport, to really get the insights would he need to drive the innovation that really keeps nike as a leader in this space. >> so -- so you're not going to put out a number out there, huh? >> -- and it's important -- no, i won't put a number out there. let's say it's significant. we think the impact obviously with football is also significant. >> is it the most you've ever spent on a sporting event, mark? >> i wouldn't say that. it's certainly up there. it's incredible new product.
retail, online, social. there is so many different aspects. we unveiled an incredibly compelling piece of communication, an advertising today that will appear on youtube, a fascinating four-minute piece that i think will captivate particularly those youths, football crazy fans, from around the world. there's a lot in the mix for us. this is an important event. this is where we shine. this is where we show our best work. it's kind of like preparing for an exam, and it's coming up, and we want to -- we want to bring our best, like the players do when they compete. >> well, you certainly have been doing that. when does the spending stop, for those investors that want to see improving operating leverage here? when do you sort of take it down after such a giant moment like the world cup? >> well, you know, with any sporting event, particularly the olympics and then the world cup, you're going to see spikes in spending around what we call
demand creation, or marketing. so you'll see that peak over this fourth quarter and into the first quart other of next year. but then, it'll stabilize down into more normal levels at that point. we're working hard with within the operating pieces of our business to look to expand the profit margins, as well. >> let's talk about the other areas of business. definitely want to ask you about the fuel band, because reports suggesting that nike is ab abandoning it completely. what's the future of this product? >> well, first of all, digital sport, as we call it at nike, is incredibly important to us. we think it's going to be a bigger and bigger factor in terms of the experience consumers have with the products that we create. so you're going to see digital actually be more and more integrated into other products we have. our goal is to increase the number of users, those that can experience nike fuel and the
fuel system that we have, as well as other applications. so you're going to continue to see us commit to this area, to focus on expanding the reach. today, we have about 30 million fuel band users. we're hoping to push that over 100 million. we have partners that we work with, obviously the most visible partner we have is apple. we've been working with them for a long time. and we're excited about where that relationship will go forward. >> can you give us a hint? are we going to expect some sort of collaborative device coming out, nike and apple? >> i can't really say that. there's been a lot of speculation, which i understand. i will say the relationship between nike and apple will continue. and i am personally, as we all are at nike, very excited about what's to come. >> so just to be clear, are you out of the hardware business now and focusing more on the fuel software business? >> we are focusing more on the
software side of the experience. i think we will be part of wearables going forward. it'll be integrated into other products that we create. and then we'll look at expanding our partnerships to create more reach for the nike fuel and fuel system. that we have. so it's really about actually expanding the reach of nike fuel. and the best way to do that, we think, is through the best partnerships that we can find. >> all right, to be continued from apple. i also want to ask you about the factory strike in china, which is in the news. we just learned yesterday that a aadidas is going to scale back. is it having an impact on your production at all? >> yes, i think all of the manufacturers working with yy in china are impacted. we feel that our source base is quite diverse. we have over 700 factories, so we feel we're in a position to minimize the impact that we have
there. we're monitoring the situation very closely. we take it very seriously, and we're hoping that this can be resolved very quickly. >> all right. thanks very much for commenting on that. mark parker, always good to see you. good luck on the big day. i know you were launching a lot of new products in madrid for that, leading up to the world cup in the beginning of june. good to see you as always. mark parker, the ceo of nike. >> big interview in the countdown to rio, sarah. we'll be paying attention to it. >> -- and what's interesting about nike's strategy is adidas is an official sponsor of the world cup, so nike is ramping up when it comes to the new products and sponsoring some of the teams out there. head to hoead match of their ow. coming up, exclusive comments from starbucks chairman and ceo howard schultz. i've always had to keep my eye on her... but i didn't always watch out for myself. with so much noise about health care, i tuned it all out. with unitedhealthcare, i get information that matters...
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group where rick is standing by. rick, over to you. >> thanks, kayla. there's a lot of talk, especially on a friday, about what's moving the markets, and the number-one answer, especially on a friday, is what's going on in ukraine. but i have to tell you, you know, it's a lot like the life insurance issue. you know, we all have life insurance. we fully don't expect -- or hopeful hopefully, don't want to die anytime soon, and we don't ask the insurance company back for the money, and i think many traders look at weekends as periods of uncertainty where they can't tweak their positions so the things get exaggerated a bit. i call to the objective observer to look at the following three charts. first chart's year-to-date of 10s. remember, this is year-to-date. so about two-thirds of the way through this chart on the right is march 16th, which is when we had the crimea referendum, okay? i'm sorry, but looking at that chart and the complexion of the chart, it is impossible for me as a market guy to pick up the influences of that part of the world.
now, if you open it up to even closer to home, let's look at the german stock market, year-to-date. also remembering march 13th, hard to pick it up. and maybe the most glaring example of all, this is in their backyard, the euro zone. the euro currency year to date two-thirds of the way through. i'm sorry, the argument doesn't hold water. am i downplaying the significance? absolutely not. i learned a long time ago in the chicago pits that logic isn't necessarily the driving force of any market, but i will tell you what. i think there is going to ab huge lesson to be learned in what's going on there, and i think it's about global warming slash climate change. without any bridge energy, and especially with the germans in the euro zone, buying into this religion, they've left themselves so vulnerable, the achilles' heel that putin smells, is energy. we need to learn to prioritize
better. millions and millions of people need jobs to keep society in a rule of law fashion. if you take away energy, you create chaos. nobody seems to understand that more than putin. you know what? when it comes to things like fracking as a bridge energy, it shouldn't be no way what they're going to experience over time, it's the only way. carl, kayla, back to you. >> it's all funny until the lights go out, rick, you got that right. rick santelli, we'll talk to you later on. forget legos or blocks, the next squawk breakthrough wants you to build a space station, or just your own circuit breaker. very personal computing. the dow is down 136. ♪ [ banker ] sydney needed some financial guidance so she could take her dream to the next level. so we talked about her options. her valuable assets were staying. and selling her car wouldn't fly. we helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today...and tomorrow.
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♪ this is ground control ♪ the market continuing to linger close to session lows here. dow's down 128. nasdaq off the lows, but still more than 1% decline. some of the high flyers get more air taken out of them today and people continue to rush to safety. utility's the big winner in terms of sectors. you look at the month, kayla, four sessions left in april, historically the best month of the year. and the s&p and the nasdaq -- or the dow, i should say, will be lucky to break even for the month. >> the question has been, do people sell in may and go away?
with such a weak april, do you think people will buy in may if the data improves further? that's a big question that the markets' team is looking at. >> very interesting action today. howard schultz reported earnings, upping the forecast for the year. he spoke with us this morning and expressed a great deal of optimism about the future. >> i think the big news coming out of the quart other, though, was the significant transformation in europe that we promised over a year ago and the continuing success in momentum throughout the asia-pac, and specifically china. we also talked a lot about the fact that we've uncovered a lot of growth and opportunity in other significant real estate formats. i think that will bode well for the future. so net-net, a great quarter for the company, and we're just getting started. >> interesting. stock's obviously -- he's had to deal with higher coffee prices. >> right. >> cramer tried to nail him down on whether he would be buying here with coffee up 80% year to date.
you know, he tried to hedge around that. i was interested, 10% of operating costs, just the raw coffee price, even with all that increase in cost, it's not a huge contributor to the -- >> well, with so much else going on at starbucks, it's interesting to see a number that high. someone on twitter tweeted me said starbucks is a realistic company that happens to sell you coffee. as it diversifies, it's interesting to see how much of the focus is still on coffee. >> and then adding alcohol, which they've tested and now will roll out to some storms trying to create a whole new day part, either for a beer at lunch, or maybe it's a place where you go for happy hour after work? that would be a dramatic growth initiative if it were to work. >> maybe, and you think about airports especially, some of the delis located right next to starbucks, they and their kiosks have alcohol. that's another product offering they could have. it could compete against the mom and pop shops. >> 6% comp in the states, hard to argue with. >> especially in this market.
over, but intuit shares are rising, up 2.5%, 3% on the session. intuit has said that basically online turbotax sales were up about 14%, and as a result they've boosted their consumer tax growth outlook. so a more positive perhaps quarter coming up for intuit, because more people are filing online and more people are using their products. intuit's turbotax to do so, carl, back over to you. >> thanks a lot. the pilots voted to join the union this week, and now jetblue's flight attendants are seeking to unionize. they're working with the transport union to sign authorization cards which would allow them to hold an election. of course, we did talk to dave barger, the ceo, on the show yesterday, very vocal against unionization efforts. here's what he told us yesterday. >> very disappointed regarding our pilots electing the airline pilots association, carl. we're now into our 15th year.
and so, i still believe in a contrarian model, and we have many other work groups not represented. and i believe that, listen, all 16,000 of us will continue to progress and move jetblue forward. but still, very disappointed. you know, when you start to look like the other models, that's a challenge. i think this is a challenge to our culture. >> a story that happened to southwest years ago, starting out as one of the smaller carriers, you start poking the majors in the chest, and the legacy -- the older you get, the more likely you're to have legacy issues. >> and the more contrarian you are. some of the employees must look at other companies and say, well, what sort of benefits would we have if we tried to emulate that. certainly in the recent airline mergers, there have been a lot of benefits for the pilots and flight attendants. so we'll see how this goes. >> absolutely. in the meantime, the market action, if art cashin were here, he would point us to the 10-year. 2.65 is about the lowest yield
in about a week, which will give you sense of how fear is being gauged. whether it's with regard to events in the ukraine, on what may happen over the course of the weekend. i was curious, all right, we have four sessions left in april. what has worked? we know what hasn't worked. almost all the names month to date at the top of the list are in energy. anadarko, chesapeake, cabot, peabody, diamond offshore. you're talking month today gains of 11%, 12%. the number-one gainer was allergan, of course, for separate reasons. >> right. >> if you would have been smart enough to take a flier on energy at the beginning of the month, you're happy today. >> with the dow down 118 points, the utility the only sector in the green. you're seeing exelon, con ed, pepco, a lot of the names in the green. that's the ultimate defensive space, so that in addition to the 10-year, can show you how investor sentiment is shaping up today. >> yeah, overall for the week, a narrow range relative to the
remainder of the year. s&p's been -- yesterday on the dow, that was hard to watch. hopefully, we'll get more action in the next hour. that's what brian sullivan will bring us as we head into the weekend. >> yeah, we were debating about the unchanged thing. it's, what, the first time in 13 years. >> yeah, since christmas eve 2001. tyler mathisen said, does that mean santa's coming tomorrow? >> yeah, yeah, a big question, guys. what did you get us here for "fast money halftime"? >> no, a lump of coal. >> a strong lead-in. the correct answer. guys, thank you. have a great weekend. welcome, everybody, to the "fast money halftime report." here is the game plan. rumble in the jungle. amazon getting taken to the woodshed after reporting razor-thin profits. finally, retiring of bezos' strategy. two tech investors go head to head on whether there is trouble