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tv   Squawk on the Street  CNBC  January 23, 2015 9:00am-11:01am EST

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for joining us. >> thank you. this has been fun, guys. >> it has. >> it has been. >> we'll be back in the big city monday. >> we go back to a place that's new, cool too that we love. barely got to enjoy our new york digs, midtown. >> jimmy, in new york come to the new digs. make sure you join us on monday. "squawk on the street" begins right now. ♪ big morning here at nyse courtesy of a long-await ipo. online data storage company box going public today. we'll talk with the ceo in our next hour. in the meantime, good morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer at new york stock exchange. david faber is off today. take a look at premarket. it's not just box making news. earnings from ge mcdonald's, starbucks, a warning from u.p.s. futures are roughly flat. same story with oil.
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ten-year yields around 1.84. the euro on track for its worst month in two years, below 1.12. more on that in a moment. road map begins with u.p.s. shares down sharply in premarket trade, after cutting guidance around the holiday season. fedex down in sympathy. mcdonald's shares rising in premark on the company's first same-store sales growth in the united states since 2013. and starbucks, record fiscal first quarter results, in line with estimates. chairman and ceo howard schultz is going to join us exclusively on cnbc in the next hour. u.p.s. probably the freshest news, jim, cutting its guidance, citing undere inging underperformance underperformance. they're calling volatility on certain days wider than others and expenses caught up with them. >> yeah. i found this disturbing. they spent a fortune trying to get the holiday season right last year and they failed. and now they spent a fortune
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trying to get it right this year and they failed. so management is in question here. i just think -- my charitable trust owns it -- talk about the good ones we own starbucks, lululemon, but this is a big dis disappointment. i understand why the stock is down this much because, frankly, they should be in the sweet spot. they hired aggressively they said on days when they were not that busy, they didn't do well. i just have to call into question what they're doing. i mean really this is the kind of thing when you see this you say, they are -- where's the board? the board has to look at what happened here and make tough decisions about the ceo. >> they of course citing things like the west coast port as something that threw a wrench into the quarter. does that not ring true to you? >> as great bill parcells says there's no medals for trying. these guys are trying. i want guys who are winning. >> obviouslying second holiday season in a year where that's an
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issue. >> go through this release and say, all right, look this is a great american company and it deserves better leadership than it's getting. >> all right. we'll talk more about -- fedex down in sympathy. mcdonald's the other big story, moving higher despite a miss. comps better than expected including the first same-store sales growth in the united states for 2013 for the month of december. for the quarter, down 1.7. above estimates. revenue down 7. don thompson saying the company continues to face meaningful headwinds. >> the reason why this stock is up, because -- back out china and it's not as bad a miss. china did have supply problems. there's a level of financial discipline they're putting in here. capital expenditure plan the lowest its been in five years. saying we should return cash to shareholders rather than keep growing. very disappointing. this is further along in the sense that they clearly get that there's a problem. should the board take action here? i think a short lease on
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management because this kind of performance with its endless alley by says to me wendy's 52-week high they serve burgers, too figure out the comps. burger king better. chipotle better. this, i like the new ad campaign but the ad campaign says you've got the freedom to choose. that's terrific. but they're not choosing. >> wendy's, seven-year high. >> and nelson pelts, worked with him, redesigned the menu the stores. took a simple menu makes it win with monthly promotions that's how you do it. >> it's the worst miss for mcdonald's in five years. short leash, what's short? >> i mean -- >> a couple more quarters rest of the year? >> i think 2015 has to be the year. these companies -- i've been saying on twitter -- people are sick of it i don't give a -- the nfl doesn't tolerate this. john fox gets fired. >> after winning 12. >> the bears fire anybody who wins ten games. although they had a bad season
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this year. looking at rigor the nfl is in if you can't get a turnaround in a couple of years then coach is broomed. now, i think the accountability in business should be similar because the money's larger. so this is thompson's year a make or break year. you say, listen we get it we're not doing it right that is something which says you better start doing it right. you hold yourself at least to a higher standard. i like the cap x being cut because they need to figure out what's wrong. >> they have addressed the menu. u.s. comps for the quarter, as we said, down 1.7. that's not down 3, like they were in the third quarter. you think that might have been the low in terms of negative comps? >> i think one i expected a horrendous miserable, worst quarter imaginable and all i got was a horrendous quarter. instead of losing two games, instead of losing -- instead of losing four games, right in a row, has now lost two games. you literally feel better that maybe they can get a couple of
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"ws." eight months, we'll get this fixes you need a time frame what happen howard schultz did when he came back to work i'll turn it in 18 months, the time it took, 18 months, and he turned that chain around 17 goes to 8 and where it is this morning. >> let's turn to starbucks. obviously record fiscal first quarter results in line global comps up five cited improved traffic growth in the u.s. new offerings. current guidance below whether a lot offen alifts expecting, typical conservative guidance april live interview with starbucks' chairman and ceo howard schultz later. mcdonald's's revenue down 7. starbucks revenue up 13. >> so much to like. china up gigantically 8% traffic. you've got terrific discipline here in mobile doing amazing things. there were -- conference call they didn't scratch the surface
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of all things going right. here's where -- i compare him to belichick if it wasn't for the recent -- make it pete carroll, they're in seattle and schultz is a seahawks fan. >> johnson, been on the board for six years. >> i know k.j. when he was at juniper. he's a tech guy. troy, i wish him the best of luck. he's taking a coffee break weep have to hear more from howard why k.j. may be the right man, though he does drink a lot of starbucks coffee which was mentioned on the call. >> one in seven americans given a starbucks gift card in the holiday quarter, up from 1 in 8 prior year. >> shocking numbers. going back and forth with schultz, what is the disposable income spent on starbucks versus disposable income in gas line? find that out. roastery the disney world of coffee. also ipa of coffee. this company understands even
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could we lose people because the economy's better? no, because we're going to put them through college. starbucks has the -- starbucks has answers that a lot of people in washington would like to have about how to improve the country, a lot more there. >> why only 309 to 313 for the year? >> you mentioned starbucks is conservative and i think they did mention second half's going to be strong. coffee fully hedged. i like initiatives going to kick in. bring back japanese businesses very, very good. it's interesting that -- really great guys you don't hear about currency headwinds, you know? they don't -- this is not bob dylan. you need a weatherman to know which way the wind blows here. >> yeah. fascinating story. >> amazing story. >> a lot to talk with howard. >> look people are going to criticize me that i'm so hard on saying mcdonald's or u.p.s. it's howard schultz that makes you so hard on them. because howard schultz is about winning, okay. he -- like at the same time he's
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compassionate, interesting man with lots of outside charities that he does work on. and he doesn't sit there and make alibis when europe turned around, he's about rigor. where is the rigor in mcdonald's? where is the rigor at u.p.s.? i don't see it. >> would you apply that dynamic to ge this morning? >> organic growth is really good plus nine. cash flows guide. the stock is not giving us the right signal. it's not giving us the right signal. at the same time ge is once burned twice shy, ge is we want to hear more -- jeff immelt did conclude in the release saying they finished strong. more questions to ask. >> industrial revenue up six, though oil and gas came in six. >> honeywell, organic growth less than ge but honeywell delivers on the plan. dave cody the delivery man in the industry. that stock is reacting well. >> talk about ge's quarter in
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moments. after delays online data storage company box finally going public here at the big board. we'll bring you the opening trade, talk with box founder and ceo, aaron levie. s&p and nasdaq after being down 3.5% for the year finally back in the black. more "squawk on the street" live from post 9 in a minute. is rolled over into a td ameritrade ira. yes! so no set up fees! wooh! yeah! so i get help from rollover consultants? wooh! yes! no rollover hassle. great. woah oh, we're spiking things, robbie. for all the confidence you need. that's better! td ameritrade. you got this.
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♪ general electric reporting fourth quarter operating earnings of 56 cents a share, beat by a penny, helped by growth in industrial segment. revenues misses consensus dragged down by oil and gasp we had jeff immelt a few weeks ago, we asked what's it like going into the cycle exposed to oil and gasp able to make up some in industrial transportation power, water. >> absolutely i think this was not a bad quarter. look at dividend money return 24 free cash flow very very strong. industrial cash flow plus 30%. 64% for nbcuni. the issue is there's a perception they did go in all in ge. last thing we asked jeff is
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it -- where do you need oil to blow earnings out? the answer better toward 100. i think that that is a sense that they moved aggressively into at the top oil is keeping the stock back because that -- i've got to tell you, organic growth is the best of any major industrial i've heard so far. >> margin not a bad story. 50 basis points the story of 2014 as they tried to hit the targets promised. >> he's delivering. ge ended, his quote, go ended with strong fourth quarter industrial earnings and margin growth. environment remains volatile but infrastructure growth opportunities. the company itself is under the gun because people feel they bought two different companies involved with oil and infrastructure in the last year and disposing when the financials are looking up. but you know what? i think also oil and gas, equipment orders falling 15%, power, water falling 12%, energy
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management declining 5% thank you, stephanie to give us that. what's keeping these. >> ubs yesterday brought it in initiated as a buy, along with big conglomerates. >> laundry list of buys. one of those, listen they had too many buys on that list put it that way. >> meantime, box the other big story today. begin trades today after pricing its ipo at 14 above the initial range of 11 to 13 pricing value's online data storage company at 1.67 billion. we'll talk to aaron levie, ceo, after the stock opens for trading. got know what you think about the deal. >> controversial. i'm recommending buying. why? they have big bosses. why people think google's turning a commodity. the answer they have, i think, a cloud security better than google. i think the commercial drop box, they've been able to charge the other guys haven't, because the price has been cut from where it was, i think they're giving a
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gift to people. this is a general atlantic deal. the laugh one, it was trinet one of great home runs. bill ford major domo at general atlantic made people money if you buy stocks the ipos. he's not one of the guys to generate a huge pop, watch the stock go down as the case last year when we saw many poorly performing ipos. >> is it critical to you levy says we'll be profitable by x or an amazon-like story. >> no, no it's critical. i want to see level of des-palestinian. paper -- discipline. this is not doa. this is not an icu. this is a company of great growth. i think that wouchbtone of the things that people miss, they give a great gift. bankers saying we're not going to bang you on this, and the longer story -- it's been a troubled story. >> sure. >> in terms of up and down nature of. i think levie a very brilliant man, sometimes i say, let's give
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him the ball. tweet he wrote in november of 2013 ipos, if your stock shoots up you left money on the table. it drops you screwed investors. if it's not, you're boring. >> a guy understands the game and the bankers understand the game. watch. i think it will be an opportunity if you can buy it. >> better late than never, i guess. >> i like that. >> we'll count down to opening bell, cramer's mad dash after a break. one more look at futures. we are on track to break a three-week losing streak for all of the major averages. see how today goes. more "squawk on the street" from the nyse is straight ahead.
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♪ it feels good it feels good♪ >> just about ten minutes before the bem bell. watching sky works. >> the best isn't good enough. delivered what i call picture perfect quarter, doing business with apple, becoming the internet of all things semiconductor company. a stock that is straight up people will come in and take profits, no matter what. i think after the smoke clears go back and buy what he's selling, maybe the best internet of things play that i've seen so far. >> on the heels of sandisk's warning which is probably the worst warning of the quarter? >> sandisk, by the way, looks like a low multiple stock but absolutely missed the quarter, multiple ways. preannounced, then they reported and they had basically guide down again. that's not what you want. you want -- you want sky works. this has been a big
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disappointment, sandisk, i'm surprised. i want them to cop.comme on any show and explain. customers are rejecting. >> kimberly-clark debate around this one. >> yes one, a lot of people i'm watching twitter, people hate me for making people accountable saying what did i do in 1997 and when did i stop beating my wife in 1983. i didn't get married until 1987. a terrific job for many years, he gets a pass. there are currency issues here. and i think that when the smoke clears, people come back to this. i think -- everybody gets one season or one quarter where they don't deliver. this is a nondeliver quarter. they were hurt by venezuela. people are going to back the country's a black hole. these people are adjusting. currency horrendous kimberly-clark. >> colgate removed from the list. >> they put proctor on. proctor's restructuring like
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mad. looking falk will come on he did the great thing spinning off health care. people who have held him -- put him in the short shrift category, they've been hurt. sometimes a guy does get a pass. i'm giving it to him. >> if this year has been the story of staples, utilities and reits, do you think that changes here post-draghi. >> i think we are really in the midst of a sea change moment where you're going to start going back to technology and saying, who's part of the internet of things? who is developing wearables? who is doing things very forward and will buy them? who is doing restaurants will and buy them? everybody else called into question. if oil continues to stay down we will want to buy industrials for a worldwide economic growth story. >> right. that would be a shift. so far this year super defensive. >> general mills one of the most poorly performing companies one of the better performing stocks. utilities act as growth stocks.
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they're hardly that. stay close to that. these are bond market equivalents, people say i don't care what price, i get that yield. one day that changes. when it changes, it's vicious. >> we'll talk more about that in a moment. we'll get the opening bell in seven minutes. don't go away.
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you're watching cnbc "squawk on the street," like from the financial capital of the world. opening bell in about four minutes, as box sets to start trading today at nyse. in the meantime though futures relatively tepid here europe's been on fire jim. seven-year high on european stocks. dax closer to 11,000 than 10,000. is this draghi move going to have long-lasting effects. >> when you have that currency give you a head start versus the rest of the world it makes sense that you might think earnings will be ignited for the companies. draghi, late to what the united states did. look there's -- it's -- i don't mean to be political, really not, but bernanke did this we have a lot of jobs created and
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the market's up. i think people are saying guy takes blueprint, got to follow it. wait and see because a lot of companies are doing poorly there. but, they've got -- this was a major blink by the germans who said over and over balance budget, balance budget balance budget. once you have 1930-'31 regime replaced by '32-'33 you'll get a nice pop in the stock market. >> 1.12 this is -- since the may high if the europe re, if it were a security would be in a bear market just about bear market. >> well, euro i mean you can take it wherever you want i guess. look draghi's serious about reigniting the economy, very concerned about right wing politics and what could happen and backlash if there's a lot of unemployed. because remember, they're more political than we are. they're more worried about social unrest than we are. this is a bold move. i understand it. wow, he's trying -- he's doing his darn best.
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>> better late than never, as we said about box. >> combination of oil and this we've seen better numbers out of germany in last few weeks. we need to see better numbers by everybody else. >> pmi, back to 52. germany back to 51. >> initial first numbers that we're seeing. i'm encourages by the numbers, give than this thing doesn't start until march. eurozone manufacturing strong uptick in retail sales uk. french manufacturing 49.5 up from 47.5. encouraging numbers. and i haven't been encourages by anything in europe by years other than a recent trip i took there. >> meantime we should mention, we are going to talk to the prince alwaleed. prince abdullah died at age 90. talk about what that means for the country, what it means for commodities around the world. >> i mean probably the man most central to where the direction of oil's going to go. >> analysts moves lululemon,
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jpmorgan goes to overweight. they say it could be $4 billion grant in five years, double where it is now. >> i trashed myself severely my charitable trust owns u.p.s. go the other way on this. lululemon a comeback story. interesting talk about a shortage of high quality names. the traffic trends are good lululemon, this was a darling, it became nasty. i was there last weekend. the price is better. quality always strong. this is a dramatically positive theme. i like the call. >> we should mention as well dreamworks, has a ily convened conference calm new ceo out, fewer features a year 500 lay-offs. >> bob iger has told you how to run a movie company. he gave you a blueprint. >> set for the opening bell. a look at s&p at the top of your screen. what a week it has been from earnings season and the bank
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results out of morgan stanley to warnings from tiffany last week. obviously, central bank activity. all around the world, canada brazil, ecb, unbelievable. >> this is -- a fulcrum week. right now there's just a sea change going on where there are people who every day making big bets. they take it up. they send it down. be careful. find stocks you believe in. and hold on to them. and believe in management. i do believe ceos must be held accountable. >> a look at s&p, down here at big board, as we said earlier, online data storage provider box, celebrating its ipo. we'll talk to the ceo and founder, aaron levie in the next hour. nasdaq franchisee owner of hooters restaurant. >> hooters, all right. >> you know what? you look at wendy's at a seven year high done mean people aren't eating out. >> this is mismanagement issue i'm keep harping on it wendy's
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does not have proprietary product. biggie fries inferior to mcdonald's fries. they have a simple menu simple game plan, they are domestic. when you're a domestic company, it's better to be flipping burgers in the united states -- i don't mean to break into the logic of what people do biz know many people who work in these industries -- but wendy's a step above right now. wendy's is a step above. >> yes. we mentioned u.p.s. kimberly-clark, all in the red. kla-tencor, another story that has the stock -- >> you have research putting up great numbers. applied materials putting up great numbers. you wonder what the heck? i don't know. i have to tell you, they are -- they just told you how great things were not that long ago. i'm tempted to believe in the company rather than run from it. good yield, they've done a lot of things for shareholders. let's take a look before we damn these guys with negative because they've been a very well-run
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company. >> as we said, talk to howard schultz of star bucks in 30 minutes. the second biggest gainer with 5% gain at the opening. >> if you read red lines, revenues miss, this is a conference call story, the conference call i told you a great play well orchestrated play. and howard schultz delivered on every single front. shanghai, the most starbucks in a word shanghai. shanghai shanghai. >> shanghai. huge chinese story. >> remember what schultz did, other guys had troubles in china. when he goes over he invites families moms and dads of the workers. he understands the culture. other guys could use a refresher on that. >> saudi arabia is in mourning, after the passing of king abdullah at age 90. joining us by phone, saudi prince alwaleed bin talal, the chairman of kingdom holdings. thank you for joining us.
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our condolences to you and your family. maybe you can tell us a bit about how your country and how you are reacting this morning. thanks for the call. yeah, today i just buried the late king abdullah and tonight there will be the big meeting of members of the royal family and members of the saudi community to come and pay their allegiance to the new king of saudi arabia king salman and the new crown prince prince. >> the king was known as reformer. he opened up the economy, doubled down on his relationship with the u.s. he got you into the world trade organization. what do you think will be his true legacy 10 15, 20 years from now? your highness, can you hear me?
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>> i think we might have lost him. we'll try to get him right back. >> got to get him right back. influential man. >> and enormously knowledgeable on a host of issues whether it's obviously commodities that help define saudi arabia or the holdings on some of the biggest names in america. he's explained the world to me multiple times. happy to be schooled by him. he's got a great base of knowledge. >> absolutely. we'll continue to watch what's moving here at exchange. starbucks, you know we mentions ge, you followed it by mentioning honeywell, also up 2% this morning. >> steve cody's about consistency. he continues to deliver. great organic growth. planting seeds, his term. what i like about dave cody is is that he's one of the few executives mcnerney at boeing too they have a five-year plan short cycle, long cycle businesses and he delivers on the five-year plan which means he's got an industrial that just
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doesn't screw up. you know sometimes somebody doesn't screw up gets a premium multiple. he deserves. i think dave's one of the fine of the industrial executives that has ever ever been around and he's revolutionized honey well and made it so every year they developed new products not only -- the two go-to guys 3m and dave cody they are competitive. >> we have the prince back. your highness can you hear us? >> yes, i'm with you, yes. >> my question to you before we lost the connection was, what you think your uncle's legacy will be 10 20 years from now. >> well as you know king abdullah is the sixth king of saudi arabia after king in 1932. and then five of his sons came after him. and now clearly, king salman and his crown prince will continue on the same path. clearly saudi arabia has all of the challenges politically,
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economically financially, socially. i think the prince is a reformer. i think both will be on the track of king abdullah and continue on the reform movement of all fronts. >> your highness jim cramer thank you for coming on the show. sorry for your loss. i wanted -- >> thank you, thank you mr. cramer. >> certainly. you've been always on point with me. never be afraid to tell the truth about the oil market. some people believe that the price is down because saudi arabia's decided to hurt the american fracking industry. other people i feel would say listen this is normal supply and demand. this is one more cycle, saudi arabia does not have it in for the united states they're great friends. could you tell me how much is supply, how much is demand, how much is saudi arabia thinking? >> yeah. you know i can assure you that saudi arabia is not using the oil price right now to impact the fracking industry in the
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united states. what happened in the price of oil, conference of events oversupply in the united states in the whole world, and you had growth faded away in japan, china, lately in germany. so really oversupply and the growth and demand is not so high. all of the events caused the price of oil to go down. clearly, as side effect of that inevitable some oil rigs in the united states will be rendered uneconomical and shut down. but i can assure you, also we feel the pain in saudi arabia because saudi arabia's budget depends 90% on oil. we feel the pain a lot here. >> right. your highness let me ask you, is this the type of thing i know that there are lots of different quotes flying around about what saudi arabia thinks maybe it should go to 20 30. is this a type of self-correcting decline? you've seen all of the cycles. can oil stay down here for a long time because of u.s.
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overproduction and a slight downtick in demand or will this naturally bring about worldwide growth and there will be depletion in u.s. wells and we will find ourselves back at 60 70 next year at this time? >> it's inevitable that the price of oil, which is right now below 50 that some oil rigs in the united states and the fracking industry will be uneconomical. we are already seeing indications of many of these being withdrawn. until and unless a point between supply and demand the price may fluctuate between 40 and 50 range. in the immediate to long term it's inevitable the price of oil may go up more. as i said i think we'll never see the price of oil again at $100. >> wow. >> yes. your highness there are some who worry, though death of king abdullah means even short-term
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tactical strategy, that will be a change in the way saudi arabia approaches the global oil market, do you think that's true by any measure? >> not really because king salman was a deputy of king abdullah for the last few years and the prince was second deputy for this period also. so element of continuation and the element ofrp stability will be prevailing new york about that in the foreseeable future. >> your highness in terms of overproduction we often think the united states is doing. but are you surprised that the amount of production coming from iraq coming from libya, coming from iran coming from russia, and that maybe all of those are also part of the supply issue that's driving prices down? >> yeah very good issue because although libya's in turmoil internally and facing civil war, production was not cut
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dramatically. even iraq did strike a deal with the north province and -- under the kurd's control, also began dividing the oil production between them. yes, there's oversupply from iraq, from libya and russia let alone the united states obviously. even iran even a deal with the united states, even go up in production. really there's a huge supply of oil in the world. and the growth and demand is not as high. so until and unless the point is reached between the two forces i think the price of oil will reign under pressure in the foreseeable future. >> if you talk about pressure should i conclude that opec is done and broken? >> look opec was always the original producer.
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remember oil produces one third and exports one third of the total oil demand. so i would not say that oil, that opec is dead. but i think the impact of oil of opec as it was years ago, is not the same for sure today. >> never's a long time your highness. i know you choose your words carefully. you say foreseeable future under pressure, but never in you do mean it when you say that? >> oh sure because you know if a lot of oil wells and oil rigs in the united states are rendered ineffective and uneconomical, there's no doubt that supply of oil will diminish. if japan, china germany and all of those countries will really have -- see slowdown in the growth, growth come back inevitably the price of oil may go up because of undersupply and
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because of the dproet ingrowth in demand. i don't see the supply forever, but eventually economies will have better growth in their economies. >> i'm thinking of what al mad dri said this week the price will return to normal soon the line out of davos. i wonder what you say to him if he were joining us on the phone right now. >> yeah i heard that i heard that what he said. but obviously, i think it's not going to be that soon. the economies of japan, china india, even germany, we have seen how they cut their growth from 2% to 1.3%. all of the economies, growth they will not go back to the normal expected growth in the coming, you know months. i think it's going to take a half year. it's not going to be that easy that quick goes back to $60, $70
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range. >> i've watched your career of what you buy. you're a watcher of cnbc, thank you. is there something to buy now? what stocks are you buying? what stocks represent great value? >> well, frankly speaking rather than you asking me i'm going to ask you, mr. cramer what to buy. >> i didn't by citi at a low price and i've never been able to call the market as well as you. if you can just tell me would you ever think about exxon being valuable here? obviously you don't need to double down on oil given your position but are some american oil companies weathering the storm better than you thought? >> well for sure. exxon and chevron, these giant companies, even if price of oil goes down they economic the investments in the united states and other places they went downstream somehow, so they don't only depend on the price
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of oil if it goes down or up. >> the story in yemen continues to make a lot of news here in the states your highness. people involved in national security wonder if it hurts the u.s.' operations in fighting al qaeda on the arabian peninsula, what you make of that. >> >> yemen is in complete turmoil. the prime minister resigned and within hours the president resigned after him and now there's a political vacuum over there. clearly, we see the hands of iran infiltrating that country through its blatant and open support to the houthis there. unfortunate situation. it's more than saudi arabia facing megaturmoil. this could be trouble. as you see, the acts and movements have originated from yemen. that's a situation whereby the united states and allies have to look at very carefully.
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>> your highness let me ask you about weaker countries that produce oil, go back to oil for a moment. how much danger is it that venezuela falls because oil's come down? are you concerned about brazil? would you say there are some couldn'tntryies that can't handle the decline and it will provoke unrest or really let's say the diminution of great countries because they can't handle the price here? >> no i think the comparison between brazil and venezuela is not accurate. brazil is a diversified company, many things besides oim venezuela's a different situation because they have a lot of subsidies and dependent on the country is tremendous. you could have political turmoil, you've seen the president of venezuela, just lately, came and visit saudi arabia iran russia also he was pleading for support because his country is impacts more than
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other countries in our region because they don't have a lot of extra wealth on the side for that rainy day if i can use that term. >> your highness you've been as jim said earlier, a wizard at stock picking, the art of stock picking oak the past 10 or 15 years. now guys like bill gross arguing we're at the end of the credit supercycle and in for a generational shift in the way assets are supposed to be diversified and allocated. do you see your own portfolio that way? are you making seismic changes to the way you're going to be investing in the next 10 or 15 years. >> not really frankly speaking. we are well establishes, mature company, more than 30 years old. really, our case is different because it's -- we are diverseify diversified weep keep looking for opportunities.
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like the united states or in china, clearly we have a different -- we are a different type company and looking for opportunities, you know globally and especially in the united states also. >> your highness there are some companies in our country, i think you recognize, i've got to ask you, what do you think of say, jamie dimon at jpmorgan and what do you think about tim cook at apple? >> well you know both good friends. you knee iow i was in touch with jamie dimon, congratulating him from his recovery from illness he had. really, jamie dimon is really legend in banking industry. i have all respect for him. clearly mr. cook also a very good friend of mine because we're investing in apple long time. two lejds legends. >> great question by jim. i wonder if you were to remake
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your board, your highness made up of u.s. ceos can you think of four or five you would name? >> well you know it would be a dream to have buffett on the board. a dream to have mr. gates on that board. all of my friends, by the way. >> your highness, a lot of times we've seen big declines in oil and the shutdown the production shutdown has been rather dramatic. we in this country are seeing companies cut their cap x budget but they still expect to see production go up. short term. couldn't that put more pressure on oil and this 45 47 area might turn out to be too high for now? >> well you know in the foreseeable future, from six months to a year year and a half i think volatility's going to be in the oil industrying we have not seen the bottom yet.
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depends how demand grows in those countries who witness slowdown. and really in the supply side because we have seen right now that there's a game between opec and nonopec countries like russia, the countries outside opec there's a game between them who should cut production first. clearly saudi arabia is leading the way in opec saying we're not going to reduce production because you're the more efficient producers. eventually there's no doubt that some countries have to blink and reduce production. demand, you have to see who's going to blink first. i don't see saudi arabia or opec countries countries blinking, because they know if they reduce production some other countries like russia will increase production and fill up the gap that was done. >> are you surprised, your highness, that china, which used
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to be the big marginal buyer of oil, is not just taking down a huge amount of oil here and keeping prices higher from sheer demand. are they slowing in a way that you're not used to? >> well you know i mean china is slowing, you know but slowing from 7.88 to 7.88 to 7.3. it's not a huge reduction, obviously. remember, at the end of the day, china's a beneficiary of reduction of price of oil because they're a net importer of oil. so china is really benefitting exactly like the united states. >> finally, your highness, do you buy the dollar or euro? >> no i'm a dollar man. >> your highness thank you for your time. >> thank you. in our condolences to you and your family on the passing of your uncle. >> appreciate it. thank you. >> talk to you soon. >> people have to understand
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when you meet certain people and they give you advice and tell you the world, you've got to listen. the prince has been someone who has helped many of us understand what is going on globally in oil. that interview was very important for those who are saying why did we spend so much time on many different issues because he's a weissise man. >> another story about the low cost of oil hurting iraq's ability to combat isis domestically. ripple effects of things he's discussing are amazing. >> his blink comment, the $100 you asked him about, i feel less certain that this level can hold right now because of what he said short term. longer term, maybe we're in a period of lower oil prices. there's no reason to disagree with him. he knows more than we do. >> as we have been talking to the prince dow's down 55 a big crowd by post 8. over to bob pisani on the floor. good morning. >> well, great interview with the prince.
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but we've got news here. a little bit of excitement. boxes ready to price. not quite there yet. indications now 18 to $20. remember what happened with box. they priced 12.5 million shares at $14. that was above the price talk of $11 to $13. the first tech deal of the year. a lot of companies out there wanting to go public looking carefully at that. two important factors. a hot space, talk about enterprise software software as a service and a small float. 12.5 million shares not a lot on a lot of demand for this hot space. bear that in mind. right now 18 to 20. if you look out over here you can see the ceo of i.c.e. over there, talking to aaron levie, the ceo, he'll be on talking with you shortly. a lot of excitement building here. i'll let you know what's go on in a few minutes. s&p 500 futures we dropped at 8:30. that was the problem. one, oil was dropping. it stabilizes.
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two, u.p.s. came out with the warning at 8:30. i believe that was the reason we dropped. that's weighing on transports all morning. down 9%. big drop there on that warning here. meantime in europe europe's up again today and the yields are down, and the bonds there, we've had a terrific month. this is from monthly numbers for germany, france, spain. germany at historic high france at six-year high high expectations for qe. the thinking is i talked to people yesterday, qe good for u.s. stocks. why wouldn't it be good for european stocks? the hevj wisdom tree hedged etf for european equities the hottest etf out there now. effects of the euro. remember quotes i showed you priced in euros. if it's priced in dollars it's a different story. this is going to be hot. i'll cover the conference monday talking about currency hedged etfs. in the sweet spot of earnings
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season. 88 companies reported. it's been a terrible quarter. december 31st expect 1.7% growth in earnings for the s&p. yesterday it was the lowest down 0.1%. yesterday was the low. i think it's going to turn around. today 0.25%, more companies reporting, 88 of them reporting and more diversified. we get today companies like general electric honeywell, they weren't great. but starbucks terrific. when you start getting companies improving numbers -- remember 70% of companies historically beat we give the publicity to those missing -- but 70% historically beat numbers come up. i'm expecting the s&p at the end of the day, they'll have 3% to 4% earnings growth. modest but significant. waiting for box to open 18 to 20 are the indications. back to you. >> jim, you said you like it. >> yeah. i liked it to 18. i felt 14 i thought a lot of give by saying 18 a lot of
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people gave me a lot of heat. >> isn't that the story? you like the deal but it gets rich for you quickly. >> darn. honestly 11 when i made my 18 projection people were criticizing me. ooh you think i care? 18 is where i'll have to tell aaron, that was kind of like -- that was that level where i still feel you can make a lot of money. now i worry. now i worry. >> bond pits. check in with rick santelli. good morning rick. >> good morning. yes, quickly, leading indicators home sales coming out. look at two-day chart of tens. rates are down a bit. realize on the week we're off one basis point from 83.75 to 82.75, that's 1.827. so we want to pay attention to that. you see year-to-date chart you get a glimpse. we have been going sideways on a week where quantitative easing made a big splash in europe. does that seem like a normal calibration? look at the difference between that chart and the next chart.
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year-to-date bund yields down seven basis points on the week means the next chart starting in august is recalibrating. recalibrating. that's the dechb between tenifference. getting up to the magic 1.50 level. here's the battlefield. this is the battlefield. and the euro is getting more downside momentum. we'll talk about it on santelli exchange. big technical level at the lows open the chart. haven't been here since fall of 2003. last chart weakness among weak currencies well established this is the euro versus the yen. now the euro weakest level versus that currency since thanksgiving 2013. back to you. >> thank you very much. rick santelli. jimming you're not going anywhere. >> no, you're kidding me there howard schultz of starbucks. >> we have the biggest supermarket for chips, particularly cars, that's where the sweet spot is for chips and russell goldsmith, city national
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sold this week. people who do it right, they deserve a victory lap. i've been critical of thompson u.p.s. but when someone creates wealth like russell goldsmith, i praise them. i'm an equal opportunity slammer and praiser. >> jim's going to skik ing toing to stick around. breaking news on existing homes, lei. howard schultz and aaron levie, company making its wall street debut. indicated 19.50 to 20.50 now. don't go away.
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♪ good friday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisner simon hobbs, jim cramer. dow's down 53 points. jim will lead us with howard schultz. first, rick santelli getting economic data leading indicators. rick? >> yes breaking news. december leading indicators a path of 1%, close to expectations. last month downgrade .2 to up .6 to .4.
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that changes things. half a one percent the weakest since april of last year. but of course now the .4 revision changes that. now going to aim the wagons east and diana olick who has breaking news on december existing home sales. diana? >> rick existing home sales up 2.4% in december month-to-month to rate of 5.04 million units. that's a slight miss. street looking for 5.08 and november's numbers were revised down slightly. big disappoint in the annual. the full figures for 2014 total sales down 3.1% for the year from 2013. the first drop in annual sales difference 2010 which marked the end of the home buyer tax credit. not great year. and the question is do we go any higher? what was the problem? prices. median existing home price in december 209,500 and the realtors say pricing beginning to accelerate again.
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why. >> because of very low supply. inventory fell 0.5% year-over-year in december. and it's the first decline in inventory in 16 months. that is just a 4.4 month supply balanced market is closer to a six-month supply. not great news heading into 2015. back to you. >> diana olick great job on that. terrific report. starbucks reported earnings in line, that's heyadline. find out why. joining us exclusively, howard schultz, chairman and president of starbucks. howard, your cfo has a line in the quarter. give me three reasons yp earnings per share growth to accelerate as we move into the back half of the year. that's why the stock's moving up. give us three reasons why that can occur? >> well first off, coming off an extraordinary quarter for holiday which we prepared all year for. it's very unusual to have every business in every geography
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exceed expectations. so we were extremely pleased with holiday. in terms of the back half of the year, we have plans in place that we think are going to be incremental. mobile pay delivery, coffee in our favor. we feel that we're set up very well to have a very excellent year. i think we're all humbled by the response, reaction the market's had to our performance. >> numbers in china both startling and stark versus some of your i don't want to call them competitors after i saw the number, but from america, 8% comp, extraordinary. what are you doing right in china that the other guys in china are not doing? >> you have to remember we have been in china for 15 years. all during that time we have laid the foundation to build a brand, have a local chinese team who is managing the business. we have established starbucks as not only the leading purveyor of coffee but a brand of choice in luxury within china.
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as i mentioned on the call yesterday, we now have 320 stores alone in shanghai which is the largest market in the world for starbucks. we had 8% comps in the cap region and most was traffic. it's not only china, it's japan, acquisition we just made there, where we think we can extremely accelerate the business not only in stores but cpg. also there was no mention on the call about europe. europe had the best quarter in the history of the entire company. so, this is a moment in time where everything came together. it's linked districtly to the relevancy and emotional relationship with our customers around the brand. it's not just america, it's around the world. >> i think one of the standout issues here -- excuse me as an ipo rings the bell -- mobile payments. spent a lot of time on how a great quarter is. is it a possibility we'll be using pay at my starbucks at the
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new york stock exchange by the end of the year? >> well very hard to hear you. there's screaming in the background i'm think you asked me about mobile pay. >> yes. will we have it here? >> okay. we spent the better part of the last year preparing for mobile order in pay and delivery in the second half of the year. the interesting thing about this is, this is built off of the foundation and integrating it off of the mobile platform we have in our stores and the loyalty program. so all of this is going to be seamless for the customer. what we're finding in portland is that we can demonstrate early on, this is going to be incremental. it will be nationwide between now and the end of the calendar year. and delivery will come to a number of markets in the second half of the year. i think, jim, what we said a year ago given the seismic change in consumer behavior that we like every other consumer-based bricks and mortar retailer, has to reinvent the
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experience and drive traffic. and i think this quarter represents the fact that we are winning with the customer but i also will say that we have to continue to innovate continue not to embrace the status quo. this is one quarter. we're in this for the long run. we've got lots of runway to go. very excited about future of our business. and i think, as i said earlier, though starbucks has 22,000 stores around the world, this is still very early for the company. and i think the hiring of kevin johnson, a world-class business leader and a ceo coming from juniper, represents the fact that we're bringing into our company, in a sense, a number one draft choice who has a skill base and experience that's going make the team better make me better and add business act cue minute to the thread of what we have to do as a company and that is being very very smart with regard to technology and ingrating the brand with the way the customers live work and play. >> i'll interrupt quickly. box opened at 20.20.
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46% gain after pricing of 14 as you know. >> i hope people got in. you talked about the idea of the experience. and i see the roseastery. i'd be remiss if the next one is in new york. people understand why this is the disney world of coffee and what it means to have kraftcraft coffees to get younger people drinking. kraft beer is crushing regular beer. is this a defensive move? how exciting is the roastery? >> well i wish you could be here and see if for yourself because the camera does not capture what is going on here. my view this is as strong immersive speerngs asexperience as it exists in retail anywhere in the world. lines out the door since day one. record opening for the company. we will have one in asia 2016. we are searching for real estate around the country for one in the u.s.
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i can't say where it's going to be. if new york pops up with a great site we'd love to bring it to the city. we're looking for other places. this demonstrates to us starbucks is in the business of doing everything we can to not only separate ourselves from people within our business but everyone within retail and demonstrate the kind of experience that truly exceeds expectations of our customers. >> howard is there an easy quay to quantify how much incremental revenue you're getting from consumers saving on gasoline? >> it's an interesting question because i think the market was very disappointed in the month of december, which demonstrated that retail spending was just about 1%. which i think demonstrates that gasoline really did not come in to play. i don't think we're seeing too much of that yet. changes in consumer behavior do not happen overnight. i think, again, when jim's question about the second half of the year, if in fact we as well as others will see a benefit from gasoline, it's not
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going to happen overnight. it's going to take some time. i don't think we benefited from that yet. >> howard food doesn't get asked enough a swing factor. beer and wine not asked at all in the conference call. what do food beer wine mean for starbucks in 2015 '16? >> another answer to your initial question. we're seeing significant attachment from beverage with food. the quality of our food has gone up since the aquact acquisition. tests have gone well candidly i don't think those are baked into the numbers that the street has, because we really haven't rolled it out on a natural basis yet. but one thing is for sure. our food has gotten better customers recognize it. our people are proud of. we're doing the kind of thing that recognizes it's not only coffee it's the total experience at starbucks. we mentioned on the call which
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i think is important, that we're raising wages for people in our stores providing incremental benefits. we have to do everything as we can as a company to demonstrate that building shareholder value is not only linked to shareholders and customers but at the same time we have to link it to our people and bring our people along with us and share our success with them. >> howard i talk a lot with you about mobile payments. i know you're way ahead. people at visa apple, in major banks who think, howard schultz's solution is not the solution. we've got the solution apple i pay is the solution. can you coexist? are other companies going to adropts adroptsa adopt your mobile strategy or is this meant for starbucks only? >> jim, i think this is the question of the day. there's a great race of who is going to be become the visa of mobile payment. there's going to be multiple winners. let's establish one fact. there's only one consumer brand and one bricks and mortar retail
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company that has been able to literally change behavior and that's starbucks. we're processing 7 million transactions a week, 16% of our tender. as a result of that we're in a position i think to partner with a number of people who want access not only to our customer base and loyalty program but opportunity to live inside of our stores. i've said in the past that we're taking a thoughtful disciplined approach to this. we're not going to make these decisions quickly. but i think we're in a knew neek position and having ongoing conversations with all of the players in the space. we're in a unique position where we have value to offer partners that we're talking to and most importantly, a seamless relationship with our customers. >> what's happening in our country? you talked a lot when you came back about the so-called third place. how can one in seven americans be involved with starbucks and is there a limit? is there a point where everybody
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wants coffee or tea? i mean honestly the penetration here is so remarkable, i don't understand it versus every other place. >> well you know jim, if we were having this conversation ten years ago people on the other side saying that starbucks' days are over. we reached that duration. but the fact is we have probably less than 15% of the overall coffee market in north america and less than 1% on a global basis. what we have been able to do i think, demonstrate to our customers and the marketplace that we're much more than a coffee company though our core product and our core purpose is the coffee experience. the sense of community, the third place. i think the number one issue in the currency for building enduring brand in this kind of environment is trust. we have a tremendous amount of trust and license with our customers. they've given us more than the benefit of doubt because we have
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performed for them. i think the experience in our stores, a sense of community, and i think people are looking for a place like starbucks. i think what's very interesting, though, the universality of the relevancy of starbucks is no longer europe or latin central america or ash shap it'sia. it's a global phenomenal. it's steeped in a performance driven company to the lens of humanity and that resonates with people all over the world. >> is there a price people won't pay for coffee? watching the praline explode, social media explodes it's a club, i want to be part of a club. is there a price people wouldn't pay to be part of the club? >> i think there's elasticity in every product. we have to provide value and continue to surprise and delight our customers. the interesting thing about your question, though is that mobile order and pay, the loyalty program, the gold members, what
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we've been able to do is despite the price of what we charge things for, our customers recognize and we see this in research, there's real value to the starbucks experience aside from what they're paying for the price of a cup of coffee. we have to continue every single day to push for reinvention to not rest to not embrace the status quo and do everything we can to reinvent the experience even while we're winning. and i think we're humbled by the response the success we've had this quarter. but we're going to leave this call and go right back to work and do everything we can to surprise and delight our customers who exceed the expectation of our shareholders and really do everything we can to share the success of our company with our people. i'm not going to let you go yet. europe was a huge turn around the world, right, you're the ambassador of the united states around the world. i hear company after company say that the dollar is a huge headwind, the dollar's a huge headwind. you did not mention the weather
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witness on your call, why is that? >> well i think with 22,000 stores around the world, we've got weather and currency issues you know in parts of the globe that we've got to deal with that. we've got to navigate through. you know we can't allow those kinds of obstacles to get in the way of what we have to do every single day. there isn't a year or a quarter that we're managing through where we don't have some obstacle that is quite significant. i think over a 23-year public period we've managed to not only navigate through this but more often than not meet expectations of shareholders not making excuses. when we disappoint because we're not perfect, we come clean, we're transparent, and we move on. that's just the way we roll. >> congratulations, howard schultz, chairman, ceo, founder of starbucks. great to see you as always.
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thank you. >> by the way, all-time high this morning for the stock. 61% gain in two year. you own it in the trust? >> yes, some people are bankable in the country and this world. you heard from the most bankable ceo on the globe. >> jim, have a great weekend. >> all right. i'd like to stick around for box. >> box. don't even leave at all. >> i'd like to stick around if you let me. thank you. >> simon. >> its a big day here at the new york stock exchange. box has just made its debut as a public company. trading at $21.78. that's the valuation of $2.5 billion. >> and they -- the raise was 175 million. remember the price talk 11 to 13. but it priced at $14. it opened about 15 minutes ago at $20.20. all box officials were here aaron levie was here jeff spraguer was talking to him.
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officials here right over to my left here. there's glenn, the designate the market maker. he's a bit of a superstar. he did the ali baba ipo, twitter ipo, he handles a lot of these. factor everybody's talking about, earnings -- excuse me sales up 70% in q3. question whether they continue that. that was a factor. other two things that attracted people one, hot space, enterprise software. number two, relatively small float if you take out investment by a management company, only 11 million shares available. small float, hot space. that makes for a hot ipo. back to you. >> i'll say. up more than 50%. thanks very much, bob pisani. next, we'll talk to the man behind the ipo, box ceo, aaron levie, live on his company's first day as a public one. stock up as i mentioned, up more than 56% right now. "squawk on the street" will be right back. aflac!
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and closeout inventory. the year end clearance sale ends sunday at sleep train. ♪ your ticket to a better night's sleep ♪ box flying high in the clouds as they started trading on the nyse. valued more than $1.6 billion. joining us here aaron levie the ceo of box. aaron, great to have you back. congratulations. >> thank you very much. >> we showed you a tweet from a year or two ago you said if your stock shoots up you left money on the table. if it drops you screwed investors. if it's flat you're boring. >> i didn't mean to imply anything about our ipo.
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>> why did you price it the way you did? >> you know i think the -- our job is to try to get a fair valuation for the company in this process. and i think that was the strategy we employed and let the market figure out what the pricing there from there given the growth of the business i think you'll see kind of what we're up to. >> aaron, congratulations. >> thank you. >> there's a -- i read in the paper today, like you, people saying google's commoditized you, they're not making money, we don't know when they'll make money. you could make money tomorrow if you wanted to curtail growth i understand it. you're far more security oriented than google. cybersecurity matters tremendously now. >> the thing that's misunderstood about our business, we're not in consumer space. box helps manage corporate data and information for the world's largest companies, general electric, eli lilly, toyota fox, a bunch -- we're with comcast, nbc as a user in
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various parts of the organization. we are in health care with standard hospital, life sciences, again a bunch of the leaders. we secure itting make it it act sellable, collaborate around. that's not the focus of google. the most important point, we are participating in a once in a lifetime transition from on premise computing to cloud computing. and that we're moving from a world where you invest in storage infrastructure concept management software appliances security technology in your own data center. what we do at box, take the technology, put that in our data center, deliver it as a service. when people think the cost of storage goes down over time as an example that doesn't relate to our business. we give them limited storage as the price of storage goes down that directly benefits our infrastructure costs. so, that's one of the misunderstood dynamics about the business. >> drew's a terrific exec drop
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box is much loved. is it better paying than to be a free model and the individual and work into the enterprise? >> it's important to also think about the size of businesses that we're talking about. without speaking about specific competitors a lot of players in the consumer splas rr place that have done well in the s&p market. what we are focused on at box working with the world's largest enterprising powering how they store, manage coordinate how their information flows to their business. we'll have lots of competition on the low end of the market. we serve those customers great. they never had to invest in the infrastructure in the first place now they can move to the cloud. for customers of all sizes we're enabling a set of capabilities no other product has. >> what would you say is the growth outlook in terms of acquiring new businesses? you say enterprising serving fortune 500 companies. how many are out there that you can sign up. >> 52% of the fortune 500 we
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don't yet work with. and the large part of the market weep have users in all of the organizations that bring the product into the workplace to use it. but a lot of our growth is going to come from both new and existing customers that continue to deploy box on an ever growing rate. one of the unique things about our business model that isn't typical in software is we have 130% net retention rate. customers are growing their deployments over time even when you factor out customers that churn off. our job is to continue to make incredible software that allows users in these organizations to continue to adopt it -- >> i guess the only thing is i've heard the knock against you, it's very expensive. you're spending a lot of money to acquire new businesses and service them. is there a point where you need to get your spending better in control and decide you want to be profitable? >> as we showed both in the video, i don't know if it's online, we encourage anybody to watch it you will see a tra jex
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trajectory change, ratio to revenue that will continue to improve. it's important to remember we're in a once in a lifetime transition. we're going after a market where tens of billions of dollars are spent every year in the legacy technology. what we're trying to do is capture the value there, and go -- get acquire customers which is why we're spending that money. customers profitable after two years and they continue to grow from there. so, that's why we spend the way we do from a sales and marketing stand point. >> i loved watch you waiting there, so excited to be on this is a huge day. >> i'm 30. breaking news. >> in december. >> so i mean the picture's great. no doubt the product's great. but shareholders longer term have to struggle with the central question of whether you're going to make money. >> yep. >> and maybe you know sales force, net suite not make money and sales force has a huge valuation and maybe they're safe, but others to the point, sara's saying, you'll burn
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through the cash you've raised in two years. what happens longer term? i'm not sure if you answered that. >> i can't talk to a forward looking financial standpoint now. i would say that we run the business actually far more conservatively than i think it is assumed because we're going after such a large market. we care about the individual profitability on a per customer basis. right now we're in the mode where we're going after this market in a big way with a product that's very differentiated. i would sty investors, we prefer investors that understand that model that understand the sort of replatforming. when you think about the new next generation i.t. model for a larger organization, it's workday, workforce, these platform we're trying to take storage infrastructure from the environment and move it to the cloud. you know economics are pretty clear in the s1 in terms how to we get to profitability in doing so. >> let's talk about this the
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actual mechanics of what's happened here on the floor. you're selling little of the company, 10%, at the same time you had the classic down round. why did you have a down round? and why are you selling so little? >> yeah we don't -- we didn't see it as a down round. there's different prices you get at different points. we go through different kinds of prices. this was just our process for taking the company public. >> tim cook tweeted, as you've been sitting here congratulations to levie and the box team on their ipo and for creating a great company. nicely done. >> great breaking news. i wasn't check twitter there we did a lot of that here. you say -- >> that was the real tim cook his handle verified? got it. >> it's nice to get back to running the company as opposed to doing this? >> yeah. >> did you worry it wasn't going to get done? some thought it would happen a long time. >> one of the challenges you can talk to the s.e.c. about this, we've been in a quiet
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period. we can't answer a lot of questions. a lot of speculation that has mis understood the environment we're in. we're happy to be public and make sure it's more clear what we're doing as a business, where we're going, how we see the market transforming and we're going to have, you know, hopefully great partners in the process, and so we do appreciate tim's tweet. >> to tim's point, curious about your vision for technology and the future. a massive shift from pcs to tablets. you've been on top of mobile, where we are and where enterprise is now. what's next. >> well in you think about the, you know most businesses of let's say employees of 500, 1,000 employees on up you know we're built up in a more analog world and we're moving to much more digital world. whether you think about life skinsz company sciences companies, manufacturers, retailers all of the organizations have to begin to digitize their businesses and we see that taking on so many different forms.
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new on-demand experiences for consumers with legacy kinds of companies out there. we have -- we're going to see an entire replatforming of i.t. environments to move to cloud and mobile models. i mean microsoft announced with the holographic glasses we beginning to transform the way we interact with the technology that we use, and the businesses that we have and our job at box to enable companies to go through that transformational effort. >> can i pick up the fact tim cook tweeted and i assume he listens to cnbc listening to you now or the office, his gamble as far as -- to team up with ibm, use the consumer centric politics with ibm's ability to search corporate data and big data sets easily. >> yeah. >> it occurs to me that in that environment, you kind of fit rather well. i'm interested that tim cook would take a personal interest in that. this would be a very small purchase for apple out of its
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free cash flow. how do you feel about the company potentially being acquired? do you have those conversations? >> we've been public one hour. we're focus on building. >> you're a perfect -- for somebody who further wants to move to enterprise. >> i can't speculate how well we would be bolted on. i would say we're going through a once in a generation transformation in i.t. these come around every 15, 20 years when my co-founder start the company we were committed to one sole vision. we have many more years in from what we're trying to build out. >> conversation. >> thanks. >> we love to get updates. >> we will happily make our business much more clear over time. thank you very much. >> aaron levie with box. >> thank you very much. >> jim thanks for sticking around. >> i have a question. you said 18 fair price. now it's at 24 a share. >> yes. >> what do you do with the
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stock? >> did you get it wrong? what happened? >> i thought people told me i was too aggressive. i said no a great company. you look at it in a snapshot of what you're losing now you're losing the big picture of what you're about. congratulations. >> appreciate it. >> dominic chu, mark flash. >> watching shares of "the new york times" now. the stock moving higher on an article in "the new york times" magazine citing talk about michael bloomberg buying newspaper possibly. according to the article, at end of his mayorship the bloomberg had approached "times" chairman that he was interested perhaps in buying the paper but rebuffed. however his interest has not waned says the story. the stock is up by 2.5% as a result. back over to you. >> coming up brent crude prices rising as the saudi king's death announced adding more uncertainty to a volatile market. of course we've had prince
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saying oil will never reach $100 a barrel. we'll talk to the former ambassador to saudi after this. your mom's got your back. your friends have your back. your dog's definitely got your back. but who's got your back when you need legal help? we do. we're legalzoom,
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with the passing of the saudi king abdullah the watch is on to see what his successor does when it comes to policy and
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specifically oil policy. the nephew of the late king and chairman of kingdom holdings joined us earlier on "squawk on the street" with his insights. have a listen. >> the element of continuation and the element of stability will be prevailing no doubt about that in the foreseeable future. and still and unless it could be a point between supply and demand the price may fluctuate between 40 50 range. however the immediate to long term, it's inevitable the price of oil may go up more. as i said i think we'll never see the price of oil again at $100. >> never see the price of oil again at $100 the former u.s. ambassador to saudi arabia. mr. ambassador, good to see you. what do you think of the comments never seeing $100 a barrel? >> certainly continuity in saudi policy, after all, the country
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has been run essentially on collective leadership basis. the new king king salman part of the decision making loop. so is prince muqrin and the new prince, and now in line to succeed for the next generation. it was also part of the intergroup. i don't see any change likely. >> go ahead. >> i was going to say, the prince did recognize i think the direct quote, we do feel the pain of the lower oil prices. in other words that this is hurting the economy of saudi arabia. i'm wondering what you think that policy is right now, how much pain they're willing to tolerate. >> well saudi arabia has $900 billion in foreign exchange reserves, which is about a fifth more than their gdp. almost four times their annual budget. they can feel the pain. they can suffer for a long-term gain for quite a while to come several years. so i think the pain is real.
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but determination to see this out preserve and gain market share, squeeze out new sources of energy so that saudi arabia's patrimony is not dispainted dispainted. all of this is very real. >> energy policy any chance we could see a change in the powerful energy ministers in saudi arabia. >> the minister has been there i think since mid '90s. any power struggle there? think chance either the current regime or the successors could want to change that? >> well there's been no indication of serious disagreement in the kingdom about the long-term strategy of riding out low prices and squeezing out competitors. and while he has been, as you said in office for quite a long time, there's no indication that he is unacceptable to the new
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team. on the other hand periodically there are changes in leadership. i would expect a slow recycling of positions in the government and eventually he will retire. >> ambassador, people have obviously curious to the pentagon that he occupies. also the 6,000 saudi princes who may or may not be getting their regular income as a result of what has happened to the price of oil. and of course everybody the throne has been passed to not one of the grandsons but, importantly, again to one of the sons at age 69 early 70s. and now there's an indication there's not enough stability amongst the grandsons and princes to actually move on one generation, which comes back to that central question as to whether he can cut it amidst the opposition that may be behind closed doors.
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>> well he's a technocrat and held in high regard for his technical ability by the royal leadership. but i want to make one key point and that is it doesn't seem to have been noticed by many people, but king salman in addition to elevating prince muqrin to crown prince elevated a crown prince in waiting, and that's the minister of security who is very highly regarded internationally and in the kingdom, who is believed earlier to have the inside track to be the first of his generation to succeed to the throne and who has just seen his chances improve quite considerably. >> thanks very much for joining us. you'll have to come back to talk more about the broader instability in the region. ambassador chas freeman, good to see you. >> over to morgan brennan, news
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on fedex here. morgan. >> carl, well check out share of fedex, down a little over 2%. just reopened after halted for news pending. the news pending company reaffirming fiscal 2015 earnings per share, saying that it is going to be -- that its forecast of previous forecast of 8.50 to 9 per diluted share is in place, that's in line with street expectations. we're getting that news following united parcel service, u.p.s. lowering its guidance earlier today. lowering its fourth quarter guidance as well as its 2015 guidance. seeing shares of u.p.s. trade down almost 10% on that news. that, of course coming as the parcel carrier spent more than expected on its peak season capacity. so again, fedex trading down 2%. u.p.s. trading down 10%. gives new meaning to the term holiday hangover. back to you. >> thanks very much.
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the other big loser today, of course that everybody's watching, is the euro. sinking likely stone. already had been weakening for the past year. double digits yesterday as well since mario draghi pulled the trigger on the trillion dollar stimulus. we've seen this currency in free-fall. bouncing back off the lows of the session. hit in the 111 region a new level sense we haven't seen in 2003. european stocks having their best two-week period in several years, weaker euro boosts earnings outlook for european companies and strategists say it's that flexible open-ended nature of the bond purchase with the big sticker price causing trade to abandon the euro in masses. also election uncertainty when it comes to greece. the election over the weekend. all of that leading to the weaker euro and the stronger dollar heading for its best week in a year. better u.s. growth easier policy in europe.
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it's painful for some american companies that do business abroad. kimberly-clark, the latest to warn about. but "squawk box" team had a chance to ask treasury secretary jack lew about the strong dollar and he's not too concerned for now. have a listen. >> a strong dollar is all of my predecessors joined me in saying it's a good thing, good for america. if it's result of a strong economy, it's good for the u.s. good for the world. what we've also said is that when if there are policies that are unfair where there are interventions designed to gain unfair advantage that's a different story. we have been very clear in both multilateral, bilateral settings that's not acceptable. >> so he's sticking to the party line, the strong dollar's in the best interest of the u.s. and the world. the question is how far does the euro fall from here because it's the speed of the move that is catching a lot of people off guard. leading to some tensions. you see central banks reacting across the world just this week.
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>> the question is when does it become disorderly? i'm not sure if we've got a chart, wasn't it down 7%? >> this year. it's down 16% if you look over the last seven months. >> for that acceleration on a major currency that is a concern. that's why the danes have cut twice, warning about intervention. swiss national bank did what it's doing. from other central banks deep concern bordering, i would have thought on a stronger emotion as to what the europeans are doing. >> commodities priced in dollars has ripple effects, corporate debt across the world priced in dollars, that could have a destabilizing effect. we have to watch this. shaping up to be one of the biggest market stories on the year. coming up box trades at $23 on the debut, "squawk alley" joined by josh stein. a partner of the vc firm draper fisher. what he thinks about the pricing, when we come back. i tantly transferred money from his bank of america savings account
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watching shares of mcdonald's in the red after earnings miss and shaky outlook for the first half of the year. thompson saying the chain continues to face meaningful headwinds. a mcdonald's shareholder, jordan, i thought that mcdonald's was going to open higher. i think higher in the premarket after the results because, well they were lower, same-store sales numbers were better than analysts were forecasting. just that analysts become too negative or is there signs of improvement here? >> i think there are some signs of stabilization, probably better than improvement. december same store comps in the u.s. were actually up slightly. on the other hand asia comps were a little short. in general, i think the revenues for the quarter were okay. expenses were a bit higher because they're reinvesting in the because they know they've got issues.
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it's important to focus on the longer-term potentials with mcdonald's, as the company said first half is going to be tough, in large part because of comparisons of a prior year. but as the year progresses we think that they'll be able to make some progress hopefully the u.s. starts to improve. some of the temporary supply chain issues and food quality that they've had in asia specifically should lap and be resolved. and i hope that the company will be able to get some traction. if it does the company's not that expensive. pays attractive dividend 3.7%. we think the stock actually if you have a 12 to 18-month time horizon, could be up, say, 25%. >> jordan you are right about the yield. the high 80s have been a floor for the stock. i see they announced 2 billion in cap x for '15, go back five years to find a number that low. if the fix is about investing, why cut cap x? >> well they're slowing down the number of new store openings, and focusing more on
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investing back into the stores that they currently have to fix issues. to be honest the actual store bases are pretty updated. so to get to a lower level of cap x shows they're focusing more on fixing what they have rather than just trying to open additional units. some of the cap x savings actually will be respent back in operating expenses to try to drive better top line. >> what moves do you like that they're making that you think is going to lead to a turnaround? they haven't seen positive u.s. sales since october 20137 is it the menu changes? new advertising? what gets you hopeful here? >> we've seen you know a flattening, now maybe a slight increase in comps. there's an urgency at the company. i think that will be more evident when you hear the call that starts in just a few minutes. don thompson recognizes that there are issues here and the company's working very hard. working hard is not enough. you've got to get some traction.
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so they've talked about things like menu simplification and they've talked about the store of the future with more electronics helping to increase the speed and quality and quality of the experience. there is a place for mcdonald's. it's not necessarily for everyone. . but a place for it in the u.s. and internationally and we think they will make progress as the year progresses. >> thanks for joining us with your case for mcdonald's, matrix asset advisers. a mcdonald's shareholder. >> coming up markets in the red, hurt by more weak earnings today. the dow now down about 80 points. 78 points as you can see after yesterday's big ecb rally. more squawk on the street when we return. barbara just bought a bike. she wrote a tweet about it. you can't learn much from that. but take data from millions of tweets combine that with your company's
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welcome back to "squawk on the street" and the friday edition of the santorum exsantelli exchange. >> glad to be with you. >> at lot of the data i'm looking at we're going to hit a soft batch and some of the data from december is demonstrating
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that. you have different ideas. you think business to business investment is better than many think and could be the saving grace. >> i've created a new index based on a new government statistics that came out yesterday of gross out put, i've created a b2 b index that measures business spending in the economy and it's more than double consumer spending so business spending is what drives the economy, not consumer spending, but i'll tell you something that's interesting, even though gross output and gdp both went up 5% or more in the third quarter, business to business spending was actually flat for the third quarter. maybe that will play a little bit into your views of a little more skepticism of what's happening in the economy. >> well after six years, and i continue to say that all the governments around the world and all the things that happened that are good you know, agencies or governments take credit for, bad things they ignore and say it isn't their fault, but in the end any rationale person would expect
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economies like the united states economy to have bounces off some of the issues that occurred in '07 and '08 no matter what any of the so-called tailors for all the em porers think, would you agree or disagree? >> yeah. it's an artificial recovery to some extent. genuine recovery and artificial. they're both of them at play like weeds and wheat growing together and the government constantly stimulating the economy, europe is doing it now, the united states has done it for some time. >> that's a greatnalogy. if you're hungry you can eat dandelions if you put enough vinegar and oil on them. the president gives his state of the union, talks about different aspects of taxation none of this is going to pass but i'll tell you what 529s are a big deal and the logic is as i understand it, half the holders of 529s are not middle class they're a lot above that maybe something we should tax, what
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happens to the notion of, you know, tax reform to me this is very enlightening there's never going to be tax reform left center, right, they need the campaign contributions and every carve out will find have and have nots. your thoughts? >> rick i teach at chapman university and i can tell you that when you give education a very valuable commodity and make it free for two-year college program then people don't value education like you see. this is going to backfire on the president. the tax issue is even worse because when you decouple the user with the benefit, more problems create like with medicare and that sort of thing. >> we're out of time and have to have you back. what does that say down the road, becare. simon hobbs, alls yours. >> thank you very much, rick. "squawk alley" approaches and see what's on deck with jon
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fortt. >> we've got a board member from box which is up sharply after its debut here at the stock exchange this morning. talking to him. also another tesla co-founder with an interesting drive train straight out of silicon valley will join us and kara swisher on apple compensation, a good look at that in the proxy last night. all coming up on "squawk alley."
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. good friday morning. 8:00 a.m. at box headquarters in california 11:00 on wall street and "squawk alley" is live. ♪ welcome to "squawk alley." joining us as always this morning, jon fortt and kayla tausche here at post nine. busy morning as the markets gave up some of the gains from yesterday's draghi led rally but the big story down here at the exchange is box. cloud storage company box going

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