tv Squawk on the Street CNBC October 12, 2015 9:00am-11:01am EDT
>> powers activate. >> you have to be in the middle, becky sandwich. >> let's practice. >> this is ridiculous. >> come on. >> it's like a team thing. then like that. >> you know what i'll do to you? i'll go high five, pull it down. >> no, like charlie brown. join us later today during "closing bell" when we ring it. "squawk on the street" begins right now. ♪ good monday morning. welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber. premarket study after the best week of the year for the s&p setting up a big first week of earnings season. the emc deal is official. bullish call on apple. china tacked on about 3% as the pboc expanded lending programs.
japan was closed. oil coming off the best week since august. bond markets are closed. this morning it's the largest tech deal in history. dell agreeing to buy emc for 67 billion. you will hear what ceo's of both companies told cnbc. >> we will hear where things stand now with inbev and san miller. >> and twitter planning company-wide layoffs. a big move from newly installed ceo, jack dorsey. dell agrees to acquire emc in a cash and stock deal valued at $67 billion. transaction includes a special stock that tracks the performance of emc's stake in vmware. michael dell will lead the combined company. he talked about his future plans this morning on "squawk box." >> we are focused on in the first 18 to 24 months, a significant reduction in the
debt, which will come from certainly the cash flow of the combined companies which is quite powerful. some cost synergies, but importantly the revenue synergies here are about three times larger than the cost synergies. >> as we said, biggest tech deal ever. biggest purchase of a publicly held company by a private buyer. and they're saying it cements the turn from what was a consumer company to the enterprise. >> yeah. it's a huge deal, as you said, carl. one they've been talking about for over a year. people who have been involved in structuring this transaction indicate it's the last 8 to 10 weeks in which they have done the heavy lifting. no stranger there in terms of these two companies having been in talks with each other. joe tucci has been focused on getting a deal done. a year ago those talks between emc and hewlett-packard. this is the deal that got done,
in no small part because of this unique deal, the inclusion of this tracking stock of vmware. it's a very interesting twist in delivering economic value to shareholders of emc. and those who have structured it this way, as you might expect, are positive on it in terms of believing that this tracking stock will trade very similarly in price to the common stock of vmware. it's going to create a great deal more liquidity of vmware, which, jim, as you know, something a lot of investors have clamored for. the percentage also look something like this. 81%, remember, is owned by emc. that becomes owned by dell. they put out 65% of the 81% of the tracker. let's call it 53% of vmware trades under tracking stock. 19% trades as it currently does as common. dell owns the rest. they believe the fact that it
will be tracking an active public equity, the fact it has a board of directors separate from dell, and that it will create more liquidity will be beneficial and therefore mean that it will trade very close in price to the common equity of vmware right now. that's the key. others say, no, it will still trade at a discount. >> i fear it will trade at a discount. i will say you're right. vmware is up 5, down 5 stock. many stocks in that industry would be up 50 cents, down 50 cents. one of the reasons why i've been historically not willing to embrace vmware, despite its high growth and prefer red hat, sales force, cloud-based, is because it's crazy. every time you get it wrong, you wake up and you're down a gigantic amount. that makes sense. david, how much of this is tax motivated? the reason why emc never spun off vmware is the tax bill will be high. >> they believe this is a
nontaxable transfer. the cash you're getting for your emc share, that's taxable. we all know that. then you roll your basis into the tracking stock. but that is considered to be not taxable to the corporation or the recipient of that tracking stock. an important component of this, no doubt. how they're getting to that 33.15 number overall, jim, there is an inclusion of a go shop provision, emc can look for other buyers. they say we never officially market checked the company. when you talk about a $65 billion deal, you pretty much know who is out there. you have the support of elliott, which was a 2% holder, but pushing this company to find a buyer for quite some time. that said, the only name that comes up in any chase is cisco. any small, small possibility. >> i know.
>> not saying that will happen, but simply the idea. >> to me, chuck robbins is building an amazing company, the new ceo of cisco. if he did this, i would regard this as a set back. maybe the ultimate takeaway is this is a gigantic deal when one month ago we thought we were in a horrendous market for tech. >> let me tell you a bit more, one of the more stunning parts of this, $45 billion in new debt is what they're accessing, what they have fully committed. this is not conditioned on financing. fully committed from banks. once the news started to come out, banks started to see this is real. everybody signed on. you could spend ten minutes reading the press releases to who is on here committing financing. 45 billion. a lot of it, as we said last week, will be investment grade. >> isn't that something? >> people making the point, listen, the money emc was
spending on buybacks almost equals the interest payments paid by dell on this. you can get to an idea where the banks became comfortable with it, not to say that it's not a huge -- if i told you two weeks ago we'll do a $45 billion offering for this deal, people would have said you are kidding me? >> that's why hewlett-packard is interesting again. stock is moving up. people want to think cisco is going to do something, i don't know. to me, juniper can do something. the main thing is that this group, which had been dormant, has become the leader -- the leader in the market. that's inconceivable to me. >> deal structure aside, is there room in the space for another highly leveraged player like these guys? if so, why wouldn't everybody else be after them? >> if microsoft reports a good number, intel tomorrow, a lot of chatter that there's a rebound, even though the numbers for pcs
were terrible on storage. ibm's moving up. they'll tell you it's more of a cloud play. these things got to 10, 11 times earnings. they became the cheapest stocks in the market n this chase for value of which michael dell, i think, has correctly called the bottom. >> of course, he's been a private company for a couple of years now, let's call it. interestingly, as a part of this, sort of a side note, but interesting to note, the tracker will actually be considered a common stock of dell. therefore dell is now actually going to have to find qs and ks again. >> that's why the release says michael s. dell, silver lake transaction. they're -- he's public. >> it will be considered a privately controlled public company. we will get full information on dell again in terms of qs, the quarterly reports. they won't have an analyst call. they don't have to worry about that stuff.
>> like j. crew? >> they have public debt. the vmware tracker will be considered a common stock of dell itself. >> amazing. >> we'll get more information on dell for what that is worth. obviously a lot of people know they have public debt, so they've been presenting a lot of financials in the past. whether we see another deal of this size is hard to imagine. >> you said there were still deals going on. >> there are. >> still. >> not leverage transactions like this one. dell may be levered less than four times. they will talk about as little as three times after synergies. you heard mr. dell talk about the revenue synergies and the cost savings. my understanding is he and silver lake are rolling in current equity and putting in another 3 $1/2 billi1/2 billion included in this is temasek. and there will be other asset sales by the overall company. >> i'm intrigued by value.
i thought that value could be running out of team here t it bottomed august 25th, that's not the case. this is bullish. bullish for value. >> we'll see how vmware trades. rite now it's down. no collar or anything like that. antitrust will be interesting. they believe they'll be okay in china where things get bogged down because dell is such an enormous employer in that country. any believe that will get them weight in getting chinese antitrust in a quick manner. >> golden wheat, the numbers we're getting from when the celebration of the beginning of the country, extraordinary. it looks like it jives with what we've been hearing from apple, what we've been hearing from nike. but it says that yum is execution. coming back to the problems of
yum, wow. it does not equal what starbucks is saying. starbucks quietly moving up. some companies doing quite well here. by the way, i will talk about one in the mad dash, you will not want to miss it. it's so contrary to this market. speaking of the market, we begin a new market week. the dow going for seven straight winning sessions. the blue chips coming off a weekly gain of 3.7%, the best since february. the shanghai up 3.3 overnight. a senior official from that country's central bank says the stock market's correction in their words is almost over. over the weekend, china's central bank took fresh steps to ingest liquidity, expanding a pilot program to facilitate bank borrowing. the list of earnings starting with jpmorgan tomorrow, wednesday, wells, it goes on, all the way through friday. >> i'm so glad jpmorgan decided to move earnings to after the close. we are so tired of having to compete with wells fargo,
jpmorgan, we try to figure out who is best. thank you, jpmorgan, for giving us breathing room. tomorrow is a huge day, huge tell on the low mult pal stocks versus the higher multiple. the rails have been strong. why? we don't know. intel has been creeping up. why? we don't know. tomorrow may be an interesting test about the companies whose stocks have just started bottoming. on china, there have been 23 days since june 12th peak that have been up. that's a huge number of stock days that were down. 50% of the days since the bottom, which we saw in the last part of august have been up. my take is that 3,000 level has been holding and that the whole move in the industrials was timed on the bottom in oil which happened that exact same week and the bottom in the chinese market. so chinese and oil caused this move into the industrials and the value. let's see if that can be contained. >> wow. >> oil just had the third best
week since the financial crisis, last week. transports also the best week in a year. people feel it could be trapped in the high 40s. you're wiping out the golden call, which marked an official bottom in oil. i say official because oil bottomed the weeks before, but delta will be strong. united continental. surprised at that number. earnings are coming through. a lot of that, here we go, peak in the dollar. peak in the dollar. >> we have to get to a lot of other things. i wanted to mention quickly, ely l eli lilly shares. >> that's the one i was going mad dash. >> this wasn't even in the numbers. we were looking for -- the diabetes number we were looking for and the alzheimer's. but you buy lilly now, down here, down nine, in one month will you look real smart.
>> they stopped development of an anti-cholesterol drug. >> yes. >> well, while i wait for the mad dash to see the ramifications -- >> the stock is going to bounce. >> there may be indications for other names. >> we'll get to lilly and some more changes ahead at twitter. it's been only one week since jack dorsey took over as permanent ceo. we'll get the latest. shares of palo alto networks up. we'll talk with the ceo. dow going for seven straight. hasn't done that so far this year. more "squawk on the street" from post nine in a minute. at mfs investment management, we believe active management can protect capital long term. active management can tap global insights. active management can take calculated risks. active management can seek to outperform. because active investment management isn't reactive.
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we're getting more potential news on abi's continued efforts to acquire sabmiller. sky news and britain reporting the latest offer, i have not confirmed this nor has anybody else, 43.50. we'll see. the key here remains whether or not they can get the board of directors at sab and the santo domingo family that we've talked about so often -- i'm told ab
inbev has confirmed they are raising their bid. it's coming in as we speak. i almost went like this. >> nice. >> i believe to 43.50. the key is, regardless of what they raised it to, will they be able to get sab to either agree to a deal, which may be unlikely given the time parameters, or extend the so-called put up or shut up provision. which would close this thing down as of noon on wednesday in the states. that really is the key effort underway now. and why they're making a higher bid and making it public to have it in front of me now as well. this improved proposal of 43.50 confirmed by ab inbev. no word from sab, but will they extend it, give them dew diligence or shut them down again. ab has made it clear it's not
going to go hostile. it won't go forward with a hostile tender offer. >> molson coors would be the winner. that stock is screaming. that tells me there's smoke and fire here. >> don't forget, it's 43.50 now in cash, that's up from 42.25. but also then they have that significant stock offering that they are essentially believing, the santo domingo's at 14% and altria already has said yes to 27%. they'll say it's 43.50. the blended value is not 43.50 when you take the stock part into consideration, even though many believe there's only two parties interested in that for the tax-free nature. >> what do you say to viewers who look at these deals with suspicion? >> before you start jumping over the idea that the high yield market is out of control, these are companies with gigantic cash
flow. some people say carl icahn marked the bottom in all markets, we're seeing a recognition in that the bear market in certain phases has created a level of value that some people can't resist. and the people are the smartest. inbev, michael dell, smart operator. guy who knows tech better than anybody, beer better than anybody. and it's bullish for those sectors. let's not leave out the fact those sectors had been selling at multiples that were incredibly low, and people had given up on a whole part of the market except the companies that are in it. bullish. >> dell is making excepts on the conference call saying they gained share for 11 straight quarters, he says. they're enjoying life as a private company. that's another key term. the ability for these operators to the go private and say private. >> it will be considered a
public company again, i know that's a hard one, but it's privately held public company. it's a weird construct, he'll still be diable to do whatever wants, but it will have public filings. >> he explained i can't do what i like do as a public company. he can't do what twit ster is doing, lay people off without people saying, oh, something must be wrong. twitter was a fat company. dell had to readjust. the way to readjust is in a private form so we don't see the bloodletting. >> we'll count down to the opening bell on this very busy monday ahead of a very busy week. don't go away. some come here to build something smarter. ♪ some come here to build something stronger. others come to build something faster... something safer... something greener. something the whole world can share. people come to boeing to do many different things.
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♪ >> time for mad dash on this monday. we mentioned at the top of the show, news from eli lilly about a discontinue ways of a cholesterol drug, jim, having an implication not just for its stock but others. >> you owned eli lilly because you have a diabetes drug that has a grade cardiovascular profile and a great alzheimer's drug, those selling are wrong. the biotech has been in a low market. down 22%. one of the weakest is regeneron. they have formulations that will bounce. this is an injectable. many people were on this. i think that what you want to watch is regeneron lead the
biotechs out of the wilderness. not clear to me this is value driven rally, but good news for regeneron. the spillover to merck, i'm not as big a fan of merck. lilly hat biggest pipe. but see if regeneron can break the spell of negativity over biotech. >> they benefit from lilly stumbling. >> now they have clearfield with am j amgen. >> cell gene would be up five if it wasn't for the fact that there is this pull on biotech. watch cell gene, amgen and regeneron. >> we have the opening bell coming up for this monday.
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you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in just a minute. the story of the morning is large cap mma, beer and technology. bond markets closed for columbus day. so far, jim, you talked about oil bottoming. you talked about the dollar potentially peaking. your own psychology has taken a turn. this bottom is starting to look real. before this, this was the bullard comments, the sanguine who created a virtually three-day bear market. the flash crash during that period. the whole rotation to international showed you and to oil, showed you that oil bottomed and that is very bullish. other than magnum hunter this morning, which showed you the white flag going up, you are getting barts of the economy
that were valued so cheap and they're roaring. money is coming out of other areas. but it is bullish for areas in the bear market. >> the opening bell. a look at s&p at the bottom of the screen. at the big board, eg shares, emerging markets consumer etf. over at the nasdaq, techweek, a traveling technology vest fall, launching its week-long festival in new york city. the things you say, jim, notwithstanding, glencore trying to allay fears. >> calling for a sale of a chilean copper mine. they were up against companies like freeport, a lower coast producer. and other metals, dirtier metals. oil shipping market is very
strong. but, glencore getting rid of assets means glencore may go under, which puts a bit under that. petrobas downgraded by a small firm, but these companies were most indebted. it it's lehm it's lehman. lehman wasn't able to sell that korean deal. if you get glencore off the front pages, it makes things better. there's still a tremendous bear market in growth. let's see what happens. >> the journal detailing some transactions, the streaming deals where a company comes in and buys the mining output, if you will, into the future at a certain price which would seem to cap glencore's ability should things move up. obviously gives it near-term liquidity. >> it's so difficult for people
at home to focus on a company that doesn't trade here, let alone petrobras which is the debt. these were the underpinnings of what i felt carl icahn, when he made his fabled tape, this is what i was most worried about. if you can take those two off the table, you will get a strong market in the internationals, international real industrials, but not going to get a strong market in growth. people recognize it's the bearish phase for growth, i don't see it turning yet. >> i'll tell you one name that has done well, if it's up today that would be seven straight. ge. which has earnings this week. up 10% last week. second to dupont. >> ge is the paradigm here. another company with nice organic growth that had not gotten respect until nilsson peltz got in. nelson peltz and immelt are friends. this is not a dupont.
it was not a heinz. it's a difference of view about what to do with the balance sheet now they got rid of the finance. if ge buys backs 40% of its stock, it's not done going higher here. >> an important moment for trian, as they try to change their approach to the idea that they will be brought in by certain managements to give them a stamp of approval. >> yes. >> whether or not that works over the long haul, we'll see. it's interesting. so far it worked well for them. ge stock trading above $28 a share. >> cheap. they kind of want that idea. i think maybe in the activist world there's one other firm value act that i would argue sort of brings that to the table as a possibility. therefore allows them to get things done without nasty fights. >> kinder, gentler activism. so many people talking about what he's going to do, and brien.
>> what are they taking about when they say ed brien, the interim ceo now. we'll see if he becomes permanent ceo. >> selling ag, selling agriculture which has been a big track on the situation. ag, you have to be careful. this is a commodity, we're in a bear market, ag is related to brazil. whenever you hear south america, you have to run. you have got to run. that's not changing. >> brien has had practice busting things up. >> yes. people love breen. deserving the value he created at tyco, where people felt there wasn't a lot of value. dupont now, people are questioning the value. she had -- kullman had some great quote to streams. did she give away exalta? people feel that way. >> they do. kimors has not done well either. >> wow. i don't know. disappeared from the face of the earth. >> yeah.
>> remember, again, i'm not signaling there's a bottom in tech. watch palo alto. we'll have them on. that's the best of cybersecurity. that can't get out of its own way. the valiant picture doesn't get better. drugs, no, but industrials, ge, paradigm, yes. the 12 times earnings, 11 thymes earnings, rebirth since the last week of august. >> rebirth. >> renaissance. >> some of these airlines are just not backing down after an amazing week. delta, united, even southwest, which today talks about these computer glitches that caused it to cancel almost 500 flights yesterday. >> that tells you this is a peaking dollar which is all hurt every once of those. it's a belief that -- jet fuel has not had a big turn down. natural gas doing well. oil -- it's more usage. as it gets down, it's continuing to shut.
as you see hillary clinton do well in the polls, i like delta ahead of this quarter because united air had been the weak sister that was a beautiful number. stay close to claalaska. alaska already had a bear market. the down 20% mob is back. the up 10% and 15 mob cannot get out of its own way. can't. bifurcated market. stay close. >> s&p is about 2% away from break even for the year. been in the red for a few weeks now. >> i think s&p has a lot of banks, what you'll see when you see jpmorgan is going to determine. the banks have been not heard from because of net interest, the fed not raising rates. isn't it great we have not talked about the fed? even though i think china said the fed should be on hold. lots of other nations want to pressure the fed. >> give us certainty. >> certainty.
>> preparing for the idea of a rate rise for years conceively, just saying let's do it already does that fall on deaf ears? stanley fisher was at that conference. he heard them. >> i think the fed got this right. they saw an unemployment number that wasn't that good. now a pick up in china. i think the fed will do something right, and a lot of people criticize the fed and they'll end up with egg on their faces, including people connected with the fed themselves who i won't mention bullard, because it's become unfair. my wife again said -- some people in my -- people at my summit -- the summit bark cbecu cookout that my wife won, how did you decide to lay down and play dead to bullard. i said i try god with the gentlemanly approach that has not worked. i'm reverting to my own ways. none of that jeffersonian nonsense. >> really? >> more like president will
saab. wilson. >> but not breaking somebody's leg at second base. >> chase utley. didn't have to happen. >> a play>> time for him to bece investment banker he was always meant to be. >> chase did ask me when i met up with him on june 16th. he wanted to know if he should buy or sell apple. you know what i told him? >> own it. >> he had a good game. that was the renaissance of his career. he knows to hold apple. that's over. that phase of his career is a win. the apple phase. we saw once again morgan stanley raising numbers. >> on apple. >> apple is going to be a core holding that happens to be, after a huge run, just kind of creating a bottom here. >> yeah. that call is interesting. morgan stanley takes their iphone estimate from fiscal 16 from up 3 to up 7. a realistic bull case of 12. some argue today they're putting
the whole iphone cycle debate to rest. >> there will be a wrong call saying you have to sell this. skyworks, those things are valued. they had not been, but selling at 14, 15 times next year's earnings. let's be careful. do you sell those companies? let's also watch intel. micron bottoming significantly after a big quarter. apple down again as part of this growth funk. that will end eventually. the growth funk that includes google it will end eventually like the industrials ended. but nor pamore pain ahead. >> shares of emc are up about 2.5% or so after the announcement of the big deal. 24.05 in cash and a share of a stock that will track the public equity already interesting in vmware. shares of vmware, vmw, they are down sharply. people may say what's going on? that's largely hedging. you can basically figure out, given the 0.111 ratio that you'll be getting how to hedge
that. so you short vmware. at least what's out there available. there will be a lot more liquidity in that stock when this deal closes. because you'll have this common, then the tracker which will be actually a float that is three times that. >> remember, vmware could have been out of favor in this bar market in growth where people are more interested in emc. when i say bear market, what i'm saying is when you see a pail low abili palo alto, people are fleeing the googles and apples. that's got to stop if you're going to see us take out the s&p high and people have to say jp morgue season too cheap this has to happen. the banks are the swing vote here. the banks are the fulcrum of the next move. nobody knows whether they can make money in the next environment. john stump, ceo of wells fargo,
people think he has more leeway, he will not play with the yield curve, the dow at point zero environment, he will invest further. the key is jpmorgan getting to the next level. can they deliver in this low interest rate market? i don't know. carl, wells fargo, you buy it if jpmorgan gets it. >> we'll learn more tomorrow from jpm and goldman on thursday. let's get to bob pisani on the floor today. >> happy monday. small bounce on several sectors. by in large a flat open. biotechs having a nice move on the upside. sectors, taking a look. either side of positive or negative. not too directionally clear. china had a good overnight. europe started positive and drifted into negative territory. i've been away for a week. one thing obvious for me, watching it from afar, is the rally that we've had in the
beaten up names. this is very typical, buy the losers for the start of the quarter, but it's noticeable -- first couple of weeks here. the worst performing sectors last quarter were energy and materials. the best performing sectors so far are energy and materials. industrials had a crummy quarter. people have been trying to figure out whether this is the right time to buy some commodity names. energy has had four rallies since december where people have tried to buy for several weeks and it's failed. it's failed for times. this will be the fifth time. i'm not saying it will fail. nobody seems to be touting the fundamentals. goldman had a very long note out on the commodity situation. here's what they concluded. despite t despi despite the magnitude of the haven't rally, we do not believe any data releases or company
announcements over the past two weeks suggest a change in commodity fundamentalfundamenta. you guys mentioned lilly stopping the development of that cholesterol modifying drug. stunning decline in lilly and merck. put up lilly and merck here. down 7%. we lopped 10 billion off of lilly. piper jaffray had a note saying this drug would have been 2% of their sales in 2019. the consensus was 1.5%. that seems like a dramatic decline considering it would only be a small contribution to their revenues. the ipo market is starting to get exciting. put up that one for ferrari. ferrari announced the terms. this was a surprise given how tough the market has been. they came out of nowhere. high-end sports cars. 17.2 million, 48 to 52. talking about roughly 10% of the company going, raising about a
billion dollars. the company would be valued at roughly 10 billion. look at what the shares are and the way they float this particular thing. ipo about 10% of the shares outstanding. ferrari family will keep about 10%. fiat chrysler will have the remaining 80% but are saying they will distribute the remaining 80% to shareholders l early next year. we'll see if that happens. before that, the markets have got to absorb the biggest ipo of the year, it's this week. that's why ferrari is surprising. first data is wednesday night pricing for thursday, 160 million shares. do the math here. this is about $3 billion. that would make it the biggest ipo of the year. also one of the biggest lpos in a long time. on top of that, we have the second biggest ipo, pricing at exactly the same time. albertson's, the third largest food and drug retailer, kroger's number one, walmart number two, they're number three. they bought safeway a while ago
is coming this week. also pricing wednesday for thursday. this is a lot to throw at the ipo market. two biggest ipos of the year. another big name in the following week. by the way, they have not announced a date for ferrari. my understanding is they'll price on the 20th and begin trading on the 21st. that's what the desks are talking about now. that's the week after next. a lot go through in the ipo market in the next couple of weeks. it hasn't been that great. last week only 5 of the 11 ipos priced. almost all of them, 20% -- most of them priced 20% below their midrange. the only one that didn't, put up pure storage. that was $17. you can see what it's doing now. $17.50. that's only because it's up today. other than that, it's basically right around where it was priced. by the way, pure storage could be considered a competitor of emc. right now, dow jones up 10
points. carl? >> thank you very much. oil coming in a bit. let's get to jackie deangelis at the nymex. >> that's right. oil prices under pressure this monday morning, under $49 a barr barrel, we did get some release information from opec. opec's monthly oil report out. they are expecting u.s. production to decline in 2016. it's the first time the cartel is saying this. if it happens in a meaningful way, it will be the first decline we've seen in eight years. they're also saying that cheaper out prices will spur global demand for the rest of the year. for 2016 they're taking demand forecast down a year. the opec secretary-general said this weekend he expects the market to be in reasonable condition by the end of this year. you have the kuwaiti oil minister out this morning says opec members themselves not looking to cut production but it will be high-cost producers exiting the marketplace that will help rebalance things. generally a bit of a weaker
dollar supportive of prices, not seeing that happen. we do expect to see volumes be thin because of columbus day today. back to you. >> jackie deangelis, thank you very much. when we come back, mick mulvaney, the south carolina republican offering his take on the search for a new speaker of the house. speaking of the gop, be sure to watch "your money your vote" the republican presidential debate on october 28th on cnbc. st
. twitter got above 30 for the first time last week, giving some back today, jim, as we deal with reports of layoffs coming in in virtually every department. >> yes. i think you have to believe that the old regime was too fat or there is a transition quarter, to all the exciting things they're doing on video. it's poorly timed. you wish they had done this ahead of the big showboat on video. they're moving very, very fast. people feel snookered, that's a mistake. think about a year from now what twitter look like it does not look like what it does a month
time for cramer and stop trading. >> the nonstop selling in growth continues. watch netflix and amazon, j & j up a lot. considered to be value growth, which is tomorrow's earnings. netflix imports this week. netflix and amazon, without a doubt the tells on whether the bear market in high growth ends. keep those on your screen. i believe it's not over. maybe netflix has reported an amazing growth to get this selling, this immense selling in high-growth, which has become the black hole in this market. >> you like the price hike last week on netflix? thought that was fantastic. i think that shows you they can put through any price increases, similar to costco doing quite well. retail doing quite well. back to school better than people thought. >> was it? >> yes, because we're seeing the
spend on the cheaper gasoline. >> came right in time. >> yes. it's really helping retail. you will see that bounce here. i'm very concerned about growth. >> i'm helping ebay -- >> ebay, that's off that call. >> that thing has had a longer impact than i would have anticipated. >> that's in a bear market, too. csx tomorrow, johnson & johnson, jpmorgan will tell us what will happen over the next ten days. >> how will you handle this tonight on "mad." >> i'm doing a five-part series on what works in oil. in terms of the sweet spot and the worries of biotech, j jj bienaime. biomarin will hold biotech. >> you have to rest up.
we have not mentioned cpi coming in. >> this week is the most important week in many months. you'll have to stop watching baseball to stay up. those who watch baseball will not be able to catch up. >> i'll rely on you then. >> i'll be watching baseball. >> yeah. we will see you tonight, jim. "mad money," 6:00 p.m. eastern time. when we come back, the ceo of palo alto networks, launching a new cybersecurity initiative. stock up 80% in 12 months. dow has just gone negative, close to the flat line this morning. important than your health.
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good monday morning. welcome back to "squawk on the street," i'm carl quintanilla, with sara eisen, simon hobbs and david faber. we're left with some big stories in large cap mma as we watch dell, emc and sabmiller. the dow not doing a lot in terms of amplitude, up just five points. >> here's the rundown. stocks remain stable, but oil
reverts its gains today, now below $50 a barrel. >> the ceo of palo alto networks wants to help big companies deal with security threats. >> and the big banks reporting earnings this week. we'll tell you how to position in that sector. >> first, let's look at the market. carl mentioned the oil market reversing its rally falling nearly 2% now. also stocks, the dow is up about 4 points, not much action, but we're coming off the best week for the s&p of the year. let's talk about it. steven reese of jpmorgan and andy lippat. the headlines today, we have $567 billion tech de5a $67 billion tech deal and a beer deal. >> that brings the focus back on the corporate sector in the u.s. companies feel good about the
outlook. there's been a lot of noise whether it's china, the fed. but if you listen to what companies are saying, the overall situation in the u.s. feels good. that's why we're looking forward to the upcoming earnings season. >> is it a statement of confidence on the economy or the realization that the window for low interest rates will close soon. >> i think interest rates will be low for some time, it will be slow moving. i think it's an indication that corporates feel good about the outlook. >> we'll talk to you about corporations and earnings growth specifically. i know you're looking at two sectors, but first, andy, the move in oil. you've been in the lower for longer camp. were you surprised to see oil rally like it did last week? does it change your opinion about were it's headed next. >> i was surprised we had rally of $5 a barrel. that was on the back of declining rate counts, market sentiment is changing given some political risk coming in in the middle east. i think we have one more push
down to about $40 a barrel over the next five months due to refinery turnarounds and the impending return of iranian oil on the market. >> has sentiment changed? it does feel, andy no matter where you look -- this is a push back for those who say it will head back south, the market is rebalancing. whether it's companies rethinking, the baker hughes recount showing five weeks of declinin declining. it's not an exact science on production, it has to say something about the future. >> definitely does say something about the future, that's why i'm bullish on oil until 2017. oil is declining in the u.s., but we still have a lot of oil out there and petroleum products stored on the water looking for a place to go. >> let's talk earnings. steven, you won't see it in the energy sector. you are looking towards consumer discretionary. the problem with that, so is everybody else. it's the best performing sector.
if you look at the quarter, they're down. consumer, probably low double digit earnings growth. health care another area where we will see 7%, 8% growth. so, while a lot of people like it now, if earnings come in and deliver above expectation results, the multiples that come in as markets pull back, there's still good upside, particularly in housing and companies that have a strong presence in e-commerce. you mentioned health care, which i find interesting considering there's been a lot of trepidation, especially with the biotech stocks. you're still an investor in the group. we selectively buying the core parts of health care companies, you have to remember this is one of the best performing sectors over the past four years. i think given up the pullback, there's great opportunities. >> you started by saying clearly that corporations feel good about where they are. >> yes. >> the rubber hits the in
terms of whether there's going to be a slowdown. i don't know how relevant it is, on thursday we will get the new cost of living adjustment based on inflation for the 70 million people on social security. the indication is that inflation is so low they won't get a rise at all. >> yeah. >> at a time when health care premiums are rising. presumably a quarter of the population will have to cut back expe expenditures in some form to make ends meet. how relevant is it. >> we are seeing minimal wage increase. you look at what companies are saying that pay minimum wage, we've seen increases across the board at companies like mcdonald's, walmart and target. there's other offsets out there like gasoline prices. many expected those to rise. that doesn't appear to be happening. overall the environment is still
mixed. >> what does that say about consumer discretionary? >> be selective in consumer discretionary. the housing sector and e-commerce takes shares. >> one of the overarching themes for the market, commodities. glencore selling two more copper mines, trimming production. does all of this look like a bottom is forming? there's a discussion in the last hour about these moves and whether they suggest the bottom is in. >> i think the bottom is forming. i would really be surprised to see oil go below $40 a barrel. as you say the supply/demand dynamics are changing. it does feel like the market is getting better. i think things will turn around for the oil producers in the first quarter of 2016. >> we have some time to get there. thank you for joining us, both of you, on today's markets. market keeping one eye on
politics on capitol hill, no news about who could replace john boehner as speaker of the house. john boehner is reportedly pushing for paul ryan to run, though the statements from ryan's office suggests he still doesn't want the job. is that true? what is next? republican congressman mick mulvaney will weigh in when "squawk on the street" comes right back. active management can seek to outperform. that's the power of active management.
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much discussed and reported on right here last week. dell's purchase of emc a reality in what will be the largest technology deal of all time worth roughly $67 billion. most of that coming in the form of cash to emc shareholders, 24.05 a share in cash being financed incredibly in the capital market, also the inclusion of a stock that will track the performance of vmware. in fact track the performance of its public equity. under the deal, dell will buy emc which owns 81% of vmware, then take 65% of that 81% or let's call it 53% of vmware and have that track vmware's public
equity which represents 19% of the ownership in the company. dell will control vmware and continue to have about 28% of the shares in-house. in a strange way it will force dell to start filing public statements again in terms of qs and ks because it will be considered a common stock of dell if you follow me. the most important part of the consideration is the idea that it will trade close to the public equity of vmware. it's the belief of those who structured the transaction that given the additional liquidity created, given the fact that it has a public board, and given the fact you have a common equity out there, they will trade close together. that's the key here for delivering value to emc shareholders who will have an opportunity to vote on the deal. one of the largest of those, elliott, has come out in favor of the deal. they have been pushing emc for quite some time to do something. emc and dell have been talking
for a year to get this deal done. earlier we heard from michael dell on cnbc talking about the f benefits that will be brought to democrat because of owning vm wi vmware. we also built an incredible server business. where vmware has an unbelievably strong position, the way to connerization, which vmware is also well positioned for, you are seeing the anchor tenant in all of that is the commute engine. they are talking about at least a billion dollars in revenue synergies as a result of controlling vmware. cost synergy is not detailed but they are expected to be significant. that becomes important when you take on an additional $45 billions in debt.
that's what dell is going to the capital markets for. banks have lined up to commit that in bridge financing that will be replaced by bonds. the bank lists goes on for quite a few pains. it is certainly a reflection of strength in the debt markets at this point. much of the borrowing to be done as investment grade, not high-yield. it will bring the leverage ratio of dell up to four times before those synergies. still, enormous. $3.5 billion is what i'm hearing will be the additional equity contribution of dell and its partner silverlake. they also brought in temasek, and there's the go shop here, for 60 days, they can scout a better offer out there. unlikely they will find one. elliott signing on believing this is the best they can do at this point. we'll see how dell, which has been a private company now for two years, we'll see how they operate as a much larger public privately controlled public entity, carl, is what we will
call it. >> we're going to need an acronym for that. that will be fun to watch. congress is in recess this week. still no resolution from the republican conference as to who may replace speaker of the house boehner. just who will step up to reunite the party? joining us is south carolina republican congressman, nick mulvaney. good to see you. good morning. >> good morning. thanks for having me. >> we're waiting to see what paul ryan says. assuming he does decide to put his name up s your caucus open to hearing his pitch? >> sure. in fact, we would welcome paul coming and meeting with the group if he decides to run, we are supporting danny webster. paul is the type of guy who has credibility in a bunch of different areas across our conference. could be a unifying force if he decides to run. it's up to him.
we'll see what happens. >> what would he need to say to nail the deal, close the deal? >> that he will change the way the house is run. that's what this is about. it's a poorly run organization. we're getting bad results as a result we want new leadership, we want new leadership style. if paul can commit to that, he can be successful. >> you think congressman webster has a shot. people are calling him a dark horse candidate. he's been in the house since 2010 and may lose his see the in 2016 because of the whole congressional district of florida all those lines being redrawn. >> you don't have to be a member of congress to be the speaker. daniel has something that a lot of folks don't have, credibility when it comes to institutionalism. he ran a transparent open shot, a member driven operation that was actually able with a narrow republican majority to overcome a lot of vetoes from a democrat
govern governor. he's proven the system can work. i recognize the fact he's a dashdark horse. you can't count him out. >> how does paul ryan longer term you are night the whole party. charlie dent said yesterday on "meet the press," if he has to do a deal in reality to get things done on the debt sealing with the democrats or other measures, isn't he going to alienate you guys that honeymoon immediately ends? >> charlie and i have had this conversation 100 times. we recognize the fact we're a minority within the party. we want to have our say. that's the difficulty here. we don't expect to win more. we expect to do better, but we have not been participating at the leadership table. expectations are for paul do better than john did, but also to allow the conservatives to be more actively involved in what the party does.
we have an organizational problem that needs to be fixed. >> shorter-term, do you buy this line that boehner suddenly has more room to create a more expansive deal before he's done? >> no. i don't. i've been against lame duck operations for a long time. that's where john is now. i don't think it's right for him to be trying to negotiate a two-year deal with the president. >> how willing are you to use the debt ceiling if you have to? >> you go back throughout the past couple of decades, the debt ceiling was a result of negotiation, the balanced budget was a result of negotiation. i described appropriations season as christmas, the debt ceiling as late january when the bills come in. we have to figure out why we're always in debt and always in deficit and the right time to have that conversation is over the debt ceiling. it's the right conversation to have at the right time. >> what about the collateral damage that comes from the
uncertainty and nervousness. we're here at new york stock exchange. we'll feel it if it comes down to the wire. >> did you real well last week during the chaos in washington. so y'all know how this works. the markets get it as long as we don't go up to the last minute and not tell people anything. we'll be fine if we started now explaining to folks and the markets what we wanted out of a debt ceiling, welfare form, some type of social security disability insurance reform, those types of things. as long as we're transparent, i'm not worried about shocking anybody. >> you can't compare the chaos of last week to the chaos that could ensue if congress could not raise its federal borrowing limit. >> that's actually not right. that's one of the things conservatives have pushed back against under the current leadership. no one has suggested we wouldn't be able to pay our debt. if you listen to the obama administration, they moved away from saying we couldobligations.
the debt will be paid. that type of rhetoric that our leadership has been using against us that got us to where we are. that temperature will come down and language will change. if everybody knows that, why on earth would the president give ground to you. >> what way? >> if everybody knows that the bills will be paid and the debt ceiling would be raised, why move at all? what does he have to lose in that environment? >> because he doesn't want to have a discussion about welfare reform. he doesn't want to have a conversation about that. why would you want to scale any of that back at all? the president is in it the catbird see the, but it's been a result of bad management mostly by the republicans in the house. >> it's going to be an interesting few days for sure. we appreciate your time. please come back. >> thanks for having me. >> two weeks away from the cnbc republican presidential debate live from the university of colorado at bolder.
>> good morning. >> what do you think of the emc deal? >> there's a lot of pressure in old line legacy technology companies to figure out what's happening, next generation, companies will come together. this is probably just the beginning. >> 60-day go shop. anybody else big enough out there? >> there are people big enough? >> do you partner with any of them. >> we partner with dell. >> so presumably that wouldn't change in the new environment? >> i don't think so. >> let's talk about the book. why now the need to write a book, what does it say and who are you sending it to? >> today we published a book with the new york stock exchange, a guide for c suite executives and directors of new york stock exchange companies on cybersecurity. in every boardroom around the world, cybersecurity is one of the top three topics and folks
are wondering what to do about it. we're trying to give them education that they can understand. >> that suggests they really don't understand it. if you could pick out one thing from the book that would surprise most people what would it be? >> there's three basic tenants. that legacy technology is clearly not working. that's not a shock, but a wake up call to say you need to understand this as part of your fiduciary duties. the second thing, make sure you are training your people. what are the questions you're asking? and to make sure we're sharing information as fast as possible. >> reuters put out a story today suggesting that companies are struggling now to find adequate insurance. that deductibles for cyberattacks are growing and there's a general cap of 100 milli million. where are companies left knowing they cannot plug those gaps?
>> it means security -- or that insurance is not answer to a security issue. the reason you can't get insurance at a reasonable rate is that the insurance industry knows how to manage risk. they have no idea what the magnitude of this risk and what do about it. >> i want to ask about one specific risk that you guys identified in ios devices, china ma malware. >> apple has a secure proprietary operating system, but this shows things under someone's direct control, but users can be jailbroken and nontrusted sources are invited into their device, and that can infect whole enterprises. >> do they have a handle on this? >> i think they have a handle on
this. they're good and disciplined about these things. we notified them in advance and they're working hard to make sure they put measures in place. >> is there an engineering leap that needs to or can be completed in order to get a leg up on hackers at large? >> generally it goes back to the idea of we're fighting a battle of 25 years of legacy technologies coupled together and the attackers don't have that disadvantage. we have said start from the ground up -- >> but you won't turn all those servers into trashcans. >> no, it takes a long time. when customers purchase our technologies, they realize it's a long cycle. >> at the end of last week, there was a report that nuclear operators were kidding themselves saying they were properly protected. where are we on this issue?
is this something that can be sorted, a war that can be won or does this go on and on? >> when people think about some concerns in cybersecurity, there's businesses that power utilities and nuclear places, there's not a lot of information sharing going on. >> is this a war we can win? will it be a big issue in five years, ten years, or more of an issue? >> this will be with us for a long, long time, decades. we'll know we're winning coming back to the insurance question, when you can buy cybersecurity insurance that pays out with the deductible that you can afford without giant exemptions, that means we have handle on the risk. that's back to this brook, get a handle on the risk factors. >> good to see you, mark. mark mclaughlin, ceo of palo
a anguk deaton won the prize. he's a professor at princeton university. iraq releasing footage of iraqi jets carrying out air strikes targeting isis facilities, most of the strikes were in ramadi but also north and west of the capital of baghdad. southwest says it expects its technical systems to perform normally today after glitches led to some 500 delays on sunday. it had reported problems that prevented some customers from checking in online for flights and also booking new travel. it caused a lot of long lines at the airport. a parade of james bond cars drove along on sunday. the latest vehicle driven by the spy, the ashton martin db10. the 24th james bond film is scheduled for release in the u.s. next month. that's the cnbc news update this hour. let's go back to you guys at the
nyse. >> a two-seater to boot. a recent financial turmoil has made people in this country more negative in their outlook to the stock market. steve liesman is back at hq with the exclusive results from the cnbc all america survey. good morning. >> we've been talking about this decline in optimism in the united states when it comes to the overall economy. one clear reason for it from our survey is the decline in attitudes towards the stock market, the recent volatility, the resent plunge in stocks taking a toll on america's views on the economy and also on wall street. look here at what's happened. we separate this into two groups. one is all adults. you can see they're down near some of the lowest levels, about whether or not this is a good time to invest in stocks. just 33%. a pretty good plunge from the june survey. we also have the financial elite, those with incomes up over 100,000 and more than 50,000 in the stock market. they came down as well.
56%. a couple things on this graph is interesting. if you take a wider view, you see the all adults are not effected with what's happening in the up and down in the stock market, the financial elite are affected. when we look deeper inside and which demographics lost that optimism, you see here on the next graphic -- maybe we don't have it. the financial leaelite, optimis down close to the 50s. if you have any investment at all, you declined. you expect higher wages in the next year, your optimism fell on stocks, those 65 and older also declining on stocks. that has an effect on what people think the best investment is. you can see this interesting chronicle here of peoples views on real estate. climbing almost every survey from 2012, 24% say real estate is the best investment. now to 39%. look at what's happening between
this tussle we have over time between gold and stocks. folks, this is the best greed fear indicator of the american public i can possibly think of. during the worst of time, stocks favored 19%. gold, 37% it came down slowly. at one point in time stocks beat gold. now look what happens? since the stock market plunge, 25% now say gold is the solid number two spot. 25% say gold is the best investment. 21% stocks. we don't nk this is one of the indications out there, general views of the american public on stocks and the best investment out there. >> gold, which has been doing well. >> they got this one right. >> we'll see if that sentiment shifts given what we've seen in the markets which has been a strong comeback. thank you. >> pleasure. we'll hone in on the big banks. their reporting earnings this week. on the phone to give us a
preview is gerard cassidy, managing director of rbc capital market. banks have been underperforming in this market rally. is it that the estimates for earnings are coming down or the hope for higher interest rates from the fed is getting pushed out longer. >> i think it's a combination of both with the expectation that the fed may not raise short-term interest rates in december, it will affect 2016's earnings estimates. so we expect lower estimates for 2016 following the third quarter results which start, as you pointed out, this week. >> i'm looking at the estimate force ba s for bank growth, 8%. those estimates were higher. why are they coming down for the current quarter? the trading activity? >> it's the trading activity for the large banks, names like jpmorgan, citigroup, goldman, morgan stanley will be impacted
by the weaker volumes in the fixed income area. for the other banks, it's primarily the interest rate environment, the yield curve is flatter and the expectation that the fed may not raise in december is affecting these estimates. >> when the chairman of barclays talks about the need for european rivals to do mergers in order to better fight against what he says are the u.s. investment banks becoming stronger and their franchises deepening around the world. do shareholders in this country potentially underestimate the value of those franchises moving forward as time ticks by and we go through, say, another business cycle? >> i think you put your finger on it. the europeans are still struggling with their recovery, particularly in the capital markets. you've been noticing recently the restructuring that credit suisse and deutsche bank are doing. investors are not looking at it
as deeply as they should be but i think over time they will. >> back attorneys for a moment. the u.s. economy has been doing better. i would think that if you're exposed to auto loans, mortgage loans, credit card loans, is that the sweet spot right now? if so, who benefits the most? >> i think it is the sweet spot. on friday afternoon the federal reserve releases the weekly data that gives us loan data. last week in the loan growth we are now as an industry growing loans at about 8% on a year over year basis. commercial lending in particular is very strong. it's growing at double digits, 10% 11% on a year over year basis. the consumer is picking up as well. names to look to are pnc, bb & t and wells fargo. those will be direct ben fish beneficiaries. >> i know you like pnc, but you also like citi and jpmorgan.
why are those the ones to have? >> the larger banks, to us, are very inexpensive. particularly citi group, trading at a discount to book value. we think senior management is doing good job turning that company around. we'll see continued benefits from improvements they've been laying out. jpmorgan is the dominant capital markets player around the globe as well as being one of the strongest banks in the united states. >> going to be a busy week. thanks for joining us. gerard cassidy, rbc capital markets. >> you're welcome. up next, after a rough week going public, ferrari sets up for a $1 billion ipo. will this breathe life into the ipo market? kid: hey dad, who was that man?
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welcome back to "squawk on the street." shares of eli lilly slumping. lilly stopped development of an experimental heart drug after it did not show enough efficacy. the drug was designed to reduce the risk of heart attacks by raising the level of good cholesterol. shares are down about 7% in early trade. david? >> this morning, ab inbev increased its offer for sabmiller from what had been 42.15 to now a 43.50 offer. no word at this point from sab and its board of directors in terms of whether that officer acceptable or something it will reject. perhaps that may be taken as
positivet leaks of the potential offer may have made ab inbev get ahead of the board. all of this comes as result of ab inbev's to own sab in what would be at least a $104 billion deal requiring divest titures around the globe should they be successful and in the face of a countdown that happens noon on wednesday for a potential deadline for this deal not to happen. that's the date to which sab has the opportunity to say no or the so-called put up or shut up on abi's part. in it rejects, abi will go away unless that put up or shut update is extended by sab and at sab's request. perhaps that will happen at this point. perhaps they will have a negotiated transaction or perhaps the deal will fall apart entirely. many investors scrambling to figure out the odds of which way
it will go at this point. of course, we'll be following it closely to see. the keys continue to be the santo domingo family led by alejandro santo domingo. we talked about him a number of times, what their position will be. they remain on the board of directors at sab and whether or not they are in favor of this latest offer, 43.50 cash for most shareholders of sab. but the significant stock component with a small cash component going to altria and the santo domingos who are thought to want that part of a deal because it would be a lot more stock and therefore tax-free. all right. >> how many more tries does brieto have? >> not many. at this point their hope is to get sab to push the so-called put up or shut update. deals of another kind, watching the ipo market hitting
bumps in the road last week but ferrari setting a $1 billion ipo today. we missed you last week. >> you would think why -- three of the biggest deals of the year are occurring in the next week in the worst time for the ipo market. it's mystifying, that's why we're surprised, those of us who watch the ipo market, about ferrari's announcement. everyone thought they would put it off given the market conditions. no, as you heard, they dropped it today. the road show beginning today. they'll raise about $1 billion in terms of the deal. look at the numbers. 17.2 million at 48 to $52. the important thing here, likely to be pricing next week. that's what i'm hearing. not official. pricing talk is on the 20th, and go public on the 21st. that's a bit of a surprise. some people thought this would be put out for some time. look at the shares and where it's going. they'll float about 10% of the company. ferrari family will retain 10%
ownership. fiat chrysler will keep the other 80%. but announcing they will redistribute the remaining 80% to shareholders early next year. that's the plan. meantime the market ahead of this has to absorb the biggest ipo of the year, two of the biggest of the year. the first being first data, the big payment processor, 160 million shares at 18 to 20. so $3 billion the mid point. the second biggest one with, albertson's, food and drug retailer, that's coming. that's around 1.6, $1.7 billion. the number three food and drug retailer in the united states after kroger and walmart. albertson's bought safeway. the business has not been very good. last week there were 11 ipos that were supposed to price. only five of them came. of the five that came, on average, they were 20% below the mid point. that's a lousy ipo market.
the only thing -- put up pure storage. pure storage did price at the mid point, that was $17, but think you got any pop? it's $17 essentially. not much of a move on the upside. a lot of people feel the need to get the -- what's out there into the public realm right now. ipo business so far, look at the ipo/etf, basket of about 50 recent ipos, down about 6% on the year, underperforming the s&p 500 by 3 percentage points. ferrari is a surprise and people need to get this stuff out there. a lot of floating rate debt. >> so what you're surmising, a lot of bankers behind closed doors are saying this is the best window you'll get for some time. >> i think that's probably right. given especially two big lbos out there, first data out there and albertson's. a lot of money, floating debt, and people are concerned about higher interest rates. >> so wednesday night?
>> wednesday night, the pricing for both albertson's and first data. the middle of next week is ferrari. ferrari doesn't have the numbers quite as big, but high-profile. these are three big names so they're getting a lot of attention outside the ipo world. i'm rather surprised ferrari announced the deal. >> only 10% of the capital. >> they're floating. but they'll distribute the other 80%. the family keeps 10%, they'll distribute the other 80%. >> one of the great tickers of all time? >> right. this is a critical moment for the ipo market. the stock market has to hold up for the next week and a half if it starts falling apart going into tuesday night -- >> they're going to drive ferraris into the new york stock exchange? >> i'm calling around. i'm hopeful something interesting will happen. remember when harley did the w
new -- >> i'm not sure you could get a ferrari between the posts, could you. >> we had the budweiser horses here. >> this is a serious trading floor. >> we're serious reporters. >> you don't want a big party. >> i'm in favor of anything. >> the seaworld. >> we had penguins. >> a good time on the floor. thank you, bob. up next, the messenger service that competes directly with the bloomberg terminal just got another $100 million in funding from new investors including google. the ceo will be joining us. st
the secure cloud based messenger service symphony just raised another $100 million round of funding. the company competes with the bloomberg terminal launched its service of course just last month. joining us now on the news line is the ceo of symphony communication david gurle. welcome to the program. >> thank you for having me. >> it is it true to say you were only after $50 million? >> only 50 actually. we've had an amazing round this second round of symphony. we were looking to add about $50 million and the demand was so high that we went beyond over
$100 million raised right now. >> what are you going to use the money for? >> you know, we received tremendous interest since september and way before. with so much pent up demand we decided it was time to double down and invest on products not only but also in sales we're going to offer internationally, we are already present in new york, london and growing in hong kong and singapore. going australia and japan. south america. so that's where we're going to spend the money. >> you know, david, it's interesting. you're little more than a year old. this is your second round of funding. as you know only too well. the first round of funding was very much aimed at a lot of wall street operators perhaps for security, perhaps for compliance. this has a different headline because google is involved. and i wonder if you can talk us through how maybe your aspirations are changing and why google would be interested in
this way. >> you know, our aspirations have always been the same. we want to be the choice for your business communication where the trusted infrastructure you can trust the content. the best way to start such an initiative is in financial services. financial services is demanding. the barre is very high. the expectations are also very high. so you need to make sure you go in this market and earn your passport to go beyond that. and so that's reason why the original round of investments were brought together by all this wall street and citi firm. product we looked at the section of other markets there are many other opportunities for people to use symphony and google and other players we are actually very interested in looking into symphony and see how it could
create that standard for business communication. so that's been the rationale for our second round. >> your billed, david, as an company trying to be an alternative to the bloomberg terminal. is that really what you're trying to do? are you really going after the terminal something thomas reuters has been doing for at least a decade? >> i will let somebody else do that for the next decade. our vision is way beyond the terminals which is only small users in the market. clearly there's an overlap. i'm not going to argue about that. but many other areas in financial services people need trustworthy platform. our pricing go to market strategy is to make sure every institution can use symphony across the organization. >> the product itself i understand is available for anyone to use. but if you want to get the enterprise level security, then you have to pay a fee. i just wonder five years down
the line, david, where you think your service will stack up in the public consciousness against e-mail, against skype, against social media. i mean, how big will it be? and what will it be like? >> we want it to be very big. we have ambition to be very big. the round we just raised from the people we raised demonstrate ambition. you know, we are secure not only for individual users but also -- the payment our customers make is for compliant capabilities so they can meet regulatory requirements. and we want to be one of the big names in the five to ten years to come where you want to communicate you'll use symphony. >> we'll leave it there soon. talk to you soon. david gurle, the ceo of symphony as it raised $100 million. >> coming up next on "squawk alley," what the largest tech deal in history means for silicon valley. we'll talk to the co-founder and president of confide about dow
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♪ good monday morning. welcome to "squawk alley." joining us this morning is jon brod, confide co-founder and president. john, cay kayla tausche are out. first up, a lot to talk about in tech namely the largest tech deal in history dell agreeing to buy emc in a deal worth $67 billion. michael dell will remain ceo. he talked about their