tv Power Lunch CNBC September 7, 2016 1:00pm-3:01pm EDT
the people that are angry will probably get over it. >> joe. >> strike about what's going ob in the next iphone, ten-year anniversary. >> already, today? >> yeah. >> you guys throw the stock back up if you wouldn't mind. there it is. just shy of 107 and 40. happening right now. power picks it up. we do indeed pick it up, scott wapner. thank you very much. you're looking live at the bill graham civic auditorium in san francisco. right now apple kicks off its annual product event, eagerly awaited, anticipated. apple ceo tim cook expected to take the stage at any moment. the excitement building all day long. this was the scene outside the auditorium just a few short hours ago. people waiting in line to get in on a crisp fall/summer morning. it is going to be a busy two hours, folks. we've got the best team in place to break it all down for you. welcome to this special edition
of "power lunch." i'm tyler mathisen. >> and welcome back, tyler. i'm melissa lee. shares of apple moving lower right now as a big apple event gets underway. it's been a pretty lackluster year for the stock. as you know apple far underperforming the broader markets up by just about 2% in 2016. and apple shares are up just 8% since the company last introduced a new phone back in september of 2014. >> and i'm brian sullivan along with jon fortt, who will be here with us for the next two hours. we deliver all the breaking news, dig into everything apple and talk about where to put your money in tech right now. we've also got a very special guest joining us in a bit, legendary z.z. top front man billy gibbons here. very cool. but we begin, kayla tausche, she is live at the apple event in san fran where tim cook is expected to stage. kayla, i think amazon may have jumped the gun a little bit here. >> reporter: oh, they did. and gizmoto was very quick to pick up on that fact. amazon having a landing page for iphone 7 accessories from spec
and many others and hasn't taken it down after many tech outlets including cnbc have reported on it. but that being said it's probably as good as guaranteed at this point that what we will get at today's event will in fact be the iphone 7. normally when you have the round number models, you have a generational shift in the things that the device can do. that's not going to be the case this year. apple will reportedly be shelving some of those really noticeable changes until next year when the iphone turns ten. but there's still going to be a lot of new bells and whistles to watch for. here's what's been telegraphed so far about what the iphone 7 will carry. first, you're going to really have a noticeable difference in the fact that the headphone jack is expected to be missing. that is expected to make the phone thinner, perhaps you have a flat screen, a new home button. and perhaps even the device becomes waterproof. then you're going to have a new dual lens camera, perhaps new colors for the devices. remember last year they rolled out rose gold to much fanfare. this year it's expected to be black and blue.
elsewhere in apple's product lineup you could get a new apple watch. that has been widely expected. earlier said don't expect an upgrade to the mac book or the ipad, that might be for later events. but we'll see. and we'll also see what the company says about its services offering, apple pay, siri and apple music. we know at least one of the apple music executives expected to take the stage today. of course that's just about to get underway here at the auditorium in san francisco. we'll bring you all those updates, brian, when we get them. back to you. >> all right. thanks very much, kayla. jon fortt, welcome. good to have you with us. >> good to be here. >> saw you yesterday at school dropoff. >> yeah. >> great day for the little guys. what's at stake for apple here? >> well, i think what's really at stake is probably margins, tyler. because the question is what's going to happen to all of these people who haven't upgraded their phones in a couple of years. they might just as well go with an iphone 6s as a 7 if they
don't see what they want in this model. apple's laid out lots of options that are cheaper. the 6s, the se, do they refresh the se? so margins are at stake. there's also the question i think of wireless, bluetooth. if you're not going to have the headphone socket as you have in the past, the question is well how are people going to interact with sound, with music on this device? >> so how will they? >> if it's bluetooth, you want to see apple improve bluetooth, they're in a unique position to do that because they own beats, which is a big headphone company -- >> a way to get me to buy beats? i feel manipulated, jon. >> they haven't updated the beats headphone line in two years. it's due. >> two years is like dog years. it's like 14 years in real people lives. there could be a physical attachment through the lightning charger. >> the charger port. >> some are saying there will be and possibly take your 3.5 inch millimeter cable for your headphone jack and buy an adapter, little tiny little adapter you can lose a thousand of and then connect that to the lightning.
>> who wants to do that? who wants to rely on that? if your kid takes it out? >> buy $400 set of beats with bluetooth -- >> swallow it. >> i'm losing it wherever. that's a stopgap, but it's not a great solution. >> you got to love apple to love this, from what we know? >> well, we don't know enough yet. there are a lot of assumptions, oh, next year's the big year, i think that's a lot of speculation. apple's going to go up there, no, this is a big update. watch what they do with the chip, wireless, they're going to make their case. >> compare this update to the last update, which is where they went after years of resisting to a larger screen. >> the iphone 6 was a huge update for them. it did so well. it pulled in lots of upgraders. the 6s was not as big an update for them. apple was caught by surprise by how many people did not move to the 6s. the question here is apple going to be caught by surprise again, or are the people saying ho hum this isn't a big deal?
do they have it right? >> jon, stick around. let's bring in our apple power panel. ian, nancy tang ler ceo of heartland financial capital is her holding. nancy, i'll go to you. kayla's making the argument that the big advances happen every other cycle or so. is this perhaps more comparable to what happened with the iphone 5, in your view? what did happen with the iphone 5? was that enough to move the stock then? >> yeah, well, let's define terms real quickly. i mean, in terms of timing, the iphone 5, if you look at the performance subsequently next to three years it was a good time to own the stock. same -- i think the underestimation of apple is a side business for many of us in the business. and the thought that we aren't going to get enough, as jon had said, i disagree with that respectfully. i think there are going to be enough bits and pieces, and the upgrade cycle is in apple's favor in this particular
environment, margins have been pretty stable. and services have been growing dramatically. so i actually think that we'll see the stock 12 months from now up about 15% to 20%. the dividend continues to grow. and free cash flow continues to pile on. >> why should i believe that the upgrade cycle is going to be intact? ian, what's your take on this? if i'm told that i have to buy new headphones and new this and that and i have an iphone 6 already, why not just wait if the iphone 8 allegedly is going to be the greatest thing since sliced bread? because that's also the tenth anniversary of the iphone. i believe, and this is just me, that tim cook will push forward big advances, but holding it back for the iphone 8. >> i think you're absolutely right. i mean, the big question coming out of this is going to be, is there enough here to get people to upgrade and either come off of android? and ultimately from what we've
heard it doesn't sound like that to me. remember, the overall market is pretty saturated. you've got 25% of the world's population has smartphones. and the reason they dropped all the subsidies across all the carriers was for this upgrade cycle. so you really have to incentivize people to come off their older phones and to still pay a premium for this product. so ultimately i think, you know, the iphone 8 may be a much bigger thing for the company than iphone 7. >> you know, nancy, let me go through just a couple quick numbers from a stock perspective because apple's 12-month forward p/e is 12, price-to-sale 2.6, google trades at 20 times forward earnings, microsoft 18, facebook 26, google's price to sale, 7, microsoft 5, in other words, apple trading at a significant discount on a number of sort of basic valuation metrics. why doesn't apple get more respect from the investing community? >> well, because it's just a hardware company. >> don't let them hear you say
that. they'll get mad. >> no, but if that's why, i mean, it's trading at a discount to electric utilities for crying out loud. they did take share, more share in the last six months from android than they've taken in a six-month period. the market share that apple is playing with is 15% of global market share. and then don't forget their margins are double samsung. so while i understand that this isn't necessarily a trade against those other names that you mentioned earlier, brian, or against samsung, i do think we have to look at this in the total context of valuation, management and the growth of the services business. all the other elements, i mean, melissa, you are right that upgrade needs a push, but there are a ton of people that just don't have a choice. people like me who threw my phone inadd vert evertently ove
weekend, there are people that do need and can't wait for the 8. >> let's not forget samsung has had problems of its own with a note 7 recall because of some concerns about fires and heat. >> jon makes the point that wasn't their top selling device. >> no, but it's bad for the name samsung, isn't it? >> yeah. >> but remember, you're talking about buying a technology company that's supposed to be the most innovative company in the world on valuation. on dividend yield. it's still the same story. and ultimately if you look at what the numbers are, they're only supposed to grow revenues mid single digits at best over the next couple years and earnings in the high single digits. so i'm not sure that 12 times or 13 times is that cheap. and, you know, if you're sitting here comparing them to utilities then ultimately it's like what are we doing here? are we looking at apple as a technology company or -- >> maybe they'll focus more on software. sit tight, we've got breaking news from the apple event with
kayla tausche. kayla. >> brian, there appears to be a promoted tweet coming from apple's twitter account that says new cameras, water resistant, stereospeakers, longer battery life, this is 7, learn more. the link that it posts actually leads you back to the live stream of the event. but embedded in the tweet is a video that purportedly shows a device that is sleek, it is black, which is a color apple hasn't included in its new iphones for at least a couple of years now. and it does show that duo camera that had been widely expected. it isn't necessarily flush with the back of the device as some had expected, but it is that dual camera protruding just slightly from the device. and we'll of course learn more about this device. it's not appearing in apple's twitter feed itself, that feed that it refreshed just last week after not really using it at all for the last five years ahead of this event. so we still have a lot of questions about this device.
tim cook is on the stage right now talking about apple music and then the app store about the growth in both of those, apple music with 17 million subscribers now. the app store growth still 100% year over year. so we'll bring more to you when we have it. but a video that appears to be a promoted tweet from apple showing the iphone 7. >> what twitter account did that come from, kayla? >> well, our social media team, brian, pulled it as soon as it was posted as a promoted tweet, but perhaps it has been deleted or stored separately within twitter. when you use the original link to the tweet, you can see it. but if you just pull up apple's twitter feed, twitter.com/apple, it is not posted there. so that's why we're scratching our heads a little bit on this one. perhaps they jumped the gun and put this up a little bit too early. but we are still looking at this tweet as you are showing on the screen right now. >> it's all going to be okay. it's all going to be okay whether -- >> also the link is apple.co,
not dot com, something to note. >> it could be a tweet posted to apple's twitter account. >> it does go to the link when you click on it. >> right. something that was promoted that went up too soon. hard to know. they're not exactly breaking a lot of news with what's in the content of this tweet. either way it is things that we had expected. >> water resistant is not interesting? that seems like a -- >> it's interesting. but the 6s and 6s plus were already water resistant, apple just didn't advertise it. but viewers dunked it in water said, hey, it's still working. i'm not sure that's shocking. but there is more news to come about what processors and the capabilities that come with dual cameras. we've seen -- >> what's a dual camera? literally two lenses. >> two lens.
and also image processors inside, those are the sorts of things we don't yet know. >> all right. jon, sit tight. coming up, new chargers, new wires, maybe i got to buy new headphones, how far can apple push customers before they defect? will they? does apple have you no matter what? we'll debate that next. it's scary when the lights go out. people get anxious and my office gets flooded with calls.
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their big launch event just getting started in san francisco. couple headlines about music apple saying they got 17 million apple music customers. however, moments ago -- well, they didn't tweet out, they had a promoted tweet which we now learned would not apparently appear on your twitter feed because apple's official twitter feed has never tweeted, but yet the promoted tweet went out and had this link to this video, which apparently is the iphone 7. basically the link just takes you back to the live event. so apple, i guess you could say, guys, is using twitter to advertise maybe for the first time ever. that's a good thing for twitter, isn't it? >> jon and i were noting they just started this account recently. that's why they've never tweeted before. >> this is perhaps the downside to using your twitter account for the first time on your biggest event of the year, if in fact, if in fact this is kind of a social media screw up where they put apple video -- >> how would you have found this if you didn't know where you
were looking? >> i don't know. have to look at the content of the tweet. >> timeline. >> could be if you're a follower -- >> no, i think a promoted tweet is going to everybody. you pay twitter and then -- >> oh, hits whether i want it or not. >> yeah. zebra on society and it's in there. >> an apple tweet. an apple promoted tweet. >> so apple is one of the most loved companies in the world with a massively loyal customer base. however, they keep making changes to their hardware to force you to keep spending new money could even apple be at risk of losing some of their fans ask that money? let's bring in branding expert dean crutchfield. here you go, dean, from the museum of apple defunct products i've brought some things from home. >> that's a big one, man. >> here's the first ipod, for my old imac, the round with the blue and green back. this has a connector that no longer works. i think they called it iaee or
something like this. the first ipad ever, which is now really expensive paperweight, which we remember these connectors here, right? i got about a thousand of those. and to prove it's not just apple, i brought in the palm one tongueston. i'm not a horder, i just like technology. you get the point, dean, which is if the rumors of this headphone jack change are true and many of us who have kids spent a lot of money on headphones for ourselves and for them, is apple impervious to any kind of negative publicity at this point? or do they even risk losing people? >> they risk losing people. i think it's a good thing to get rid of the ear plug jack. it's been around for too many years. i think it's a small step change that actually says a lot for apple because no one else seems to have the problem. >> i hear you, but my name isn't jack. >> this works well as a bracelet. this little thing. >> go to a rave, tyler. >> nice. >> hasn't brian intentionally or not made the argument that in fact we do stick with apple? i mean, he's brought out the first ipod, they sold a lot
after that. >> look at that, they're all sexier. that's about apple, it's not justin novation but sexy design. they've always been good at that. as long as they keep doing that, they're going to keep the following. >> these days you hold up a samsung phone and hold next to an apple, there aren't marked differences between the sexiness of the two different devices now. seems like everything is sort of converging to one form factor, a flat phone that's thin. no big deal. >> no big deal, but nonetheless it all comes down to brands. that's where apple is, you know, powerful. people love that brand. they associate that brand. it's not a hardware company. it's not a technology company, it's more like a lifestyle company and consumer brand. and all the other players are not. >> i have to say i was skeptical with apple at various points in the past. most especially when i recall when the ipad came out. and i thought that was an occasion where apple was trying to sell me something i really didn't think i needed. in other words i could have done fine with my little flat laptop, which was slim and so forth. but i found that the ipad really
did serve a function. i wonder if we're being quick to criticize this phone on that same thing. where they're selling me something i really didn't think i need, which is a wireless headphone jackless phone. >> well, it's the beauty about apple -- >> they may be smarter than i am. >> they're pretty smart people, but they're great at spotting gaps in a market and making them a market. that's what they've done their entire history. i think hooer we're just seeing a design evolution of a phone. but i think it's going to be the most memorable thing that comes from the event is the fact they've taken out the earphone jack. >> evolution, not revolution. >> evolution only, this is not revolution by far. >> is that where they're missing now? because they have built their life on revolution in products. >> yes. yes, i agree. they need a big step change to kind of gee up the brand. >> what could it be? >> i think in some ways you miss a leader like steve jobs, he was a genius, he was a marketing man, a brand man. tim cook is more of an operations man, leading a business, what's his vision to
take it forward. so i think that's what's required here. apple's already had a very strong vision in terms of its direction. i think at the moment it's a little bit unclear. >> are we too tough on apple because of their previous success? >> i think we should be tough on apple because of their previous success. >> but they created an entire industry. >> yes. >> now we're like what's next? what have you done lately? like the second album is never as good as the first. >> but you're apple. that's your brand. we demand it from you. this is not samsung. we're not expecting them to do that. >> that's your weight that you have to carry, that you created. >> they have a responsibility to be there and to do that. it's not about what they're doing today, it's what they're going to become. >> as investors you also have responsibility to do that. you absolutely have to do that. how many times did people not do that perhaps enough with blackberry or research in motion? >> true. i've covered apple since around 2000 and everything that i've seen so far suggests the iphone is a singular product, perhaps once in a generation. you can't expect apple to create iphone after iphone.
i mean, we've never seen a consumer product that sells this many units at this kind of a margin. perhaps all of us apple included have to adjust our expectations on what a hit from apple actually looks like. >> when iphone sales are down, to me i'm listening to the iphone series 7, we want the series 8 by the sounds of what everyone's talking about they're deliberately holding stuff back. why is that? >> apple doesn't do that. they release their innovations when they're ready to the best they can design them. >> we got to leave it there. thank you. dean crutchfield. big apple event kicking off with a car pool karaoke. you heard that right, between tim cook and james corden, pharrell also joined in. apple purchased the rights to karaoke back in june. and we are expecting much news out of the big apple event currently underway in san francisco. "power lunch" will be right back.
new developments out of chipotle, according to reuters chipotle had an introductory call with bill ackman. recall last night pershing square announced a 9.9 stake in the company. this after pretty spotty year for bill ackman being in the wrong side of the trade long position in valeant and short position in herbalife.
right now chipotle shares hold onto a 5% gain today. we are expecting much more out of the big apple event. is original content the answer to apple's television strategy? we'll take a closer look at the tv side of the apple story coming up. hey, jesse. who are you? i'm vern, the orange money retirement rabbit from voya. orange money represents the money you put away for retirement. over time, your money could multiply. hello, all of you. get organized at voya.com.
hi everybody. i'm sue herera. here's your cnbc news update for this hour. president obama speaking to southeast asian youth leaders in laos, expressing frustrations in delays in passing the transpacific partnership trade deal, but added it will get done. >> it's always going to be hard. nothing's easy in the u.s. congress right now. maybe there was a time when it was, but i haven't seen it. it sure hasn't been easy since i've been president. all right. but eventually we'll get it done. >> groups of syrians returning to their homes in jarablus after turkish backed forces pushed back last month. turkish crews were working to restore power and water supplies
there. muslims from around the world began converging on mecca for the annual hajj pilgrimage. muslims believe taking part in the pilgrimage leads to a spiritual rebirth. last year 769 pilgrims were killed in a stampede. back here at home tiger woods says he hopes to play next month in the pga safeway open in napa, california. it would be his first competitive golf since august of last year. the safeway open runs from october 13th to october 16th. good luck. a lot of people would love to see him come back. that's the news update this hour, brian, send it back to you. sue, thank you very much. let's get a check on your overall markets. it's not just about apple. by the way, if you're a pr strategist at a major corporation, now might be the time to release bad news. i'm just saying that. the dow jones industrial average is down 37 points right now. the nasdaq is down a whopping 0.01%. tyler. all right, brian, apple's big event happening right now in san francisco. let's get out to kayla tausche
with the highlights so far. hi, kayla. >> reporter: hey, tyler. the conversation has turned now to the apple watch. tim cook talking about how it's rated number one in j.d. power's customer satisfaction survey. and the fact that the introduction of the smart watch just 18 months ago had a measurable impact on the revenue of other watch makers. but then jeff williams, the company's chief operating officer came on stage. he's talking about product advancements for the apple watch after the third operating system came out over the summer. he talked about a new ability, capacity that the watch has to contact emergency services in whatever country you're in and send a message to your family. but then he talked about a special app that is coming to the apple watch. that is pokemon go. he just introduced the ceo of the company that of course develops pokemon go. of course it is co-owned by nintendo whose shares are on the move this morning, not only because of the mention of pokemon go, but also because of
the mention that super mario, the nintendo property, will be available in the app store and new super mario stickers in imessage will be available. so that's just the beginning of the conversation about the apple watch. a couple other points of note that other executives have brought up during the event. there was a focus on education. tim cook calling it a powerful source of change for good, apple can be that change and to that end the company is giving a mac and ipad to 4,500 teachers, an apple tv in every classroom and ipads donated to 50,000 students. susan prescott, who is a v.p. of marketing came up and demonstrated in realtime live collaboration in iwork. so expect google drive, microsoft office 365 to be put on notice because of that new development there. so that's the latest from the apple event here in san francisco, guys. but we're going to be interested to hear what else they have in store for the apple watch and then of course the main event, the iphone. back to you. >> kayla, back to you in just a
few minutes i'm sure. much of the focus today surely on the new iphone, but what about the apple tv? what about apple music? the company doubling down on original content, will that strategy payoff? let's get that side of the story with julia boorstin live in l.a. >> hey, brian. though today's announcements are primarily about hardware, we are already seeing some updates to apple's content strategy. in fact, tim cook kicked off the event by announcing apple music has 17 million subscribers and talked about the upcoming itunes music festival lineup. there has been speculation that apple will announce more updates to its streaming music subscription service. it has been beta testing some personalized play lists that look like a direct rival to spotify. there's also been speculation that apple could release a new apple tv operating system with new siri capabilities and improved remote apple with the ability to search for shows across apps, youtube and even live television channels. of course today's announcements
come on the heels of a number of apple content deals and announcements. the news fox sports go app with the ability to watch four games simultaneously launched first on apple tv last month. in july apple bought the exclusive rights to distribute a new car pool karaoke show, which tim cook referenced in his opening comments. and apple's also developing a reality show called planet of the apps. plus, twitter and apple are reportedly working on an app which would enable easy live streaming of some nfl games that twitter has the rights to. with amazon stepping up its investment in original content for its amazon prime video, and with a consumer shift away from buying tv shows from the likes of itunes and towards subscription services, it's no surprise that apple's making some changes to keep up, tyler. >> julia, thank you. by the way, julia, have you heard whether tim cook can sing on that car pool karaoke? >> we'll all have to tune in to watch, tyler. >> we'll have to watch. it's a fun feature. but i have my doubts on
whether -- >> probably sing the auburn fight song. >> who knows what that is? there's pharrell. let's bring in our apple panelists jason weir, the cio with albion financial. ian winer is apple analyst and director of equity trading with wedbush securities. nancy tangler back with us and jon fortt is still with us. so who wants to take this jump ball? is content, nancy, the future for apple? can it get in there and go toe-to-toe with amazon, with netflix? is that what it wants to do? >> i think a lot of this at the moment is feelers. i mean, apple music is good. it's not great. and this from the ipod inventor and the one that brought us streaming music in a big way. i'm less focused on content than i am on services overall.
i'm also not a leading indicator on content. i started watching seinfeld in the year 2003. >> i hear you're very hip. i hear you're really cutting edge on this stuff. you knew who pharrell was before pharrell was cool, i'm sure. >> how about you, ian, are you a believer that apple's content -- when they say services, which nancy raised and talk about the growth and the services revenue, what services are they talking about? and secondly, do you think that content is one of the hothey ne to be servicing. >> so apple pay, you're talking about tv, the music, et cetera. so once you're hook sboed into system, the services is a recurring revenue which is powerful leg to the story potentially. as far as them getting into content and the tv, most people i know own an iphone are also on amazon prime and also are on
netflix. and they're way behind the curve. and from what i understand a lot of the conversations they've had with a lot of the content providers on the media side are not going so well. so i'd be surprised if apple tv becomes anything really important for the next few years. >> jason, how about you? is there anything as a holder of apple that you've heard today or expect to hear today that makes you change either your the number of shares you own, the price target you might put on the shares? >> not so far, but the day is early. so we'll see what happens as we get into kind of the core of the event. i mean, everyone's looking toward iphone 7 to say what's that look like and are we going to get a real upgrade cycle over the next couple of quarters. going back to the content and going back to apple tv, et cetera, you know, our expectation isn't so much they're going to compete with netflix or amazon in terms of original programming or get into the content -- original content generation business. for us it's more about aggregation. it's more about thinking that --
>> bless you. >> bless you. providing that service and providing that ability, the cohesiveness of the ecosystem that allows you to get whatever you need as an apple user as opposed to, well, i like my device, i like that it can do this and that but i can't get television so let's go somewhere else. it's about providing all of those services and doing it very well. >> i'm remembering a vice presidential debate -- stick with me here, it's going to take a while, but it's going to be good when it gets here. lloyd benson debating dan quayle. and benson said, i knew jack kennedy, i worked with jack kennedy. and, mr. quayle, you're no jack kennedy. i know iphone 6, i've worked with iphone 6, you're no iphone 6, new 7? >> apple services aren't exactly services the way i like to define them and tend to divide them with other companies, which
is to say they're not all recurring revenue in the sense people have signed up for something that gets charged every month. a lot of this is transactional revenue. this is people buying apps, buying extra content within games. all that gets lumped in under services along with things like icloud that people are paying monthly. with iphone 7 you're getting certain features like increased water resistance, different colors, this camera we haven't heard the full cape nlts of yet, there's been a lot of speculation that could be a big deal. i should mention there are reports coming out of the event now about the new watch. >> who's got the better services footprint, is it amazon, microsoft, apple? how do you rank them? >> amazon is at the top because they've got multiple different services. >> i get what they do. >> microsoft is doing well, azur has done well and ibm is sort of nipping at their heels. jason, quickly. we've talked about a lot of stuff, let's talk about the
stock. this was a $100 stock in november 2012, it's $107 stock today. i know if you traded you might have been able to make money, but bottom line is apple hasn't done much for a couple years. so why not? and are you buying more? >> we're not buying more, we like our position. talking about 2012 through now, that's one point in time you could say it was 100 and now it's 107, but if you adjust that calendar a little bit, you could say, well, it was at 55 and now it's 107, so it's doubled. so that's kind of a subjective timeframe to demonstrate, you know, what's happened to the stock price. what really affected that was the multiple. i mean, apple's sales and earnings have continued to grow over that period, but at that time the multiple was higher than it is today. so what we're doing is we're looking at that and saying nothing at apple has changed in terms of innovation, in terms of management, in terms of the fundamentals. yes, there's been a slowdown because we had such a strong iphone 6, but the core reason to own this company are still intact and multiple is now
cheaper today. >> all right. we have to leave it there. jason, gentlemen and the sneezing lady will sit around. thank you very much for being with us. we do want to bring your attention to shares of intrexon, up 3.6%, headlines crossing that florida house members including the speaker designate are requesting emergency funding to use intrexon technology, the technology developed to fight zika. remember they make the genetically engineered mosquitos that are self-limiting, they don't reproduce. so that is popping shares of intrexon now up about 4%. apple music, let's talk about one of the greatest musicians of all time, zz top's billy gibbons in the house. "power lunch" going to get his views. can't miss this in just two minutes. what'd you got here? this bad boy is a mobile trading desk so that i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices, right?
discussion has turned to the apple watch with an improved display that is two times as bright as the previous apple watch, a processor that is 50% faster and the capability to have graphics at a much more detailed level than before. the new apple watch series 2 also has a built-in gps unit and can stay under water for longer. the previous apple watch could withstand pressure up to 50 meters. that is the same for this watch, but apple talked about the fact that it had tested it extensively so that it could measure for effects of apple watch over years of swimming and that they actually manufactured the speaker to flush out the water after your swimming session is over. will be interesting to see how exactly that works, but executives called this version swim proof, whereas the previous version just splash proof. guys. >> hey, kayla, any word on the battery? i hear all those new features and think that battery's going to run out really fast.
>> well, with a brighter processor, a faster processor, you know, you have to think how much is that going to drain the battery. the expectation is that the battery life would be better, we don't have exact details on exactly how much more powerful that battery could be, melissa. >> actually, an upgraded processor tends to improve battery life because they operate more efficiently. but then when you double the brightness -- >> the gps also. >> the gps probably won't do that much to harm it, but my guess is, and of course we'll get the word when they give the stats at the end, they'll probably be right in line with where they were before. they don't tend to reduce battery life. move to the music side. by the way here one of the best selling musicians of all-time, he's bad, he's nationwide, joining us is bill gibbons of zz top. i have an album. >> that is an album. >> first ever like in -- >> do you have a turntable? >> i do, as a matter of fact.
bill, good to see you. thanks for coming on. >> thank you for having us. >> before we get to your tour and this other stuff, you and zz top are the longest continually performing band in the world with the same members. so you are deep in apple music, spotify, pandora, what do you think of apple and what do you think of the streaming music business? >> well, we're big fans of apple. we've been big fans of streaming as the streaming continues to unfold. i think the interesting aspect is there's a lot of players attempting to get into the game. and we are in a position right now where there's probably more music accessible than any other time in history. >> but do you get paid for it? we've had musicians on this show say i'm getting streamed a million times and i got a dollar. >> well, i think that that is on the backs of most streaming services to make the pay scale a little more equitable. let's face it, the younger
musicians are still attempting to refine their style. and i think upping the pay scale to a more equitable playing field lets them stay in the game. >> so have you exchanged dollars for dimes? dimes for pennies? >> pretty much so. yes. >> when it used to be radio play, it was governed by, what, bmi and you got royalties out of there, that was one thing. this is different. >> yes. the rules and regulations that hover over the streaming services have yet to settle. dollars for dimes is probably an understatement. there's that one more hot rod car to build, so let's stream on. >> and you've got a lot and we're going to get a lot more views. sit tight, bill, we're going back to kayla quickly and then come back to billy gibbons of zz top. >> hard to follow zz top, but, brian, we are getting a special edition of the apple watch series 2.
it will be a partnership with nike, and it will be a nike plus watch. both companies have discussed their partnership together. trevor edwards, who is the president of nike is currently on stage discussing this. of course not really that surprising given that tim cook, the ceo of apple, is the lead independent director on the nike board. nike actually left the smart device gadget market a couple of years ago. so interesting to see that this is the fruit of that partnership going forward. will be interesting to see exactly what the parameters of this device will be, but apple and nike partnering for a special edition of the apple watch, guys. >> all right. kayla, thank you very much. welcome back. so, you know, you see pretty sanguine about it. i know you've been around a long time and sold millions and millions of albums. who out there in the music world, apple, spotify or pandora, is the best for your business? >> the best for the business is yet to appear. and i think the race to become
the industry standard, if there could be such a thing in the future, is going to be those that make the most user friendly way for fans of music to be able to access it. that's another challenge. speaking of so much music accessible, the big challenge is finding what you like. and in the old days radio programmed for better or for worse things to listen to, and i think that the streaming services are incumbent to follow that charge and assist the listener to find what they really like. >> billy, i remember in the '80s first becoming aware of zz top and one of the things that impressed me about you guys is you had the image down, you were playing your instruments live. you always had a very strong live presence. is that where the music industry is tilting now? whereas people have gotten really used to making a lot of money just off the recordings. when you look at your live
shows, are they just the same kind of draw in merchandise as they were before? or are they perhaps even bigger in some ways than they used to be? >> well, we hope they're getting bigger. the -- of course the tide has turned making merchandising and live appearances that much more appealing to do the get up and go. the record business is still in pretty good shape. you have singers like adele and taylor swift selling tonnage. and yet this interesting new future holds some real interesting problems. >> so i understand you and zz top make more money touring than you do on music sales. >> well, it's been very good same three guys playing the same three chords. >> by the way, friday night in jones beach you can see zz top. they're at the sands -- >> you're going to be at jones beach? >> oh, yeah. >> that is -- my first time this
summer. what a great place that is to see music. >> yeah. >> but here's the thing about bill gibbons you may not know, tyler. >> there's a lot i don't know. >> we met -- i think i was giving a talk with boone pickens about oil. you were there. i said are you the guy from zz top? you said, yes, i said what the hell are you doing here? his wife is a former stock and investor, you were asking questions about the stock market. are you currently actively invested in the market? >> well, we follow the great words of peter lynch from magellan who said so wisely follow that which you know. and in our case the real serious stuff is relegated to the professionals that are kind of personal -- in attendance for personal investing. on the other hand, cars and guitars still have my attention, so we go that direction. >> but you own stocks. >> oh, yeah. >> what do you like?
>> stock cars. >> do you own apple? >> indeed. yeah, we're big apple fans. today we consider today a day of liberation, you know? the iphone 7 has -- you don't need wires any longer. >> what do you listen to when you're not listening to your own music? i want to compliment you for putting just like me -- dressing like me and putting the white pocket square in there. >> thanks to gilligan, she got me this fine irish linen pocket square in dublin. >> what do you listen to? >> we still listen -- we've got our favorites going back -- >> boogie stuff. >> muddy waters, jimmy reed. >> yeah. >> then we've got our contemporary favorites, jimmy vaughan and the t-birds, onto government mule. >> yeah. they're playing too. >> they're working with us. >> very cool. >> jones beach. >> bill gibbons, real pleasure to have you here in studio. best of luck on the tour, jones beach friday night. thank you for all your insight.
>> indeed. >> good to see you again. safe travels. >> yes, indeed. >> sharp dressed man. >> well-dressed man. >> let's take a look at this new video coming in of the new nike watch just announced at the big apple event. we're expecting much, much more. so you'll want to stay with us. as we head out, take a look at apple by the numbers. "power lunch" is back in two.
take a look at apple shares. tim cook has just begun talking about the new iphone 7. we have small details in drips and drabs. tim cook saying so far the apple phone sold 1 billion units total, best selling product of its kind in the history of the world. more details on a new 7 straight ahead. ♪ what's the value of capital? but what's it cost to modernize a school district? what's critical thinking worth? a basketball costs about fourteen dollars. what does it cost to build a new sports arena?
what's team spirit worth? a telecommunications system isn't cheap. what's it worth to talk to your mom? what's the value of one more tree? a forest? a walk in the woods? what's the value of art? art open to the public. the value of capital is to create, not just wealth, but things that matter. morgan stanley. capital creates change.
welcome back to "power lunch." i'm eamon javers in washington. the fed's beige book is out, and the report is this. national economic activity continued to expand at a modest pace during the reporting period of july through late august. most districts reported a modest or moderate pace of overall growth. contacts across the 12 districts generally expect moderate economic growth in the coming months. now, a couple key economic sectors to bring you, consumer spending, tourism, retail volume appear little changed since the prior reporting period although boston and cleveland san francisco suggest modest gains. now manufacturing activity was flat to slightly up in general
with chicago in particular reporting a moderate pace of growth. in retail -- i'm sorry, in real estate and construction activity expanded further than most districts, residential construction growth was moderate across many districts but robust in san francisco. now on wages and employment, employment expanded at a moderate pace since the previous report. conditions in the labor market remain tight in boston, chicago, new york, san francisco and minneapolis. and st. louis reported that pressure on wages remains strong. in the oil market demand for energy related products and services continued to decline albeit with some signs of stabilization in agriculture, a couple references in the beige book to a strong and record national harvest. that's pushing prices down further. and then a couple of key areas to look at here in terms of trends, the elections were mentioned several times in terms of creating economic uncertainty in different regions of the country, particularly in real estate decisions and retail auto sales specifically. the zika virus also mentioned here a couple of times, shows up
as a theme people are watching particularly in the atlanta district which encompasses south florida where observed fewer international arrivals and monitoring the potential impact of the zika virus. and in the san francisco district on the marijuana industry, financial institutions in states with legal marijuana reported increased operational costs related to regulatory constraints. so the growth industry there of marijuana maybe being constrained a little by regulatory concerns. back to you. >> thank you so much, eamon javers. little reaction in the market. also check on the dollar and as well as bonds, not too much. but bob pisani, lots of other things moving on the floor of the new york stock exchange. >> yes. we are seeing an interesting day even though the leadership groups, techs and banks, are not doing as well as previous weeks. still they're doing pretty good today. look at the s&p 500, really not a lot of change. we were down about three points in the s&p prior to the beige book announcement. that's essentially where we are right now down 3.6%.
banks aren't moving much though they're a leadership group, the kbe here up just fractionally as we went into the fed beige book announcement. that is remaining right there at 33.83. take a look at some of the big banks today. even though we are generally somewhat down day, banks are taking the lead here with some of the regional banks on the upside. and this has been a real big trend here for the quarter with some of the major banks posting big gains, morgan stanley and some of the regional banks like regions financial essentially up double digits for the quarter-to-date. even though we have not, melissa, gotten the big increases in interest rates that people were anticipating, we have seen some modest loan growth. we have seen fees increase for a number of the banks. and a lot of these banks 40% of their revenue are fees now. so you can see the big returns that we've had in the banks so far. that's continuing today. melissa, back to you. >> thanks so much, bob pisani. now to the bond market, rick santelli is tracking the action
from the cme. rick. >> if the word moderate meant b-plus or a-minus, maybe that would mean something, but it was kind of lost on the marketplace. moderate isn't good, and we're less than moderate as of some of the most current data points. and when it comes to wage pressures, traders have talked about this issue along with hours worked, but it doesn't seem to be pushing the envelope. it doesn't seem to be giving the fed kind of that breakout feeling. so when you look at the marketplace, the dollar index hardly moved. it's up about a fifth of a cent today, but it's really been getting drilled as of late especially the last couple sessions. as you look at the multiday charts on the short end twos and the longer end tens, they are basically -- they aren't basically, they are unchanged after big drops yesterday. doesn't look like the beige book is changing anybody's mind with regard to strategy to the upcoming fed meeting. back to you. >> all right. rick santelli, thank you. and back to kayla tausche at the apple event in san francisco. kayla. >> reporter: brian, we're
beginning to get some of the details about the long awaited iphone 7. apple's head of marketing phil shiller currently on stage following a video where the chief design officer of apple, johnmy ive, described it as a gorgeous device, as a deliberate evolution of apple's original founding design for the iphone. some of the advancement in this device two new black colors will be available. phil shiller saying they are very high-tech colors that will be available in addition to gold, silver and rose gold. and then he talked about introducing a new type of home button. the company will be incorporating the force touch technology that apple watch users will be familiar with into that home screen button that is the central command for really everything you do on the iphone. he's now moved onto talking about the new model being water and dust resistant. something that the chattering
classes had been expecting but had not been confirmed quite yet. so those are the details that we have so far, guys, for now, back to you. >> all right, kayla tausche, kayla, thank you very much. let's now bring back our apple panelists. joining us apple shareholder jason ware of albion financial and another apple shareholder jim lesco of granite investment advisors. after the introductions, we're out of time, guys, thanks for coming. that's a joke. jason, first to you -- back to you, i should say. you've heard a few things, you've seen a little of the apple iphone 7, as an investor, not as a consumer, what's your take? >> well, it's about in line with what we were expecting so far. as i mentioned yesterday on the program, you know, basically we're going into this event with pretty low expectations. most folks feel like they have their hands around what we're going to get in terms of new features and the hardware specs. so far nothing new. but again, i think that sets the
hurdle low for apple stock because going into it people aren't expecting a whole lot. if we get kind of an inline event and then a decent upgrade cycle, i think there's some head room there. >> ian, what do you make of it? this seems like it was probably one of the first or maybe the first time that apple stock has done nothing practically leading up to a big launch like this. and here we are and the stock is flat still. >> well, let's see. they have new colors and it's dust resistant. the suspense is terrible. i hope it lasts. but ultimately i just think there's just nothing that exciting so far. and so if you're the incremental buyer of a $600 billion market cap company, you're going to have to see something pretty interesting. and we just haven't seen that yet. so stock's had a nice run into this and it's not a surprise to me that the stock's not just exploding on what we've heard so far. >> tim, i think that's a good point. i want to bring you in at this point since you're new to the conversation, who is the incremental buyer of apple stock? at this valuation, value investors, they've had some time to take a look at the cash pile of $231.5 billion and to take a
look at the valuation and say now is the time to buy. who is going to come in and step in after this product launch which meets low expectations, according to our panelists? >> well, i think it's pretty clear the expectations were pretty low. and it's an evolutionary product design. so i don't think that anybody's really expecting something blockbuster. but the -- in a world where people have been flowing money into passive investments for some time, i don't think apple stock really moves until the market starts to change direction in one way or the other. such a large part of the indices and most of the money flowing that way no matter how many, you know, value managers decide to buy the stock, growth managers decide to buy the stock or at this case a lot of hedge funds have been absent the stock for a while. as long as we're in this range, i bet the stock stays within the range. >> you kind of anticipated my question, tim. is apple a growth stock or is it a value stock? or is it a breath mint or a candy mint?
>> i think it went through that long period of what we like to call value stock perg toir. but it moved from being a growth stock to a value stock. it takes a little while for people to believe something that went from a high teens multiple down to almost a single digit multiple at some point to really garner the support that they can produce a good long-term earnings strength. and i think that's what we have, an evolutionary product design change, huge refresh cycle -- >> does a growth manager want it? >> growth manager wants it suddenly to come out with something that's going to blow the doors off. and that's just not where apple is right now in the technology cycle. >> you know what blows the doors off to me, the one thing i will say, jason. forget about the dust, i understand ian's point, but what's been cool $250 billion in cash. how much is apple's literally cash pile scrooge mcduck, sitting on top of this thing,
that's a lot of money. >> it matters from the standpoint they have a lot of dry powder to buy growth, innovate with and invest in r & d for future apple growth to be a part of the story. one of the things i mentioned prior not in this program but in days passed that growth r & d as percentage of sales has been going up for tim cook. there's typically a pretty good correlation as r & d and percentage of sales and stock returns. so that cash pile provides them a lot of opportunity. so as an investor that's exciting. if you strip the cash and look at the core business, makes the stock cheaper. on those two standpoints it's a positive. >> i agree with stripping the cash but in terms of nving in r & d and buying growth, that's exactly what apple has done in the past few years. no. >> well, i don't think all that stuff frankly matters that much. apple has always spent less on r & d as a percentage of revenue than most have. they have a very unique approach to it.
but going back to the event itself i think what's emerging now it's clear that this phone is all about the camera. apple is going all in on this camera and the changes they've made to it internally. the argument around their new image signal processor that they've kind of completely re-engineered the internals of this both from the lens perspective and to the chip perspective, even to the software and changing how you work with live photos. now you can crop those, now you can shoot raw on this phone. they're really making an argument this is entirely new because of the photography aspect. >> why do i need two lenses? >> why do you need two eyes? >> they have not gotten to that yet. the speculation is one lens will be more wide angle, the other would be more telefphototelepho together they would work together -- >> they'll show us -- >> we don't know yet. >> tim, it's interesting, i get it, we're so obsessed with the
phone, it's 60% or so of their revenue. apple's got to diversify. in our planning meeting yesterday i sort of said this tongue in cheek, i said apple is becoming exxon. in other words it's a giant company that churns out one product -- >> sorry -- >> the natural gas deal which by the way they probably overpaid for, but you get my point, tim, which is that apple doesn't it need to diverse -- as great as it is we're spending two hours talking about it, doesn't it need to diversify a bit? focus more on the other stuff as well? it cannot be a one phone pony. >> right. i think you've nailed it. we talked last time i was on the program the fact iphone has grown into this great big tree and all the shrubs they've planted around the tree are trying to grow, but iphone grows so fast that it's become the monolith in the portfolio with incredible margins. so as they push towards these services, and the services business is not insignificant. it would be a fortune 100
company if it was just a services business. and it's high margin services versus what amazon and microsoft and others are putting out, which really is a commoditizing service. there's growth at apple and really on the ecosphere, not really the unit volume of iphones. as long as they keep developing software like apple pay, like icloud, like photo sharing and in a world where everybody just simply shares their pictures and their videos all day long, you have to have a top end camera. so i actually think that's a pretty good story. >> cameras keep getting better and better. tim, jason, ian, jon, thanks. one of the big winners in today's apple event has been so far nintendo. apple announcing that super mario is coming to the app store. and pokemon is coming to the watch. this is why dominic chu is here. dom. >> this is why i'm here because our friends at cnbc pro did a search to find out what happens a day after the price of nintendo spikes up like it is today, those u.s. shares currently trading -- they were
up about 30% of one point and then apple remembers saying mario game was going to come to the ios platform. now, over the last decade nintendo spiked up by 10% or more six different times. in a single day. on average a month later the stock was 2.7% lower than it was before that. and it was only a positive trade, about a month out a third of the time. so for a lot of traders looking at this opportunity, it may be one where they're saying take some profits here, otherwise keep an eye on nintendo because those shares they're having that pokemon go effect right now, melissa. >> what a spike. dom, thank you. more to the markets and technology than just apple. there are plenty of other stocks out there. which ones could make good investments? we'll get free advice next on "power lunch." every great start-up begins with a simple idea. but with growth comes complexity. that's why so many innovators are on the ibm cloud. like refinery 29, with nearly a billion views a year.
shares of apple moving a little bit lower just by 16 cents right now. less than about, well, less than 0.1%. dominic chu has been doing some research. >> we have been doing some digging. so apple stock is following the same kind of trading day that typically happens on big iphone announcement days. here's what we're talking about. if you go back to apple stock history in the iphone era, that's 2007 to today, there have been ten times where we've had similar iphone announcements. so our data partners crunched
the numbers and it turns out that on the day of an iphone announcement like today, apple stock is believe it or not, yes, typically down but not by that much. it's playing out today. we're talking about down less than 0.1%. but it's negative trade 80% of the time eight of the last ten. now, it's a different story a day later. apple stock has rallied the day after an announcement seven of those ten times and were posting an average gain of nearly 1%. so it makes up for it. and for those who are wondering about what happens a little bit more medium termish beyond that, 20 trading days or a trading month after the iphone announcements and the story perhaps not as positive. this stock is down six of the last ten times during that period. the average loss there nearly 1.5%. so the usual caveats, guys, apply. this is a small sample size. there have only been ten announcements prior to today. so you can't make a huge kind of correlation if you will, but remember this is apple's single most important product and we should point out that the day before the original iphone first
came out in january 2007, on a split adjusted basis, guys, apple was a $12 and change stock. it's $107 today. it was as high as $134 last april. so this is a stock that's definitely gone up. now these product announcements may be kind of trading catalysts, but maybe it's hard to draw a conclusion. >> it was 100 four years ago. which adjusted for inflation means there's been no return. >> well, i mean, yes, you could say that. you could say that. so apple bulls out there will say this has been a stock that's risen quite a bit. maybe not as much as others, but still the bullish case is it's done decently well versus the market. >> stock has doubled in five years. >> right. >> but most of that was in the first 12 or 15, 16 months, right? >> the bearish case is of course out there for a lot of people as evidence by the stock move today. but still $12 stock back in 2007, $107 today. >> when you buy and sell -- >> melissa, when you talk about it tonight "fast money" 5:00
p.m. eastern, the whole thing that we're trying to do today, i think, is apple going to say something or show us something enough to make new people go out and buy new stuff? isn't everything else irrelevant? >> the question is it going to change the investment thesis surrounding apple and so far there's nothing been unveiled today that will change the investment thesis of apple. >> that's not your opinion. the stock's not moving. >> i mean, possibly, i mean, maybe that won't lengthen the upgrade cycle as much as people had believed, but already upgrade cycles have been lengthening. >> melissa, it's the camera versus the headphone port, is what it is. how much do you care about this camera that's able to zoom now, it's able to do depth of field, which is something you had to resort to an slr, dslr to do before, and how much do you care about missing that headphone port that's just been there all along, you listen to your music through it? i don't know what the answer is. i don't know where every man is going to come down and every woman is going to come down on this. >> right. >> but the fact is there are a
lot of loyal iphone users who have not yet upgraded who have to make one of several painful decisions, to switch to android, to upgrade to the latest iphone 7. >> to wait to the iphone 8. >> or to wait until the phone breaks and maybe buy something cheaper. >> am i the only one that ever downgraded? i went from a 6 to a 5? >> yes, you're the only one. >> i didn't see the benefits of the 6. >> teenagers i hear do that, like as a punishment. you can get a new phone -- >> are you giving me a time-out, jon? >> maybe he hasn't earned a new phone yet, jon. [ laughter ] >> up next, investing beyond apple. there's other stuff happening and we've got it coming up. audi pilotless vehicles have conquered highways, mountains, and racetracks. and now much of that same advanced technology is found in the audi a4.
apple is at the top of everyone's minds today, but what about the rest of the tech sector? the xlk tech etf is up 11% this year and big names like amazon, google, microsoft all up significantly over the past 12 months. so which are the tech stocks investors should be exploring beyond apple? let's bring in paul meeks and denny fish, portfolio manager of
the janus global tech fund. paul, start with you, you like a very common theme out there, cloud. how much are you willing to pay for these cloud names though? >> that's an excellent question. right now i would only buy them on dips. and i would buy them in this order, amazon followed by google followed by microsoft. but again, only on dips. i write articles for cnbc pro, and even though i'm best known as a tech investor, last week i published an article on cnbc pro advocating the purchase of signature bank, if that tells you anything. >> hold on, guys, i want to get more about that but we want to go to kayla tausche in san francisco. more on -- >> reporter: well, melissa, the conversation has moved from the strength of the cameras that are now part of the 7 and 7 plus family to the speakers and the headphones, which of course have been a controversial change in this device. they said the iphone 7 and 7 plus will in fact have stereo speakers. and they have migrated the
headphone jack from the independent jack to the lightning port, but the company is saying it will include a new set of headphones as well as an adapter for old analog sets of headphones in the box with every single iphone 7 and iphone 7 plus that is being sold. hopefully that will allay some concerns that old headphones wouldn't work or have to buy new headphones. i know this is an issue that jon fortt has specifically sharp feelings about, but the company is confirming the headphone jack will be removed. but it is trying to help consumers with this migration by including new lightning port adaptive headphones. >> any word on the size and what it looks like? i mean, we were having this conversation. it sounds like a very trivial matter, but we're having a conversation, you lose things. if this thing's like a tiny chicklet, that's going out the window no time. very, very fast. >> well, from an engineering standpoint, melissa, one of the reasons why the company was expected to remove the headphone jack was to be able to make the
overall device slimmer. and that's what would make it water resistant. so we're still getting word on the specs of exactly what the headphone jack and the lightning port will look like. i imagine that's something they'll hit momentarily. >> yeah. jon. >> from the pictures, melissa, it looks like this adapter is about the same length as the width of the phone. >> oh, it creates a new edge completely. >> you stick it -- the lightning port to headphone adapter, you stick it in here but it's about this long. >> it fits on the bottom of the phone. >> you have a picture theoretically what it is right there on your desktop. >> you can't see that, viewers, i know that's frustrating. >> he's describing it beautifully. >> it's effectively, yeah, it's an adapter. it's a three-inch -- it's a dongle. >> i'm glad you said that. >> playing pictionary. >> but it's this tiny little
thing -- >> it's pretty small. that's what i was trying to gauge the size of. >> if you want to charge your phone you'll have to decide do i leave this attach to my headphones. >> it's probably three inches long, i guess. a short piece of rope. that's from yesterday's show. it's about three inches long. it's something else to lose. it's something else that you have to buy. >> something else you forget. >> forget your headphones as it is. there it is. >> that's how we all charge our phones. that's it. that's nothing new. that's the plug we all use to go into the bottom of the iphone. and apparently now that's where your headphones will also go eargo you cannot charge your phone -- >> while you're -- >> and i said ergo as listening pun. >> so far ahead of us. >> you can't charge it and listen. >> at the same time. >> yeah. i mean, that's going to be a problem for some people. i might be an edge case. i'm an edge case on a lot of things. i admit that to people. >> you're a tech guy. >> when i'm in the car, i'm charging my phone.
as a rule. the car has a big fat battery. >> abc, always be charging. >> yes. gas is helping that battery. so i plug in my phone. but i also like to plug in the auxiliary into the headphone port and get the sound through the car because my wife uses bluetooth and we don't want the car getting confused on who it should be listening to. so this is perhaps an edge case, but like i said, this is the camera versus the headphone port. which do you care about more, viewer? >> what you just said, what you just said, again, we're talking minutia, i guess, but what you said to me as a guy who listens to a lot of audio books, i listened to this book, because i've got a long commute. >> yeah. >> i use the adapter cable from the headphones that go into my car. >> right. >> because i have a separate device i don't want the phone, the bluetooth -- i've got the phone, that's the bluetooth, i use physical cable, but i'm always charging it as well. now i'm not going to be able to do that. >> so all the accessory makers,
belkin, et cetera, here's their opportunity, right? they're looking at this how can we make money off this, the people who want the phone -- >> split that cord. >> they have a dongle problem. how can we solve their dongle problem. they're good at this. >> let's transition here to a person who has no dongle problem and does not need an adapter, to sue herera, for a cnbc headline. thank you very much, ty. here's the news update at this hour everybody. president obama joining southeast asian leaders for dinner during their summit in laos. before dinner he met informally once again with philippine president rodrigo duterte. obama canceled an official meeting with the philippine leader after he made a vulgar remark about president obama. members of congress trading jabs over who is to blame for last night's failed zika funding vote. the $1.1 billion funding measure failed to pass the senate. democratic house and senate leaders lashing out against the republican colleagues.
>> we are here today because once again in the middle of a public health emergency, republicans decided to pander to their base with yet another political show vote last night. walt disney world is now scanning the fingers of small children before they enter its theme parks. its scanning policy now includes 3 to 9-year-old children. those over 10 have already been required to have their fingers scanned. the program is an effort to combat ticket fraud. and colin kaepernick's football jersey is now number one in sales across the nfl. he posted a message on instagram saying he wasn't expecting this result, but it shows people can achieve justice and equality for all. that's the news update for this hour. back to you, melissa. thank you, sue herera. let's bring back tech investors paul meeks and danny fish. paul was just saying he was going into signature bank most recently, presumably because of valuations are of a concern at
this point in certain areas of tech land. danny, i want to go to you. where are you finding value right now? it does seem like the stocks that have been in favor in techland, they are reaching historically high multiples as it relates to themselves. >> yeah, thanks, melissa. appreciate you having me on. i think if we can go back to a debate that you were having about apple whether it's a value or a growth stock earlier and apply, you know, kind of our framework to how we think about large cap technology stocks. and i think a name that we are still overweight and we like here is alphabet. and, you know, one of the key reasons and i think it's important to contrast the profile of alphabet relative to apple is if you think about apple and you think about all the debates that you're having today about what the iphone 7 looks like. you know, the reality is what does the earnings growth stream for that business look like say post fy18 once we get through
the anniversary launch of that phone? i think that's where investors have a lot of questions hence the compressed multiple. you contrast that with alphabet. and if you look at the street estimates out there that are calling for anywhere between $50 and $55 a share and you think about that earnings stream that's still going to be growing mid maybe even potentially high teens at that point in time, which is still a significantly faster growth rate than you get with the s&p 500, and that stock's only trading about 15 times that number. and furtherfurthermore, if you where they're losing currently, the core business is only trading around somewhere 13 to 14 times that fy19 number. and then also just the defensibility of the franchise. >> paul, alphabet fits into your cloud thesis, but you also like facebook. and i wanted to ask you specifically about that because it seems to be hitting a string of new highs. today a new high. morgan stanley upping the price target here.
at what price do you get -- you are clearly concerned about valuation at a certain point. what point do you get concerned about valuation when it comes to facebook? >> i think there's a move in the stock probably $15 to $20 more. the way i look at facebook is they have a lot of runway left, both on revenue, cash flow and earnings growth because they haven't fully exploited messaging and video. in the meantime the stock trades at a 20-something times earnings. and just like the previous speaker said, i think it's actually given that growth rate pretty attractive. so i see about $20 more. i have a portfolio on -- platinum portfolio on squawk and 50% of my portfolio and we're only allowed to have four stocks, is in facebook. >> we got to leave it there, guys. thanks so much for your time. >> thank you. >> thank you. many apple critics say the company has failed to come out with an innovative product while tim cook has been ceo. is cook an innovator or
we're getting more details off the iphone 7, jon fortt making the point the camera is the most important feature of the iphone 7 and that could be competitive when coming to gopro products seeing shares down 4.5% so far. let's get back out to kayla tausche in san francisco. more details to come, kayla. >> reporter: melissa, the conversation now has moved to the chips inside the iphone 7's suite of products. a new chip called the a10 fusion was described as a rocket ship 40% faster than the chips in the 6 and 6s lines. and of course that is something that is going to be helpful for having the iphone 7 toward maximum performance and maximum battery life though we're waiting on details of exactly how this optimizes the battery life of the iphone 7. speaking of batteries, we want to show you exactly what those new airpods look like that the company announced just moments ago. of course these are about the
size of cuff links. they are the new wireless earbuds that the company is going to be enabling alongside the iphone 7 and 7 plus. they will be coming with a wireless charging case. and you can recharge them for up to 24 hours of listening. they also announced a new beats line of headphones including the beats solar 3 wireless and some coordination between what apple is doing on the bluetooth wireless headphone side and what beats is doing as well. this presents a couple problems that i'm sure you guys will discuss. one is these are so small, i said the size of about cuff links, how do you keep track of them? how easily can you lose these and need to replace these? and second, just another item you will have to remember to charge in order to use them despite the fact apple is attempting to make it as easy as possible with this new wireless charging case. >> all right. kayla, thank you very much. i mean, this is the point here. you've got more stuff to keep track of, jon, and lose. >> that's true.
but balancing that out is the new w1 chip. you've got an a series of chips that are the main processors in the phones. you've got the m series of chips that are the motion processors in the watch and other devices also in the phone tracking your steps or able to see how you're moving. now you've got w chips that are mainly for wireless. now you're going to be able to connect your headphones whether they're from beats or from apple with your phone presumably eventually with your ipod and maybe with your watch without having to go into the bluetooth menu and poke around and see the device. >> they're not going to make it so the only earpods that i can plug in are beats or apple's? >> no, you can do it the old way, but if you have this w1 chip in and you put these wireless headphones near your device, they will prompt a connect. just being nearby. >> just being nearby. >> just being nearby. just close to you, right? >> close to you. >> so they're trying to solve an interface problem here. they've said wireless is the future. they don't want you to have to
hunt and peck through menus on the phone in order to connect to these wireless devices because they're coming out with a lot of them. this is the solution. >> in the bottom of my briefcase, and they're going to be uncharged when i want them. >> i don't want those airpods. i don't want those airpods. >> jon, i'm angry. >> if you want headphones the type that fit over your head and those are going to be wireless, those won't get lost. >> no, those won't get lost. >> and those will have the w1 chip as well. >> what are you talking about w1 chip, airpods, the whole thing is weird. >> well, we're filling two hours with this is what we're doing. >> no, listen, i understand that my ears may not be representative of the general population. >> love those things on the airplane. >> they're real and spectacular, these things. but the new shape they rolled out last time, you're running, they fall out, they're gone right down the sewer. i understand i'm old man sullivan right now, but i'll tell you the difference. i have bluetooth headphones, they die half the time mid run.
wired headphones may tangle, they may be annoying, but they never lose a charge. >> beats wireless headphones that are larger those will last 40 hours. >> what about all the kids out there that we're up here and we got all successful people, what about people scrimp and save to buy a $400 pair of headphones or god forbid you drive a car my 2010 jeep doesn't have bluetooth. >> then they will be like you and they will stick with an iphone 5 or buy an iphone 6, they won't go to the 7. if they're scrimping and saving, they're not part of that upgrade cycle. >> how can they buy it if it doesn't exist? >> do we have a picture of the dongle? >> we have the dongle. >> what is that? >> that's what i tried to describe on the air. >> the lightning side -- >> okay, melissa lee, you describe that. >> you said an adapter. >> it's not a dongle technically because i believe dongle has an electronic connection. like a wireless signal.
>> adapters and my dongles confused. >> we need someone who knows more about dongles than us on the show. >> we're going to take a quick break. emily fox of vanity fair will join us and so will ed lee of recode. programmed machines to. ge is an industrial company that actually builds world-changing machines. machines that can talk to each other digitally. hello? they don't talk to each other like that, ricky. shhhh, you'll anger it. he looks a little ticked off now.
it has been almost exactly five years since tim cook too over as apple's ceo. and financially he wins some pretty high marks. triples revenues $233 billion cash war chest and a billion apple users. but in terms of innovation, just one brand new device, the apple watch. and undefined direction regarding apple tv or cars. joining us emily fox from vanity fair has been patiently sitting with us, and ed lee. folks, welcome. emily, you make the argument that cook gets a bad rep as an innovator, that he has been an innovator but just in ways we might not see. how? >> sure. if you think of innovation as coming up with a brand new previously unimaginable product that you can hold in the palm of your hand or put in your lap, then yes, there has been an
innovation lag since tim cook has been at the helm of apple. but i think that's a very narrow definition of innovation and i think tim cook has made some really big changes in apple. >> what are they? >> if you think of the financial situation apple is in. it's unimaginable heights. he's brought apple products into brand new really successful markets. and then there's the security issue. i think tim cook has put a huge emphasis on security at apple. he stood up to the fbi on a matter of national security. and i think for an american ceo that's a pretty big innovative step to have taken. he also created the apple watch, which i think we can all agree hasn't been a huge commercial success as of yet. but apple products tend to take a couple of years to catch on. i think we can give him a little bit of breathing room. >> you say he's broken into new markets, do you mean internationally? >> yeah, it's a big step forward for apple. >> ed, react to what emily just said. is he an underheralded innovator? >> i would say, you know, innovation is hard. i think it's a hard thing to
gauge even in a short period of time or especially in a short period of time. i don't think he's sort of quite come out with things that sort of merit that badge necessarily, but at the same time for context look at steve jobs who was we really put up as the main innovator. it took him years to find the iphone itself, the imac, he had a lot of flops in between. we haven't seen tim cook do it yet, but we have to give him more time. i think that's my take in terms of where the innovation -- >> i fundamentally disagree with the premise here. i think tim cook is as much of an innovator as steve jobs -- >> take it away. >> if you just take away that iphone that drowns out everything else when it comes to revenue and when it just comes to design itself. look at the mac pro. it's being built in the united states right now. we don't talk about it enough. completely redesigned professional pc. look at the mac book, which is now slim like the mac book air. that part of the line didn't exist before. if you look at ihome to control
the software to control things inside the home, look at car play inside the car, plus the apple watch. i mean, this is on pace -- >> i disagree with jon. >> isn't there a measure of how good the innovation is by dollars? i mean, the fact the mac book pro is 10% or 11% of revenues, shouldn't we say, well, yeah, it's an innovation, but this number of people buy it. >> go ahead, ed. >> so i'm going to disagree with jon a little bit here. i don't always do that. >> do it. >> it's hard. i think innovation as a term, as a benchmark is a really, really hard thing to reach. i think tim cook has done a lot of great things. these innovations in terms of i would argue more incremental upgrades, he's done a good job of managing the balance sheet and making sure the best possible product. the iphone itself if you think about the iphone however what steve jobs did with the iphone, he's created an entire new economy. look at uber, uber would not exist without the iphone. it's a $70 billion company now. that's the thing. it created a whole new culture,
a whole new infrastructure. the idea of having a smartphone in this way -- >> but that's what i'm saying, ed. you put the iphone in there you distort the entire comparison. >> yeah, but that's the bar. >> that's the bar. that's what hard is about it. steve jobs set a high bar. >> we have to get to kayla in san francisco. >> we are getting availability for the iphone. starting price is $649. that's retail price, face value. as you would expect prices for earlier molds will be decreased as a result. that is not a monthly payment, if you are getting this through one of your providers. that is just the whole tag that you're going to get retail price. they are are also upgrading a memory you will get in your iphone 7. 32 gigs is starting then it goes
up to 128 gigs and 256 gigs at the top and that's double the current max ka pass knit this 6 s line. that is going to be extended to the 6 and 6 s for those new models for people who are buying those that haven't already bought them and then very interestingly the company announced that if you participated in that new iphone upgrade program when it actually started last year, you will be eligible this year for an upgrade to a new device. so apple is basically rolling out the red carpet and saying if you participate in our upgrade program we will extend that to qualify you to a new iphone every single year. finally, airpods. $159. those will be available in late october. phones will be available over the course of the next week. preorder start this friday. guys? >> all right. thank you. >> that pricing stuff is very interesting. john ford, how important to me,
we haven't heard a lot, but that 256 giga bites, that gets your attention. you are taking photographs -- hold your thought. we will talk about it after the break. all over the apple headlines. power lunch is back after the break. it's your daily retreat. go ahead, spoil yourself. the es and es hybrid. this is the pursuit of perfection. so i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices. the market's hot. sync your platform on any device with thinkorswim. only at td ameritrade.
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energy lives here. ♪ [engine revs] ♪ [cheering] ♪ the highly advanced audi a4. ♪ emily fox of vanity fair is here. you are an apple woman. did you see anything today? would you ever change to an android phone, number one? and will you be in line on day one, day ten to go by a 7? >> as a general rule, i never stand in line. but i -- >> i like that. i knew i liked you.
>> but i will stay to my apple phone. i don't see a reason to switch to an android. >> do you see the reason to switch from a 6 to a 7? >> i think i will switch. i've had my 6 for two years. >> really? >> new season, new phone. >> space blue, maybe. >> how about you? >> i will hold on to my 6 and wait for the 8 will. >> what will be different about the 8? >> everything will be different on the will. >> like on mars. >> everything. >> on a serious note, if you pay full price for ipod 7 and you buy the airpods, you will pay close to $1,000. do they have that base? >> they do. it is a desirable product. it is not just a necessary thing, but a have-to-have-it. >> is the market as big in asia
for that $1,000 combination package as it is now for the existing 6? >> the addressing market is smaller the higher you go. i think it is more of the hail why effect, from just having this great brand, this lower models -- >> have you of lost -- >> absolutely, all the time. >> you lose an ear bud, you will be -- >> i would give myself probably two days before i lost both of them. >> a good business model. >> always sauk success. >> the plus is $20 more expensive than it was in the past. wireless head phones are at least $100 more -- >> but i've never had to buy them. >> apple can't keep a secret any more. all of this stuff in the blogs before? >> yeah. a problem that i'm sure apple will work to address over the next coming weeks, years.
>> maybe it doesn't matter. the stock didn't move. >> the software stuff was more after surprise. >> let's look at apple stock. let's see it. there it is. doing anything? down half a buck. that's it. >> all right. >> thank you. >> we're going to go play with our iphones. >> "closing bell" is up next. >> hello, everybody. i'm kelly evans with the new york stock exchange. >> i'm bill griffeth. tim cook doing car pool karaoke. how cool is that? but the real music story, the new head phones, true, apple is getting rid of the traditional head phone jack for the iphone 7. investor reaction so far has been muted. we will take you live to san francisco for the latest developments. >> i think those will be a bull market in the pharre