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tv   Street Smart with Trish Regan and Adam Johnson  Bloomberg  April 24, 2014 3:00pm-5:01pm EDT

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>> call it the apple effect, the company rep per -- report .arning and -- i'm trish regan "street smart" starts now. welcome to the most important hour of the session. 59 minutes on the clock and coming up today, amazon's rhyme focus -- the company looks for growth. we will tell you the metrics that matter most ahead of the latest report. we are talking about dunkin'
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brands -- the ceo, nigel travis, will sell -- will tell us how the weather wreaked havoc on last quarter's numbers and how he's feeling the coffee price pain. we will get his reaction when his competitor, starbucks, reports after the bell. let's move onto to the stocks we are watching -- julie hyman keeping an eye on the stock. rex you had mentioned apple and the stocks trading higher. the number of different factors with the company raising its buyback authorization. raising it dividend and announcing a 71 stock split which many analysts say could place it in the dow jones industrial average. the earnings numbers which also in particular and the company's iphone sales surging as the iphone was introduced through china mobile. iphones a big driver but
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sales did disappoint. verizon numbers are out and even though verizon numbers beat the narrativewth, over at&t's earnings yesterday is that more customers are going to the phone installment plans which will be less profitable for these entities. by biomed to get an increased foothold in orthopedics and artificial joints. the price tag is $13.4 billion. >> time now for the big story. amazon prime focus -- set to report in about one hour. shares have not been doing so well since the last report. down almost 15%. recently, amazon and hbo signed a deal bringing hbo programming to prime members. it marks the first time hbo licensed its content to and online only subscription
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service. they seem to have one goal -- growth. it has launched its fire tv set top box, increased the price of prime and is reportedly working on a streaming and music service. here's everything you need to know. good to have both of you here. will behe one thing you looking for more than anything else? >> i was looking margins. i like to see were just a those can spend his money and where he can invest. the film and centers, or is it new products? the operating margin is very important will stop the stock generally works well despite that will stop at the top growth story and investors have given this company and its management team a pass quarter after
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quarter but the question is always on investors minds all stop where will it end. has been a recent pickup in the stock price and people have gotten worried that they might actually be in jeopardy. what to you think? >> that's the concern and we will get some understanding when they print the numbers. story?on still a growth people are rotating out of the name. this has been a teflon stock. it would be down in after-hours and open up and by the end of the day. people always want to own amazon. howwe slowing down growth? sharp is the growth slowing down? could it slip into the teens? unit growth the that has been slowing down and
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that's one of the reasons investors sold down the stock. the final bit is shipping losses. they spend $6 billion on shipping. two dollars for every one dollar. >> should they be ok if they are getting more off of amazon prime and isn't that built into the model when you are anticipating an increase in sales? a penny onany makes every dollar of revenue. they will become a transport company and fixes problem. so it is for real. >> what about search? you look at alibaba and the success they have had, they sell a lot more stuff than amazon. but they are not making any money off the actual sales of the goods. they are effectively a surge for all of these goods. amazon has started to take share
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away from google. like the issue here is if you are going to search for a you can go directly to amazon and amazon is trying to build that out of become a form play. they have a surprisingly platform. every time you get the kindle tablet, is typically an ad there targeting you. >> not just the actual product sales but advertising sales as well. business.% growth it's a revenue stream they have not played in as much but as the user base gets eggert, it's something they will focus on. >> talk to me about streaming and their attempt to get more content for prime users. >> i think it's a small deal for amazon. it makes them a little more effective and they can promote
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to drive users to amazon prime which drives retail business. it's a big deal for hbo because it's the first time hbo has made their content available. have kept it in the pay-tv ecosystem where if you want hbo, you've got to subscribe to cable. >> are they trying to make a play for the netflix and hulu audience? have beenhink they one of the most aggressive companies in the space, pushing into original content. amazon is a powerful platform. >> do you anticipate they're going to deliver? again, we have to be concerned on the top line. if you get slowing growth, investors will rotate out and
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because of the fact they are plowing it back into the company, it will be a while profit thereomes for the next wave of investors. -- howou are doing tv much can they do. and brad stoneny wrote the everything story. you dilute theo effectiveness? >> it's like google. a certain percentage of their and spending every year is for the home run stuff. amazon is at that point. i don't think they can build a better mousetrap. we need to understand mobile business.
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>> here they are on this hardware side and the set top boxes they are doing. >> so much commerce will be shifting to mobile and amazon does not want to be at the whim of apple or google. if you want to mow the lawn, let's go out and build a lawnmower company. >> same thing with the drone. concerned there package growth unit is excel and faster than fedex and ups can handle. >> we will be watching very carefully and be chatting with you later. coming up, shares of apple have popped today is tim cook makes moves popular with investors. one economist will tell us why russia's policy is the a
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locked up on the west is the cold war all over again. ♪
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>> apple is seeing its biggest jump in two years. shares up over 7% on the news the iphone maker announced it 30llar quarter, selling million iphones. apple buyback announcing a seven for one stock split, making one particular investor very happy. carl icahn tweeted after the news -- i agree completely with apple lost buyback. believe we will also be happy would we see new products.
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there's actually no new product frombut is it a diversion the slump or do they have innovation up their sleeve western mark joining me on the the tech analyst from hudson square research. are we going to see some good tings out of the company? >> i think the thing to look at earnings grew 60%. last year, they declined 60% and a year ago committee declined 18%. if you look for one reason why apple stock climbed, earnings did not just slow, they declined. only waym here, the you will really move the needle is with a new product category. apple has a 30 year track record.
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there's a lot of tech companies that have that. they have to report them as separate segments in their earnings. the share buyback is great. they returned $21 billion. >> it is something he has been pounding the table for. he is extremely happy about all of it. spending $4.5 billion year on research and development will stop when will that translate into something we all want and we all use? wax investors look at the cycle for apple and we just have this vague vacancy that happens every spring for the first two quarters. that is a high-margin business, the ipad. >> even the watch, if it's priced at $299, you've got to sell 50 million of them to add
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to 10% of revenue. >> exactly will stop so what have they got? >> you also have to be concerned about the overall changes in the fund little smart phone industry. you are able to get much that her phones and the functionality gap is narrowing. the price gap is widening, which means you can get phones close to an iphone for significantly lower. >> you've got to open up new categories. there are new things just like we were talking about with amazon that apple could be pursuing. they have 800 million accounts on itunes. they should be monetizing that across a number of different ways. >> itunes almost feels like it's a thing of the past. >> who wants to own them? i just want to stream them. >> you heard:'s point. what's a 290 nine dollar watch going to do for them? >> the next category trying to figure out how to move the deal
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is difficult. my point is that's not my job. my job is to look at the track record and 11 times earnings at 2.5% dividend yield, you are not paying a lot. .ou are paying for the prospect we have a buy rating and we think they will deliver but it's .ard no one predicted what the iphone is going to be. no one had a tablet before. >> tablets were on people's horizons. >> after the iphone, they certainly were. >> i don't spend a lot of time trying to figure out what the product is but trying to understand what the product will be and how they can do it. most valuable company on a u.s. list of exchange.
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>> what are the cash flows going to be in 30 years? >> we don't know what anybody's cash flow will be in ready years. >> it looks inexpensive on a ratio but it's close to half $1 trillion. >> let me ask you guys about this. they are doing the 721 stock split. part of the dow jones industrial average. will that get more retail investors interested if it is a cheaper price point? >>it's just math all stop inclusion on the dow would also be a positive. >> i agree with: on that point.
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andincreased buyback doesn't move the needle in the same way ipod, ipad and the app store have done so far. >> thank you, jill and. i will see you in a little bit. coming up, aaron out economist putin's old actions will end badly. ♪
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>> in today's global outlook, we are talking about putin's parentless past. president obama warned him that the u.s. has more sanctions ready to go if he continues to defy the geneva accord.
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the director of the earth institute at columbia university says putin's provocative policies are putting it, russia, on a collision course with the west. post for the -- my guest host for the hour. let's talk about this collision course you think russia might be on. what is going to get it there? why is this going to become a problem? >> what putin is doing is brazen , really very disappointing after many years of fairly cozy relations. stabilizing -- and we don't know where it's going to stop. there's the crimean annexation and a lot of application and a lot of attempt to disrupt the normal politics of ukraine trying to get back on track
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after the downfall will stop >> we are in a situation where putin has gone into ukraine and the expectation is he is not done. thisll continue territorial landgrab where he wants to have a controlling block from russia all the way to china. how does this play out? are we going to sit by and allow this to happen? >> realistically, we are not going to confront this militarily. step did something that over a nato boundary, i think we would be on a path to disaster. encroachontinue to into ukraine. he's determined that russian territory. >> it is this reestablishment of the ussr? rex at least in ukraine and some other places. other parts are outside his reach, but even when we don't
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respond to let kerley, and i'm against any military response, there is going to be a breakdown. >> you say there's going to be a breakdown, but let me share this with you. saint years bird is hosting a big economic forum or summit in may. take a look at some of the people expected there. we've got lloyd lang fine, head gorman,n stanley, james and the number of other companies will be represented there as well. i would say in the re-there should be a breakdown in our economic relations with russia american corporations and financial institutions seem to still be willing to do business. >> we are in this intermediate phase right now where it's not clear what the intentions are or at least putin hasn't stepped over the boundary of an actual invasion.
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true that western financial interests and business interests in germany just want things to go on, but they will not go on. bankers may be there, they put later there and take it out of the banks. anybody want to put money there? >> they think they are going to make business. money is leaving russia, new projects are not going forward, there's is loss of capital and capital flight, and that's youly to continue even if have the sessions, meetings and so forth. >> it is an economic problem. that should be what influences him back to the center. -- >> putin needs connections with normal world-class industry around the world for russia to have a
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chance. they are breaking those relations. >> i'm thrilled to have you here for the hour. we will be talking next about income issues replacing race and affirmative action. that is next.
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>> all right, this is "street smart." i am trish regan. the supreme court dealt a blow to affirmative-action. the initiative in michigan is a blueprint for other states to have a band. path paved through family income and economic standing. but does? this effectively promote diversity in schools columbiais from university. also joining me, the director of policy analysis at a university
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a research professor at georgetown university center of education. great to have all of you here. anthony, i will start with you. if we are not going to use affirmative action to create a diverse student body, what shall we be looking at? if race is no longer a factor, does raise and social economic socialdoes race and economic standing matter? race does not matter unless you allow race. if you are a black kid and you go to an all-black school, we could say that you are being let in because you are going to a low income school. >> it sounds like the schools just want diversity. it may not the necessarily racial diversity. it may be economic diversity.
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>> the harsh reality is an is a factor unto itself. in m." literature, it is very clear. if you are black -- in it is veryiterature, clear. if you are black and poor, you are more poor. >> i was looking through some of the statistics and basically what you see, the percentage of u.s. students who have received 11% arereate degrees, coming from the bottom quartile. 79% are coming from the top quartile. the students are coming from families that are earning $100,000 or more. 9.4% of the degrees are being who comeo students
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from families with an income of $30,000 or less. it does seem we are educating the rich more than the poor. economicocial backgrounds play into diversity -- should social economic backgrounds not play into diversity? >> we are dividing race and income. we have the lowest social mobility of any high-end come country in the world now. if you look at the sustained kids, 36% have a four-year degree. students, 16%.n hispanic kids, 11%. there is a tremendous divide. >> yeah, there is a divide. >> they are reckless and this and so many other things. this is the most reactionary supreme court we have had in 80
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years in this country. >> if you are a wealthy minority that grew up on fifth avenue that can buy and sell your entire class versus the kid who grew up in a trailer park in should treat to be won on fifth avenue because they are minority, they should be given preference? take intoa is to account true diversity? that means racial diversity and economic diversity. >> so look at both? >> they are looking at both. schools are trying to find ways to look at middle-class income, but now they can't even look at race. the door was slammed on race. to do now?they need specifically with the university of michigan -- they are not going to look at race anymore. what is the next best name to ake sure you are giving lot of opportunities to a broad
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group of people? >> they will have to redouble their efforts when it comes to outreach and recruitment. they will have to come up with absolutely, admittedly imperfect proxies. the supreme court has made it much more difficult to have racial and ethnic diversity. >> and there is a collapse in the share of minority kids in some of the schools already. the law school class as the smallest share of african american kids they have had in decades now. it is already taking effect because this went into effect in michigan a few years ago and it is having devastating effects around the country of now closing the door that had been partly opened in recent decades and now that door is closing again. >> isn't there a better way to address this? wouldn't be through social economic grounds? doesn't this give people
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struggling in our society the best opportunity? >> that would help. of course we are going in the opposite direction on this. of course, we are becoming more divided by income and wealth. the supreme court gave the biggest boost to that. they said, let the rich give any amount to campaigns. the supreme court only stands up for the rich and powerful. it has no interest in the poor and it has no interest in minorities. >> let me get back to anthony. as you look ahead, what do you anticipate from other schools across the country as you look at michigan and the supreme court? >> i think the truth is the american higher education system has become complicit in the intergenerational transmission of race and class privilege. presently since about 1995. 85% of the white kids going to topege went to one of the 100 four-year schools.
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75% of the black and latino kids yourto open admission for -- four-year schools. it is larger than that. we are transmitting divisions in race and class throughout the generations in higher education has become the capstone in that process. >> if i may say, anthony's group is doing some of the best research -- >> how do you like that, anthony? your work is absolutely fantastic. >> thank you for speaking with me. alright, moving on here. why america needs a wealth task to close the income gap? plus, these ceo of aetna is not afraid of a little cold weather. he joins us next.
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>> income inequality is at its highest level since the 1920's and as the gap between the rich and poor and in to grow, some point to taxation to solve the problem. whether it is tax on the mega-wealthy or closing loophole so the rich cannot game the system. my next guest inks it is time for those of the top to play a proper role -- thinks it is time for those at the top to play a proper role in the american recovery. you're talking about a wealth task. dire as would treat wealth differently -- the irs would treat wealth differently. >> we should close the loopholes. why is it that some of the richest in the country get the top tax rate of 15%, the so-called carried interest. >> arrive at equity spends a lot of money lobbying -- thanr no reason other their political power. there is not one scintilla of economic sense for this.
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gets tot that google keep its international earnings in bermuda tax free when all of was done in the united states and paid for by -- >> why is it that we have created a corporate tax environment that is so hostile it is encouraging companies like google to go to bermuda? >> it is not encouraging it. it is allowing it. >> we have the highest corporate taxes in the world. >> and no one pays them because it is a complete game. >> maybe it make sense to bring them down and then people may be paying it them. >> aiken afford to pay a lot -- they can afford to pay a lot more than they do now. to have -- to say google or intellectual property in the caribbean -- i mean, come
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on. andk, we have limited time need to get something else. it is very different to come out as a star athlete making a couple million bucks on the court. you may not make that next year. you might get injured. you might make that for a couple years, and don, it is over, what are you going to do? millionaire who can live off the interest on that money. one is income and the other is wealth. >> absolutely. >> but we don't seem to distinguish between the two at all. >> and the concentration of wealth is vastly higher than the concentration of income and the well has been soaring of the top. this is another reason why having a modest tax -- we have so many billionaires that are able to basically shield their money. this is part of our massive problem. we can't even find the most basic services in this
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country. we are collapsing at the bottom and our wealth is soaring at the top. >> do you think something like this has a shot of getting through? like the private equity carried interest issue. >> at the very top, the power is the money. we have a very corrupt political system. but the people still have the votes. i think in the end, it is going to happen. it is going to happen because people are so disgusted with corruption right now. they are going, what is going on? day, a lotnd of the of americans say, i may not be wealthy, but i aspire to someday be wealthy and i do not like the idea of the government having barehand in there to take more. >> i found it incredible that mayor deblasio of new york proposed a tiny tax increase at the very, very top to fund universal primary education and the rich, they went wild.
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oh, that is socialism. kind of society, we are not going to make it. if there is not some sense of responsibility at the very top, because the top have made off like they have never made off. we have more wealth at the top of income distribution than any other time in american history and they are walking away with it does the supreme court says, yes, spend as much as you want to have all the votes you onto most of america is this now. >> it seems there is a real class warfare issue. >> there is. the very top is fighting the war and winning the war. why do they get 15% top tax rate? the war did not start with the common people. with the top.d >> we will have more with -- actually, i mean to say, you are gone. you are leaving me.
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fascinating conversation. always great to speak to you, john. coming up next on "street smart ," tired of company is blaming everything on the harsh winter? who says next, a ceo the winter actually helped. helped. find out who that is, next. ♪
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>> ok, welcome back to "street smart." i am trish regan. take a look at this. the health care provider crushing estimates. joining me, these ceo, mark bertolini. congratulations. welcome. attribute this success to? >> we managed to cross -- we managed to grow across all lines
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of business. we continue to integrate -- continue to integrate coventry. >> tell us about and what that has meant to you. >> we have picked up 230,000 paid members in the first quarter. we are approaching 500,000. we just hit hundred thousand today in the second quarter. we expect that we will probably plateau around 100 50,000 paid members by the end of the year. we will have attrition as the year goes on. currently there has been no positive impact from a bottom-line standpoint from these members -- it is too early to tell. >> too early to tell, but let me ask me about the people who have been signing up. what are you seeing? you did hear the administration say 35% of the 8 million people are signed up on were under the
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age of 35, so that was encouraging. are you seeing similar results? what are you seeing? >> in the first quarter, we saw generally an older population sign up, probably for or five years older than we expected. as we got to the end of march, we saw younger people sign up and enroll. now we are trying to find out what is the age demographic of the people who actually paid in the program. >> you say it is still early to tell, but can you give any initial read? will this be a good thing ultimately for your business? >> i think getting everybody in short is a good thing. we need to get people in short in order for them to have it access to the health care system. -- you have to get people in in order toured have access to the health-care system. it is rocky. we will get it straightened out over the next couple years. >> i think you talked about this in the recent results, that one
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thing that did sort of way on your was the hepatitis the vaccine.- hepatitis c as you see more him in a in the drug environment, what does that mean for you, for your company , what doese more m&a this mean for your company? >> i think we need to address peopleo change the way are paid out through the system. we need to address capitation. or is the money. how you spend it should be aimed at keeping them healthy. them healthy, how? >> cold weather keeps people at home. it was not a big number. >> they do not go to the doctor, right? >> or they don't go to the doctor. between the flu in the cold weather -- >> mark bertolini, thank you
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very much. from starbucks to apple, we're talking the top 10 stocks you need to know, next. ♪
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>> ok, here we are, heading into the close. three minutes, 46 seconds left. time for the top. top 10, starbucks. analysts are expecting u.s. sales to be above average as they get traffic or baked good sales. [indiscernible] >> all right, number nine is walmart, up slightly. the retail chain announced two or directors will be retiring,
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among them the former ceo lee scott. that will leave the board at 14 members total. quarter earnings were at 20%. time warner cable saw a loss of only 34,000 customers. only because it was 217,000 in the prior quarter. >> the social media giant making another acquisition by buying a global fitness app. it allows them to gather data from their smart phone we will have more on that deal -- >> and ahead of earnings, too. they beat estimates. that was yesterday. that is old news. all right. and actually they rallied after that and into the morning. a lot of stocks in the markets in general, i pop them back down. number six, you liability -- eli
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lilly, down six percent. the pharmaceutical company does what kind of pharmaceutical company is there other than a drug company? they are facing their worst year of the planning sales and nations -- >> patents. >> i was going to say, as patients expire. that may not be what you want with a pharmaceutical drug company. >> all right. it company said it would boost its dividend and ensure -- increased the share buyback by $7 billion. the earnings also beast -- the estimates. it looks like it go -- it could go into the dow as a result of that split. just imagining -- >> this morning tom keene said apple gives more cash back to shareholders as adults come back into the room.
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does tom keene say that carl is the adult in the room? [laughter] number four, logitech, down seven percent. they reported their first sales growth in 11 years. >> number three is general electric, up slightly. the company is said to be in talks to purchase a french builder of power plants and transmission gears. is according to a person with knowledge of the matter. fortunately for us. couldntial transaction top $13 billion in an agreement announced may be as early as next week. 4g, it is actually a big deal. it is a lot of money. it -- for ge, it is actually a big deal. it is a lot of money. caterpillar.
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caterpillar eliminated seven percent of its workforce in the past year because of a mining strike. and here we are with the bell. >> our number one stock of the day, amazon up three percent ahead of analyst estimates. we will have all of their earnings for you in just a couple of minutes. close, it seems like we are ending the day pretty much flat there. get to someo breaking news right now. >> this is bank of america. and it happens with more thelements related to financial crisis. the prosecutors, according to people familiar with what is going on, are speaking to the bank of america. it is relating to the sale this is on top of nine
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half-billion that was agreed to last month. these things just keep sort of piling up. eventualknow what the tally is going to be. >> getting their money back, i guess. a whole loty get more. >> i'm sure they want to take as much as they can possibly get. they did chill out at a time when the bankers needed it and then the bankers paid themselves bonuses. >> no value judgment. >> we are going to hold onto that and move on to amazon. we're waiting for their numbers across. the expectation is for $.23 a share. becomehas effectively the everything store it wants to be. it wants to be everything to
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everyone. my only question here is as we look at these numbers and we look at these different businesses they are in, is there a danger of them becoming overly diverse fight? >> 75 billion revenue company, 150 billion market cap. they have the money to invest wherever they think they can get a return. some of the businesses they have invested in recently, kind of getting out there a little bit with drones. part of their capital spending plan which is similar to google. we will allocate a very small do some of these investments that might be a realm.bit outside of our click the microsoft earnings just crossed early. let's go to julie. >> microsoft is coming out largely in line with estimates in terms of the sales. the armenians coming in at $.68
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which is above what analysts have been looking for. we don't have the other headlines at this point. dealey're also closing the tomorrow with nokia. we will let you continue to pour through those numbers as we go back to paul. obviously in a lot of different businesses right now. the margins that this companies making, they are so much slimmer ,han say, you look at alibaba maybe this week, maybe next. what is the difference there? >> jeff bezos is running a different business. this is a pure play shopping business. what he is saying is that this is bought off. the long-term commerce growth opportunity around the world is just extraordinary. it is only about seven percent of sales right now. it is growing significantly faster. we will take whatever it takes to earn profits.
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that is what amazon has said on the street. >> look at alibaba, they are actually making money. >> alibaba has a little bit of a different plan. one of their businesses is more advertising driven. it is a high margin business. >> you have been pointing out over the last few months that the p/e ratios are insane on some of these stocks. so, if you are running a tech company, even if it is a big retailer, why not take advantage of the insanity and do this kind of thing, ramp up your growth while you can, spend some of that margin while you can? they will be suckers anyway. >> why not. amazon'sas been strategy from the get go.
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is one thatder base is pretty comparable with bezos and his ability to invest in capital. >> pandora is coming up below estimates. the company says in the second quarter that the earnings per quarter will be breaking near three cents. listener hours when up during the quarter, 12%. about 4.8 billion altogether. >> we are talking about the streaming businesses. they are trying to create more content. it can benk successful? >> it absolutely can't. it is all about programming. >> hold that thought because amazon just crossing.
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jon erlichman breaking those numbers down. gives us two cents -- two sets of numbers. they give us what they are expecting for the second quarter. for the first quarter, and looks like the earnings are in line with where wall street expects them. revenue obviously important with this company because as you just highlighted, they are spending, spending. to sum up the growth and the sales that we see. it looks like 19.7 billion in revenue. looks like the revenue with stronger than wall street was looking for. the operating profit, this gets back to the fact that they spend so much, it looks like $146 million. ais think about that for second. 200 million in operating profits on 20 billion in revenue. the second quarter, they are
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giving a range of what the revenue will be. 18.1 billion. that is a big range. the wall street estimate is smack dab in the middle of that. the street could go either way. they might make as little as 18 billion in revenue or closer to 20 billion. >> ok. we have starbucks crossing as well. net expectations in terms of earning per share. >> the cost numbers are ahead of estimates. comparable sales of starbucks up six percent, about 5.4% was the average analyst estimate. starbucks is raising its forecast. it gives a range of the year. it is through bringing up the range at least a little bit. the company is bringing up the lower end of its range. it reports on a different sort of financial schedule.
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a little bit better than estimated. we have seen some stock reaction on the positive side in the after hours as well, about one and a half percent. it saw strong growth in europe, the middle east, and asia. comparable growth was also six percent which is the highest growth in that combined region in about 14 quarters. asia pacific, comparable growth which was seven percent as well and that is the area that starbucks has been focusing on. opening a lot of new outlets. it looks like that growth continues space in that particular region. >> i want to go back to paul for some analysis. we saw amazon sales were up 23%. this is an issue you highlighted earlier. is this enough to justify where the stock is? >> the stock is trading down
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just a little bit in the market. as john mentioned, the quarter came in better than expected. the eps was right in line. kind of got that margin issues. we see that in the second quarter outlook. the revenue outlook is in line with where the street is. of 55e looking for a loss million and the street was at a profit of 200 million. this is the same story which is we are driving growth, driving solid growth but we will invest in our business and our quarter to quarter operating profit. >> is interesting to look at the after hours trade. we are looking at the after hours trading which popped out to 349. i'm looking at the same thing with microsoft. they are trading dollar above the close. microsoft looks like maybe the street is taking that more positively even as it goes through the headlines.
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the amazon was tempered for amazon. >> starbucks as well. people areok at how reacting to starbucks news. up one and a half percent and now we are hearing some of that. people get used to expecting strong results from starbucks. you can see some reaction. this is the first quarter. it is notable for that reason. >> good. a packed earnings afternoon. thanks everyone for being here. >> 13% of the s&p 500 companies have reported today. >> i knew it was a busy day. >> starbucks might have beaten but it's competitor following weaker than expected numbers. i'm going to have no one on set.
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the ceo says he's not concerned at all. tired of waiting and waiting. well, you're not alone. we are calling the airlines's out on their ridiculous message, that need to go.
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>> the first quarter earnings for dunkin' brands fell by three and a half percent. stickingt company is by its full-year guidance to help dig deeper into the numbers. to give us an idea i would like to welcome the chairman and ceo back to the show. -- i clearly have quite a feat. i will have to bring on some people to join me. what happened? what was this about?
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>> well, it was simple. 55% of our stores in the northeast corridor or. you guys live in that area, you know what it is like. in our business gets disrupted. but monday, you go to the office normally, tuesday comes along and the school is out or were is out and you don't go out. lost piece of business. it is not like you are going out to dinner with your wife on a friday night and the weather is bad. and subsequently go out on the saturday night. so, we lose it for that day. it seemed throughout the whole quarter that we had storms every single week. >> starbucks came out with his numbers. the samet seem to see issues as you guys. is it because you are more
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concentrated than the northeast? >> absolutely. 55% of our stores are in the northeast. we have plans to move across the country. i've were based on what seen. if we look at the other numbers, most of them were negative. we were actually positive despite that weather. we feel really good about the business, we feel good about our operations. most of all, during this quarter, on the duncan side of our business, we lost dunkin' donuts perks. we have hit 750,000 members. our goal for the year is two and a half million. that will continue to drive the loyalty and the frequency which was so key to maintain. >> it is a competitive landscape in terms of the breakfast market. you have talk about, starbucks trying to make a more aggressive play.
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are you worried about that at all? counteract that competition? >> we do this by the way we have always done it, we are going to be defensive, offensive in terms of moving forward with the strongest offense that we can put in place and we think that that is continued new products coming out where and the ice cause the season now. the ice coffee season now. we move on to new breakfast sandwiches. we have got our program which will boost loyalty and really make sure that people think we are dunkin' donuts. >> i'm a fan. i know coffee prices have been going through the roof. they doubled. how do you hedge that one? >> well, we have hedged it for the full year. this is the purchasing and distribution set up.
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if we have to increase any prices, it is on highly differentiated products that nothing has. our franchisees understand the value to consumers. at the same time, we have strong mitigation processes in place. >> i know that you are trying to expand some on the west coast. not too many dunkin' donuts. how is that going. it has very much a new england identity. how are you expanding. >> we are expanding very well. we talked about the cash on cash returns on the new stores across the country. we have right -- got great franchisees. we have really good operators. we announced that these are
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traditional stores, earlier than expected. an awful lot of people on the west coast who write to us, e-mail us, send us twitter messages. we feel very good about expansion. they could not deliver the same kind of margins for our franchisees. >> is a cover edition of the latest edition of "business week ." we will discuss the guy who broke the curse of the bambino.
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>> the airline industry that keeps you waiting for its own good. the baseball owner that broke the curse of the bambino. those are two of the stories that we are working on. the baffling way that airlines annoy us by the way in which we boarded the planes. it is kind of mind-boggling, right? mind boggling. boeing showed research going about a generation and it is taking 50% longer. >> do they just do this to message travelers?
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>> i think they do it because there is something bad so now you can sell getting in front of the line. most pay $10 or more to be in the front. >> that is a really low margin business. they are doing everything they can. >> there is a back to front, windows, middle, i'll. all of those things are slower than if you just boarded the plane randomly. randomly is actually faster because people than just self select. >> that is like with the delta shuttle guys. >> you can grab your free bagel. >> everyone is competing together. >> you look at the career of
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john henry, owner of the boston red sox. this is a guy that started out. winning in baseball is like in futures trading. >> not only did he come in and break the curse of the bambino. he has come to be representative of the current era in baseball which is seen an influx of financially minded wall street trader. you can really make a lot of money speculating. was a huge he baseball fan. as the game has changed him older players are not as good as a used to be statistically.
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that is probably because there are fewer steroid enhancing drugs. the whole focus is on finding and acquiring younger players who are essentially commodities and projecting their future performance. >> is like an option. you say, i think maybe this guy will be good. >> exactly. if you make a bad trade. if you signed alex rodriguez and he blows up, it can set your team back for five-six years. >> the downsides are a lot less. >> there's is a lot more risk involved. they are basically like the wall street analyst. now they are beginning to adapt actual wall street tools. they're trying to apply that to baseball.
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>> as these teams become more apensive, the stoxx, one and half billion dollars. >> everybody needs to read this story. thank you very much.
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general motors beat analyst estimates and avoided posting the second quarterly loss since then cropsey. analysts have cut their estimates. unless you are living under a rock, you know that general motors is preparing to pay billions of dollars.
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it is 1.3 in the first quarter. they think this will be enough for the first quarter but who knows. analyst mike brian johnson had a one penny loss and actually came out with a profit adjusted $.29. that is a lot better and better than the whole street. the are doing great on earning side. when you don't look at the recall situation because they make such great products. those silverado's, though sierras, they win awards and americans want to buy them. >> the stock was down by the end of the day. >> i think people are thinking, billion isn't 1.3 going to cover it. >> they say they will not forecast what it might be later. are they going to trust the
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company? >> i think this is huge. consumer trust issue. >> and you did not see that in q1 that maybe in q2. >> e-cigarette makers will soon have to answer to the fda for the first time. they propose to extend their reach over the tobacco industry to include the $3 billion market for e-cigarettes. this will limit sales to minors. samples and require nicotine addiction warnings. >> they actually have to provide an ingredients list to the fda as well. this is good. i don't think we are asking for the moon, just a few basics. let us know what is in the product. don't sell to minors. >> it took a couple of years for
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these rules to finalize. even our in-house analysts said they forecasted as a $6 billion industry. now it is down to 5 billion because cities are starting to ban them just like cigarettes. >> they don't leave a smell. it is not like you're getting secondhand smoke. >> what is the issue? >> the issue is based on the lack of research. the assumption that this could be a gateway cigarette. is thatind more bizarre cigars and pipes are also being regulated but they want regularly before. if you are under 18, could you pack of cigars? what do you know how horrible it smoking aa toddler cigar? >> it is very interesting. it is an early stage for this industry. to your point about it being a gateway drug, in some way, kids
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look at smoke and tobacco as just being really taboo and this help it. now, why would you smoke a cigarette when you can do a vaporized version? >> the problem with cigarettes is that they give you lung cancer. this stuff doesn't give you lung cancer, you are just taking drugs. i'm addicted to sugar. there is no fda warning about that. caffeine, a lot of things. are just taking drugs. all you're doing is taking nicotine. another talk about addiction, is facebook addicted to acquisitions? >> facebook is jumping into fitness. companye acquired a
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called moves. were not of the deal disclosed. facebook now just to keep a piece of the health and fitness health market. nike seems to be pulling back on that. this goes back. when we talk about nike pulling back, i mentioned how scott galloway was saying that you already had this device. you carry around with it all of the time. it is your phone. >> they must have heard you. as though the barometer, at least for nike hasn't been quite the success that they were anticipating. quest to getst a as much data about people as possible. findingrg said they are different ways and ecosystem that people want to share their data with others. data.s another type of
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there are possibilities with where you're running and how fast you're running. mobile revenue is at 59% of their company. >> is really about watching you. americans do not care about fitness. we eat mcdonald's and smoke e-cigarettes, we don't care. it is a niche market. that is why nike fired everyone working on this. >> i don't think that is true. because you have not gone out of new york. are whole foods. >> niche. has a new look. mcdonald's says it's famous clown will take an active role on social media using the ha shtag ronald mcdonald.
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he will post videos and pictures. pictures. will tweet so, he has a fancy little vest on there. >> he has a blazer. >> he has a blazer that he wears over the top. i heard he was going to look less creepy. he looks like hugh hefner. >> how do you make a clown less creepy? >> good point. >> i liked him when he was younger. >> he does have new hair. >> it is intriguing that they are playing him up again because the knock on him was that you were pushing this junk food to kids by using this. >> like the camel in camel cigarettes. >> they might be bringing them back. >> mcdonald's is selling tobacco. was using the ronald mcdonald name. >> they were making fun of it. they did a reclaiming of modern
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-- of ronald mcdonald. >> i happen to like mcdonald's. >> i know you do. it is something that you do rarely. >> he freaked out. >> if you had invested $100 in this fund, you would have doubled your money by the end of last year. is run by college kids. beating the s&p. that is next.
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>> undergraduate students at have outperformed fund managers. the student run dragon fund is returned $1.2 million. they had their best year ever. mid-cap. the s&p 400 joining me right now, we have a
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chief investment officer. we have seniors anthony -- and joshua kohler. so, what was the key to success. investment is completely in our hands. we don't have any perverse incentives. year for 2013.e it was a tough year. a market that was just on fire. how do you think you got that extra edge? what are you investing in that did so well? like struck so has a tight process and it is successful and repeatable. what we invest in is biopharmaceuticals.
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you looking at this year? >> we are not actually in the fund this year. have two quarters. >> here's this whole debate about the fund manager. guys are confident because you are on the faculty. you have been with the students since this whole thing was launched. what is it that you try to do to help guide them and help them be successful? >> we have a vigorous process picking stocks. we have a consistent approach over time. studentsudes the splitting up into sector teams. they have to convince the other students to vote something into the fund. it is really up to the students whether something gets in her doesn't get into the fund and that has worked quite well. you can think of this is a
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meanie beauty contest. it is not all about values. >> you have to be able to sell it. the kids have to be able to sell it to get people to go along with it. year?is been the best >> this has been their best year. they have outperformed all of the other u.s. domestic equities managers and the global managers and our area managers. if they were a morningstar rated fund they would be five-star and they would have been above the average. atxico back to this looking 2008 and you guys are certainly on an upward track. what is it that you are doing? you're both seniors, looking to work on wall street? >> yes. investmento work in management. i request a rate in june. >> i want to be in equity
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analyst. i like coming in every day in a dynamic market. >> muni we'll be seeing you here in new york. next, we will have a little bit more after this break.
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a cards against humanity is party game for horrible people. it is extremely popular. some of bloomberg tv and businessweek bravest decided to give it a try. matt was in there. take a look. click starting and working away. collects the profoundly -- starting and working away. collects the profoundly silly. collects this is for her label people. is for horrible people.
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collects pic >> picture cards correctly. judge. cards are is the >> this is the person who most recently went to the bathroom. >> i just peed before i came in here. >> why am i sticky? >> is that what actually says? >> you cannot look at them as they come in. that is not how it goes. issues -- d daddy issues. last longer than four hours. mr. clean right behind you.
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[laughter] pedophiles. >> the winner is the last one. tight pants. >> would that be yours? >> rubbing up on you. this equally.own they went to the university of chicago and a made up games for each other. and will explain the whole game. >> you have a sentence, kind of like a mad lib style thing. everybody else besides the person who is holding the black card throws in a white card which is the answer.
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the person holding the black card and decides which is the funniest. the hat to then next person and then he or she chooses the black card. >> how do you get a winner? the most rounds wins the entire game. it is the most popular game on amazon. is incredibly popular. it is very easy to pick up. adverse to dirty phrases, thenrd you should not play. this is definitely nsfw. collects really successful. >> a lot of people like stuff that is not safe for work.
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i've had this for months. and i played whenever i can. few drinks having a first, assuming you are over 21. then have a couple of drinks and play this game. >> cool. thank you very much. >> thank you for showing our little club. the interesting thing about this game is that i don't know much it is but it is fairly expensive for what it is. however, if you so choose you can go on the internet and print out your own version for free. the guys who made it, they are giving it for free but if you want the preprepared version, you pay for it. >> good to know. that does it for us today. >> i will see you tomorrow. it will be friday.
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>> that is good.
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let's talk about where stocks closed out the session today. we actually started out higher and then give it up by the end of the day and we were little changed particularly when it comes to the dow. the nasdaq was the outperform her. earnings as matt miller pointed out earlier today. 13% reported just today alone. from u.s. stocks, let's go around the world, little are there a field. suffered itstf
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longest loss since january. a proposal to include mainland chinese equities. joining me now with investor reaction is -- people are up in arms over this. it is really interesting. why? >> you have fidelity saying that it is crazing, you have mobius saying that it doesn't make any sense. as long as these capital controls exist, investors will not be able to fully take advantage of these equities. they will have to be underweight. they will not be able to take advantage of the rally. >> they want to play it separately from the emerging market indices. right now, there are capital controls which means you cannot own needs.
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this is a must to have licenses from two regulatory agencies. even then you have to have a quota. if you cannot cap this, there is no point in having this index. it is gone by a trillion in assets. >> why are they doing this if they are facing so much resistance? >> you would be allowed to tap a much greater number of companies. they're almost 3000 the trade in the mainland index versus 140. it would bring about 12 billion, they're hoping that it would be 12 billion for these indexes. mobius said this is a little bit of the tailwagging the dog but maybe there is a thought here that if they do this it will prompt further opening of their markets. >> sort of pressuring china a little bit. it seems like they are backing down in this particular case. it thinks the rewards are worth getting some pushback. >> well, they are serving lots of people.
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he will talk to three thousand different investors. they will make an informed decision. we will see how it comes out. >> in the meantime, people can invest in chinese equities through hong kong. there are other ways to sort of go about it. >> yes. >> thank you so much talking to us about emerging markets. just to talk about some of the other elements that we are watching after the close, of course he got amazon earnings trading. the close of those are earnings coming in ahead of estimates. starbucks numbers coming in ahead of estimates. microsoft, the eps beating estimates. just as we saw a lot of the earnings relating news, we are going to continue to see that tomorrow, particularly with microsoft and amazon.
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>> this is taking stock for thursday, april 20 4, 2014. i'm pimm fox. today is deemed "fresh ideas pees." microsoft is pushing to the cloud and they say it's paying off for the bottom line while chief executive is pumping money into services for future growth. we will examine both of these technology giants. and the regulatory look at e-cigarettes.


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