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tv   Closing Bell  CNBC  October 27, 2015 3:00pm-5:01pm EDT

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>> maybe. maybe not. >> go red hawks. miami university was a -- miami was a city. >> before miami was a state. that's right. >> courtney reagan, thank you very much. >> we have got goth the dow down 65 points, busy last hour, "closing bell" starts right now points, busy last hour, "closing bell" starts right now. welcome to the "closing bell," i'm kelly evans at the new york stock exchange and i'm andrew ross sorkin sitting in for bill griffeth. ibm shares falling after the sec reveals they are looking at how they account for transactions. >> walgreens is on the verge of buying the vie val drugstore chain, right aid shares up 42 1% but can it get past regulators. >> and investors are gearing up for another earnings barrage after the bell, apple, twitter,
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gilead. we will have the instant analysis. >> we are 26 hours away from the start of the cnbc's coverage of the gop presidential debate. steve forbes and todd butch holds are here to tell what you say they want to hear from the candidates and predict who they think will come out on stop. we begin with ibm under investigation by the sec they have dis pleased. bob pisani has the latest as the shares are falling. >> well, obviously investors are taking this a little ease seriously. ibm down 3.6%. it dropped 2% on this news and their investigation on revenue recognition issues at the sec, ibm says they are cooperating with them. they are investigating how they account for certain revenues that they get from transactions in the u.s., in the u.k. and irela ireland. you would think does that sound that serious? i think the issue here is that revenue recognition is sort -- in the software services particularly is sort of the
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heart of their growth that they're having and anything that interrupts that or calls into question how they're getting that growth is a big issue for the company. so right now we're moving on the down side here. ibm said that it learned of the investigation back in august, that's very interesting, the news was disclosed in the quarterly report. you might ask yourself could they have told us this when we had the conference call that might have been a little helpful. they chose not to do that. and remember something, they did open up this morning, they had some news, they did say that they were buying back $4 billion in additional stock that is correct always helps. they are a huge player in the buy back business. they've been buying back their stock for many years but it's not been a good year for ibm. they are down now with a 3% decline probably down 14 or 15% on the year. any more news on this we will let you know immediately. >> bob pisani on the floor. joining us now for more let's bring in charlie ma grin. we were talking last week about
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your enthusiasm i believe it was for ibm shares. just as a shareholder is this the first time you knew that the sec was looking into the company? >> yeah, this is the way that they announced it. they will typically have a sentence, sentence and a half saying there is an investigation. they don't know any more than that. bob actually read the entire disclosure on this which is about 20 words. at this point nobody knows anything. i will point out the sec does investigate lots of things, it doesn't mean they are saying there's wrongdoing or that they will find any wrongdoing, it just means they're looking into it. >> while it was in their third quarter release bob was saying they didn't highlight it on the call. there wasn't more attention drawn to t was that an error on their part? >> they are obviously saying at this point they didn't think it was material at that point. i do have some experience with public companies, you do get a notice from the sec that they're look into something, it's a fairly common occurrence. i don't want to try to pass this off as nothing because it's not, but at this point we really don't know that there's any bad news. i will say that software as bob
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said is an i wish area where revenue recognition can go one of two ways. the same exact deal can get treated as a license or subscription and the accounting is very different. >> you look at this and you say it's not material because they decided that they -- they didn't think it was material or are you worried that they are hiding something or is there some kind of disclosure you think they could have provided that they haven't? >> it's because they don't -- no. at this point the way this works is you get a notice from the sec saying that they are looking into the following topics. that might be all you know. you may get a request for documents you a bu i'm almost positive by point they haven't heard the sec say that they have done something wrong or believe me they would disclose that. >> i guess we look at the share -- the reaction in the shares, charlie. earlier this morning of course they were also announcing that $4 billion buy back, but even then there wasn't much of a response to the upside here. >> right. >> just kind of looking at
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what's happening in the market today, what do you think this move is telling us? >> well, it's telling us that all institutional investors an lists know there is a big disconnect between the eps of the company and the cash flow. eps is much higher than cash flow. i'm a bull on the stock, but even i know that, even i admit that. they are a very frequent user of stock repurchase to help earnings per share. they issue a lot of options to their management and they often add past that expense. if you buy back the stock that is an aggressive way to treat the impact. but i think that's widely known. i know it and it's why frankly the cash grow is not as strong as the earnings per share. >> would you prefer this they continue buying back stock or make a big acquisition. >> personally i prefer they keep buying back the stock. i think it's going to look like a very good use of money but i will say they do use it to offset dilution coming from options they have begin to management and that is where the
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accounting is you could say a little bit aggressive. >> thank you for your perspective. we appreciate it as we try to figure this all out. >> we now have another big story of the day, walgreens alliance nearing a deal to buy right aid. >> a big story here. merger would bring together the number two and number three pharmacy chains and would mark the third deal in the pharmacy sector this year alone. right aid shares spike to go one month high on reports from dow jones that it's in advanced talks with walgreens for a merger. the number three pharmacy chain lowered its outlook last month on higher costs of integrating its own recent acquisition of pharmacy benefit firm precision rx. walgreens ceo who came over through the boots alliance merger from last year has made no bones about the fact that he was in the hunt for an acquisition. in july he told analysts healthcare consolidation is necessary in the wake of
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obamacare in order to achieve scale and margins. earlier cvs picked up omni care, that leaves express scripts as the only major stand-alone pharmacy benefit manager. rick peterson over at s&p capital iq says this would be the fifth largest deal in the space over the last year or so. as pbms continue to play a bigger role this is a space to watch. walgreens reports tomorrow ahead of the bell. it's going to be an interesting conference call. >> indeed. bertha, thank you. let's get to the "closing bell" exchange for today. joining us is jim lowell, cnbc contributor jack pa roachy and ben willis on set with us. welcome one and all. ben, thoughts on this market with the dow up 60 points. >> market is stocks and right aid is the hot story, h-o-t, "star wars" another hot story,
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ibm the big story on the buy back, you have a spike of 2 points and settled right back in. aside from that the big concern for me in this market and most professional traders are looking at the underperformance for the russell 2000, especially since monday. that's not a good trend. people trying to take some protection in the vix. the other big story i haven't heard anywhere but in my groups that we chat with is that the airlines have been under pressure under clinton pressure in what the prospective president mrs. clinton will do to biotech she plans on doing to the airlines, we see some selling in the airlines based on this. >> ben mentions the small caps struggling. would you buy them? >> oh, i think i might buy a small caps manager proven his or her worth especially in the small cap value camp. from our perspective, look, this is the u.s. economy remains the not so little engine that could. the hill has gotten a little steeper, the head winds a little stronger both in terms of strong dollar, slowing global growth
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but also some challenges to our manufacturing sector and overall sector at home. but we continue to think that slow growth is not no growth creates the kind of environment where good stock pickers continue to make significant headway over the intermediate and long-term. >> jack waiting to pipe up out there. what do you make this have market? we've struggled so far this week, we're waiting to hear from the federal reserve tomorrow. why aren't we looking better here in the market right now do you think? >> well, you know, first of all, kelly, today is t plus 3, the last day to trade stocks and have them settle in october. there has been a pair blik month. we are seen this market go up almost 10% this month and that is usually followed by a strong november and december. now, i think what's happening is that the world and the market is waking up to lower input costs, contained inflation and earnings that are not a catastrophe. people were expecting the
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absolute worst maybe because they were expecting a dollar that was a lot higher. all of that you factor in the fact that the fed is probably moving out a rate hike until next year. now all of a sudden you will have a period where you have these fund managers chasing returns. it's really turning into the perfect storm for equities when you think about it and kelly i think the only thing i would be concerned about is maybe a spike down in the price of oil because that seems to trigger redemption selling. >> it's true, andrew. almost like the self stories have been -- i don't know how stealthy this one, moved lower on oil and natural gas. for stocks october is shaping up to be a good month. >> it's been a great month broadly. the problem is now we have ibm, we have vel yant, all of these sort of single story names but they are big names and people are focused on that. >> the fang stocks have had a significant move. it's been a focused move to the upside which is why i mentioned the russell. they did have a nice pop and
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moved laterally but it's drop off is disconcerting going into the month. there are a lot of naysayers going into october. climb the wall of worry and here we are going -- >> you brought up facebook, netflix, apple and alphabet. right before those earnings came out, amazon, alphabet smashed through expectations. how far has that reset the momentum for a market that was looking for leadership? >> again, we look at stocks a little differently but i think a lot of the selling we saw in the fangs may have been the short sweet experts so those stocks have had pretty much a chance to recover, not all so much today, but most of the big names have been moving. for the health of a market when -- that's why i said it's been a market of stocks than a stock market. we had that pair a blik move that jack mentioned early in the month then we flat lined. again, so if i'm looking to kweet crete any long position i
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would probably get long conviction as proo tex. >> do you think november is the new october? >> i would like to see -- i love selloffs as a buying opportunity, i believe december we will be higher than we are right now. >> we got it. it was the flash -- it was the flash correction. we already got t i think people have got to realize that. this market is now on its way up for the next couple of months. remember, when you get those selloffs it looks like it's the worst. remember the head wnds in the beginning of october, between china and everything else, andrew, all right, we were looking at what looked to be the beginning of what was going to be a steep decline and all of a sudden the market turned around. that tells you how resilient and how powerful this market really is. >> all right. we will give tlooef on that note. jack, jim and ben. >> about 45 minutes, a little more to go here, the dow off nearly 50 points, we talked about how ibm is weighing on the blue chips, the s&p mean while, though, also down about the same amount, giving up a third of a percent on the day, nearly 7 points, the nasdaq relatively
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better, it's still down 9. >> a busy day after the bell earnings, apple, twitter, gilead among the big names reporting, we will bring you those numbers the second they are released. >> and up next as cnbc gears up to host the next gop presidential debate tomorrow night, steve forbes and a former economic advisory to george h.w. bush will be here to discuss the candidates tax and trade policy. our coverage starts at 5:00 p.m. eastern tomorrow. you can also watch it online by logging in and aut kagt at [ male announcer ] eligible for medicare?
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welcome back. you're looking at a live shot at the site of tomorrow night's gop
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debate hosted by cnbc. our special coverage kicks off tomorrow at 5:00 p.m. eastern. you can also watch it online by log noog jeb bush was expected to be the natural gone challenger to hillary clinton but his campaign may be hitting a rough patch. our a mon javers has a special report from boulder. >> nobody really thought that we were going to be where we are today going into tomorrow's cnbc debate. it's all going to be about trump versus carson for that number one, number two slots in the republican field. where is jeb bush? he is way back in the pack. if you look at the numbers over the past several months his poll numbers have done a steady slide down. it's enough to be frustrating to jeb bush himself personally and also confuse his family, his whole group of advisors that he inherited from his brother and his father. these are vaet ran republicans who now feel like they don't quite understand where today's republican party s take a listen to this sound bite of jeb bush over the weekend. it's a sound bite that surprised a lot of people because of the frustrated tone in jeb bush's
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voice. take a listen here. >> i've got a lot of really cool things that i could do other than sit around being miserable listening to people dem niez me and me feeling compelled to dee noneyes them. that is a joke. elect trump if you want that. >> and you get the sense listening to jeb bush right there that he is frustrated with the rise of trump, doesn't quite know what to do about it and he's got a whole lot of other options as he said. today, though, he's maybe collecting his thoughts, gathering his nrj for tomorrow night's debate. he put out this tweet showing that he was on a hike today here in colorado, getting his mojo back. he said he was hiking in the el dorado want i don't know state park with military veterans today and that is a good way to clear the air, clear your mind, refocus and get set for that debate. this is going to be one of those moments where jeb bush is going to have to prove to his donors and supporters that he can go the distance in this race otherwise the doubts are going to creep in and people are going
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to start to wonder whether we are seeing the fall of the political house of bush, guys. >> eamon, thank you for now. we will see you out there shortly, our eamon javers in colorado. >> tax reform, economy, government spending are just some of the business issues that will be talked about in thomas cnbc debate. here to discuss those and the positions you will likely hear from the card dats, steve forbes and todd buckholds join us at post 9. welcome to both of you. steve, whose ideas on the economy do you think have it right? >> i think several candidates, even rick santorum will be in the baby debate. all of the candidates except for carly fiorina and one other have put out tax proposals to radically the tax code. the key thing is tomorrow night all the candidates have to rip into barack obama. they don't realize the intense dislike and distrust of the president in the base of gop. that's what jeb bush has to do and also come out with passion
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for your economic programs. they've put them out there almost like it's a checklist instead of something that reagan led with in 1980, 30% across the board income tax cut. >> you think the debate is more about fighting the democrats broadly speaking than fighting each other tomorrow night. >> absolutely. that's what reagan in 1980 when he had nine other opponents, focused on jimmy carter and a collusion to get this economy moving again. what's surprise something they haven't taken the bark off barack obama. what's surprise something they haven't with passion come up with alternatives to obamacare and the tax code. they've put proposals on the table but you would have to search deep into the web to find these things. >> todd, the front runners continue to be donald trump and ben carson who we have actually heard less from maybe on the economic front than other issues. will that focus tomorrow night help or hurt them if it is more about the economy. >> when you think about donald trump and carson it's kind of like one is mad as help, the other is sleepy as hell and that's who we have to choose
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frchlt look, donald trump has been doing terrific in the polls and carson not frankly because of their policies, it almost doesn't matter. donald trump is an attractive candidate for lots of people who probably have no idea what his policies are and his policies are not straight down conservative rooech views, he is anti-free trade, he obviously has a strong tax cut plan, but the real question for the debate is will the candidates themselves as steve recommends and suggests focus on barack obama and details of plans or are they simply going to make it about who is got the more appealing personality and if it's about a peelgs personalities i would ask you this, which of the candidates can you see as a successful talk show host? i would say jeb bush is failing in this race because nobody looks at him as the kind of guy who could sit as you are sitting today in front of a microphone -- >> is that the way we want to evacuate these candidates? >> this is what america has
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become. that's why donald trump looks so good. >> i have a donald trump question for you and a theory i want to paucity to you as somebody who was in the business community who is a republican thus far you haven't seen many business -- people from the business community come out enthusiastically for donald trump. however, you don't see businesspeople anymore say he is a joke. in the beginning he was a clown, he was a joke, everybody poo pooed him. now nobody does that. is that because they think he is real. >> he has tapped into this anger and angst that's out there. >> will they support them ultimately? >> it depends on how he does in the debates. if he starts to take back some of the stuff he has bun on immigration and just do a wink and a nod on it, on free trade and goes with the tax side, yeah, you could see him pulling the party together. the key thing for him is to get the negatives down. he has already got the positives, already got the polling support, especially in new hampshire where everyone is
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making their last stand. he's got to get those negatives down, people say maybe he is not so bad, we can see him in the white house. people can imagine him in the white house. that's what reagan in 1980. the key thing for these other candidates don't try to fight on donald trump's turf. you're going to lose. put out your own proposal, show you have real parks and believe for t that's what bush has to do. trump wants to make america great again. bush? i don't know. >> todd, one issue we have heard both carson and trump endorse over the weekend was health savings accounts, one way they would try to fix the entitlement issue while not necessarily stripping people of healthcare and maybe trying to fix obamacare at the same time. is that an approach that you and others support? is that an idea that should be put forward here as a solution? >> there is no doubt that there are millions of americans today who were stripped of their healthcare and feel greater anxiety than they have ever felt about healthcare because of
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obamacare. so certainly republicans are receptive to that message. obamacare stripped people of health savings accounts. for some reason the obama administration doesn't think it's a good idea for individuals to look after their health and care about where money is spent. >> they are coming back now in popularity for people who can't afford their deductibles or employer who are worried about the cadillac tax. is this -- has the moment as trump put it come now for broadly speaking health savings accounts maybe use those federal dollars. >> i think the moment has come -- and i think actually this is an opportunity also for marco rubio who has taken the position of looking at families and asking what do they need. a larger child tax credit, for instance. more time off and he's got a plan on that regarding the government pay which is controversial among republicans, but there is a real opportunity here for rubio to come forward and say, look, let these guys mad as hell and sleepy as hell get all the publicity but i actually can get things done in
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a way that will make american families better not simply business business. >> gentlemen, for now thank you both. >> steve forbes, todd buckholds joining us at post 9. >> we have 35 minutes to go. remind that are debate is tomorrow night on cnbc. meantime the dow is down 40 points, s&p down 6, the vix is higher again on the session, oil is lower, the nasdaq is down 7 points. >> coming up, find out what grade fed chair janet yell season receiving in our latest survey of the top money managers and economists. >> guess what percentage of the nasdaq 100 stocks are hitting 52-week lows. dominic chu will have the answer t may stries you and it's coming up. you pay your car insurance
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welcome back. as fed officials begin that you are two day monetary policy meeting in washington janet yell season not winning raving reviews. we have the low down on her perceived performance. mr. lease man. >> the low down on the low grade that she's getting, janet yellen getting just a c plus according to our 41 economists, fund managers and analysts here. she started off with kind of low grades in the b minus range and then successfully navigated the end of qe right through her first year and coming back down as the perception that she has not handled well this transaction to the on again off again is the fed hiking rates, is the fed not hiking rates. take a look at what the actual
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grades are. you can see a goodly number of people give her a b, it's this 33% giving her a c that drags down the overall grade and some giving her a d and an f. here is some of the commentary. joel not missing words, he says she appears indecisive even if she knows what she wants to do. jim bianco, even more straightforward, if the fed's policy was to intentionally confuse the market how would it differ from what they're doing now? you can see when we peer deep floor the concerns that wall street has with janet yellen you see concern for leadership and also critically communications taking step down in terms of the grading that she gets. not everybody is critical, kevin giddis at ray mon james says she has faced down her critics but knows that it won't be long before the committee must act. i give her high parks for her patients. what you find, hell kel, not a
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lot of people giving january net yellen an a for her efforts this past six months. >> how much pressure this puts on them to raise rates either tomorrow or more obviously in december so that they don't lose the confidence entirely of markets which have said, you know, you are the fed that cried wolf when it comes to rate hikes. >> i don't think the fed is going to raise rates tomorrow, i think that's off the table. they have feel the pressure if the economy does improve, it shows a flimmer of hope. when they say they think they're going to raise rates if the forecast comes out the way they intend and then the forecast doesn't come out then they back off, people criticize their communications in that regard. >> they have yet to be bullied into raising rates and by the way this has gn on for about a year now, right? >> about a year. i guess when you go back and look at the tail of the tape
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june 2015 was they were definitely going to hike, then it moved to november and december is the moment. taking step back all this communication and communication, have they gotten policy right? it was probably a smart move not to hike in september given what's happened to the data and the idea that the fed wanted clarity and got clarity and guess what that clarity was. the clarity was the economy was weaker than they thought. not hiking rates into those numbers seems to be good policy. >> steve, thank you. time for a cnbc news update with sue herrera. >> here is what's happening. isis claiming responsibility for a suicide bombing yesterday that killed a worshipper and injured others in a mosque attack in saudi arabia. police said they found a letter written by the bomber to his parents confirming his intention
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to attack. representatives of the united nations stood and clapped after a vote to condemn the u.s. trade embargo on cuba. only the u.s. and israel voted to keep t president obama wants to lift the sanctions but that power lies with congress. ups expects the tuesday before christmas to be its busiest day of holiday shipping season. it expects volume between black friday and new year's eve to rise 10% to 630 million packages. yesterday fedex says it expects a 13% rise in the number of packages shipped. >> tonight show host jimmy fallon poking fun at himself for hurting one hand while recovering from an injury to the other. he took to the stage last night as you can see in a hard hat, safety goggles, doing a little bob and weave there to avoid any more danger. he cut his hand over the weekend and we certainly hope he is on the mend. >> put down the sharp instruments, that said, back to
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you guys. >> sue, thank you so much. sue herrera back at headquarters. getting into the thick of things here, less than half an hour to go, the market still down 50 points on the dow, the s&p giving up six or seven, the nasdaq down 8. >> anything could happen. the final and most important half hour of the session, a leading trader is going to tell us what he's watching next. >> apple and twitter set to report earnings right after the bell. we will give them to you right ben wen they hit the tape. stay with us. 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.
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see you tomorrow, mac. see you tomorrow, sam. just another day at norfolk southern.
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welcome back to "closing bell." star wood hotels and resorts spiking on a "wall street journal" report a little bit ago now that at least three different chinese firms are compete to go buy it. they include westin, w hotels and the st. regis. that stop up 9.5%. >> less than half an hour to go in the session. we're joined by keith bliss. what are you watching and what is this market watching? we have so much to digest this week. >> the way the calendar converged upon us, you have
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macro, fed, 600 companies almost reporting earnings this week. the market is watching -- just sitting back and waiting for apple to report at 4:30. that has become the big bell weather for our committee. we want to hear so many iphones they have sold. >> apple is the new alcoa in that regard. >> that's how our economy has evolved: because of the die virginia ensees that we're starting to see, the larger cap indexes have held up pretty well, made back all the grounds they lost in august, but the russell 2000 is lagging behind. >> going back to this issue about apple relative to alcoa, the new economy versus the old, does that make you feel more comfortable given the durable goods number the ism reading one of the first data points in october could fall below 50. >> it would if everybody worked for apple but not everybody
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works for apple. we still have a lot of our jobs and we want to have a lot more of our jobs still that n. that old economy manufacturing sector. at some point it will become a problem for apple regardless of how many iphones they have sold. >> levels what are you watching? >> right now the russell 2000 and i want to see if we can get back above it's 50-day moving average right now and it's slipping here into the close, i'm not sure we are going to get there. i'm not real confident about pressing the longs here in this market. >> we will let you get back to it, keith. thank you so much. >> my pleasure. >> on monday the nasdaq 100 index closed within 176% of its bubble record closing high back in march of 2000, but there may be dark clouds looming for the tech heavy index, dominic chu is back at global he had lead quarts and has had a story. >> let's follow up on what kelly and keith were talking about here in the major indices, keith mentioned about the small caps but the nasdaq 100, the largest cap of all those nasdaq stocks has been again creeping higher
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but been due to a lot of larger cap companies like the a.m. zons and microsoft and alphabets of the world. a lot of the companies are negative near dwrooer day and some of them the largest cap stocks out there. the nasdaq 100 year to date up 9% it's because of a handful of stocks at the top that have been leading the way higher. if you look down below some of the other names of larger cap tech stocks that have been dragging things down for the nasdaq overall intel down 5% year to date, it's got $164 billion market cap, it carries a lot of weight in the index, qualcomm same story on the chip side, down 20% year to date, a $93 billion marked cap and biogen down 16%, 60 some billion dollar market cap overall. these types of stocks are weighing things down despite the fact that the nasdaq 100 is creeping higher. something to keep an eye on. now let's talk about a huge tech company, keith talked about apple, let's go through the
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numbers here quick as we get ready for the earnings coming out after the bell. the estimates from analysts say earnings will come at $1788, sales of $51.1 billion. now, about the trading, it's traded positively after earnings four of the last eight earnings reports, the options markets currently pricing what could be a plus or mines 5.5 move on the stock. on twitter estimates 5 cents for them on sales of $560 million. out of the seven quarts quarters had a has traded only two have been positive. andrew, some things could to keep an eye on as we head towards those all important earnings reports after the bell. >> just minutes before the bell is going town, the dow right now is off about 54 points, the s&p 500 off 7 points and we should tell you td ameritrade out with earnings today, we will break those numbers down with the company's ceo in just a moment. also jeb bush seen there
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campaigning, here we go, for the gop nomination out in iowa. he has been touting his experience as florida governor. coming up we will fact check his campaign comments against his record and of course jeb bush will be in attendance at cnbc's presidential debate tomorrow night. you don't want to miss it. at mfs investment management, we believe active management can protect capital long term. active management can tap global insights. active management can seek to outperform. that's the power of active management.
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welcome back. checking in on shares of td ameritrade down 1.5% today, revenue lag ago bit, but the company signed up 63 billion in new clients. >> joining us now in an exclusive interview it's fred tomsik the president and ceo of td ameritrade. i just want to go broad for me just for a second. we're trying to understand where the market is right now and it really has been a tale of two cities, if you will. the market has rallied in a month that it normally doesn't but then we had all of these single story names where we have
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had lots of problems. >> yeah, no, that story is true. we have seen a divergence between the traditional companies and some of the tech sectors. you've seen amazon have a great earnings quarter. the market right now if you look at our investors basically with the correction i think they are a bit cautious right now, cash balances are up marge nals are down, investor movement index has fallen. people are waiting to see where this market goes right now. >> to for your investors is it still a fed driven story or are people playing individual names, buying the vix, what are you they doing? >> right now they continue to buy some of the tech stocks, netflixs, amazons, apples of the world, they continue to be bullish on those types of stocks. they do trade then decks a fair bit, mostly with derivatives, but light now we've seen some pull back in their optimism and they are definitely waiting. there's so much headline news
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that's driving the market right now that i think they're watching what's going on with the federal reserve banks around the world. >> i was going to ask you, fred, when it comes to your own business, i know you have said how much of an interest rate hike would help you. in the story in foreign policy the fed needs to get its story straight, we were talk being steve liesman about whether the fed has a credibility problem. are you clear on their intentions? >> not really. i do think they've confused the market. some of that is the data and what's in front of that data, some of it's what's going on in other parts of the world and how that's impacting the u.s. economy. i do think they're doing the right thing to be cautious and wait for a discernible trend before making a move. >> can you explain why an interest rate hike for you is actually an improvement because the counter argument would be that if the market goes down because of it that's not good for you because people then don't go into the market. >> that's correct. but, i mean, we have -- 55% of
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our revenue is asset based, 45 of that is interest sensitive. we have $108 million of interest sensitive assets. particularly at the short end. and that would be something -- and presumably they get this right let's all hope they get this right, when they do rise it's for the right reasons because the u.s. economy is starting to turn for the better. >> in the meantime, fred, how are you guys going to generate more revenue growth? >> we have had a very strong year in terms of anything we can control as you said at the top, we gathered $63 billion of net new assets, that's the seventh consecutive year of 10% or greater organic asset gathering rate. our tradings with 462000 which is a record for us, very strong trading level with the volatility in the market. particularly in the fourth quarter. and we continue to grow our investment product revenue through our guidance and advice
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based products where the balances were up 14%. >> we appreciate your time today. we should tell you with just minutes away before the bell the dow is going to be down and the s&p down as well. >> making an early call for the open? >> i'm not good at this. >> not the close. >> you want the open tomorrow? >> you said it was going to open down 15 points. >> did i -- >> it's the morning. it's -- i'm a morning show. >> we are down 50 points here with 12 minutes to go. corporate earnings already in this morning. bank of america is going to tell us the positive and not so positive trends that she's seeing. stay with us.
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because the time to think about today. go long.
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welcome back. we've got about nine minutes to go. savito, welcome. >> thanks. >> we want to try to figure out what influence that's having on the markets which are having a good october but sputtering lately. where are we seeing the big beats and misses? >> a couple of trends that we're noticing. we're beating on earnings which is kind of like par for the course, every quarter this
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happens, everyone cuts earnings estimates heading into the quarter. right now we are track ago 1% beat on earnings. what's a little troubling to me is that we're missing on sales. so that has been the missing link in this recovery or this, you know, bull market is that it's been a top line -- >> missing on sales after we lowered or missing on sales even after the lowering? >> so even after a lower bar on sales we're still missing these kind of, you know, much lower numbers than what we would typically see. so we're tracking really anemic sales growth. in order for the fed to tighten everything, the economy needs to look like it's improving and that's not improving all that much. >> even though earnings are beating they are expected to fall for the first time since the recession year over year. >> it is slightly negative, forecast to be slightly negative. >> just the pure significance of that for you, what is that? >> i don't think that alone is a big deal. i mean, a huge chunk of that is
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energy, we saw commodity prices cut in half. it's not a big surprise that the s&p earnings numbers are geared -- they are levered to energy prices. so that in and of itself isn't that big a deal. i guess what's not so positive is that the consumer who is supposed to spend a lot more when oil prices get cut in half hasn't really come back to life yet. i think that's where we're still waiting to see better signs. you know, the other thing that i think is a little bit alarming this earnings season is that we're seeing real signs of wage pressure hit margin. so for the more labor intensive stocks margins are starting to get squeezed by the higher cost basis and it's kind of questionable how much longer this cost cutting driven earnings recovery can last. >> i know that's your concern but it's good news for a lot of other people watching this economy. we will leave it right there. thank you so much. >> thank you. >> it is now time, if you think
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we're going to leave you alone, now time to say good-bye to kelly, you are heading out to colorado for tomorrow night's gop presidential debate. >> correct. >> which is, you know -- >> to remind everybody, there is a look at the stage for tomorrow. the debate is two parts, 6:00 and 8:00 and toigt hang out with joe kernen. you will do the pregame, the half time report -- >> it's a different half time report. there is going to be a lot of coverage. frankly we have a ton of people out there, from jane wells who will be covering from andrew could be some protests happening around the debates, people inside, i mean, there's so much to pack into this event, it's going to take all that time. >> you have to be careful in the green room because they have brownies and they have these gummy worms and they are a little different than the gummy worms that you know about. >> do you know the best part? >> i want to put that out there. you have to be careful. >> my sister just moved to denver so the best part is i get to see my sis. >> have fun.
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>> it will be a lot f fun. you are in great hands. thank you for joining us during this period. >> awesome. you can see kelly as we just said and the entire cnbc debate team tomorrow when coverage kicks off at 5:00 p.m. if you are not near a television you can watch the debate on or do it on the ios, android or apple tv apps by signing in with your tv provider, nbc pro users will be able to watch the live stream on kelly, get yourself to the airport. when we come back we are tracking the closing countdown and after the bell apple and tritter out with earnings. we will break down the numbers with our crack team of analysts. you are watching cnbc, first in business worldwide. with patient-centric, digital innovations; from self-monitoring devices that can interpret personal data and enable targeted care, to cloud platforms that invite providers to collaborate with the patients they serve. that's why over 90% of the top 25 global pharmaceutical companies
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leaving you free to focus on what matters most. welcome back to "closing bell." we're here with the great bob pisani. i don't get to do this with you ever. >> it's so much fun. >> thank you. >> wonderful having you here. >> energy is a problem because oil is trading at the low end of the range and the stock market gets smacked around by the oil market these days. that's a bit of a problem. then we have the industrials and the transports and they're kind of -- they moved today because some of the big global industrial names were a little on the disappointing side. we're getting beats on the bottom line but the revenues are missing by a large margin on some of these companies. global slow down, orders are slower and number two the strong dollar really hurting these
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companies. something we didn't have a chance to mention today, did you see the defense stocks, we have new highs in a bunch of defense names, who can heed martin, 52 week high, authorize tlup grum man, there is a deal to raise the debt ceiling level, this is great news for the defense stocks because buried in this whole deal is more money for the defense names. in the last week or so as word has been coming out as there's a deal brewing all the defense names have been moving on the upside. >> we have star wood potentially now in play, that stock has moved up nearly 10%. >> here we go. >> this is just the last few days. it looks like that deal -- you can see the same thing with basically all the other things. you are right, unusual amount of merger activity. >> rite aid now with walgreens this afternoon. >> that's right. here is one that's interesting, express scripts, they are going to be reporting after the bell.
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remember, this alliance thing with rite aid is involving all these pharmacy benefit managers, express scripts was down because they have a relationship to rite aid that could be very much hurt by this whole overall deal. i want to hear what express scripts has to say about this supposed talked about merger that might be happening. >> bob pisani, "closing bell" begins right now with myself and sara eisen. >> welcome to the "closing bell," i'm sara eisen in for kelly evans. andrew is going to rejoin us in a minute. let's see how we're finishing the way day on wall street. the dow is closing the day out down 40 points, s&p 500 down a quarter of a per sent and nasdaq down about 4.5 points. joining today's panel we have our own mike santoli and paul hickey. also with us we have "fast money" trader kim see more.
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we have twitter earnings, apple earnings, gilead, we're day one of a two day fed meeting, we have the republican debate. are you ready? >> we have ibm with some kind of we don't know what scandal, we don't know -- >> and chatter. >> we have star wood, right? what else do we have? rite aid. >> yes. >> star wood, right ate. mike santoli, is it earnings, deals, the fed? what are you focused on most? >> obviously the earnings is the most identifiable catalyst. the fed is one of those things tomorrow we will start to parse the at the same times. the market itself was really draghi, much worse than the s&p and the dow suggested. you have the small caps not doing well, the transports as was mentioned, i feel like this character has gotten a a. bit ragged. >> paul hickey what sort of signal did you get? the major indices didn't do a whole lot. healthcare stood up in a good way. >> healthcare getting a bounce after being pummeled the last several days.
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you're seeing the market digesting an explosive end of the week last week. in the last four weeks we've seen 30 stocks in the s&p 500 jump 30% or more from their lows. you don't see that move that often in large cap stocks. yesterday and today you are seeing a little more digestion and waiting. we have the fed tomorrow and like he said a lot of news today in earnings coming out after the bell. >> can we do some single names? ibm, what do you think of him th? >> you know, it's really hard to tempt obviously revenue recognition is interesting because the thing about ibm for years is they don't have enough revenue. it's not as if this was some great growth story. obviously we don't know the character of this investigation, the market, though, is not in the mood to give the benefit of the doubt to ibm. >> should they? >> ibm it's just another long litany of problems for the stock. i think this is the least of its worries. >> hang on, guys, here we had, gig yad results are out. meg terrell has those numbers. >> third quarter beat for yil
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gadd. eps, $3.22 a share, versus analyst estimates of $2787. revenue for the quarter $8.3 billion, versus estimates of $7.82 billion and that all important hepatitis c number, worldwide sales $4.798 billion versus estimates of $4.5 billion. so a big beat across the board for yil yad. i don't know if we have inter day -- thea inter day or after the close trading on gilead, a big beat across the board, guys. >> 8.3 versus 7.8 in terms of revenue expected, a good number for gilead. mike santoli, this is driven by that hep c drug. >> it certainly is. it looks like after hours stock is going to trade off a little bit. the question has been exactly what does the market want to pay for these earnings, it's been seemingly overearning, people are concerned about the long-term growth path. >> this one held up during the biotech selloff that we saw in recent weeks. >> i think some evaluation
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perspective, though, again, on this one. it trades, you know, 40% cheap to some of the heavy weights in the biotech index, eight to nine times when you look at celgene and the others at 12 to 14 times. i think the bar remains low. i agree it's about hep c, also about the hiv on the hep c side. i still think there's a cash flow machine for these guys and on the hiv side it's more durable than people are giving it credit for. >> and when it comes to the drug makers earlier, paul, we had pfizer and merck out with better earnings, pfizer raising it's 2015 forecast. >> merck and gilead are related here, you see the stock selling off a little bit after the hours. they had a big run last week and going forward merck will have a competing project for gid y'all. >> urd' talking about the fda warnings -- >> which is a competitor which boosted the stock.
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merck will have of a competing product. it's cheap for a reason, the market is not seeing those earnings necessarily being as robust once there is' competition. >> the hillary clinton effect have any effect on pharma right now? >> i think that's been a weight on the entire sector, gilead has held up better but that's going to be an issue weighing on the market. i don't think this specific reaction right now after hours, it's only a couple of hours, is going to be a big impact on the stock. longer term -- >> tim seymour, you own twitter, correct? >> i do. >> so as we a waited for those results which should hit the tape next what are you hoping for? what's realistic at this point? >> i thinked to understood going to be definitely about a little more substance or formal substance i should say. we already got the guide on the third quarter numbers, they filed the release a couple weeks ago, we know they will be behind on the range, and i think if you ultimately look at the stock to
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me it's the early stages of a long-term monetization story, add spend in the digital space is something these guys will be a part of. they will grow add spend in the monetization taking 5% over the next four or five years. people are concerned about the leadership here. as a shareholder i'm a little -- it doesn't make me feel great that we've got a ceo that's going home with two different families so to speak. i think that's the big issue for the stock and i think we will get more on that stock. >> you never want to see that, i guess. mike santoli, you like to look at the earnings expectations and how the stock is performing in earnings. as tim mentioned we did get a little bit of guidance here. >> a little bit. really the stock has been just kind of sitting there against the $30 level give or take for a little while now. it seems to me there was a stretch where we said all the street wants to see is a permanent ceo. we got a permanent ceo and the stock still doesn't work. i think we will get a long leash in terms of what this quarter delivers but you have to have
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something coming in. >> it's not the numbers it's just the product at this point. >> it seems like it. >> i would say that i think if you look at maus the bar is very low for these guys. it used to be they had to grow substantially, they may add another 5 million maus but i think really people want to look at the revenue per user and those numbers are getting a bit better slowly. i think their numbers matter. >> tech in general, we were doing stories on cnbc today, i was surprised to see that the nasdaq 100 is not too far away from a record high. almost a percentage or two a pay wai from a record high and has done among the best so far in year in contrast to what we see in groups like the transport which broke down again today. >> it's been a very kind of nifty fifty flavor. it's kind of a var know sorry. >> alphabet, amazon and
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microsoft. when you see three of the ten largest companies in the s&p 500 gap up 10% in a single day you don't see those kind of moves very often. outside of volatile times during the financial cries. in a normal theory to see those three stocks move so much that's going to move the sleep sleep higher. >> what about the break down on the transports. we had economic reports including durable goods and consumer confidence which was a mass. >> look at the regional manufacturing indices, five major ones that are tracked on a major basis all of them are in contraction mode the last two months. the industrial sector of the economy is weak right now on the stronger dollar, weak oil, dallas fed is one of the weaker ones. the difference, though, is that manufacturing is weak but you have employment doing well, you have consumer confidence up until today was a weak number but has been holding up well and housing has been a write spot. new home sales were weak but that was comply constraints rather than weak demand. home builder confidence.
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>> prices were higher. >> manufacturing and industrials more isolated rather than broad representation of the economy. >> we also have to talk about oil, right? >> i'm still worried about twitter. when are we going to get these twitter numbers already? what's taking so long? too t. took a month to a noint the guy everyone knew was going to be. >> i don't know. you wanted to talk healthcare. >> energy was the worst performing sector today and oil prices did fall. we're dropping below other levels. i don't know where oil -- they were below $44. >> the global growth indicators have been poor. maybe it is just kind of the lagging glimpse of what we knew happened in china and the emergeling economy for months and we were worried about it for months. the "wall street journal" article this year, it's an industrial earnings recession now it's here to stay. well, it's here but it's not proving to me that it's hooer to stay. it seems that which are seeing
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the effect of what happened in the past couple -- >> the ups earnings as well, paul. what are you getting in terms of major themes from guidance from earnings? is the revenue recession as bob pisani calls it, is it about the strong dollar or about a global economic weakness. >> i think it's a combination. the revenue beat rate is the lowest we have seen going back to at least 1998. companies have having trouble beating their revenue numbers, that's a function of weak international economies primarily i think and less so to do with what's going on in the u.s. >> dupont was also interesting because it's getting slammed by the strong dollar and actually the stock is higher, expectations are low on this one or it's been priced in? >> you can see that i'm a real amateur here. it's in the afternoon. >> in the morning it's much more secure. >> no the answer on dupont is that the company is getting broken up, that's what we're playing for here. >> some kind of rationalization,
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but i agree with that just more broadly if you miss earnings and revenue you're getting slammed, they are not cutting you a lot of slack in terms of what happens on the stock price when you miss your numbers. >> tim, what names would surprise you? we have so many of them today. >> well, i tell you if i looked at the official more broadly consumer discretionary despite the weaker growth has done very well, big cap tech has done well, staples have done well. even companies that are more levered to either a more discretionary part of the economy or even just a very conservative part of the economy, i think it's very company specific. i think the expectations into this quarter of earnings were very, very weak, minus, you know, 3% or 4% earnings growth, we have beaten on the top line -- on the bottom line as everybody says. as i look at the numbers, especially in the big cap tech sector it's telling me the consumer is allocating money towards certain things. that is where you have to stick to.
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the industrial economy is probably alive and well. there's certain parts of the economy that won't be growing that much in the next couple years. people want to own growth and it's being rewarded. >> i think we're just getting twitter earnings. those numbers hitting the tape. $569 million on revenue that looks like a bit of a beat on the 560 expected, nongap 10 cents a share that's 5 cents above what analysts were expecting. >> i thought that they were going to tank their earnings this quarter because jack is just getting in and it would be very easy to not worry about it, so i think that they are going to think of this as a good sign. >> it doesn't look that the market is taking it. >> but they should. >> it's got to be monthly average users. julia boorstin has some numbers. >> well, we see twitter shares moving lower in the after hour trading. 320 million wall street had been looking for 323.3 million.
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that's the monthly active users. excluding fast followers it's lower than that. 307 million ex clugsd those estimates those are people who only use twitter on feature phones, via text. now, the earnings per share of 10 cents did come in twice as big as expected, wall street analysts had been expecting adjusted earnings per share of 5 cents and revenues did beat expectations, 569 million versus expectations of 560 million. on the upper end of earnings as well as revenues, but it does seem to be major concern about that user number and just looking at some of the details here in the report, they say excluding the impacts of foreign exchange rates total revenue would have increased 64% in advertising revenue would have increased by 67%. so looking at the forward looking guidance, this is another reason why the stock is trading lower, guidance for q4 total revenue is now 695 to $710
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million, the consensus was $740 million or roughly around there. now, also the current guidance for adjusted ebitda is also coming in lower than consensus guiding for 155 to 175 and adjusted ebitda -- a million in adjusted ebitda compared to expectations of 198. looking like guidance is coming in light. >> getting absolutely pummeled here in the after hours. mike santoli disappointments on monthly average users and guidance. >> they didn't tank the quarter but they tanked guidance. that really is the story here. the trajectory is not what the street needs to see. no acceleration. investors are not in a position to feel like this management is intentionally low balling let's say. >> i just want to get your word in here because you own the stock. are you is disappointing. >> i'm disappointed that the guidance is conservative. jack dorsey isn't going to make
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bold claims. the revenue per user is important, the retweets by google is important for the company. let's see what they have to say on the call, i think it's not a terrible number. >> what happens when he has to start the square road show in the next month or so. >> you mean that he can't be at the office? >> right. i wonder if he will say anything about that. thank you, tim. thanks, everybody. be sure to stick around and cash tim and the rest of the crew on "fast money" 5:00 p.m. eastern. apple and twitter's conference calls both kick off at 5:00 p.m. eastern. they will have all the latest headlines for you as well as the after hours stock moves, analyst reactions, suntrust bob peck will be on the show. don't miss it. much more on twitter's earnings still to come on this show plus a round up of all the other earnings after hours action and some of the stock moves we're seeing. >> then it's the main event, apple's results, they are minutes away, we have an all star panel to break down the numbers. you're watching consumer first in business worldwide.
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welcome back to "closing bell." earnings have been coming in at a fast and furious pace. seema mody rounds up some of the action. >> a lot of big movers. let's start with akamai tech.
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revenue came in at $551 million versus the estimate of $550 million. a slight beat. this despite competition from amazon, google, microsoft in the cloud space. we're seeing shares down by around a quarter of a percent after hours. a different story for an dark co petroleum. $1.69 billion versus the estimate of $2.31 billion. the oil and gas producer posting an earnings loss of 72 cents versus the expectation of 73 cents a share. shares were down 5% ahead of its earnings report right now unchanged after hours. a mixed earnings report for express scripts, $1.45 adjusted, a penny higher than the analysts consensus, revenue a miss, $25.22 billion versus the estimate of $26.4 billion, you can see shares are down just fractionally after hours. we will keep digging through the results. back to you. >> thank you very much. seema mody. let's get back to julia boorstin
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with more on twitter's results and an ugly reaction. >> ugly reaction. i think the reaction is really to the guidance for the fourth quarter which is lower than expected on the top and bottom line. i want to dig into the user numbers that is the issue that has been plaguing twitter stock and twitter's management. they ended the quarter with 320 million monthly active users, they say that's up 11% year over year. they only added 4 million new monthly active users over the course of the quarter. the estimates fast followers 307 million -- i'm sorry, 307 was the total ma uchlts excluding fast followers. the sms fast followers coming in less than wall street expected. the fact that companies like twitter, instagram, snap chat continue to grow so dramatically over each quarter, the fact they odded 4 million users raises
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questions about how successful of changes they made have been. we will hear from jack dorsey then. >> it is a good question. for more let's wling brink in michael graham on this stock. michael, julia raises a good question, they launched moments, it was only a few weeks ago and jack dorsey has only been the permanent ceo for three weeks. but are you disappointed to see they only added few million monthly average users in the quarter? >> hi. i'm actually kind of encouraged by the mau number in the quarter, they added only 1 million fast follower maus but 3 million core m&as. for a metric that has been bleeding i think that was a pretty good result. i think the stock is reacting negatively to the revenue guidance for q4. the growth rate implied in the guidance is 48% down from nearly 60% in q3 and that's even a little below the growth raid we have modeled for next year.
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q4 is usually seasonally strong and the fact that that revenue guidance is a little week is going to be a main focus on the earnings call coming up. >> mike. >> you know, i guess the question is what would you like to hear from dorsey on the call in terms of what they're going to do to position product right? they continually said they have to make the product easier to use. do we think moments is a step in that direction? >> i do. the company has stated consistently that pouring potential users into the top of the user funnel has been going pretty well. they have a google relationship that's been ongoing for a few months. the problem has been with converting those visitors into registered users, active users. the product improvements that the company has been, you know, putting forth over the last few months that's really what we need to see and i think the pace of execution there is improving. you know, one example of that is the moments launch which just happened very recently. they have already started putting new add units into that moments launch. i think it's a sign that the
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pace of execution at the company is picking up. >> i thought their biggest problem, michael, is user growth. i know obviously the stock guidance is disappointing no question about it, but when you're talk being 320 million active users, instagram has 400 million and we know facebook has more than a billion. isn't this going to be jack dorsey's biggest and number one item on the to-do list? >> without a doubt you are absolutely right. user growth over the next couple of years is the most important metric for this company and that's why i think the product improvements will help that. it's one thing to get people exposed to your product, but it's another thing to keep them engaged. i think a good sound criticism of the tweeting product over the years has been it's hard for the layperson to engage with t they're making the product easier to use, it's been an ongoing initiative. that needs to keep going next year, but it seems like they are headed in the right direction.
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>> i don't know if jack will mention it on the call, can he do both of these jobs and do you worry what's going to happen in q4 in terms of his involvement? >> it is a big of a concern. steve jobs did it once and did it fairly effectively so i think there is a precedent for tech ceo to be running two companies at once, but i do agree it's a tall order. i think he's going to be working some long hours here coming up, but i imagine that, you know, sometime in the next year or so they will come up with another solution for one of those companies. >> all right. we will see what they say on the call, thank you. michael graham. twitter shares down sharply after hours. >> we are going to look at apples earnings and where the stock goes from here. first scott cohn will fact check jeb bush's record ahead of the presidential debate tomorrow which we can see on consumer beginning at 5:00 p.m. eastern time. risks and capture opportunities.
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help cover what medicare doesn't pay. and could save you in out-of-pocket medical costs. call now to request your free decision guide. and learn more about the kinds of plans that will be here for you now - and down the road. i have a lifetime of experience. so i know how important that is. we're just one day away from the consumer presidential -- republican presidential debate. ahead of it we've been looking at seven governors in the race, though the lens -- the lens of america's top states for business rankings and our consumer fact patrol that will be on duty tomorrow night. >> scott cohn is in charge of both of those things. he is here with the final part of our series. >> if nothing else, jeb bush gets great credit for timing, he was governor of florida from
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1999 to 2007 as the tech bubble gave way to the housing boom, especially in florida. here is jeb bush's take on it all. >> 1.3 million new jobs, 4.4% growth, higher family income. eight balanced budgets and tax cuts eight years in a row that saved our people and businesses $19 billion. all this plus a bond upgrade to aaa, compared to the sorry downgrade of america's credit in these years. >> of course the housing boom turned out to be a bubble, too, and as bush was leaving office florida was plunge noog a recession that was longer and deeper than the national one. yes, according to state budget documents florida tax cuts during the bush years totaled about $19 billion, though a big chunk of that came from repeal of the federal estate tax, some of the cuts were one time only. in 2003 some fees went up. yes, they balanced every budget
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because the state constitution requires it. florida did achieve a aaa bond rating joining eight other states with a designation at that time. jeb bush left florida in 2007 with the 37th ranked education system in the country, based on america's top states for business ranking that year, not very good record on education. despite the tax cuts florida was the eighth most expensive state for business. it was the top state for infrastructure that year, but not before jeb bush doubled the infrastructure budget. overall in 2000, though -- 2007, though, an impressive eighth place finish for jeb bush. we got more on all the governors who want to be president, republican and democrat, at top states.consum >> not too bad, number eight. here we go, apple earnings due any minute now. of course, we want to talk about it ahead of the time. we have ross gerber, super bullish on the stock. we are expecting earnings per
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share 188, that would be up 32% from a rear ago, revenue estimates $51.1 billion, up more than 20% and the iphone units, that's the important one, this is an iphone company, 48.1. that's the consensus on wall street. ross gerber, you have been a big fan of apple's products and its stock. what are you expecting? >> i'm expecting them to beat these numbers by a little bit. the stock always moves around and honestly -- >> ross, hang on a second. we want to go to josh lipton with the earnings. josh. >> apple just reporting to let's get you those numbers. $1.96 on revenue up $51.5 billion. the street was looking for 1.88 on $51.1 billion so a beat on the bottom and top. just turning through the product categories, iphones up 22% to $48 million that's in line with what the street was looking for. ipads units down 20% year over
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year to just about $10 million that's just undershoots what the street was looking for. macs, $5.7 million that is a record up 3% year over year, gross margin 39.9%. apple is saying to expect q 1 revenue 75.5 to $77.5 billion. street was at $76.8 billion and revenue buy geography, china a critical area for apple there, some questions about whether that momentum can continue, apple reporting revenue in greater china up 99% to $12.5 billion. i did just have a chance to speak with apple's ceo tim cook about these numbers. obviously the big one for investors iphone units can they continue to grow not just next quarter but in the quarters ahead. there are has lot of challenges for that, maturing smartphone market, slowing china. tim cook confident that they will grow those units pointing
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out metrics. they are continuing to see the highest rate of android switchers ever. the past couple quarters i've talked to cook about that, i was interested about whether that would level off, he said, no that's a trend that continues. he also pointed out to me that about 70% of the install base is on a 5 s or earlier. that would imply a lot of potential upgrade headroom and beyond. as for china, tim cook telling me he was just there last week and the china business he says he sees no signs of a low down. he told me if you listen to the news even though it was a slow down there he remains he said incredibly confident in apple's china business for the long-term. guys, back to you. >> great report. thank you very much. josh lipton. >> great report to you, josh lipton and a pretty decent report from apple as well. it looks like better andrew on margins, better on mack shipments. china revenue of 99% growth not too shabby for an economy that's
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slow in growth rate. >> ross, what do you think of this? >> of course i'm happy. these numbers continue to beat estimates, they continue to show growth in all areas. with a new ipad coming out that should stem the decline there. we have apple music hitting full speed in the next quarter, we have a wonderful christmas season ahead of us for apple and i literally have a stack of apple devices by my bed that's so thick. so i'm sure you do, too. you have got to be in this company if you're any sort of conservative investor or aggressive, too. >> what have you been doing? i see you scribbling. >> working through the numbers. >> and? >> it's tough to beat apple. it's a great quarter. it has something for everyone, but the stock is not moving. in fact, this is now, you know, nine out of niep quarters it's beaten on the bottom line, the china numbers didn't fall apart. you may see a little covering happening, but the fact of the matter is that the smartphone
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market is maturing, unit sales slowing down, apple is doing a great job in taking more share, but that dependency on the pichlt phone remains and that skepticism among investors remains. >> what is this company worth? >> it's trading below market value. they are telling you it's a hardware company. when the iphone unit sales slow down it's going to decompress. i have 115. it's stuck right here. >> i was going to say, ross, and i think you will agree with me my push back to me would be even if it is dependent on iphone for 75% of revenue growth or for profits it's putting out better than expectations or in line with expectations growth, it's putting out new innovation in technology that continues to surprise consumers in what people think of the saturated market. >> absolutely. share ration you are absolutely right. and, you know, i'm tired of this when is the slowing of the market coming. the iphone business is a great business. this new phone is the best phone i have ever used by a large margin. i think we have to accept that
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the smartphone business still growing by 10% to 20%, apple is taking share from everybody and their technology hardware and software is just so much better. samsung is dying. it's like this is an awesome opportunity and people just need to be patient. >> don't we have to push back on the idea that the stock has done nothing. >> the stock is at 55%. >> it has not done nothing. >> i'm kind of agreeing with you here. >> oh, okay. sorry, ross. >> we expect too much every single day and every single month out of this stock. >> that's part of the dynamic. we also have to recall that they are heavily deploying their domestic cash purchasing back shares. it's a fantastic company. i don't value the -- the market is what's giving it this discount valuation. it's the market telling you that at some point the iphones dependency is going to cause a hiccup in its valuation. >> is the market right? >> -- apple is going to allow
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for significant multiple expansion. >> i also think you have to consider the fact that this fear of the iphone is we are going to stay mobile forever. these phones are not going away and dominating this high margin business is a great thing, but the reason the stock isn't going up is they have too much cash, they need to deal with the cash, they need to get rid of this cash, pay it out or do something with it then i think we will see the stock move much higher. >> okay. it started selling -- apple started selling the new phone september 25th. we only got a few days of sales. really the key is going to be the next quarter and whether it can compete with what was such a strong quarter last year and whether we are going to actually see negative growth on the year. >> i don't think we will see negative growth. how much positive growth will there be? >> whoever is talk being the market growing 20%. do you have 20% unit growth in your model. you probably don't. the reality is most people are expecting 5 to 10% unit growth.
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>> hang on, ross. paul hickey is here also, i wanted to get your reaction. obviously you can't talk that much about individual stocks but apple is such an important factor. it's interesting that it's not a leader right now in this market. >> it is outperforming the market so far in career. let's say that first. apple is more i think an international story, the international growth. domestic growth in units is a slower rate, china 99% growth. going forward we will have to look internationally here. u.s. market we're seeing smartphone penetration rates high among the iphone versus android and going to the chinese market they view apple as the highest quality, best status symbol, the only issue is the price, but they're willing to pay up on price in order for the status and quality. >> and just to put this in perspective, the collin gill police word on 115 as the price target you are not the norm for the analyst community, 83% of analysts say apple is a buy and the average price target is
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$147. >> i know. right. yet the stock is sitting right around our levels. >> we've been there since the beginning of the year at $115. if you look at tablet sales, right, unit declines now again for north of seven consecutive quarters this is the concern of what will happen to iphone sales particularly as subsidies disappear. >> that's the opposite. >> that remains to be seen. >> -- q 1 here with all the upgrades now being bill griffeth a year instead of two years, this is an advantage. you know, the new contracts are causing much more upgrades and that's what you're going to see and they're going to blow their numbers out on q 1 on the iphone sales. >> q 1 is the future. >> i'm investing in the future, i don't invest in the past. >> all right. good debate, guys. >> i like the debate. >> thank you. ross gerber and collin gill police. >> we have much more on apple's
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earnings coming up in just a moment, we will speak with one of the people responsible for funding and building applications on apple's ios platform on the future of the company. you're watching cnbc first in business worldwide.
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let's show you what apple
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stock is doing in the after hours. it is trading higher, up about 3% on an overall beat, just run through some of the other numbers in terms of the forecast for the fiscal first quarter which is the end of the year. $75.5 billion in terms of sales to 77.5. that was pretty much in line that was estimated by analysts. that iphone number 48 million sold during the quarter, a gain of 22%, it was also pretty much in line. >> one tiny number we didn't mention what's called other revenue from other products was a blotch, tv streaming, beats headphones, $3 billion. >> that's still pretty small. >> i think it's one of the issues, i don't think it's a big factor in terms of how investors look at this company, but the news making stuff is music, pay, it's the watch, it's the stuff -- >> it's not making money. >> it can't move the needle. it's not that big an opportunity for apple. >> we want to continue this conversation. joining us to talk about more
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what's left for apple good morning -- >> >> good afternoon. >> it is but i host a morning show so it's complicated. ed, you look at these numbers and when you think about the valuation of this company it doesn't make sense to the debate we just had. >> i followed the debate, i agree with everyone and i also disagree with everyone. i think for apple expectations are always super high for them, right? they're meeting expectations, it's a good thing, everyone wants to see them beat of course that's why the stock is doing 3%, it's nice up but not crazy up necessarily. i think we're talking about all these other ancillary products, ipad and apple tv and the other categories you pointed out a lot of media sales there, it's really -- these are all sideshows, it's a one product company, it's an iphone company. iphone sales were more or less in line. more interestingly their expectation for the current quarter for the holiday quarter
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which is supposed to be the big, big one, it's in line with estimates, nothing -- nothing too disappointing, nothing too -- nothing to be too worried b i wish we had more insight into the china stuff and the china numbers because that's what really we want to see going forward. will they take advantage of opportunities in china, china holidays, that kind of thing. that's less clear from these numbers. >> matt, long-term is the iphone is diminishing business. >> i wouldn't say dim thing business, but can't sustain the growth. >> not at all. globally 30% of the market has smart phones, 75% have mobile phones all together, there is a massive global market, you are starting to see in that in china. overall i was impressed with the earnings announcement today. the mobile market continues to march to the beat of apple's drum. >> matt, you believe the stock is undervalued, correct? >> always. it's a great company. there was a bit of commentary around being dismissive of some
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of the ore platforms and things they are doing, but overtime if you look at what they've started to do on the watch, music streaming, those companies are already worth close to $10 billion. >> that's finy, minuscule, the other product category $3 billion on a reg testify basis the rest of it is like pocket lint. >> small now, but all those markets will get bigger over time and shows their cap acts for the platform which is what covers back to their user love and passion which makes people want to buy more of their products. >> michael santoli, it comes down to there's two schools of thought on apple, there is the fact that you have the large numbers, more dependent on iphones as a percentage of sales, 62% what it just reported and that's going to peak at some point and the growth is not limitless or there is this idea that it can continue to gain share in places like china and buy itself room to diversify into new products. >> i think apple shows noes
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that. >> go ahead, mike. hold on. mike santoli. >> i think it's all true. it's a pet peeve of mine, law of large numbers that's not what that means but it definitely will be a challenge. i think the market doesn't know what to do with $700 billion market cap growth company. it doesn't know how to assign a multiple that recognize that is growth potential and you think that's what you're seeing. can a stock be per pettily cheap and still really be cheap? that's the question. >> matt, did you have something to say about that? >> i think the other thing we're largely talking about consumer markets but i think we will see a whole additional leg of growth here the enterprise, this is the start of the year of the mobile first enterprise, we're seeing more and more enterprises that the application that is their employees use are on mobile first and that's a big shift. took a long time for consumer markets to get to the point where you bank primarily on the iphone, you play games primarily on the iphone. you're seeing the same thing in the inter rice now, there will be huge inflection both for ipads and iphones and the
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enterprise, that is the predominant modality of how people want to interact with business applications >> we are going to thank both of you gentlemen. mat murphy of men low ventures. thank you, guys. tech giant apple and twitter reports results after the bell. up next we will take a look at some of the other earnings that are moving the market. >> going in the opposite directions. it's not great skiing that's just in colorado's economy, we will take a look at how the legalization of marijuana is impacting the state. we are back on "closing bell" in just two minutes. (patrick 2) that's the kind of control i like... ...and that's what they give me at national car rental. i can choose any car in the aisle i want- without having to ask anyone. who better to be the boss of you... (patrick 1)than me. i mean, (vo) go national. go like a pro.
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exciting hour here on "closing bell." some big names moving in the after hours on earnings seema mody joins you now with a wrap up. >> shares of twitter are tanking in after hours trade off a week fourth quarter revenue guidance. and only adding 3 million udsers in the quarter. shares down better than 11% after hours. let's switch focus to biotech. gilead raising full year 2015 revenue outlook for the third time this year to a range of $30 billion to $31 billion. and express scripts falling 1% after hours, earnings beat by a penny and shares were trading lower on news that walgreens is in talks to buy rite aid. walgreens was a potential suitor for express scripts. shares down after hours.
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andrew. >> seema, thank you for that. the economy is in focus during the gop presidential debate tomorrow. up next, one of the biggest sectors in colorado state economy. you know what it is. and how much green it is raking in. "closing bell" returns in a moment. ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪
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the stage is being set for our republican debate tomorrow night. coverage begins at 5:00 p.m. eastern time here on cnbc with the first debate kicking off at 6:00 p.m. you have 24 hours to be there. you do not want to miss it. >> and while the candidates will be behind the podiums at the university of colorado, jane wells is also in golden and she's crunching the numbers on the fastest growing part of colorado's economy. jane. >> reporter: and we have two visitors already. guys, this is the designated free speech zone set up for tomorrow. this is where the protests can gather. the media is lining up. it is called business field. but no business has changed the colorado economy more than marijuana. but here is the problem. money. not making it. stashing it. just last week the federal reserve will refuse to accept colorado's attempt to set up a banking system for pot. but that hasn't stopped expansion. over the last five years fully
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one-third of new industrial leases in denver have gone to marijuana enterprises. first medical and then recreational. grower tim collins say that landlords have to own the buildings because the bank pulls the notes if they find out they are renting to pot companies. as a grower he preferred to buy buildings rather than lease them when we can. >> we have a bank account. we work with the local federal credit union. and that is the situation most cannabis companies have in colorado. we can't take loans so we buy property as we afford to and pay for it when we do. >> reporter: and as they prepare for the debate tomorrow, "your money, your vote," what if it is pot money and the pot vote. expect the candidates to be asked. back to you. >> jane wells. thank you for that. is that your top issue that you want to know. >> i want to know whether they accidentally eat the wrong brownie in the green room. >> mike, what do you want to know? >> i'm going to be really kind
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of a nerd about the whole thing but i think it is an interesting experiment. and changing one specific economic thing about one part of the country and not having it interact with the rest of the economy and the cash being moved around the state it is a weird distortion by that one economic freedom zone because of the pot industry. >> paul? >> we were talking about drug pricing earlier. and i know they are against it in the biotech sector. to get the candidates' views. we know hillary's views and the democratic side but what about the republican. >> i want to hear what they have to say about the fed. >> you know what they are going to say about the fed. >> no, i don't know. i think republican views diverge. they promise four or 5% economic growth on the fiscal side. >> i think the anti-fed rhetoric get news play. but they want things to go up. >> i want to see the disposition of jeb bush.
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whether he is angry or mellow jeb bush. >> coming up next, much more on the apple earnings as we count you down to their conference call. we'll be back in a moment.
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welcome back. we're going to take one last look at the apple stock.
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it is earnings, now up 2%. >> a little bit off of the high. it was up 3% after the earnings release. we'll see what happens after the conference call. >> twitter moving down sharply. that does it for us here on "closing bell." thank you to all. >> this was fun. >> this was fun. >> we'll see you in the morning. >> "fast money" with simon hobbs, up next. >> and "fast money" starts right now. live from the nasdaq market society overlooking time square, i'm simon hobs in for melissa lee. live team coverage on the big earnings movers tonight continues. josh lipton on apple. that stock volatile, big time, after hours. julia boorstin on twitter, which is tanking, they bring you the latest news headlines. and if that wasn't enough. analysis, it is information here on "fast money." we're checking in with dan eyes for reaction on apple and sun trust's bob


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