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tv   Closing Bell  CNBC  October 22, 2015 3:00pm-5:01pm EDT

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it is unclear as to whether or not analysts or investors will be able to ask questions. that we have to find out. >> yeah, and three big earnings, which one are you looking forward to the most tonight. >> >> all of them. all the action tonight at 5:00. >> all right, melissa, thanks very much. busy day, "closing bell" starts right now. hi, everybody, welcome to the "closing bell" i'm kelly evans at the new york stock em changes. >> i'm scott walker in for bill griffeth. valeant getting crushed for the second day in a row and community health sinking on separate news. we will break down both stories, talk to the analyst who downgraded the healthcare sector last week and find out what she's watching now. >> take a look at this dow, though, a nice rally in stocks today and mcdonald's lifting the blue chips after a strong earnings report this morning and optimism over their all day breakfast endeavor. apparently they're using butter
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on the egg mcmuffin and people love the taste. mcdonald's up almost 8%. human move. >> some competition in the breakfast space, dunkin' donuts now lower after reporting its earnings. ceo nigel travis will join us on a first on cnbc interview. >> the company formerly known adds google, alphabet will report, amazon, microsoft, at&t and more. we will bring you instant analysis as soon as they hit the tape. >> we want to begin with today's double whammie in the healthcare space. valeant pharmaceuticals and community health getting slammed. meg terrell, let's start with the valeant. >> the latest is valeant is going to hold that conference call on monday morning. we are absolutely going to be listening for that. it will be interesting to hear. we thought it might be a good idea to take a step back and look at the main issue and that is the use of specialty pharmacies. this is a confusing thing. we thought it would be a good
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idea to walk through how specialty pharmacies were used. they were originally used for specialty drugs that needed special handling, however, they have been adopted by companies like valeant to streamline offering high priced drugs to patients. it starts when your doctor writes a prescription, they might hand you a pamphlet saying call this specialty pharmacy. patient calls up that pharmacy on the phone, they facilitate everything for you, figure out your insurance, as long as you don't have government insurance they will make sure you get copay assistance from the company so you might be only paying $10 for a drug that could otherwise cost you a lot out-of-pocket, the door gets shipped immediately to your door and gets to the patient. behind the scenes the specialty pharmacy then handles the reimbursement process with your insurer. you never have to deal with that at the pharmacy. they try to get reimbursement, as much as they can and return that to the drug companies. really stream lining this from the patient perspective. that patient is never going to the pharmacy counter and being told that their drug is really
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expensive. that keeps doctors prescribing drugs. so that's essentially what's going on with these specialty pharmacies. bmo coming out today saying the way valeant has this relationship with its specialty pharmacies raises questions because it seems to have a controlling interest. he also says this analyst at bmo that they seem to be aggressive and questionable in their relationships with specialty pharmacies. >> moving on to another drug company story, we all her turing pharmaceuticals which was the cross hairs for raising it's drug daraprim by 500%. they said they were going to lower the price. now, that was about a month ago. they haven't lowered the price and today a group of more than 150 health groups has come up with an open appeal to the company saying they need to lower the price of that drug. they also need to increase access to it and increase the transparency around their patient assistance programs saying that patients still can't get access to this drug and it's causing a lot of healthcare concerns, guys. >> me go, we should vote we did
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invite turing ceo on to this show to talk about the valeant news but he decided not to join us because he didn't want to discuss his own company. >> mean while, everyone is trying to back out as you had explained with this valeant story figure out is this an issue of the structure and delivery of healthcare today? is it specific to valeant and its pricing models? where do you think most of the focus is going to be, especially from feds going forward? >> it's really been fascinating, yesterday sit ron comes out with its report, they are a known short seller and is shorting valeant stock alleging there is fraud in the way that valeant is dealing with these specialty pharmacies. never has said how they think the fraud is being perpetrated but what is happening is people are taking closer look at this relationship valeant has with these specialty pharmacies, which is not illegal, these specialty pharmacies is r. not an inn illegal thing to do, but
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people are concerned that they might have some kind of a control in these specialty pharmacies. all sorts of other companies are coming out and saying even if we do use specialty pharmacies we don't own them and have no controlling interest in them. this seems to be what is starting to concern people. this area that's not very well understood in the healthcare space. people are just starting to learn about and it's causing some concerns. >> let me switch tomorrow picks to another healthcare story today. and a significant one at that. community health getting absolutely hammered today along, i might add, with a number of other hospital stocks and some healthcare stocks, tenen, hca, but community health is the big deal, down nearly 37%. >> the company put out third quarter numbers that missed expectations both on ebitda and revenue. this hopes a week report from hca. analysts saying the entire hospital sector is looking bad right now. as you pointed out, scott, a lot of hospital stocks down, not just community health but hca,
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life point, tenet, all of these companies in the red today, a lot of concerns about the vitality of the hospital business right now. >> i guess we don't know the answer, but what this market seems to be saying is whatever boone hospitals got for years from obamacare seems to have passed or they might negotiate lower rates. there does seem to be a tide turning here. >> it seems that way. analysts have pointed out that payer mix as an issue as well as higher labor costs. that's kind of interesting as well. so exactly what is happening here for hospitals and is this a temporary thing or more systemic. >> if it were all higher labor costs that would be a great sign for the broader economy. thank you very much. joining us now with our "closing bell" exchange today we have mark iebel from russell investments, jonathan corp. na, our own rick santelli joining us as well as he usually does, mark, let's start with you, you're overweight, healthcare, what are you thinking about val
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yan, what are you thinking about the hospitals and what are you thinking about your portfolio? >> yeah, our managers' positions aren't as inch those names. you're right, healthcare for our managers has been an overweight for a while, they've done very well with them. proactively bringing it down over the last few months and moving it more into financials, that's what our managers have been doing, most of our exposure is in the bigger, quote/unquote, safer pharma names, names like merck and j and j. been bringing that exposure down and not the kind of names we have been talk beinged. >> ely lilly having a pretty nice day. why did you guys rotate? what did you see that apparently huge hedge funds, a lot of retail investors, the broader public missed? what transformation did you spot, why these names instead of biotech and the hospitals? >> well, i mean, healthcare has been an area that that has provided a little bit nor everybody. if you want ad more consistent
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growth story you could go there, when biotech was undervalued it was a name from our smaller cap managers were there. the biotech if there was anywhere we thought there might be a bubble in this market of it certainly biotech. that was rotating out of our positions and selectively trimming the other ones of. it was a matter of maybe getting little more cyclical, hoping for a market upturn around moving away from the defensive names, but it was moving away from the biotech names that had done so phenomenally well our managers moved out on valuation. >> why is the market up the way it is today? there was a suggestion yesterday that the way stocks closed selling off into the close that today could be kind of an ugly day and in fact it's the direct opposite. >> that's what we were expecting. this market is showing us it's got a short-term memory. a day to day and turning into a trading market as opposed to investing market. bad news yesterday is not translating. >> bad news today. if we've gotten a group of
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stocks the past few trading sessions that have had negative reports a good report coming out this morning is going to help that market. interestingly enough not a lot of earnings coming out tomorrow, that's going to move the market. we're going to be able to see if it can trade without the training wheels today. >> how much of this is mario draggi i lugd to maybe looking at these price easing in december. it's up a point and a third. >> let me think. all of t absolutely all of t all of t i mean, come on. >> come on. give mcdonald's a little bit of credit. come on. >> whether it's the way oil turned around or the companies you were just discussing or mack d's, yes, probably there is a story to each of them, but the overwhelming story that put prop letters on the good stories and rocket thrusters on the bad stories is super mario and what he is' doing. listen, how many times have we
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been up 300, the dax was up 2.5% and all this and interest rates are going down but there was one other big story today, that's a little bit in the weeds, but i would say -- and, listen, i know i have my views on this, but about half the traders i talked to that deal with the short end say the first political sal voe by the administration was fired off today by jack lew canceling a two year note auction due to debt ceiling auctions >> did they have to do that? >> they are going to tell you they do, there's debate whether they are telling you the way it really is. >> that auction was canceled, they cited the upcoming debt ceiling as a reason for it. jonathan, how concerned are people down here about the upcoming ceiling? >> very concerned about it. it seems like, you know, our investors have been trying to find anything to grasp their hands on. next week we've got fomc, that's going to be our next top topic we will talk about, that ever going soap opera that's happening in washington.
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investors are looking for some sort of direction, whether they are looking for something positive or negative to really base how to play the end of this fourth quarter here. >> i asked -- i'm sorry. >> i was going to say to your point you brought up mcdonald's this morning. now healthcare is barrel in the green for the year. this was one of the most moved, most crowded spaces in the consumer discretionary. mcdonald's might technically be in the staples but it is the u.s. consumer. >> mark, let me ask you, yesterday i was thinking because the market has gone so far in a relatively limited period of time, certainly from where it was, is a retest in the rear view? i mean, is it still likely or even possible we go back and retest? >> i think we had our big test in august and september. yeah, you certainly would expect a bounce up and we've seen that, but i think going into the rest of the year, particularly with the season that we are entering, the market i think -- today is a good example. any sort of news that it perceives as positive -- and i agree with rick, today is driven
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by the ecb. this market is look to go move up on good news more so than maybe trading down on negative news. as running a multi-asset portfolios, we think the u.s. is probably second and emerging markets despite the fact that their valuations are so cheap probably a little bit longer, but the longer your time horizon good deals there. we think it plays well into multi-asset, but we think this market overall in equities is looking to rally into the year, not sell off. >> because we started this conversation with healthcare, let's come full circle. i want to call all of your attention to shares of two stocks right now, that being abvie and gilead. they are on the move and going in very different directions right now. the fda apparently warning of serious liver injury or liver injury risk with abvie's hepatitis c treatment. so that is weighing on the stock of abvie quite substantially.
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gilead also has a hep c drug and that is why perhaps that stock is reacting in the opposite manner. dom chu is back at our head quartz with a news alert on this. >> you've hit basically what they have right now is these two stocks moving in opposite directions again because of these headlines coming across that there could be, again, some risks, liver risks associated with some these treatments from abbvie with regard to its hepatitis c treatments. now, again, a competing drug or competing set of treatments is made by a slue of other people out there, drug companies, however, this one here, gilead responding sharply to the upside, grabbing a lot of attention from traders heading into the close. abbvie shares on heavy volume to the down side, down pretty largely here, about 12, 13% at the last check, now down 10%. you can see gilead up by 6, they are hovering near their session high. certainly two stocks to watch as we head into the close on what's
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been a very eventful to say the least couple weeks for biotech, healthcare and related stocks. >> mark, did you guys have exposure here? >> i don't know if we have exposure but i think it's a great example of whether it's fda news, whether it's if you hit your earnings number or not and today we saw a slue of it. if your news is good and you hit your earnings number you're going to get rewarded in stock and if you don't your stock is going to go down. we are reentering into an environment that is better for active managers when you start getting this different relation in names and those two examples you just gave are perfect example they are going two different directions based on the news. >> ebay today up 13%. >> all spaces, absolutely. >> gnc had has of course issues, down 19%, stock scott. >> absolutely. jonathan, thank you. >> investors are looking at individual stocks now. >> you have no choice. >> you're being ed to. >> what trend are you buying anymore? >> you're not buying that trend.
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>> you're not. >> you're forced into looking at individual stocks on an individual basis and i think in the long run that might be better for overall companies. >> jc, thanks. rick, thank you as well. >> thanks, everybody. 45 minutes to go into the close. this market weighing all of this. still up 302 points, the dow is answer jay, s&p up 31, nasdaq up 70. even as oil is in the green today and the dollar intention up a point and a third. >> up next, the dunk inn brand ceo on his company's earnings report. find out how he plans to fight rising competition for your breakfast dollars. >> brace yourself for after the bell results, amazon, alphabet, at&t all among the big names reporting. we will give you their numbers and also have instant analysis as soon as they hit the tape after the bell. >> we will have more on gnc which i understand has been halted. you mentioned the news a moment ago. we will try to get a little bit more once that stock reopens about the situation surrounding
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many people looking at the strng of the dollar citing mario draghi's comments this morning after the european central bank's meeting in which he seemed to indicate more stimulus may be on the way in december. >> this just out, a statement from the u.s. attorney's office for the southern district of manhattan saying essentially the u.s. attorney will move to dismiss the charges against convicted insider trainer michael steinberg as well as six other insider trading defendants in the wake of legal developments that have essentially narrowed the scope of what defines insider trading in the new york area. there have been a series of court events in the last ten months or a year involving a circuit court taking this narrower definition. the justice department tried to appeal that up to the supreme court but the supreme court declined to hear a key aspect of the case. one of berrara's seminole cases against michael steinberg is now
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going to be dismissed at his own behest along with six others, steinberg had been sentenced in 2014 after a conviction at trial to three and a half years in prison. certainly a victory for mr. steinberg. we've reached out to his attorney for comment and haven't heard anything yet. but again another impact of these landmark decisions around insider trading in new york which is the venue where these cases are probably most often brought. >> what a big, big deal. thank you so much. kate kelly with the late snooes let's send it over to dominic chu for a news alert on gnc. >> the shares are halted again. they've been halted for six minutes or so, they are down 14, 15% heading into a halt. this time this halt is for news pending. again, there has been a request to halt the shares for pending news. we do not know what that news is yet. to recap the earlier headlines the oregon attorney general has filed a lawsuit against gnc for possibly knowingly selling drugs, again, supplements
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containing certain synthetic drugs as part of this particular case here. the shares spiked sharply lower on those headlines, now this halt is for pending news. we will bring that you news when it becomes available to us, guys. remember, the firm did already say that gnc does not comment on pending litigation so we will see if there's any news that come out of it. back over to you. >> unless gnc changed its mind and feels it needs to respond, thus the halt in the stock. dom chu, thank you so much. >> mcdonald's shares hit ago record after betting than expected earnings reassuring investors about their turn around plan. >> along with that earnings beat and probably more importantly the fast food giant saying global same store sales rose for the first time over a year, u.s. same store sales rose for the first time in two years. china comp sales hurt by a
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supplier issue in that country drove the international gains. the u.s. easter brooke credibility early results from his turn around strategy that's aimed at improving quality, service and creating a simpler menu. the positive sales momentum continues in the current quarter, helps to send mcdon to an all time sigh. third quarter profits of 1.40 a share beating estimates by 13 cents. the china rebound, a lower tax rare and smaller share count. the firm expecting currency head winds to impact shares by 3 cents. it says so far it's been a very successful rollout. kelly, back to you. >> thank you, mary. we turn to noer earnings mover now. dunk inn brands actually down near 4% today. the company did beat earnings investments but some investors are disappointed by the slow sales growth. >> joining us is dunk inn brands ceo nigel travis, mr. travis,
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nice to have you on today. welcome. >> thank you, scott and kelly. good to be back. >> so the stock, you know, despite the fact that you beat, although it is important to note that i think it was the very first day of october, in fact, you guys warned or gave pretty light guidance what the street thought was light for the entire year. where are we now in the dunk inn story? ? >> i think we've actually moved forward. we had our investor day a couple weeks ago, that's what you referred to, we had our earnings today. as you see we beat the street expectations. our earnings for the year we are completely on track with what we've guided all year, our comp guidance is completely consistent with guidance for the year. we've had many discussions with our franchisees, we think we are seeing momentum of putting things back into our menu, we have excellent promotions that we are working on, got the macciato doing very nicely.
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we have some new doughnuts going out, and we have value promotions and on top of that the very successful perks program grows and actually has got to a number now way above my expectations. it's all about value and our franchisees understand that. >> i have a theory, nigel, just from observation here between you, mcdonald's, starbucks, what they have done is invest in their workers. notably raising wages, offering certain perks. to me the biggest difference service wise is your service often tails theirs, what they can offer. i think you mentioned pressure from wages moving higher in many parts of the country. are you ready to get ahead this have issue and make big investments in your work force that may pay off down the road? >> okay. so the first thing, kelly, is our work force is run by our franchisees, we've worked with them and talk being labor
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turnover, great employees in an environment that's become a little bit more difficult because we're close now amazingly to full employment. so in terms of service, we work with our franchisees every day, we've moved the needle considerably in the last few years. yes, it's flattened and it's only flattened in terms of the progress. we think we're going to see an upward trend going forward. so we're excited actually about the next several months. we have programs working with our franchisees that we think are going to improve service at store level, we're rolling out the new sandwich station, i think we've talked about before on this program, we have mobile order coming, it's been tested in portland, maine, starting next month. that's going to improve our suite of service and make our restaurants easier to operate and as a result we will have much better interaction between our crew and guests at the store. >> mr. travis, i can't help but notice what mcdonald's is doing today relative to what you guys
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are doing today from a stock standpoint. i guess the obvious question is what impact, if any, is all day breakfast going to ultimately have on dunkin' donuts? it's early in the process, we are in a very short period of time that all day breakfast has been out, but is it going to have a big impact? >> every day we look at it and it's having no impact at all. in fact, what it does is highlight the fact that the place to get the same menu all day every day is dunk inn. we are the ultimate all day breakfast. we're excited about all the publicity that mcdonald's is getting for the category. if you want to go in and get one of our breakfast sandwiches sock at night or 5:00 in the afternoon you can get t we're experts at all day breakfast and i think they're actually giving us a halo, it's going to benefit our sales in the longer term and we are pleased they're doing it. >> if nothing else people want the ice cream, nigel. i see the baskin robbins
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numbers. >> can i ask you one quick question before you go? you said on october 1st that you were going to close 100 stores. i'm wondering if there is a risk that that number could grow and if that is a statement that you were expanding a little bit too fast in some areas. >> okay. so let me just make this clear. this is a very important point. the stores that you referenced are hess now speedway-owned operations. they had franchisees in there, they are basically self-serve coffee units. they have sales of less than 10% of an average store. i actually believe this is good news, not bad news, because it gives us the opportunity to open for traditional stores. so think about t very small stores and i wouldn't think about them as store closures in the normal fashion. a lot of people have been confused by it and hopefully i have clarified that it's nothing of the kind. >> i'm glad you did, in fact, because most of the commentary
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has been the headline dunk inn closing 100 stores so i'm glad that we are able to do that. >> well, i'm delighted we have had the opportunity because a lot of people got the headlines wrong and our growth could not be stronger, the demand for our franchise couldn't be stronger. >> all right. >> and our guidance for the year is completely on track. >> nigel travis, ceo of dunk inn brands, thank you for joining us this afternoon into thank you. >> how about this rally. you have about a half hour to go, highs of the day 326 to the plus side for the dow jones industrial average, s&p is having a great day as.. up 1.3%. >> we have amazon, alphabet, formerly google, microsoft, all front and center. we will bring you their results the second they do pit the street. >> businesses are dying to get into cuba. up next, rap star pitbull tells us why he's thrilled that the embargo is over.
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there's your sector heat map with the dow up nearly 335 points, industrials, materials having a very strong day. healthcare the only sector in the red and forgive us if we are a broken record but healthcare has just had a really difficult time, almost no matter what the other part of the market is doing. >> one of the most loved, most crowded sectors in the market now in danger of turning red for the year as consumer names are
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gathering strength. tonight music mogul pitbull is giving cnbc all access to his growing empire on stage and off. >> from new york to miami michelle caruso-cabrera spent a great deal of time with mr. worldwide. she joins us with a preview of her prime time special. we have seen so many great clips today i can't wait this evening. >> he is called mr. worldwide, now the cuban american rapper pitbull has his sites set on bringing his act to a place very near to his heart. here is what he told me about his feelings of his parents' home country of cuba. >> my family always telling me in this country you can control your own destiny. you have the freedom to do and be who you want to be. take advantage of that. when i wake up i'm always constantly look to go see what else can we build, what else can we do and how can we help? >> not just in the u.s., but globally. and paying special attention to
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the other country close to his heart. cuba. >> you are supportive of the reestablishment of diplomatic relations. >> i'm definitely we supportive of t don't hang on to the past, it's about moving forward. it's about rebuilding. it's about the cubans at the end of the day. how do we make their life better. >> the embargo, should it go away? >> 150%. politics is politics. i try to steer away from that. hopefully through music we can make a powerful stands and statement because it is more powerful than politics and it is the universal language, it breaks down borders, boundaries, limits, opens countries and it will be the same in cuba. >> you can catch the premiere of pitbull fame and fortune tonight at 10:00 on cnbc. >> i can't imagine what you were thinking when he was talk being cuba. this is a potent issue. while he is right music can be a form of american soft power and you would hope you can always move forward he also cited what
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his parents said, this is the country they came to to express their pre gom. >> he talks more about that, how he dreams of the day when he can perform a concert in cuba and show them what freedom is about and talk to them about freedom. so, yeah, i mean, that's the conundrum and i think a lot of cuban americans actually think a lot about that in a way that maybe somebody who was born in the united states necessarily wasn't -- or necessarily isn't. you get really focused on all the opportunities you have here because the country that your parents come from or maybe you came from, there are almost no opportunities. >> great stuff. looking forward to it, michelle. thank you. michelle caruso-cabrera. >> time for a cnbc news update. tyler matheson has that. >> i thought i was mr. worldwide. i don't know where i went wrong chlgt here is what's happening at this hour. in a senate hearing committee members are expressing skepticism about how much they could help debt ridden puerto rico. democrats urging the treasury to do more on its own while
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republicans are quizzing the governor on it's fiscal -- >> government investigators squarely blaming the epa for a 3 million gallon wastewater spill from a colorado guide mine back in august. it said a clean up crew rushed its work and that triggered the blow out the crew hoped to avoid. lumber liquidators has pleaded guilty to environmental crimes related to its importation of illegally sourced wood products. it has agreed to pay $13.2 million to end that particular federal investigation. nike will open its first ever michael jordan store in chicago on saturday. fans are already outside camping there to be the first to get in. it's going to sell merchandise with the trademark michael jordan jump man silhouette which you just saw and will feature items chosen specifically by the former basketball star and that is the cnbc news update at this hour. it is amazing how much selling
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power jordan still has about 12, 15 years after he retired. >> and i was going to say no wonder nike stock is doing what it's doing. >> he is still hot. >> our tyler matheson. 25 minutes to go, the dow is up 322 points, the s&p adding 33, vix down almost 2 points, the nasdaq higher by 74, that's 1.5%. >> anything could happen in the final and most important half hour of the session. one trader tells us what he's watching into the close today. turns romantic, why pause to take a pill? and why stop what you're doing to find a bathroom? cialis for daily use, is the only daily tablet approved to treat erectile dysfunction so you can be ready anytime the moment is right. plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain,
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about 20 minutes to go into the close. i'm on the floor with keith bliss. und down 6.5%. cab las down 17%. southwest up 7.5%. these are huge moves for a lot of particular names this this market. >> you are being rewarded for good sales, for beating lower estimates and being punished for missing on the sales and the bottom line. that's what we're seeing in the market. >> going into this earnings season we knew revenue growth was going to be weak. the early end cases didn't look that great. i guess it becomes all the more important.
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>> revenue growth is not good. you're seeing at that time peculiar revising their sales figures down. you can beat revised lowered earnings per share, but it's really the top line sales. where is the growth coming from? we are not seeing that by and large in the earnings this year. >> look to the boarder market and digest what the european central bank told us this morning. draghi, did he change the tenor of this market, is it on a risk mode. >> the capriciousness of the market, it's back and forth. we are seeing it turn bullish. we traded through important resistance levels tonight, you cleared out a lot of the shorts, we are entering seasonal factors, the last week of october is the weakest week of the fourth quart. if you get through that unscathed it's all lights are green from there. >> quite a remarkable day. >> scott. >> kelly thank you so much. shares of valeant pharmaceuticals getting slammed,
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down double digits and down 40% this week alone. that's just one part of the bigger picture in healthcare. the sector is down more than 12% in the last three months, credit southeast down grading the sector citing extremely high valuation and recent weakness as just the beginning. the strategist behind that call joins us now. i will tell you this call got a heck of a lot of attention when you made it so that the worst is not over yet? >> we don't think it is. you're right, we did seem to strike a nerve with this call last week, but bottom line there are four things we are looking at, one, valuations still aren't cheap, earnings momentum is decelerating, throws have returned negative and portfolio managers are looking for a shift out of growth and back to value. >> it's amazing really and i guess of all of the things that you just listed, maybe the most powerful thing to fight against is the change in sentiment,
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right? >> yes. yes. absolutely. and there has been a real deference when i have talked to investors who are healthcare focus and those who are more general list and portfolio managers who have to put the portfolio together as a whole. the latter understands the risk in this sector and doesn't think it's a short term issue. >> laurie, when we look at the hospital space here, this one seems like this came as a huge surprise today. even though we did get a little bit of a warning from hca previously, what is going on with hospitals and how does it fit into the broader theme we are talking about? >> i can't comment on any specific names. we don't think any part of the healthcare trade has been spared from the crowding problem in particular. during the summer people were worried about biotech and pharma being crowded but healthcare service has had just as big of a crowding problem. >> yet i still hear, laurie, people coming out and defending this space saying the long-term prospects for many, many stocks
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within such a large group are still great long-term buys. how do you counter that kind of argument? >> well, you know, i think there is a difference in time horizon here. in the short term we're seeing just the rate of upward revisions for one year and two-year time investments is decelerating. people might still be right about the five-year trend but that doesn't deny the fact in the short term analyst right side not taking their numbers up as quickly as previously. >> i think you make a great point and a important distinction between whatever your time horizon s but when you say short term and you are making a call based on t what kind of time frame are we really talk being? >> what i've been thinking about is actually the next six to 12 months. we have been surprised at how quickly this sector has started to unravel again. >> laurie, we will leave it there. see if the unraveling here runs its course. >> 15 minutes to go, dow jones
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industrials up 313 points, mcdonald's helping a little today, mario draghi helping a lot today i have a feeling. >> the fed's janet yellen may be eyeing a rate increase but mario draghi has other ideas that may impact your investments. seema mody will get you those details when we come right back.
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as the fed looks to tighten the european central bank is looking at more easing. >> for a look at what that could mean for the u.s. investor aside from today's 330 point rally let's check in with seema mody. >> draghi comments being cited by traders as one of the reasons stocks in the u.s. are higher. he did what he does best, fueling the market is strong dovish commentary and opening the door to further stimulus. europe is dealing with deflation and slowing growth. economists expects the ecb to extend qeb beyond september of 2016. as the fed lingers over when to tight tighten, europe continues to ease n response we are looking at european stocks hitting multi-month highs. if you look at peripheral debt in spain and italy also on the move. more important the euro is weakening against the u.s.
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dollar. with china weakening europe is counting on the u.s. consumer to buy their goods. remember, a weaker currency makes european products more attractive. even then come skeptics say the market is overpricing what we'll get from draghi in december and that an order for the euro to break below 110 against the u.s. dollar, td securities say the fed needs to achblngt policy divergence would be a big win for the euro bears and dollar bulls. not just focused on draghi but yellen as well. >> our seema mody. >> so i guess the stronger dollar is good for the market today. >> go figure. yeah. >> until it's not. >> until it's not. exactly. >> speaking of the market, dow plus 313 as we head towards the close, about ten minutes or so left before we do that. industrials having their best day, in fact, the industrials sector having the best day since june of 2012. got to go back a ways. >> we're going to talk about the
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strong dollar effect on big tech companies within we hear from amazon, microsoft, at&t and alphabet. three well known names and one that folks like us are still trying to get used to, alphabet. >> alpha google. >> we will preview it for you next. become the office drama queen. in a good way.
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we are back. there aren't too many days that have bigger earnings reports this season than today. it is the busiest, in fact. >> here with a preview of the numbers about to come out right after the bell john forth, julia bors with at&t and john fortt again with microsoft. >> let's begin with the first john forth and amazon. >> well, with amazon we are looking at revenue of $24.9 billion and a 13 kent eps loss. in terms of what investors really want to look for, it's the electronics in general merchandise category, we had that prime day, you want to see that prime loyalty strong but also what is that going to do to costs? in the holiday season you've got a lot of deliveries and amazon just opened up this prime same day delivery in new areas including the san francisco bay area and more of the greater new york area. that has got to cost money. we are going to watch the cloud
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line for amazon looking for revenue just shy of $2 billion. that would be growth of better than 70% year over year. >> john, thank you. now to josh lipton with what to expect from alphabet. alphabet, alphabet, alphabet. >> can't do it. >> even though it's formerly google. >> it takes some getting used to. so the bulls have been in charge when it comes to the internet yient giant, that stock enjoyed a nice strong run, now up 30% so far this year. today street looking for earnings per share of 7.21 on revenue of 18.5 billion. cost per click, what advertisers pay google when users click on an ad and what about all that cash. google had $70 billion at the end of june. any word on whether it plans on sending some of that back to its owne owners, alphabet a wall street darling, 90% of analysts say to buy t we could have a better sense of whether they are right after the close. guys, back to you.
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>> okay. josh, thank you. julia boorstin has at&t. what are we looking for? >> with at&t's acquisition of directv closing during the third quarter the telecom giant warned first resultser inflated because they include directv's revenue for the full month of july rather than beginning at july 25th. wall street consensus expectations are 23% revenue growth to $40.4 billion. while earnings per share are projected to grow 9% to 69 cents. analyst right side looking for improved wireless profitability and also some visibility into potential synergies with directv. kelly. >> okay. julie, thank you. and, hey, where did the other john forth did? the first one is back. he will do. what have you got on microsoft. >> amazon ought to guide to almost 20% higher revenue, $35 billion. on to microsoft, we want to see a top line of $21 billion, earnings per share of 59 cents,
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the key lines here are productivity and cloud. both of those should be just north of $6 billion. there might be a little accounting issue with the pc more personal computing line because they are accounting for windows differently in this windows 10 era. that might not kick in big time until next quarter. ekt some eps head winds to play in and also expect analysts to pay close attention to the cloud business, particularly azure in comparison to amazon. they are reporting on the same day and the two biggest names in the cloud. >> thank you for now. john, josh and jewel yarks the j's. >> we have a news alert on gnc. been waiting on this one, dominic chu. >> it was the halt for pending news. gnc is out with its official statement. again, they are saying the company gnc about the oregon attorney general's claims that they had unknowingly sold nutritional supplements with unapproved substances, the claims made by the oregon
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attorney general are without merit and gnc intends to vigorously defend against these allegations in response to fda statements regarding the regulatory status gnc took action to remove from sale all products containing those ingredien ingredients. the shares are still halted, scott, down 15%. they haven't traded since 3:14 this afternoon. >> we will be right back with all the numbers you need to know. a lot of earnings and of course the closing countdown.
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i've got my colleague bob pisani here. we are right in front of the gnc trading post where the stock is expected to open literally any minute after being halted for this news. >> a little tightness because the news came so late, the response from gnc, normally they need three minutes for an indication. they are trying to open the stock right here. the indications are somewhere around in the 35, we just opened -- >> 35.51. >> 35.51. >> so the stock is back open before the halt it was down and we don't have a month for --? >> it went from 39 to 34 and now it just reopened at 35.a 5 1 trading right now -- >> just to recap the news in
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case you are literally tuning in, the oregon attorney general suing this company alleging that some of their supplements could contain illegal products. the company coming out and saying it's going to vigorously defend itself against those charges, but the stock is down sharply. a whole bunch of earnings coming in the second hour with kelly and company. thanks, guys. welcome to the "closing bell" i'm kelly evans. here is how we're finishing up the day on wall street. a strong session with the dow up 321 points, nearly 2%, the s&p atting 33, the nasdaq adding 79 despite some huge trouble in the healthcare and biotech space. again, bolstered to some extent by mario draghi's comments this morning about more easing coming down the pike. right now the focus is on earnings. we have huge names reporting after the bell today. our reporters standing by to break it all down for us, josh
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lipton, jon fortt and julia boorsen. let's introduce our panel. paul hickey is here and cocaine contributor stephanie link from tia kref. and christine shore and "fast money" trader gay adami. welcome one and all. did he have, i will begin with you, border thoughts on this market, some big individual moves today. >> there is big rotation going on. we talked about it a couple of weeks ago and it has continued out of growth into value, out of healthcare into industrials. materials, energy. today actually has been consumer staples as well, last couple of day staples as well. as the draghi comments lift aid lot of these sectors for sure. then you had earnings that were not as bad as expected. the dollar has stabilized, oil has stabilized, people are thinking this is the trough in those sectors and they are buying them in spades. >> we will get these earnings numbers to you as quickly as we
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can. looks like amazon coming out with a 17 cent figure for its bottom line, again, that compares with a loss estimate of 13 cents a share. shares are popping at 9%. we will have more in just a moment. paul, is the focus largely today still for you going on revenue growth? what's key for this market? >> the key is that expectations were so low coming into this period, we saw nice kprents from draghi in morning, where sentiment was the weakest in the market, industrials, we have seen one of the biggest moves in three-day outperformance versus the s&p in quite some time. it's a matter of investors becoming off sides and getting back into these beaten down names for a year-end rally. >> christine. >> earnings always comes in weak, analysts are fairly conservative. we're seeing the same trend we always see, 60% of companies are beating on the earnings, a little bit lower on the revenues. we are still seeing a bit of hard time for companies at the top line growth but like we have seen this morning ervgs came in
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pretty well so far in week. just from what we are seeing from amazon it's a pretty good beat. >> amazon shares up 8% as it reports an earnings beat relative to the loss that was expected. let's get more from jon fortt. >> amazon reporting revenue of $25.4 billion that's a half a billion better than the 24.9 expected. also reported a profit i believe it's 17 cents, it was a 13 cent loss expected. how did amazon web services do? it did quite well, analysts were looking for net sales on aws to be just under $2 billion they were actually over 2 billion at $2.085 billion that is strong growth for that line. also the guidance, amazon guidance to 33.5 billion to 36.75 for q4, that is at least at the high end above what the street was looking for. 35.116 billion is what the street was expecting.
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also on operating income the street was hoping for $1.25 billion in operating income for q4, analysts guiding to a range of 80 million to $1.28 billion so the high end of that operating income range also above what the street was looking for and i guess investors are being optimistic seeing that amazon often outperforms and bidding the stock up after hours. >> let's slip over to alphabet and see how those shares are moving. the results are out, looks like a bottom line beat of 14 cents, shares up about 3 -- a little better than 3%. josh lipton has the details. >> alphabet just reporting so let's get you those numbers. it's a beat, they are 735 on $18.68 billion. analysts were looking for 721 on 18.5 billion. that is a beat on the bottom and the top. just quickly looking through the release, cost per click what advertisers pay when people click on an ad that was down 11%, a little worse than what
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the street was looking for. paid clicks, overall clicks, that jumped 23%. that is better than what analysts had looked for. this conference call coming up here at had 30 even, i will be it on it and bring you more headlines as they come. >> those shares, alphabet shares up almost 6%. what he said that was interesting the cost per click came in much worse. that's obviously going to be a key trend for them. >> that will be a discussion point on the conference call. the 23% in paid clicks was better than the 18% that people were expecting and also better than the 18 range that we've been seeing in that key figure. i think it speaks to obviously they are certainly building on the momentum of some of these growth businesses. >> at&t, let's take a quick look there. appears those results are starting to come out. guy, real quick before we go to that early thoughts on amazon and alphabet. >> we have been a bull on a.m. zn for a while. i take a lot of heat on twitter on the back of amazon. my point has been it's the land grab with amazon and they proved
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last quarter that they can deliver on eps revenue and margins and they did it again now. last quarter you had that huge spike right after earnings, over the next few weeks and now you see a culmination of that rally, all time highs now. my sense is you will see a similar back and fill, but amazon still a great secular story that i think will continue to go higher into next quarter. >> still a lot of haters on that name. microsoft looks like a bottom line eps number of 57 cents which would be 2 cents shy of the estimate. here is a look at shares which look like they are still moving to the upside by 1%. we will have more detail in just a moment. >> paul, though, going back again to what guy was saying, amazon is a story especially on profits, you know, especially on margins and with a lot of what they've done being a loss leader, a lot of people have loved to hate. does this quarter change the story? >> amazon people say it's expensive but i go back to the argument from bill miller and john malone with tci, a dollar
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invested in tci when john malone took over was worth 900 when the company was bought out. just because the company isn't reporting profits it's a lot more valuable now than it was. amazon web services is almost like the iphone of web hosting, it's completely revolutionized the space. >> john mentioned that the amazon web services number did beat expectations. guys, we heard from walmart i think it was last week coming out with real challenges, strategic imperatives they are following to try to make up for the way that amazon frankly has elbowed its way into the retail space. in the release amazon says it does expect the majority of things shipped to be prime. those shares up almost 10%. >> clearly walmart is on the defensive, right, and maybe their strategy is going to work, but amazon has such a leadership advantage at this point and really the story is aws. it really s when this stock broke out is when they broke out
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these kinds of results and with no competition really to speak of, better pricing ahead, margins are expected to go higher. >> speaking of no competition, anyway, let's talk more about the cloud, how that's impacting microsoft's earnings with our jon fortt. >> microsoft turning in strong results here. it's a little confusing because we have gap and nongap. nongap is what we want to compare. microsoft turning in revenue, nongap of $21.66 billion. that is a slight beat on the top line. also 67 -- sorry, 67 cents eps 9 gap that compares to 59 expected. so that's also a beat. line by line how did they do? ? their productivity group $6.3 billion that's about what analysts were expecting. in the cloud line $5.9 billion which is a little shy of where i saw a couple analysts looking though microsoft did say that the azure and compute business saw usage more than trouble dubl. that doesn't mean revenue more
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than doubled but usage more than doubled which perhaps puts them in a league with amazon in that number for aws they just returned in. the pc group or more personal computing as they call it which includes the advertising business and their small mobile business outperformed with $9.4 billion in revenue. that is about $800 million higher than the street expected and really accounted for probably all of the beat on the top line. you want to hear how much of that is surface, how much might be something else when microsoft explains on the call. microsoft does not give detailed guidance, they guide on the operating expense line, they already lowered operating expenses in april which cheered the street. we will hear what more they might have to say about that on the call as well heading into the important q4 and holiday season. >> thank you for sorting out, too, we flashed the 57 cent number initially but it's 567 cent earnings per share number
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the like for like number. microsoft beating on the bottom and top line notably. those shares continue to move higher up almost 3%. >> awful these results are obviously great and much better than expected especially with microsoft initially i thought it was, you know, a miss by 2 cents, it actually ended up beating our estimates by 8 cents. i would be interested to hear about windows 10. they said the first month they sold 75 million. they were on sale to have more combination in windows 7 and 8. the purpose was to get people hooked. cloud we know they are making a big bet there, amazon of course still the leader, and i'm surprised to see those pc numbers come in as strong as they did. we get a little better idea with the restructuring how they will start reporting their financials. happy with that, happy with amazon and alphabet as well. >> there is a theme here on pcs. you've seen intel better than expected on the pc side, hp better on pcs now these guys as
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well. expectations were very low, we were expect down 11%, so they are a little better than expected. >> let's get more on alphabet with josh lipton combing through the numbers for us. hi, josh. >> you can see that stock moving sharply higher. i want to call your attention to two other points in this press release, one, stock repurchase. the board of directors of alphabet has authorized the company repurchase about $5 billion. the company's class c capital stock, capital return a big theme for google share -- for alphabet shareholders. this will commence in the fourth quarter of 25015. also when it comes to alphabet reorganization the company saying they are going to disclose their google business as a single segment and all other alphabet businesses combine as so-called other bets. that will start in the fourth quarter. we know investors, analysts looking for my clarity an insight into these businesses. so do two big pieces of news there helping to send that stock much higher in the after hours.
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back to you. >> paul, what do you make of it? >> i think the microsoft is one of the more impressive results because google and amazon they are continued stories, going in the right next -- >> look at this move for a second. 11%. >> this is why they hired the cfo. this is exactly what investors wanted. more transparency and a big buy back and that is exactly what she delivered. >> shareholder friendly services, that's what you get. costs per click was down but clicks are up. google still going in the right direction and doing the right things. >> are we sure google and alphabet isn't robbing peter to pay paul. paying out all this capital to investors when they could be doing something more productive with it. >> 23% paid click growth i will take that. >> guy adami. >> google is a great story. you look at the last quarter that was her first and the way she spoke to the street gave people confidence they finally have an adult in the room. i think the stock in 19 times
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forward earnings still cheap. you have to stay with it. that's been one of the names we have talked about as well. in terms of microsoft, it depose to show you that you can turn a company around in this juxtaposes what's going on with ibm. on monday we talked about ibm. you said it's going to 139, i think the slow was 1389.30. yes, it has bounced but this is a tale of two worlds, microsoft which i still think is cheap and ibm which i still think session pen sieve. >> what's the difference? is it simply the legacy business in microsoft's case is less of an interference in terms of the overall value being unlocked by moving to the cloud. >> i think microsoft is just managed better. i think they were ahead of the curve. i think they saw the future and they changed with it. i think ibm is trying to but in this world trying is not good enough. you have to be ahead of it and i still think they are behind t they're trying, but i still think they're behind it. >> one thing is clear, paul, and it's the cloud is where you want
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to be and it appears to be growing fast enough to be lifting all votes at this point. if you look at microsoft and amazon those results just this afternoon. >> that's the point. microsoft is doing the turn around and where as ibm isn't able to do it. microsoft is going in the right direction. ibm their ad campaign is featuring bob dillon and ken jennings, these aren't people that are young and into new technology. >> it is a cloud based service. >> but it's not being presented in the right direction and that's not going to drive revenues for some time. >> what about microsoft almost up 5%. the biggest mover of the pack now looks like it's alphabet. it was amazon at first on just a reporting earnings relative to loss that was expected but then google -- alphabet comes out with this report of a buy back in particular. do you think it's that, stephanie, that's largely responsible for the additional tale that we have seen here? they did have a couple other announcements as well. >> i think it's a combination. the quarter was very good as mentioned 23% paid click growth
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is a good number and much better than what we have been seeing offer the last couple of quarters. they are building momentum in a key part of the business that people analyze and view as the mechanism for trading this stock. that number needs to be a good number for the stock to go higher and add on what the new cfo is doing, better transparency and to guy's point up 19 times forward estimates. it's very reasonable given what growth you are getting. >> julia boosten has the details on atat. >> their earnings beating expectations coming in at 74 cents adjusted at 74 cents per share versus expectations of 69 cents per share. revenue missing expectations, at&t reporting $39.09 billion in revenue versus expectations of $40.4 billion, but we have to remember that yesterday at&t warned that analyst's expectations were inflated because those expectations included directv's revenue for the full month of july rather than july beginning july 25th.
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a key thing here that's likely driving that stock higher it's up nearly 2%, at&t announcing its increasing it's adjusted eps and free cash flow outlook for the entire year. it dpekts adjusted earnings per share and the 2.68 to 2.74 range. now, that range starts 7 cents above where analysts were expecting. significantly greater potential for the full year than wall street had been expecting for the full year eps. another key thing here, total churn was 1.33% which is down year over year. the company also says that a record 1.6 million device net ads including 1 million connected cards. interesting little nugget there. kelly. >> connected cars. all right. glimpse into the future. thank you. at&t shares up almost 2%. where does this leave us, christine, first to you to set up for trading tomorrow? >> this was a fabulous afternoon. i think we are going to see this bump up earning which actually
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we started the season expecting a decline of 2%, it was about negative .5% when i came n this is certainly going to help. these are huge companies. at&t we did see the revenue revised upwards in the last couple of months so we were expecting about 35 -- or 34.5 million in august, we did see it get up to 40 billion but like they said people were including more of that directv acquisition than they should v i still think 39 billion they good number. the directv acquisition makes them a formidable opponent in the video streaming space. they have a partnership with viacom, they have their cyber security deal with ibm. so they are in a lot of growth areas right now. we saw verizon do very well also. i think, you know, at&t is certainly setting themselves up to do well for the rest of the year. >> and amazon and alphabet on these after hours news. guy, what are your thoughts here. >> it's interesting these are all great reports 100%. i'm not trying to throw cold water on the whole thing.
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when there are bad things you can't say it's stock specific and then they are great reports you can't say rising tide lifts all boats type thing. i think you're following what i'm saying. these are just as stock specific stories as the negative wnz we have seen over the last couple weeks. with that said, yes, you are going to see the commencement rally tomorrow for sure. it will be interesting to see if it holds on. at&t, managed great, directv a great deal. it's been between 32 and 36 for the last three years and here at 35 is in the middle of the range. other than the dividend it's dead money. >> tempering our expectations. >> always. always. >> always. guy, thank you very much. guy adami on those earnings results. be sure to stick around and catch guy on fast at 5:00. microsoft will get underway at 5:30 and they will have all the after hours action and headlines moving those names. don't go anywhere, we are just getting started on what is
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turning out to be a wild after hours session. we will hear from shareholders when we come back. you're watching cnbc first in business worldwide. aflaaac. aaaa-flaaaac. someone's sandbagging. i'd be tired too. he paid my claim in one day when i got hurt. one day? serious hustle. serious duck. in just one day, we process, approve and pay. one day pay, only from aflac. ah! yup, we're constantly making thinkorswim better. here at td ameritrade, they're always working. like a custom screener on your desktop, that updates to all your devices. and you can share it with one click. wow. how do you find the time to do all this? easy. we combined every birthday and holiday into one celebration. (different holidays being shouted) back to work, guys! i love this times of year.
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we always have the safety of our customers and the community in mind. my family is in oakland, my wife's family is in oakland so this is home to us. being able to work in the community that i grew up in, customers feel like friends, neighbors and it makes it a little bit more special. together, we're building a better california. welcome back. huge moves in alphabet and amazon shares after hours. take a look.
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alphabet, google, up 10.5%. 10.5% gain for amazon on its earnings beat. let's get more reaction from ross gerber and aaron kessler. welcome to you both. ross, wow, i guess. what would you say about it? >> i'm just so happy right now, it's just so -- we made so much money, it's great. you know, it just proves the premise that these large amazing tech companies in america have so much potential and there was just so much negativity a few months ago. guy and his "fast money" crew are so negative and they have been so wrong, sorry to call you out. the market is moving higher -- >> i think your testosterone is too high on these results. >> we killed in t. in the last couple days. once again we have apple coming up, facebook. you know, for almost all investors these are the types of investments that you want to have assuming this falls into
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your risk tolerance. you've just got to be into these companies. >> aaron come in and curb our enthusiasm. >> yes, strong results for both amazon and google. they are getting massive amounts of share, e-commerce, advertising space. from google clearly upside, evening there was a little concern they were going to miss numbers given some of the recent inter quarter data points, the correlation has been not great there. obviously clearly upside on google. valuations reasonable, 19 times earnings, 17 times ex cash. amazon continues strong, especially aws feeds on revenues an margins. we like both, looking pretty positive for both companies at this point. >> paul. >> yeah, so for google or alphabet what do you consider to be the more driver of the stock in this performance, more shareholder friendly activities or real momentum in their business? >> aaron, you first. >> yes, so for google -- it's a
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combination. i think there was expectation they could miss the quarter based on data points, that combined with eps and revenue upside combined with more transparency the buy back, i think primarily the revenue and eps upside is driving google after hours here. >> ross. >> well, i also think it's focus. we talked about this last time they reported. i really wanted google to focus on their business and that's what they seem to be doing. they become more shareholder friendly. today with the you tube red announcement they are look to go monetize you tube, i i said is such a valuable asset they have. it looks like they're taking the right steps for the business now. maybe the alphabet separation has allowed the google executives to focus on google and all these crazy ideas are sort of out in the peripheral now and that's working for them. >> steph. >> so i guess question for both of you. how do you get your arms around the valuation of amazon? a lot of people do a sum of the parts valuation. for me i have a tough time and i
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can totally appreciate google because i can kind of value that on a pe basis. i get it that amazon just made money and 17 cents is a little bit of a victory but i think there's a long way to go there. how do you address that? >> i totally agree with you. i would think we would all have to hold hands together to try to get our arms around amazon. the valuation is ridiculous, they don't make money really but it's a story of dominating retail in every category. i literally ordered mosquito rep lent and guitar picks in two separate orders on the same day. >> and they probably each came in a giant box. >> totally. >> this is a name guy adami loves. >> i love guy, actually. but i think the reality is amazon is a stock i'm not as comfortable with as google. google makes billions in profits, amazon is tinkering around with a lot of things that don't make money. they are the monster that is not going away. >> aaron, what about you when it comes to amazon's valuation?
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>> yeah, so it looks rich, keep in mind the markets are still under pressure versus what they can be longer term. this year we're look for roughly 4% nongap margins, driven not just by one piece, but if you look at 3 p that could be a 35% plus operating margin. that's where they fulfill on behalf of other sellers as well as amazon web services growing at strong growth rates. that could be a 20% plus margin. all in you are looking at potentially a 10% margin business, amazon is sub 5%. that gets us more comfortable if you look at the long-term picture. >> they do seem to be having pricing power at least on the prime side with regard to and maybe for the cloud side of things. customers do notice that amazon is not as cheap as it used to be. how much more pricing power do they have when it comes to their ability to grow margins? >> amazon continues to focus on low prices to consumers but they are getting more efficient.
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you did see them raise prices for amazon prime from $80 to $100 so that's benefited them a little this year. they still continue to get more efficient in their fulfillment services, shipping in the last mile, you're hearing about them deploying their own trucks to deliver services way more of a an uber service providing deliver yeechlt it's not just about driving up price toss consumers, they continue to drive pricing down but getting more efficient. >> sharing performing nicely after hours. this could have a big impact on the markets tomorrow. thank you both, aaron kessler and ross gerber. let's get out to jon fortt with more on results from microsoft which hit a few moments ago. >> kelly, an important nugget on microsoft. remember i said the cloud comparison between microsoft and amazon was going to be important. we saw the amazon web services number beat. well, it turns out from microsoft the cloud revenue run rate microsoft tells me was up 70% year over year. of covers, up sequentially so
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now it's north of $8.2 billion just in general for that cloud arena. so that revenue run rate is important. we will have to see what the azure specific breakdown is because that relates directly to amazon, but that shows growth rate rise, that they appear to be keeping pace with amazon who they are trying to run down, kelly. >> jon, thank you. you would agree, steph? >> absolutely. i think this was set up to be a confusing read as soon as the numbers came out because they've changed these reporting structures. digging to it is helpful and the numbers seem to be the good numbers and the growth is where you want it to be. that's really cloud. >> and at the end of the day that's what people are excited about. >> those shares up better than 5%. reporting results after of the bell, some other huge movers, plus alphabet's earnings conference call will begin a knew moments. we will bring you the highlights as they happen. stay with us here on "closing bell." ♪jake reese, "day to feel alive"♪
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♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪
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welcome back. amazon, alphabet, microsoft, at&t are not the only after hours earnings report. dominic chu will get to with a round up. >> they are not nearly as large in terms of market cap but these are massive moves in the after hours. pandora online streaming music, the earnings are in line with estimates, 10 cents a share, that matches analyst's estimates, revenues coming in very, very slightly lighter. $312 million analysts were looking for $313 million, however, they offered lighter q4
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sales guidance than some analysts were looking for as a result those shares down by about 15% right now, 469,000 shares have trade sod far. >> moving on to another someone, we have sketchers, footwear, this has been the hottest stop in the s&p so far this year. down 24% on 1.1 million shares of volumes after they posted earnings of 42 cents a shares that misses the 55 cents. revenues missed analysts estimates, 856 million. analysts were looking for on average $877 million. sketchers a huge number. they were up 150% going into this. this report taking a little bit of that shine off the stock. it's still up a massive amount going into this number. >> also june per on the network equipment side of things, it beats analysts estimates by 57 cents versus 53 cents that's what analysts were looking for. revenues coming in slightly better, $1.25 billion, analysts were looking for 1.24 billion
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sooipd. they did offer good current quarter earnings and sales guidance. for june per networks we are talking about a stock just up about a percent on light volume. >> very different themes, guys. we started with big tech cloud story, that's one thing. when it comes down to pandora and june per and sketchers, what jumps out to you? >> forward net is surprise to go me. it's in cyber security. it has had a nice run, the valuation is rich. june per is not as surprising, they have been getting their act together as of late but across the board it was switching, deferred revenues, margins, cash. i think it bodes well for cisco. >> pandora and sketchers fall. >> pandora has been a victim of increased competition and increased better competition unlike netflix, panned dra has
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gotten better competition and in our market intelligence surveys what we have seen a year ago over 50% of consumers would use panned dra and cite it had as one of their top two streaming apps now it's down to 40%. >> we got the numbers from apple, 6.5 million paid subscribers. >> they are doing it just as good if not better maybe than pandora. >> spotify the other biggie. >> sketchers a big move because it trades almost like one of thieves high flying biotech momentum names. very much to the down side. >> the stock is down bananas over the last year, 10 points down. first yesterday it was bad versus a year ago if you look at that chart it's had a huge run. >> time for a cnbc news update. let's go over to sue herrera. >> here is what's happening at this hour. president obama vetoing a $612 billion defense policy bill because he says it uses money meant for war spend to go avoid
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automatic budget cuts to military programs. he is sending the legislation back to congress saying, quote, let's do it right. the military releasing video of a u.s. air strike on an sighs headquarters in syria. munitions can be seen hit ago building followed by a huge explosion, the headquarters located in the city of raqqah, the de facto capital. militant group. donald trump sharing an unusual tweet asking iowans if they serviced some sort of brain issue due to agricultural issue. he quickly deleted that tweet. four hours later saying the intern that accidentally did a retweet apologies, the original tweet he shared was about a new poll that found ben carson overtaking him in the latest iowa poll. peter smith's college in new york state will not appeal a court ruling that blocked it from adding john while the wife of sandy while to its name. the naming right came in exchange for a $20 million
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donation, but a judge ruled that went against a founding bequest not to change the college's name. that's your cnbc news update this hour. back to you. >> all right. thank you very much. alphabet's earnings call is set to begin, we will bring you those highlights coming up. plus we will hear from two microsoft shareholders and whether they are buying or selling the stock after the company's better than expected results. it's now up 6%, "closing bell" is back in two. it's now up 6%, "closing bell"
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welcome back. here is a look at how we finished the day on wall street. the dow up 320 points, many people point to go comments by european central bank president mario draghi hinting perhaps that hurt support or stimulus in december. the nasdaq 79. we just got, from big names that could be moving this market tomorrow. take a look at amazon up 10% after reported earnings compared with a loss expected. alphabet a big buy back bolstering that name up 8%, that conference call is underway. microsoft now up almost 7% and at&t adding nearly 2% for its part. let's dig deeper into microsoft's strong earnings. coal wilcox, tim lesko.
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welcome to you both. i see the smiles here, tim. what is it to you that's most notable about microsoft's beat and the shares response this quarter? >> it's nice to see the shares response. i think what's most notable is that microsoft even though it's now considered old tech can keep up with what is considered new tech and their movement in cloud services, their ability to deliver real strong business applications and services really drives revenue forward, you know, looking into the future. it's nice to have an old tech company that is clearly part of what's going on now. >> cole? >> i think that when you look at the numbers and breaking out about the cloud computing and the growth that's happening there, our firm is all about identifying long-term trends and the biggest thing we need to look at is what are the metrics and success they are having on that side of their business in terms of achieving their overall goal of becoming the world's most dominant cloud computing platform. so we like the numbers. >> steph.
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>> i guess the question for both of you, i know this is a great exciting cloud story, but it still is pretty small in terms of the total revenue at the company. on the pc side what do you guys make of the better than expected or less bad pc trends we are seeing and do you think it can continue? >> tim? >> well, if that's a question for me, i think that windows 10 certainly is finally microsoft has a product that people care about and seek to have on their machines. after several starts an restarts of different operating systems they finally have something current and i think their move into creating some pretty compelling tablets and laptops are pushing both their products forward and really target to push on the other oems to create compelling computers. >> microsoft up 7%. cole, what would you say? >> you've got to remember that microsoft hasn't come out with a stable operating system that chief technology officers have really liked since 2007. so with windows 10 is definitely
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a great product, people seem to really, really like it, there is a lot of legacy stuff that needs to be in this upgrade cycle. having delivered something that's great to the market it's not pricing that you are seeing an upside in the adoption of t there's a lot of pent up demand for a quality demand from them. >> set to open every $50 tomorrow. we will leave it there for now. appreciate t cole wilcox and tim lesko on microsoft. we have a news alert on mark zuckerberg with julia boorsen. >> mark zuckerberg and his wife are launch ago private school in east palo alto, it will start at preschool and go through eighth grade and be linked to health services targeting disadvantaged services. the school is set to open in august and will be free to all families. it is aiming to have 7 hup children but will start out with 50 kids in each class, next year two instant and toddler classes
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and one preschool class. chan who has been a teacher, now she is a pediatrician is look to go apply a holistic approach focusing on health as well as education, the school will include a clinic with free healthcare. they have made a number of gifts to education. $7.5 million for college scholarships to undocumented immigrants -- undocumented students. this is just the latest in their commitment to education, but it will be very different to have something really in facebook's backyard. back over to you. >> julia, thank you. let's bring in jon fortt as jon was an education report were in the silicon valley area. for a window into what this particular school will do for zuckerberg and for the vision that is they have, but also, you know reerks flekting on what many are calling the failure this have $100 million gift to newark. >> i think it goes too far to call that gift a failure if you track the performance of charter
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schools in new jersey in the newark area since then. in this particular gift and in this particular move that the zuckerbergs are doing, mark this day because it marks an important escalation in silicon valley techs attention to education and their willingness to get hands on with it. a few details here. east palo alto is right next to palo alto which is a very well to do community, steve jobs of course lived there, many other tech luminaries lived there, but east palo alto and menlo park are pretty i'm proven i wished, heavily latino and black populations there that are socioeconomic clee disadvantaged. this move is interesting because around three, four years ago a friend of mine who teaches at a private school that serves disadvantaged kids in that area said that mark zuckerberg visited her classroom, very low profile, didn't say anything to the kids, just observed. the kids didn't know who he was, but he has been paying attention to this issue for a long time.
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a few years back one of his initiatives was to get out and meet somebody new from the community on a regular basis. that school by the way, east side college prep just cut its fifth grade so it's not serving younger kids anymore, this school will slide in and serve an important community. there have been rumbling about google looking into making a move like this. zuckerberg and facebook not alone. expect there will be more news later this month about more tech companies getting heavily involved in education. i will just say that much. we will have more news for you down the line, kelly. >> that's a tease. jon, before you go, he is going private not charter so he could probably charge what he wants in this case. but so much of his mission has been trying to improve outcomes for some of the lower income kids and that kind of they think. do you know what the deal is going to be in terms of how expensive this school is or how kids are going access it? >> the report is that this is going to be free. we see a variety of approaches.
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there are charter schools in the area as well. if you do a charter you are more likely to have to obey certain rules under a district. there are advantages there, disadvantages also. if you go private you have a lot more leeway to form education the way you want. of course, they are doing healthcare services on campus, there are probably reasons why you would want to do that in a private environment as well, kelly. >> all right, jon, thank you so much. >> we will keep following all the big earnings and get the latest from alphabet's conference call coming up. less than a week away from the gop presidential debate right here on cnbc. up next, we will take a look at how the track records of louisiana governor bobby jindal and former arkansas governor mike huckabee stack up in a match of the southern doves. stay tuned. cover everything. only about 80% of your part b medical expenses. the rest is up to you. so consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company.
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thomas jefferson, teddy and franklin radios velts, ronald reagan are some of the 17 governors who went on to become president. half of the gone race have gubernatorial experience. we are getting an early jump on activities using our annual america's top states for business data to fact check their records. he joins us now with the second part of our series on louisiana's bobby jindal and arkansas's mike huckabee. scott. >> kelly, i can't believe you left out rutherford b. hayes in that lift before. like the other governors running for president bobby jindal of louisiana is promising to do for america what he did for his state, including cutting the
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budget. >> we've got to cut the size of the government economy, nobody else running for president has done that. i am the only candidate, i have cut my state budget 26%. >> that seems impressive until you note that virtually that im you note that entire cut, close to $9 billion is federal aid following hurricanes katrina that has run out. jindal kept the state spending flat in louisiana and cut taxes. this year, the state legislature has had to close a $1.6 billion budget gap. louisiana finished 46th in our america's top states for business rankings this year. it has never been above 40th under bobby jindal. mike huckabee of arkansas was leaving office in 2007 as our first top state study was givening. the state did not do well that year. 36th overall. the 41st ranked economy, 40th in education and 44th for
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infrastructure. here is how he portrays his record as governor. >> we pass 94 tax cuts, rebuilt our road system, saw dramatic improvements in student test scores and fought the corruption of the good old boy system so working class people would finally be given a fair shake. >> huckabee likes to say family income in arkansas rose 50% during his tenure but that is not adjusted for inflation, and it trails the rise in incomes during that time nationwide. we've got more about the governors who want to be president, republican and democrat, at top tomorrow the governor who says he can do for america what did he for ohio, john kasich. >> love it. so much of the discussion day-to-day seems to focus on ideology. this is a real look at experience and what happened under their leadership. thank you very much. scott cohn. next year the debate will be taking place here on cnbc next
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week october 28th. coverage will begin at 5:00 p.m. eastern time. don't miss it. we've got the latest from alphabet's earnings conference call. shares up by 10%.
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> alphabet's conference call begins. >> operating profit $4.7 billion. the cash balance now at $73 billion. that led her to a discussion of the stock repurchase news, $5.1 billion. saying that reflected disciplined capital allocation program they have there. starting q-4 she noted they'll begin to break out the different divisions. google and what they now call other bets, being this official name for moon shots, saying they'll break out revenue, profitability and capex. just getting on the phone now saying he knew chief executive at google, saying google is just beginning to scratch the surface. owe wants google to remain a place of creativity and
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innovation. i'm going to hop back on the call and bring you more headlines as they come. >> great stuff. thank you for now. alphabet shares up 10%. >> it's been a crazy hour for earnings. next amazon and microsoft conference calls.
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welcome back. while we continue to monitor alphabet's conference call we are are moments away from hearing from amazon and microsoft. just about a half hour's time. what should people listen for? if people miss this move in google, have they missed the move now? >> i'm kind of hesitant by saying this, but i actually think these results and the new management team and the transparency and the valuation makes this still a buy. i think you can buy it. i don't want to buy it up 10%. wait for it to settle a little bit. they are delivering on growth. >> why is this a game changer? >> to me, google has always been a black box. where are they getting their number and growth from? we kind of new, but we are getting specifics now. you have a team in place that wants to deliver value for the shareholder. that speaks volumes for someone like me that wants to see that. it's a rerating potentially.
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>> netflix blamed their weak subgrowth on the chip technology and credit cards. i'd like to see if there is any address on amazon on prime renewals not growing. >> if they don't address it, that tells you something. thank you both for joining me. crazy hour. that does it for us on "closing bell" "fast money" begins right now. "fast money" starts right now. live from the nasdaq market site overlooking new york city's time squares. cnbc breaking coverage on the three big earning stories tonight. it is red phone nation on fast money tonight. back at headquarters ready to react to microsoft's beat. do not think about adjusting your tv set. you are not seeing double. that is suntrust bach manning two separate calls for us. we'll check in on both


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