tv Fast Money Halftime Report CNBC June 13, 2016 12:00pm-1:01pm EDT
tough time all throughout the morning, sitting at the lows. >> thank you very much. busy morning for us here. the coverage of wwdc and microsoft/linkedin continues. let's get to scott wapner and "the half." thanks so much. welcome to "the halftime report." i'm scott wapner. we are live today from cnbc's bureau at one market here in san francisco. what a day to be here with the blockbuster news in tech today. microsoft buying linkedin for $26 billion or $196 a share. we will have plenty on that deal coming up in just a moment. oh, by the way, it's also the day of apple's worldwide developers conference. we will walk you right up to that event which begins at 1:00 p.m. eastern, about an hour's time from now. with me, jon and pete najarian.
we will get their takes on all the news of the day in just a second. first let's begin with the deal of the day. that is maybe the deal of the year, really. microsoft buying linkedin. jon fortt joins us with more. hey,' jon. >> we spoke to satya nadella in the last hour. i asked him specifically about the value that he saw in this deal, what are the crown jewels that linkedin has to offer in this acquisition. here's what he had to say. >> these professionals are using office 365 on one side and linkedin on the other side. so that's one massive opportunity for us to increase engagement in both. think about the other side of linkedin. it is about higher market sell and learn. that's all business process. that's a huge opportunity for us to integrate and expand into business processes with dynamics so those are the two sides that
are both crown jewels of linkedin, but really, it's about putting them together with the crown jewels of microsoft, that is office 365 and our cloud, and that's what's sort of super exciting. >> all right. jeff weiner and staya nadella talking about this blockbuster deal today. i said i did have pete and jon najarian with us. you surprised as news of this broke? >> absolutely. i was shocked by it as well. we all thought eventually we would see some sort of deal. i think everybody when they are looking at this figured it would be sales force. it wasn't sales force. then it turns out to be linkedin. those two seem to have a great relationship with one another. i think what's really great is when you look at what they are doing and how, financing it with debt, this is an incredible opportunity for microsoft to be able to grow and grow themselves in a way, yet be able to finance it at such low levels. that's the brilliance of this
deal. that's why this massive deal was done. >> brilliant stock for microsoft? >> i do think so. even though it's whatever, eight times rev or whatever, it seems like this is going to really be a moat that microsoft will be able to build around itself. this was obviously one of the biggest deals in tech. i think it's a huge deal for enterprise software going forward. i think these guys are going to own the space as if we didn't think they owned it anyway. >> i thought roger mcnamee was really interesting, saying that maybe it's not going to be all it's cracked up to be for microsoft shareholders. there were serious questions about the growth of linkedin. we saw the big dip in the stock earlier in the year in february. it's made a nice u-turn, obviously, since then. but there are serious questions. this isn't a slam dunk, is it? >> i don't know about a slam dunk, but i would say what they have done as far as almost having a monopoly with the people that you really want for this kind of operation, judge,
is something that they couldn't get anywhere else but sales force. nowhere else could they get it. now you have really got sales force on the one side, microsoft with linkedin on the other, and even though the premium takes it back from where it fell, it's still significantly under where it had been on the highs the last, oh, '13 and '14 before it had that big drop the beginning of this year. >> the high is $258. you look at this deal and say wow, it's pretty extreme, 48% -- >> some people are saying that stock price then was ridiculous. >> it probably was. but when you look at where they actually stepped in now, and you are looking at where this is, you can still see growth potential out there, it's an addressable market of $115 i think microsoft sees that million. opportunity and that's why they want to do it. by the way, i don't think this eliminates sales force. i think that was the interpretation. you saw sales force actually start to dip. you saw microsoft dip. microsoft bounced off those lows, back up near 50. meanwhile, look at the way things are trading, sales force, that's not out of the question. >> you may know our next guest
for his views on apple, but guy kawasaki also happens to be a linkedin shareholder. the former apple chief evangelist is here with us today. we will get his views on the worldwide developers conference in just a moment. since you're here, thank you for being here, are you a happy man today? >> it's good to be a linkedin shareholder. >> kind of a loaded question. >> i think it's a very interesting deal. as a professional, you don't exist if you're not in linkedin. they are going to get every professional. and you kind of don't exist if you don't use office. kind of makes sense. i'm so conflicted, i'm just so happy. i'm beside myself. >> are you surprised this deal transpired? >> when i first read it, i thought this is the onion. they are making up a story. who would have figured this. it came out of nowhere. it's fantastic. >> was one of the reasons because weiner was always
wanting to be, his independent side, that was one of the things you had thought would be -- >> i think it's more because if you think about it, you think of microsoft as productivity and operating system and linkedin is not productivity, it's not operating system, it's kind of tinder for professionals. it's a social media service at some level. so what does this have to do with office, what does this have to do with windows. one thing is i pretty much can guarantee there will be a windows 10 version of linkedin now. $27 billion goes a long way. >> you know, there are questions as we posed already about tint the integration process, how it will work into the various different areas microsoft can incorporate lipnkedin. those do remain legitimate questions, no? >> yeah, this is going to be a very different sort of integration for microsoft. they trying to follow the
instagram model, the what's app model to some extent, really pioneered in this age of social and cloud of letting an acquisition operate on its own, not trying to kind of remake it in your own image off the top. part of the reason for that is microsoft as we mentioned earlier on this air, doesn't have members. it sort of failed at social where linkedin has succeeded. i think they want to learn from them on that score. but they are walking this fine line between trying to integrate the linkedin technology, the business process things they do around recruiting, around online engagement, around online learning, while trying to allow it to continue to operate as a separate entity. that means nadella and weiner have to work together really closely, they have to think about how to deploy engineering resources across two organizations that are operating separately. it can be done. facebook has certainly done it on the revenue generation side, sort of provided a model in the way that instagram has been able to work with facebook in
monetization, for example, and satya clearly has a cloud pedigree. he knows how to operate in this field. but it's a challenge. it's the sort of thing microsoft certainly hasn't done at this scale in the past. >> yeah. going to be interesting, no doubt, about that. jon fortt, thanks to you. back to what was going to be the lead topic -- >> that other company? >> exactly. that other little company called apple which was a big event in town. what do you expect? >> i expect to be surprised. we don't know, there's so much talk about a.i. and siri and ios and great new advantages. as an apple user, my fantasy is total revision of the mac book pro. thinner, better battery, faster chip, quad core everywhere, 13 inch mac book pro that just kicks butt. that's what i want. that's all i want. >> you are leading me to sort of
think this event today, most expect will be about software. maybe services, maybe siri. you are still talking about wanting to see new innovations in hardware. >> i'm a dinosaur. what can i say. i hope they revise the mac book pro line. we are all waiting for that. in a sense, this wwdc has taken the place of january mac world expo. january mac world expo is this apple thing where it all happened. i hope it happens today. let's face it, it's apple's world. we just rent time in it. >> we had this big deal obviously raises other questions as to whether apple needs to do a deal. think they do? >> in social media? >> in anything. >> well, that's the current wisdom. they do buy companies. well, they bought beatz. >> i'm talking about a big, big deal. do they need to do something? >> they need to -- they need to maintain the leadership at least branding-wise as the innovator.
and i don't think there's necessarily an acquisition. i think they just have to make kick-butt phones and computers and tablets. that's what they do. >> if you build it, they will come and you think they will continue to come? >> apple has proven that maybe apple is the only company that's proven that. but apple has proven if you build it, they will come. >> thanks for being here. good to see you in person. appreciate your views and happy day for you on a couple fronts. >> i can go buy a car now. >> look at this guy's watch. >> you got a nice watch. that's a beautiful watch. >> here's what else is coming up on "the halftime report." still ahead, how stressed is silicon valley? we will talk to a top pc investor about valuations in the valley. and the unicorn that's getting ready to ipo this month. and the man who is getting
right-hand side of your screen on the orlando shooting. we will take you there as soon as we do see the fbi director emerge. we want to touch on the markets while we wait to hear from mr. comey. interesting day concerning what happened overseas. you had pretty steep sell-off all around the globe. maybe it's on brexit. maybe it's on some sort of terrorism fears as well. not so much here, although the market has turned a little bit more down. >> right. oil started to turn a little down. it was flat, started to turn a little down. it's important to keep an eye on the volatility index. we talked about how low it was. a little move, now it's a big move. we are over 19. it got over the 50 day, the 200 day moving averages, exploded over the 200 day moving average today. it bumped up there, pulled off and now we are seeing a big jump there as well. gold trading closer and closer to 1300. a lot of different things going on right now in the marketplace. i think the volatility index is very important. >> clearly. i understated the move.
you see it for yourself. nearly 15% today. doc, maybe part of it's brexit. you have been the lead guy, if you will, on our program on that issue. >> i still hope that they don't brexit but that's a hope and i don't want to invest on hope. what i thought was that they weren't properly pricing in the amount of risk that a brexit could bring even if it doesn't end up happening. the amount of risk, the volatility popping as it is as pete said, popping almost to 20 today. i think you could see more of that into this vote and if it pulls back i will just reload. pete and i are both long uvxy for the halftime competition and for our clients, because it's one of the ways you could hedge against something like that. volatility will be the fastest moving asset class as we get closer to a brexit if the numbers move up. >> these are interesting days for certain to be an investor in the market. you have these events overseas, you have the brexit, you have data coming out from china.
you have this terrible event in orlando and thoughts about the folks there and terrorism on a larger scale. oh, by the way, you have a deal today and a fed meeting this week. we don't expect much fed action but words can speak louder than actions this week. >> exactly what you say about that fed meeting, tomorrow and wednesday, i think that -- the only thing that really will be addressed there will be how much they were leaning towards the impact of brexit or the -- and not wanting to influence that vote by something they might do with interest rates, which is what we have said all along and why it's basically a zero chance. >> talk about interest rates, do you guys just get a look at what we put on the screen, the ten-year? i saw 1.61%. >> that's been pulling back. it's been interesting to see all the different dynamics of the marketplace and all these different headlines that are pushing things around right now. but to your point, i think they were trying, trying, trying, i think we will find out they really were leaning towards
maybe rate increases in this meeting. and absolutely that's gone. >> what is the deal of the day, how does it factor into your thinking of where tech is and where it can go? >> i think if it weren't for the deal, we would be looking at a market here that would be down 1.8% that most of the european are down today. nerd, instead of this relatively minor sell-off even a big pop in volatility would have been much bigger -- >> you think the deal of the day in a sense saved the day? >> well, the fact -- >> we do have a number of hours to go, obviously. don't want to jump the gun. but these kind of events play a large role in greater sentiment at times. >> right. because the sentiment was extremely negative because of the orlando shooting and because the brexit numbers were moving up. so you take that without having something like this big $27 billion deal and i think what you can get is basically tumbling that the market does occasionally when it makes that
1.5%, 2% move. i was looking for a move up to 500 points out of the dow not because of the orlando shooting but ahead of brexit. now we made a couple moves pushing us towards that now. >> we will take a quick break, step away for just a moment. on the other side, we do expect to hear from the fbi director james comey on the deadliest mass shooting in the history of this country. real is touching a ray. amazing is moving like one. real is making new friends. amazing is getting this close. real is an animal rescue. amazing is over twenty-seven thousand of them. there is only one place where real and amazing live.
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welcome back. we do continue to await fbi director james comey. he is set to speak at that table there in just a matter of moments on the orlando shooting. we will take you there live to washington, d.c. when we do see the fbi director. i do have eamon javers with us live down in orlando. eamon, there are serious questions that folks want answers to as to how this individual who was apparently watched by the fbi and interviewed on occasion was able to get his hands on the weaponry that he used. >> reporter: yes, scott, that's one of the questions you would imagine director comey will have to provide answer tos to if not this this briefing, in upcoming days, so many questions about what exactly the fbi's interaction was with this killer
before he stepped into that night club just down the road from where we are standing and also questions about exactly how many people the fbi is keeping tabs on. one of the problems for law enforcement here is that there are so many points of contact, people who reported into the fbi as potentially suspicious, the fbi does due diligence. that is an enormous group of people. some question now about how many people the fbi is trying to monitor inside this country and what potential threat all of those folks are. at some point the fbi and law enforcement have to do some decision making, have to decide who to put surveillance resources on and who is simply not a threat. a lot of that decision making will be in question now. director comey will likely have to provide answers to it. >> not surprisingly, it's already entered the debate of the political campaign as well. >> reporter: yeah. absolutely. we saw comments from donald trump today, we saw the president of the united states talking, we also saw hillary clinton out there. this immediately, like so many
events in american political life, forces everybody right back to the corners of the political boxing ring. you see everybody sort of examining the event that happens before, saying a-ha, this proves what i was saying was right all along, about whether it's gun control or islamic terrorism or the need to combat isis overseas or whatever. you see this political reaction in the united states of people very much divided politically deciding this is further evidence that they were right, their political side is right in this argument and it just fuels this intense debate that we have been having throughout this entire presidential season. you can imagine we will be having it right on through to the election in november. >> we do expect to see the fbi director emerge in a matter of moments now. james comey expected to speak about the deadliest mass shooting in the history of this country. 50 dead, including the shooter along with more than 50 others injured. we have been following the situation wondering perhaps what impact it would have on the market picture today.
seems to be minimal at least to this point. but depending on what the fbi director has to say, certainly could sway that. there remains serious questions as most of you know and perhaps have yourself as to how an individual who was apparently interviewed by the fbi on numerous occasions was able to get his hands on the guns that he used. here is the fbi director james comey. >> good afternoon. thank you all for being here today. we are here to discuss the justice department's response to this stunning and unconscionable act in orlando. our hearts are broken for the unfathomable losses the people of orlando have suffered and our thoughts and prirs continue to be with their families and loved ones. as attorney general lynch said yesterday, the full resources of the department of justice which includes the fbi and atf, the
national security division at main justice as well as the u.s. attorney's office in the district of georgia are all supporting the ongoing investigation. our agents and investigators have been on the ground since the very beginning and have been working around the clock since yesterday and they will continue to do so in the days ahead. i want to thank our law enforcement colleagues in florida for their tireless and extraordinary work so far and their dedication to the ongoing investigation. i have also been in contact with the attorney general, who is currently on her way back from china and continues to monitor developments in the case. words really can't express the depth of our sorrow or the measure of our grief for losses that have been suffered by those and lives that have been changed forever. what happened in orlando yesterday was a horrifying act, a horrifying act of evil and terror. for the lgbt community, pulse was more than just a place to go
and celebrate and see friends. it was a place that promised inclusion and freedom to be themselves, the same promise that our country holds for everyone. this was an attack on that promise. it was an attack on our values as a country and our national community. it was an attack on who we are as a nation and as a people. and our country as a whole stands united in response to this cowardly and despicable act. so with this, i will turn things over to director comey who will provide additional details into where we are in the investigation right now. >> thank you, sally. i want to echo what the deputy attorney general said just now. our hearts are broken and ache for the people who were lost in orlando, those wounded and their families. we are so sorry for your loss and your suffering. i also want to say a word of thanks and express admiration for the work of local law
enforcement in orlando. they showed professionalism and extraordinary bravery that saved lives. we are very lucky that such good people choose lives of service in law enforcement. last, i want to say a word of thanks to the people who rendered care that saved lives at the scene, the docs, emts, nurses, the victims specialists and the ordinary citizens who stopped to help family and friends. you showed us the best part of humanity in the midst of terrible loss. as you know, this is a federal terrorism investigation led by the fbi with the assistance as we always do of our state, local and federal partners. the reason for that is there are strong indications of radicalization by this killer and of potential inspiration by foreign terrorist organizations. we are spending a tremendous amount of time as you would imagine trying to understand every moment of this killer's path to that terrible night in orlando to understand his motives and to understand the details of his life.
you will notice that i'm not using the killer's name and i will try not to do that. part of what motivates sick people to do this kind of victim is some twisted notion of fame or glory and i don't want to be part of that for the sake of the victims and their families. and so that other twisted minds don't think that this is a path to fame and recognition. so what i want to do is give you a sense of what we know so far, then tell you as much as i can about our past contact with the killer. we are going through the killer's life as i said, especially his electronics to understand as much as we can about his path and whether there was anyone else involved either in directing him or in assisting him. so far, we see no indication that this was a plot directed from outside the united states and we see no indication that he was part of any kind of network. it is also not entirely clear at this point just what terrorist group he aspired to support, although he made clear his
affinity at the time of the attack for isil and generally leading up to the attack for radical islamist groups. he made 911 calls from the club during the attack at about 2:30 in the morning sunday morning, and there were three different calls. he called and he hung up. he called again and spoke briefly with the dispatcher. and then he hung up. the dispatcher called him back again and they spoke briefly. so there were three total calls. during the calls, he said he was doing this for the leader of isil, who he named, and pledged loyalty to, but he also appeared to claim solidarity with the perpetrators of the boston marathon bombing and solidarity with a florida man who died as a suicide bomber in syria for al nusra front, a group in conflict with the so-called islamic state. the bombers at the boston marathon and the suicide bomber from florida were not inspired
by isil, which adds a little bit to the confusion about his motives. and of course, we are working to understand what role anti-gay bigotry may have played in motivating this attack, an attack that occurred during the very month when we recognize and celebrate our lgbt brothers and sisters. again, it's early. we are working hard to understand the killer and his motives and his sources of inspiration. but we are highly confident that this killer was radicalized and at least in some part through the internet. so that's what we have been doing. now let me tell you what i can about the fbi's prior contact with the killer. we first became aware of him in may of 2013. he was working as a contract security guard at a local courthouse and he made some statements that were inflammatory and contradictory that concerned his co-workers about terrorism. first he claimed family
connections to al qaeda. he also said that he was a member of hezbollah which is a shia terrorist organization that is a bitter enemy of the so-called islamic state, isil. he said he hoped that law enforcement would raid his apartment and assault his wife and child so that he could martyr himself. when this was reported to us, the fbi's miami office opened a preliminary investigation. over the next ten months, we attempted to determine whether he was possibly a terrorist, something we do in hundreds and hundreds of cases all across the country. our investigation involved introducing confidential sources to him, recording conversations with him, following him, reviewing transactional records from his communications and searching all government holdings for any possible connections, any possible derogatory information. we then interviewed him twice. he admitted making the statements that his co-workers reported, but explained that he did it in anger, because he
thought his co-workers were discriminating against him and teasing him because he was muslim. after ten months of investigation, we closed the preliminary investigation. two months later, in july of 2014, the killer's name surfaced again in an indirect way. our miami office was investigating the florida man who had blown himself up for the nusra front in syria. again, the nusra front being an al qaeda group in conflict with isil. and we learned from the investigation that the killer knew him casually from attending the same mosque in that area of florida, but our investigation turned up no ties of any consequence between the two of them. in the course of that investigation, one witness told us when asked do you know anybody else who might be radicalizing, that he had once been concerned about the killer because the killer had mentioned alaki videos but the witness had concluded that he later got married and had a child and got
a job as a security guard, and so he was no longer concerned about him. our investigation again turned and interviewed the killer to find out whether he had any significant contacts with the suicide bomber for al nusra, determined that he did not and the inquiry continued focusing on the suicide bomber with no further focus on the orlando killer. we will continue to look forward in this investigation and backward. we will leave no stone unturned and we will work all day and all night to understand the path to that terrible night. we are also going to look hard at our own work to see whether there is something we should have done differently. so far, the honest answer is i don't think so. i don't see anything in reviewing our work that our agents should have done differently, but we will look at it in open and honest way and be transparent about it. our work is very challenging. we are looking for needles in a nationwide haystack but we are also called upon to figure out which pieces of hay might some
day become needles. that is hard work. if we can find a way to do that better, we will. we will also do our best to be transparent about what we find going forward, consistent with our need to do an investigation in a good way, but we will tell you as much as we possibly can. let me close by saying something i have said before. we know that this killing is upsetting to all americans. we hope that our fellow americans will not let fear become disabling, because that is what these savages want. we hope that instead, you will channel this sense of anxiety into something more positive which is an awareness of your surroundings and the seeking of opportunities to help your fellow americans, as we saw with the tremendous lines of people giving blood in orlando. if you channel that anxiety into awareness, you can live your life and allow those of us who are paid to investigate and to stop terrorists to do that work while you live the full life
that this great country offers you. if you see something, tell us so we can look at it. in every single one of our cases as we look back, somebody always sees something they should have told us and they didn't. so our request to you is please don't let them make you work into a state of anxiety that is disabling. find ways to channel that into a healthy awareness of your surroundings and live your lives. we will keep you posted on what we learn from doing our work. thank you very much. >> that is the fbi director james comey giving an update on the situation in orlando and the investigation into the deadliest mass shooting in the history of the united states. mr. comey saying at this point there are strong indications of radicalization of that individual. he refused to use the killer's name. he said right now they are going through his electronic devices looking for other information, said at this point there is no indication of a plot directed from outside the united states or that this individual was part
of any network. he also gave a little bit of history into the fbi's knowing of this individual and the interaction that the organization had with the killer. they say they first became aware of him in may of 2013, when he made inflammatory comments to colleagues. they said an investigation into him lasted some ten months. they became aware of him once again two months later in july of 2013, where the fbi interviewed him again. mr. comey ending by saying i don't think we should have done anything differently. certainly we will continue to follow this story and any other developments throughout the day. we will take a quick break. i'm here at the td ameritrade trader offices. steve, other than making me move stuff,
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bee are back. what was already shaping up to be a big week in technology made even more so today with news of the microsoft/linkedin deal. what exactly is the health of silicon valley? probably a good time to ask that question today. jeff richards is managing partner with ggv capital with us on set today. good to see you. >> great to be here. >> i guess the health is decent in technology. >> not bad. not bad. yeah. things have been good. >> what do you make of this deal? >> i think it's smart. i think it's the first big thing
satya has done at microsoft. makes a big mplay in cloud and social. the interesting thing is you looked at linkedin, within the last year traded as high as $35 billion market cap. today's deal is $26 billion. great for shareholders but an interesting note. >> if i said to you the state of silicon valley is blank, how would you fill it in? >> i would say it's healthy. the one big thing we are missing right now is a healthy ipo market. this year will probably be a record low for ipos. >> is it healthy with a cough? >> i think you look at the growth of facebook worldwide, you guys have been talking about that. you looked at the mobile demographic that our portfolio companies are going after, it's bigger than anything we have ever seen. go back 15, 20 years ago when amazon went public, there were 70 million internet users in the world. today you have two billion people on smartphones all with a credit card linked to their account, all on social media. a hlot of them are in china and india.
>> twilio will debut in the next week or so. how much much a litmus test is it? >> a great one. it's a very well run company. we know the company fairly well. it's an enterprise software business with good growth. people are looking for growth. valuation is probably going to be, i saw this morning, they announced the valuation range, pretty reasonable. it will be a good litmus test. >> guys? >> i got a quick one for you. you talk about the ipo market. i saw you think 2017 will be much stronger. why? what's going to actually fuel that to be a better market? >> you have a bunch of big marquee companies, potentially uber, air bnb, you have a bunch of different companies that people really want to own. these are 10, 15, $20 billion plus valuation companies with almost a billion in revenue and most of them will be profitable by the time they come out. they won't go out this year. lot of people are looking at next year as the year some of those companies come to market. >> you said half of your office is based in menlo park, the other half is in china.
give us your perspective on what's happening in china within this universe of tech. >> we see two economies in china. one is the traditional sort of state-owned enterprise, oil, gas, manufacturing, sort of the old economy in china. the other is the new economy which is led by alibaba. we don't see any signs of slowing growth in the tech economy in china. the new economy, if you will. you have obviously got a huge percentage of the chinese economy that's tied into the old economy so the government is trying to balance the shift between those two markets. you look at the younger demographic, there's 300 million millenials in china. that's a demographic we all want to be selling products to. you see up and coming companies selling into that demographic. >> when you see numbers, whether it's from facebook or snapchat quite frankly and you see the massive growth, the next step of mobile with the video on mobile is just exploding on both these platforms. do you buy into that or do you
buy into the companies that are providing the cloud and everything else that makes that video work on that mobile device? >> well, one of the things that's interesting, look at facebook, they build and run a lot of their own infrastructure. aws is one of the great tech stories in tech. if it was an independent company we would talk bit every day. it will be interesting to see how much of that they do end up buying from third parties from those who traditionally provide a lot of arms to those type of technology companies. but video is just booming. snapchat's booming. we have a startup actually based out of beijing that does business in the u.s. called musically. probably the fastest growing app among teenager, went from zero to 70 million users in a year all based on video. emojis, video, gifts, all this stuff is exploding. >> appreciate you being here. thanks for your patience as well as we deal with breaking news and some other events. jeff richards. coming up, right here from one market, we count down to apple's big event.
the worldwide developers conference beginning at the top of the hour. we will walk you up to that and speak to the top analyst on what to expect today from apple. shares down by a little more than 1%. we'll be back right after this. tune in tomorrow to "halftime report" for a great lineup. we will be joined by andrew left who will talk about his short on facebook. many other big guests tomorrow. we got another one.
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thank you, ping. reliably fast internet starts at $59.95 a month. comcast business. built for business. stake. please help save them now. welcome back to "the halftime" report. from here in san francisco, apple kicking off its developer's conference at moscone center and josh lipton joins us. josh. >> well, scott, thousands of developers from really all around the world gathered right behind me here at apple's big software show and here's what we expect. one, you'll see big news regarding siri, that voice activated virtual aassistant, specifically that apple will allow developers to integrate siri into their apps and that would mean, of course, that you could use siri to order uber or book a reservation on open table, voice activated virtual help, whether it's siri or
amazon's alexa or google assistant are talked about as representing the next great phase of personal computing, apple's tim cook needs to convince developers here today that his virtual assistant is keeping pace with rivals, also looking for apple music to get a makeover. that service now has 13 million paying subscribers. we know it's been criticized as being confusing but in those streaming wars music industry analysts, mark mulligan also notes apple's advantages specifically that global reach and those very deep pockets, of course, all this coming as apple has been under pressure, that stock is in the red this year, underperforming major averages as waries persist about the future that have flagship iphone business so today cook needs to take the stage and talk up the company's software and services, how they're innovative and industry leading, especially with the hardware under pressure. those software and services need to be innovated because you'll retain all users on their platform as well as, of course,
attract new ones. scott, back to you. >> josh, thank you so much. for more on what w wchlwwdc woun let's bring in tony sakanogi, thanks to have you. >> nice to join you, scott. >> you're there, we're here. great to have you. are people going to be enthusiastic about what takes place today or underwhelmed? >> i would say neither. the blogosphere for apple has been increasingly efficient so most of what gets announced is largely known by the investment community and there are a few surprises so, my guess, it will be neutral but the focus continues to revolver around the iphone, 70% of company profits and what drives the valuation and sentiment.
>> what do you make of the conversation and really the narrative that as apple continues to try and push its software and services and even you and your most recent notes say how the services business is rapidly growing people like guy kawasaki sitting with us just a few moments ago saying that's great but looking for more har ware. >> look, i think it's both. i mean, hardware devices have always what been what has driven this company and quite frankly, they will for the foreseeable future for the next three or four years, services are only 9% of revenues for apple today. and so the iphone is going to be the dominant profit driver and any future versions. the watch or potentially downstream a car. that said services are an important vehicle for two reason, one, they ensure high retention rates on apple -- existing apple hardware products
and, secondly, our belief can that apple needs to assemble a compelling bundle of services, perhaps including an over the top television service that apple can then use to sell a bundle of hardware and services on a subscription basis. because the biggest risk for apple -- investors longer term is not so much that people switch off the ipo he iphone bu 2 1/2 to 3 1/2 years would undermine profits by 30%, 35% for the iiphone. so if app coldwater come up with a compelling bundle of services and go to market with this is a product and service you pay for monthly, they can help mitigate that potential risk to the replacement cycle and that's really the key risk in the near term. >> tony, i have a quick question. the home, everybody focus on all
these different areas that app lil attack. how about the home itself and competition with echo? can you speak to that? >> certainly the home is important from a couple different perspectives. the internet of things and having control vehicle is likely going to be the smartphone so apple is working to try and provide, you know, sort of a home-based ecosystem where divides can connect to the iphone. but this personal digital assistant that you allude to i think is important. more so now i think for retention, there aren't people who are really switching off the iphone because echo fulfills all their needs or are moving to android because they believe the personal assistant is better. but certainly over time, you know, as voice becomes more common with consumers and more comfortable using voice then i think personal assistants will become very important and so some of the moves that apple is announcing today with siri
integration being moved to developers are important and that speaks to really the first issue which i mentioned ensuring retention on the iphone and ios ecosystem stays high. >> tony, thanks for being here. we will see you back that way i'm sure sometime soon. sewn sacconaghi. coming up we'll continue to walk you up to the developer's conference. stocks are down, the vix at a three-month high. what you should be watching in the final three hours of the trading day next.
we're just getting started. for big show in san francisco planned for you tomorrow. you'll hear from the nba commission commissioner adam silver and brad gerstner and mamoon hamid. and we'll talk about that with all of our guests. interesting show given the megadeal. how does it make you view betting on technology stocks right now? >> i like technology as i have a said for weeks now, i think this is going to be one of the strongest sectors in the second half. energy will soften up a little and i think tech takes the lead in the second half. >> i love what we saw today. i mentioned earlier the debt market and how low it is in terms of the valuation and financing for them. i think that part is great and i think they actually did steal
this linked in give or take because of where it was and i think guy -- >> they pay too much or others say they didn't pay enough given where the stock once traded. it's been fun and do it tomorrow. that does it for us here on "the halftime show." >> thanks very much. hardware is the brain. software the soul. that's how steve jobs described apple's products and today apple is expected to unveil plenty of soul for developers, consumers, investors, this at its worldwide developers conference in stance. apple shares right now, you see them down 1 1/4%. welcome to "power." melissa and brian is here and michele is off. now you know who is here and who is not. apple's big event under way. the ceo tim cook set to speak right now and josh lipton is there live in san francisco. josh.