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tv   Fast Money  CNBC  October 22, 2015 5:00pm-6:01pm EDT

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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 throughout this hour.
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the biggest mover of the evening is amazon. stock hitting a new all-time high. that call getting under way right now. let's get to john fortt with the latest. >> this is quite a quarter for amazon coming in the top line above expectations at $25.4 billion, making a profit, eps, a profit up 17 cents when a loss of 13 was expected. it's the cloud line that is going to attract a lot of attention. they were expected to get just under $2 billion there. they went over that. the color on the cloud is going to be important. so is the color on costs. they just expanded same-day delivery both in the new york area and in the san francisco bay area. by the way also in chicago and philadelphia. remember, that's free same-day if you order before noon you get it by 9:00 p.m. that costs money, especially because it's seven days a week. how is that going to impact the holiday season which they clearly expect to be busy
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because seasonal hiring they are projecting to be up 25%. listen for costs on this call. >> john fortt, we'll check back with you later on. dan nathan, what do you think of the amazon trade? market is dramatic. >> it's uncharted territories. last quarter was important to record. july 24th, the stock amped up the next day off a similar quarter. they had profitability better than expected. stock opened up 27%. closed the next day up 10%. good as it sound, you don't have to buy it right now here. these guys are investing very heavily. they already said they are going to hire 100,000 workers for this holiday period. they gave guidance less than consensus and will probably beat it. i would not be a buyer. >> is anybody worried that the surprise profit will be a bait and switch? next quarter when our costs are high that's when they will say, eh. >> you could have said that last
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quarter, as well. >> fair. >> i think you make a good point. dan's point is spot on. if you bought the earnings release last quarter, you bought the high and it did a back and fill over the next few weeks, which you'll probably see again. this was a ridiculously good quarter. nongap operating margins close to 4%. totally smoked what the street was looking for. we liked amazon going in the quarter. i didn't think it would have a movement of this magnitude. what's the plan? if you're long it, you take some off the table and look for the back and fill dan talked about. >> suntrust, bob pulling double duty fours. working the red phones for us tonight. bob, let's start off with amazon. what was the highlight to you? does it warrant this jump in the stock in the afterhours? >> there are a couple of things. the units accelerated. that's always the key part growing 26%. the egm, the other bucket accelerated 300 bits to 27%
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growth and aws strong growth. 80% or so. couple that with gross margins that beat 34% and operating profits higher than expectations 3.9% versus 2.5%. the guide on the top line was good. one thing to pick out is the guide on the margins. looking for $1.3 billion of profit on $1.8 billion on $30 billion of revenues. otherwise fantastic quarter. >> we'll let you get back on that call. we've got to turn to alphabet. let's get to josh lipton for the details on that call already under way. >> when ruth borat came to google, there was a lot of excitement. they thought maybe get news and insight how she thought about capital return. instead you got real news, $5.1 billion stock repurchase program.
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>> this decision is consistent with our overall capital management framework and complements a disciplined capital allocation program. our primary uses of capital will, of course, remain capex and m&a across the breadth of our businesses. >> investors have been hoping for greater openness and clarity into this business. porat says she will give that in q-4. they'll break out google and moon shots, called those other bets they are referred to. they'll break out revenue, profitability for both divisions. the q&a starting. i'll bring more headlines as they come. >> that stat the number 5.1 billion, you're rounding it. it's 50990195.359 which happens to be the square root of 26, which happens to be the number of letters in the el ga bealpha. >> i thought the same thing. >> that was from one of our
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members of our crack staff noticing that. >> noticing that? i just glanced at it. >> it's a good observation. >> only google would come up with that. you can't fault the quarter. fantastic quarter. ruth porat doing what everybody expected her to do and more. let's go to how you trade this. stock's up 10%, 11% after hours. you've got more than what you're expected. it was the surprise quarter. the question now is what do you do with the stock? i think you start taking some off. that's not to take the quarter down at all. just a trading call. take some off here. see what happens. you get a little bit, okay, let's sell the news. what else is out there? you can get back in. we are broken out above 700 now. use 700 as your support level. take off 750 when it gets to 700. >> no one will argue taking
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stock when it's up after hours. when they climb like this, tens of thousands of times maybe i'm making up a little bit on thousands of times, you probably stick with the momentum in a google. if the market sticks on track and we burst through, those resistance levels, google probably trades higher, as well. >> for more let's get back to bob peck. he switched phones. bob, we are having a debate on the desk whether or not you would stick with momentum like this. is that what you're telling clients at this point? have you heard enough so far? >> we would. first of all, revenues top line accelerated 21% growth fsx driven by volume. everyone is looking for strong operating margins, cost controls. ruth delivered it. they now have six products with over a billion users, which is astounding. they are shareholder friendly, $5 billion of share buybacks which investors wanted. the real catalyst you stay long here, the transparency.
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they are going to break out not only revenues but profit and capex. they remember it happening and being good for amazon. i think it will be good for google. >> jump back on the calls. guy, do you concur? >> i do. i think the stock rallied 40% and justified. pay clicks up 23%. i get what bk is saying. he will probably be spot-on in the back and fill here. it comes from the previous all-time high which was 680 or so. if you think about this. if you took the decimal point and moved it one over, instead of $700 stock it was a $70 stock. would you look at it the same way? it's not an expensive stock that continues to grow. i think it can continue to go higher from here. >> we haven't mentioned microsoft. it's worth noting, we'll get to that story more indepth. we are seeing the stock move in after-hours session. we are seeing a big move in the qs.
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on top of a day where we saw the nasdaq up 1.7%, this sets us up well for tomorrow. >> when you think about those three stocks, amazon, google and microsoft, $1 trillion in market cap, nasdaq 100 is $5 trillion in market cap. stocks are paring those gains. these stocks that we are talking about, they pus up really good quarters. the stocks are performing well. they are also trading at all-time highs. that is dangerous to me. that is a word of caution here. they are also masking a lot of poor performance and a lot of other stocks that make up that index. i think what bob peck just said is stick with it, stick with it if it's working. i don't think that means buy it here. >> we'll have much more on this. take a look how microsoft shares specifically are doing in the after-hours session. huge earnings feat. stock up almost 7%. that call about to get under way. we'll bring you the latest when it starts. the so-called smart money has been anything but. the top five stocks that ruined the year for the biggest hedge
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welcome back. shares of microsoft moving higher after hours. let's get to john fortt with the latest. >> this was a very interesting quarter, particularly because of the breakdown in revenue. pcs, what they call more personal computing which of course includes windows and pcs, did a lot better on the top line than a lot of people expected at $9.4 billion. people on the street were looking closer to $8.5 billion. the cloud is a standout in a real sense. even though the revenue might not be that far above what the street was looking for. there was a big currency impact. that revenue run rate of 70% plus growth year over year is important. it appears to be keeping pace with amazon. that gives people hope microsoft changed its ways. this is not a company relying on windows any more but relying on the cloud. the other business, the productivity business came in at 6.3 billion.
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it's heavily reliant on office 365. that is another kind of annuity revenue stream they are looking to grow. that is out of the traditional wheelhouse. if you are an investor, you want to hear more about how that business is doing, in particular how they plan to grow it throughout the year, and how they are going to come up against a number of things amazon announced at their cloud conference where we were just a few days ago in las vegas, with amazon planning to take on the enterprise business software landscape and infrastructure. they are not satisfied with the areas they have been. they are moving into data base and more areas where microsoft has been strong traditionally. >> after the amazon web services conference you're at, and after they announced those products that would make it easier for enterprises to switch over from oracle to amazon, you saw a reaction on amazon. is there a similar concern with microsoft's cloud business as we are starting to see the one product rolled out a few days
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ago and another one out in a year? >> microsoft gets credit for being at that mega scale similar to where amazon is. if you take a look at gartner's magic quadrants, about who i full is a company's vision? how real is their ability to execute? amazon is far up and to the right on that. microsoft is right behind them. they have the money to spend. they've been working on this for years. satya was in charge of that business. that's why he got this job. what you see happening now is a bit of a separation. hp just announced today they are shutting down their public cloud business, basically it reads like an acknowledgement they don't have the capital to spend. the head of amazon's cloud business said there are going to be competitors out there, but more in the realm of half a dozen, not 20. it is expensive to do and that is paying off for us. >> thank you. john fortt.
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microsoft conference call gets under way in 15 minutes. the stock, if it opens here, this will be a new 52-week high for the stock. the all-time high was $59, $60. >> this is where it ran in resistance in 2014 in december. it's roughly up 10% with this move year-to-date. six months later failed at the same level. june of 2015, it failed again at the same level. amazon web services, john just talked about it. if you look at that exponential growth, they are taking their lunch, taking their dinner. it's a sexier play. amazon is an etf in itself. it's got retail and tech. >> the valuations are quite different. to john's point, microsoft is behind amazon when it comes to cloud. if you want to buy a cloud company, why wouldn't you want to pay 18 times earnings? >> i've been bullish on amazon since $195. people said i was crazy to be
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bullish on amazon. we talked about it. maybe a month ago i said the reason why you've got to look at amazon not the same way you look at walmart is aws. >> i get that. i'm not saying don't be bullish amazon, why not bullish microsoft? >> mel is making a better point. >> thanks, i appreciate. she hosts the show. >> the company has guided to their cloud revenue to be $20 billion. that year they are supposed to have $100 billion in sales. that gives them that diversification, gets them away from the legacy businesses. trading 17 times next year's earnings, they have $95 billion in cash. they balked at making the wrong acquisition in sales force at the wrong price. >> maybe you'll be right this time. >> okay. i guess my point is you probably buy it on a pullback back to the level he wants to sell it at. >> more on microsoft. dan has an outperform racing $53 price target on the stock.
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manning the red phone or will be once the conference call gets under way good. to see you. was this a turning point for satya nadella? >> this is a game changer. it's what happened on cloud as well as windows 10. you're seeing a major change at microsoft in terms of customers. both enterprises, s&b and large enterprises, signing deals. it's a major catalyst. the thing investors will love, they crushed operating margins and free cash flow. probably the healthiest they posted in the last four, five quarters. now going forward, it feels like in large cap tech with a lot of these others, oracle, cisco, hpi, the dinosaurs of tech, microsoft is the only one going to the cloud and being successful there. that's where you are going to see tomorrow morning is more large cap tech use microsoft, rerated with a renaissance growth. >> is microsoft insulated from the slowing pc concern?
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>> it's a major headwind. that is something the street's well aware of, which is why windows 10 is so key. it's where that free strategy, $110 million to date is so important. because of the near-term painful long term gain. it gets microsoft away slowly from the pc toward the cloud. it's still a headwind. as you start to see numbers today, they are starting to insulate themselves because of cloud and the windows 10 strategy. nadella is looking like the role model in large cap tech. he should teach a course to whitman and some of the others. you're starting to see that in numbers. that is what investors are shocked about, hechting a ho-hum quarter and hit a triple in terms of the number. >> we'll let you get ready for this conference call. thank you, dan ayes.
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>> dom, this was the best performing mid cap stock out there this year. >> absolutely. it's been the leader of the s&p mid cap 400. when you talk about skechers, it's not as big as microsoft. it's lost 1/3 of its value in the last hour after recording earnings. we are talking about heavy volume. about 2.4 million shares traded in the after-hours session. earnings in sales came short of analyst estimates. they are blaming strong dollar, new store opening, a couple of new store openings in new york city, as well as other legal fees and other things. ceo david weinberg says the company is "comfortable" with current consensus analyst estimates. like you said, this is a stock that was set up. it was up 150% so far just in 2015 alone through the close today. the shares therefore had rallied relatively strongly ahead of that report. a big drop after hours here. it's still, even with this big
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miss, one of the best performing mid cap stocks out there. a stock that's rallied a huge amount going in here, now a bit of disappointment. that's led to that 33% drop after hours. back to you. >> dom chu, thank you. what do you make of this move? good point that it's still up for the year. >> you don't try to catch a falling knife here. what you are starting to see this earnings season is some real silos of things doing well. nike doing well. skechers not. cloud doing well. >> coming up -- investors throwing in the towel on a crucial group of stocks today. that could spell serious trouble for stocks. we'll explain. that sums up the year some of the best hedge fund managers are having. the names tripping them up.
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>> one pattern emerging from earnings. it could spell opportunity for one group of stocks. we'll explain.
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pandora seeing a huge move lower in the after hours session. julia boorstin in l.a. with the latest. >> on the call moments ago, ceo addressed concerns about user declines. 78.1 million active users may be up from a year ago but down from the prior quarter. listener hours are declining from q-2. the company expected to impact from apple music. investors do not seem to agree, that stock trading down over 20%. mcandrews tried to stress the positive saying the company is laying the ground work for growth working closely with artists, giving data on their listeners and fans and acquisition of ticket fly which he said would be transformative and would connect advertisers to the growing business of events and festivals. another factor driving shares lower was not just user numbers but revenue which fell short of
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expectations and guidance for the fourth quarter, which was far short of wall street projections. the company disclosed it will pay $90 million in a settlement with the record labels to play songs made before 1972. the company noted the call a couple of minutes ago it is working to refresh its approach to licensing to make those costs more predictable. >> here is the thing about pandora. apple music was the quarter. apple music is only going to grow. these guys will be challenged on their paid portion of their music offering and bought ticket fly to whatever she said about sinking with advertisers, that mold is dead for all intents and purposes. this company is going to be taken under at some point like napster was a few years ago. it's a sad story. too early. next -- on that note, amazon hitting new all-time highs in
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welcome back to "fast money." huge rally on the street as mario draghi hinted they might expand their quantitative easing program. the moves put all indices on track for the fourth straight week of gain. leading the dow higher, mcdonald's and 3m. american express, the biggest laggard down more than 5% in today's session after a disappointing report last night. a big day for stocks leading to b bigger night for tech after hours. alphabet, amazon and microsoft taking off. amazon up 11%, hitting all-time highs. microsoft conference call just getting started. we start off with alphabet here, more commonly known as google. we still call it google. josh lipton has been on the call. >> the conference call did just
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end. being asked about the shift from desktop to mobile presents opportunities for his company as well as challenges. here is how he answered that question. >> mobile gives us very unique opportunities in terms of better understanding years, and over time as we use things like machine learning, i think we can make great strides. my long-term view on this is it is better than desktop. it will take us time to get there. >> no surprise given we heard from microsoft and amazon tonight that he was also asked about his cloud strategy. saying google sees clouds as an exceptional opportunity. new customer adoption is seeing tremendous momentum. google continues onto vest, in his words, a lot in that cloud business. i'll point out cfo ruth importaporat being defensive about the moon
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shots. other bets remain a broad array of what she called sound business opportunities. the company has a rigorous approach to those moon shots and alphabet will be, in her words, the best magnet for entrepreneurs. >> is there any more carrot or did she lay out a path to other measures of capital return that they might pursue? is the dividend off the table at this point with a buyback announced? >> she didn't mention that. she was very clear this was part of what she would think of the disciplined approach that she wants to keep putting money into those other bets, those moon shots which she argues could be great opportunities for this company down the road. that's part of a broader plan. it was interesting when other analysts asked ruth porat, there had been a change in management here. of course, they applauded ruth porat being hired here because she would bring better control and transparency. she said no. some of what you're seeing has
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been put in place a long time. not taking too much credit for what we've seen today. >> thanks so much. as we mentioned, shares are are hitting a new high. check out shares of facebook moving higher sharply in the after-hours session. this after hitting a new 52-week high in the regular session. if it opens here, it will eclipse that high. >> stay long facebook. we've been on that wagon. facebook is one of those secular stories you stay with. their move to the mobile platform has been tremendous. the last four or five quarters have been outstanding. the stock hasn't performed particularly well until recently. this google quarter along with amazon will drive facebook up. they report november 4th. stayed long and in earnings. >> get to amazon here. that call halfway through. >> the talk is about growth. that goes to electronics and general merchandise. also cloud. take a listen to what they have to say about the cloud.
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>> we are continuing to see great acceleration in the pace of innovation. we learned 530 new significant features this year which is more than last year already. we continue to lower prices. we lowered prices eight times since rather large price cut in april 2014. the customers are really responding. >> they also said to be careful about assuming that the results are going to be exactly the same every quarter, saying the cloud is going to be lumpy. results will be lumpy. high growth every once in a while. maybe a little bit less now and then. they expect it to continue to be strong and they are fueling growth there amazon talking about india, saying that they tripled their fulfillment capacity year over year there. also talking about third party sellers. 46% of the sales now are going through third party sellers. amazon management saying that
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amazon prime and fulfillment by amazon, third party sellers who fulfill through amazon warehouses go hand in hand. the more they grow prime, the more attractive it is for third party sellers to do fulfillment by amazon. the more inventory, the more people want to be a part of prime. i want to tie together what we are seeing from microsoft, amazon and google in these results. it seems like these are companies that invested in delivery infrastructure of different kinds. think about the cloud. think about what amazon has been doing on the ground. think about other means of delivery when you look at google through android. these are companies pulling away from certain competitors because they have the foresight and capital onto vest there. now it's paying off. >> that is a good point. let's get to the man who can do it all for us. bob peck has been on two red phones tonight. first of all, we are taking a look at what would be new highs
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for both these stocks, alphabet and amazon. which do you think will get to $1,000 a share first? >> that is a great question. we'll have to run the numbers. we have a target of $77 or so for google. ruth did a good job emphasizing cost controls and painting a vision. tacked about the mobile revolution. importantly, they are having 40% of those queries deep app linking. doubleclicks up over 3.5%. india their number two market. mobile monetization is starting to catch up to desktop. the reason investors will stick around here is getting this breakout of revenues, profits and capex will protest clarity to the businesses. >> i want to go back to the initial question i asked you. the multiple on amazon would imply it's a growth stock and it would reach $1,000 before
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alphabet. >> yeah. google right now is almost a different type of play. that trades around 10 times or so ebitda. that's why investors like that. 20% growth on the top line. only paying 10 times ebitda. the way you look at amazon because of capital intensity of the business, you need to look at free cash flow. in trades right now currently around 60, 70 times free cash flow. you're paying up more for amazon right now. that's why we've been recommending google over amazon. >> i'm going to pose the same question on this desk. which one gets to 1,000 first? hands down, google. >> hands down, yeah. valuationwise, it makes sense for google to get to 1,000 before amazon. >> i'm going to go with google. the reason is i'm concerned with amazon. you have to calls be concerned with amazon they are going to start spending money again. that will erode that free cash flow. >> google is closer. i say google. i do love amazon. people get nervous about the
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valuation. google is an easier pill to swallow. >> can i make a point? this is not too different than what we saw in 2000. these four names we talked about, google, facebook, amazon and microsoft. they are the dominant players in their field. we are seeing a massive concentration among these names. we know how that ended back then. >> we have breaking news on microsoft. john? >> more lay-offs at microsoft. microsoft saying this is not associated with their prestructuring they previously announced. it is around 1,000 people, less than 1% of the work force. these are new part of a regular rhythm of the business, they say. not associated with the quarter that they are reporting. certainly shows that they have an eye toward the bottom line. they lowered their operating expense guidance just in april, appear to be continuing to look at that. you worry about morale, death by
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1,000 cuts can be an issue. clearly satya nadella and the management team sending a message they will remain lean. in terms of what all these companies, john made an earlier great point about the cloud. all these companies tonight have the deep pockets to outspend their competitors and to endure price cuts which is what amazon talked about in its conference call. it cut prices more than half a dozen times to win this war. >> ibm has the capacity to outspend all these companies and they choose to do it in a different way. they choose to buy back the stock which has been wrong. what microsoft shows is how lousy the ibm quarter was the other day. i know they are different companies, but microsoft was able to pivot a lot faster than ibm. microsoft's quarter shows you how lousy ibm is doing. my opinion. >> still ahead, hedge fund darling valeant getting hit again today. not the only name tripping up
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the so-called smart money. a look at five biggest stocks killing hedge funds. >> check out shares of microsoft. we are right now hitting levels not reached since just before the dot-com bubble. monitoring that call which is under way. we'll hear from satya nadella later this hour.
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>>. >> welcome back to "fast money." they are called smart money but 2015 they've been anything but. >> this month with the index rallies over 5%, hedge fund performance may be sinking badly and the contrast is all that much more clear. consider the goldman sachs index of most popular hedge fund longs known as the goldman vip index. year-to-date down 5%, thanks to some beaten-up and crowded stocks. valeant, the 11th most popular name that goldman tracks for this recently is probably the worst at the moment. it's down about 38% month-to-date, thanks largely to a report put out yesterday comparing it to enron. major hedge fund names like
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pershing square and viking are taking a drubbing. a popular pharma name abbvie down 11%, no doubt affected by an fda warning issued on two of its hepatitis-c treatments. an irish speciality company that is under scrutiny with valeant has been hit hard, down about 26%. dollar tree has been down 3%. this is all happening even as some of the most beaten-down names in the index overall, including yahoo and american airlines are seeing an october rally. they are doing better along with the s&p right now. >> it may be worse because a lot of these hedge funds have positions across the industry. a paulson owns valeant and sizable positions in allergan.
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you see these stocks move together on the same concerns and the hit is being multiplied. >> right. you mentioned pharma names. there are questions about whether the rally in pharma is ending, whether the favoritism toward biotech names is ending. i think it's not clear. some of these stories are idiosyncratic. when you have a handful of losers or companies with bad news that's tough to counteract, it's not a great hand to be dealt in your portfolio. >> kate kelly, thank you for that. >> thank you. >> what do we make of these stocks here? any worth picking up? >> no. when you look at them, you see names like the fang stocks are the only things working here. a some point you have to have liquidation in these things. i don't think you necessarily need to try to catch any of these, particularly valeant. that looks terrible. >> speaking of valeant, that is one name that tripped up hedge
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funds. the stock tanking the second day in a row down 12% after a short seller sounded the alarm about the company's connection to a network of speciality pharmacies. doo biotech stocks use a similar arrangement? let's bring in resident stock therapist meg tirrell. they said speciality pharmacies aren't unique. it's just the financial relationship valeant may have with its speciality pharmacies that makes the difference. >> yeah. nonetheless, we are still seeing the pain of the scrutiny on the practice spreading throughout the speciality pharmaceutical space. speciality pharmacies and speciality pharmaceutical companies are two totally different things. it does happen to be speciality pharmaceutical companies that use these things. they went so far illustrating the fear spreading in the industry about this to contact every single drug company he covers and find out their relationship with speciality pharmacies. these are biogen, merck, gilead.
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these aren't endos for horizon or valeant. each one he said has no ownership with or affiliation with in terms of ovwnership or exclusive relationship. horizon pharma, endo, allergan yesterday, these companies all getting hit in the last couple of days over fear of their use of these pharmacies. we have this pamphlet which is what valeant uses. this is a speciality pharmacy in question here. the questions arise on it controlling financial interest in its speciality pharmacies. these companies all putting out statements saying they don't have controlling interests in the pharmacies they work with. all is very small portions of their revenue. for valeant even, analysts saying this is about maybe 10% of revenues going through speciality pharmacies. the question has to be raised with all the scrutiny on this
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practice, whether there is anything fishy going on here. is this going to be allowed to continue? these speciality pharmacies are seen as a way for drug companies to keep the price of their drugs high. to circumvent insurance companies trying to have ways of going around that. all the scrutiny here, we've seen what's happening in drug pricing. companies capitulating to the pressure there. last year was inversions. all the pressure we saw there, companies capitulated to that. are we going to see that disappear in the speciality pharmaceutical companies? will this affect their models? >> meg, thank you. >> the twist today was midday when valeant announced it would have a conference call monday. it was down 12% but finished closer down 7%. >> i don't know about the company, but the stock is broken. you're flipping coins here.
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allergan, i think they report november 4th-ish. if there was a time to report a great quarter, it's going to be that. >> shares of microsoft jumping higher on the earnings report. we hear from satya nadella on what is next. can a business have a mind?
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welcome back to "fast money." an update from the microsoft earnings call. ceo satya nadella giving a more detailed thesis on his plan to grow the company in the cloud. saying there are only two companies that matter with the cloud and its enterprise. >> while many companies are developing commercial offering, there are really only two driving enterprise cloud platform innovation at massive scale. amazon and microsoft. we push each other and we each have a unique approach. microsoft has bet on a strategy to build a hyperscale public crowd as well as reinvent as the edge of our cloud. >> he went on to talk about the investment he's making across
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many different regions, 20 regions as far as data centers go. more than any other provider, he says. amazon talking about weeks ago their cloud buildout. nadella went on to say he's got 110 monthly active devices on windows 10, three times where windows 7 was the same period of time after launch. enterprise has been adopting it. an interesting note could explain the weakness yahoo saw in the surge. binge share is up to 20.7% and windows 10's adoption has been driving that. when it comes to office 365, an important part of microsoft's profit equations, they are up to 18 million consumer office 365 subscribers. that's up 3 million from last quarter. last quarter they had nearly a 3 million subscriber gain. that seems to be the clip where they are operating.
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they surpassed 200 million down loads of office mobile, indicating this cloud strategy from the enterprise side and consumer side appears to be panning out well for microsoft. >> thank you, john fortt. >> it's interesting because i think in comparing maing micros lumping it with amazon services, he is arguing for a higher multiple for microsoft shares. >> given those two, which would you rather own? amazon which is doing well, but valuationwise is astronomical. it seems like microsoft's the better way. i would suggest replacing the "m" in fang with "n." >> that's awful. >> i would buy it. >> steve grasso nailed it. it's got to hold the levels we held out july late 2014 which is
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here. >> which one are you talking about? >> microsoft. we were just talking microsoft. >> the call volume was two times out of puts today. there was a large trade that caught my eye. a seller of 15,000, probably taking a profit in index that is underperforming its large cap peers. this is the s&p. it looks like it's trying to head back to that breakdown level from august. the iwm, here is a year-to-date chart. it consolidated here. it's in a down trend and trying to get back. the iwm is down 11% from all-time highs made in the spring versus the s&p 500. one last point, the iwm is below the upfriend in place since
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2011. there is serious relative underperformance here. this is the best bang if you want to short an index. check out the full show tomorrow at 5:30 p.m. eastern time. >> final trade next. i'm here at the td ameritrade trader offices. ahh... steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this.
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big day? ah, the usual. moved some new cars. hauled a bunch of steel. kept the supermarket shelves stocked. made sure everyone got their latest gadgets. what's up for the next shift? ah, nothing much. just keeping the lights on. (laugh) nice. doing the big things that move an economy. see you tomorrow, mac. see you tomorrow, sam. just another day at norfolk southern.
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time for the final trade. let's go to dan. what grade do you give microsoft? >> nadella sounds like daniel murphy, i give them an "a." home run corner. >> bob peck, amazon? >> great quarter, weak profit guide, a-minus. >> alphabet? >> alphabet, great vision. returning capital to shareholders, grade a. >> that was a "fast money" first. >> russell 2000. you can sell. good hedging bang for your buck. >> dupont. underperformer since peltz lost that proxy battle. >> interesting move today in the bond market. brian would say buy tlt and so would bk. >> you're on vacation for a
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week. you have yourself a good time. >> thank you. >> have fun. facebook continues this meteoric rise. >> my mission is simple -- to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to mad money. welcome to cramerica. other people want to make friends. i'm trying to make you some money. my job isn't just to entertain but to teach, educate and put in context. call me at 800-743-cnbc or tweet me @jimcramer. sometimes you have to follow the short sellers to

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