tv Closing Bell CNBC April 24, 2014 3:00pm-5:01pm EDT
>> that's a big hour. that gross margin number on amazon. at some point they're going to start making money on what they sell. we've been saying that for ten years, melissa. >> maybe. maybe. >> thanks for being here. >> closing bell is up next. we do welcome to you "closing bell" for this thursday. >> magic number to watch today for the dow, looks like we're not going to get there because we are in negative territory but the all-time high to look for is 16,576. the s&p getting closer to its highs. the biggest mover of the day is the nasdaq. not hard to figure out why. apple surging today. big news broken on this show yesterday. 7 for 1 stock split along with a dividend hike. what about new products?
today investors don't seem to care about that. they're happy with the results. the stock is moving, having its best day in two years. we'll speak to a major shareholder and ask how long that will last. >> that 7 for 1 split i think a lot will agree is a move to make it more eligible to be a member of the dow jones industrial average if they have a smaller stock price at that time. later this hour we'll be joined by qualcomm's brand-new ceo, his very first television interview. also etna's ceo mark bertolinp. dunkin' brand ceos. weather was a problem. but people need coffee still in the bad weather. and the union pacific ceo, jack koraleski. and there are a lot of
earnings after the bell. mega earnings news continues. amazon, starbucks, microsoft, visa, pandora, just to name a few of the names that we will be getting earnings reports. >> she may be small, folks, but she'll have it all for you in this 4:00 hour. >> we've got our reporters geared up, instant numbers, instant analysis, know how it affects your money, your stocks and your prfl portfolios. >> dow jones industrial average for the day, final hour of trading. the nasdaq is in the lead. it is up about 20 points off the highs of the day. but certainly higher as well as the s&p 500. apple certainly the stand-out performer here up 8%. the biggest company by market value. let's get to our "closing bell" exchange talk about today's market action. heather hughes, jim lowell, greg
epp, david trainer and rick santelli standing by in chicago. david, what to make of apple's earnings and the -- i mean $90 billion is their share buyback. that's $90 billion is bigger than 90% of the s&p 500 companies out there. they are buying back a whole company. what do you make of all that? >> that's the most innovation we've seen from apple in a long time. >> zing! >> at least we got something to smile about, right? can't get it from products, i guess you might as well get it from financial engineering. end of the day, unfortunately, is not going to add any real value for shareholders. >> so you're not impressed. >> i'm not impressed at all. ipad sales are declining even though tablet market sales are going up. they're losing share in that space. iphone franchise is strong but it is not going to be strong forever. and the same thing i've said for a long time with the current valuation does not mean the stock is cheap. this is not a value stock.
>> that's the question, do we need a new product or new technology from apple, can we just penetrate the current market with all of our smartphones? is that enough? there's no new technology innovation may reward shareholders. what have you done for me lately? >> what's your answer to that question you asked? >> yeah. so we're saying as david alluded financial engineering, share buybacks, increasing the dividend even. they raised their quarterly dividend i 3w4r50e6sh8% to $329 a share so it looks like right now we're up 8% on the day, up $43 and change so we'll take it. >> jim, investors don't agree. they're clearly bidding up apple shares, having the best day in more than two years. does it make you want to perhaps go back into technology which has been so beaten up lately with the sell-offs and momentum stocks, tech and biotech? >> we never exited technology. it is a big component of the of the fund investors.
even in medical equipment systems stocks that have a lot of technology in them. the reality going forward is that apple may or may not be able to invent its way towards better earnings growth rather than just financial engineering but it is just one stock in the universe of stocks that we continue to like. >> jim, i wonder, you raise a good question. this is the current debate, value versus growth. which one is apple? >> look at it. to me it is still a growth stock. it may be trading as if it is a value stock but the reality on it is it has to invent its way forward with products, with sales, with top-line innovation if it is going to continue to remain the iconic technology stock that it is. >> rick santelli, stocks trying to wade through the flood of earnings that have been coming out this week. the treasury markets. you've had a flood of paper coming to market this week and the first two auctions this week are sort of lackluster. how did you do today? >> all three were pretty close. the two-year on tuesday was a little weak.
yesterday's five and today's seven were arguably slightly above average. but it doesn't dissipate the notion that if you have junk bonds to sell whether are you a french company, they sold $0.9 billion junk, that's an all-time record. $10.9 billion record. whether you look at 2014, m and a announcements topping $1 trillion. when you look at the financial engineering of what's going on in the equities via apple, the 10-years still look pretty good to me. now it it's what's in the pipeline for the u.s. economy. everybody's cash being out and we're rearranging the deck chairs with the economy, we're making prices go up and issuing debt to buy stock but we're really not putting positive type products that are going to help create more jobs down the road. a couple of things very quickly. a new record of flattening going back to september of '09. 5s to 30s. what's 12, 12, 12 mean? that's the last time you saw the dollar against this level at the
chinese currency. we continue to see that currency get weak. >> 14-month low for the chinese yuan. greg, on the u.s. economy, we did get better durable goods numbers out this morning. best jump since back in november. that's a pretty good gauge of capital business investment. >> i think the best thick you can say for the durable goods report is that it does strongly suggest that all the weakness in the first quarter was heavily weather related. now we have a key central economic game telling us that weakness is behind us for the reason you don't want to get carried away with it is because it is not telling us there is any underlying acceleration in the economy. we're just getting back to that sort of sluggish 2% to 2.5% growth pace we've had over the last four or five years. i'm totally with rick with apple. all of its social media friends are not creating brand-new business models that are ais being sell rating underlying growth. instead it's around 1.5%, 1% to
1.5%. that's the story of a sluggishly growing economy over the very long term and one that will be tough to eke out additional valuation gains in the stock market. >> we get a reduction in production with a rise in social media. heather hughes, admit it. >> no! no, i don't even have my phone right now! i can't bring no phone, no notes on the set. no, i didn't today. i promise. but i would say that i guess while rick and greg probably stuff all their cash under the mattress or in bonds, i think the average investor out there still should remain diversified. there is of course a piece or portion of investments that should be in bonds but i guess there is -- so greg, you say do you like the equity markets maybe as well or stocks here also? >> well, a slower growing economy depresses all asset classes. that's one reason why treasuries
are 2.5%. even though we aren't looking at traditional returns in equities as 8% going forward, the 6% we are likely to get is still better than the low return we are getting on bonds. >> okay. would inflation -- if the 10-year ticks up above -- let's say goes to 3%, would inflation help this economy, hence wage growth which you alluded to i guess has to come from the productivity sides also, so -- that would help us out for sure. >> sarah, you guys talk amongst yourselves. sarah and i are going to have some starbucks coffee as we get ready for the earnings report tonight. david, are you buying anything? what do you like? is there we like big names that have consistent returns on capit capital, j&j, walmart, companies whose profits have always been good, always been high and who valuations imply almost no sometimes negative profit growth. we're really focused on risk/reward. we think there is a lot of risk in a lot of tech names and different parts of the market, cloud stocks.
we don't see a big market correction but we do see corrections in certain spots and we think it is time to kind of roll up your sleeves and be a real stockbroker these days. you can't just ride momentum anymore. >> jim, now that we've gotten a little less than half of the s&p 500 reporting earnings, most of them beating, is it enough to carry this stock market forward and higher? >> probably but i definitely agree in the main cap space, still undervalued on a historic basis. looks very attractive. real products that have real consumers demanding at least the same amount, if not more of them, they are clearly likely to benefit going forward. while other companies especially the momentum stocks, they sold off for a reason a few weeks ago. we think that reason still exists. >> just if you're keeping store, 203 companies reported. 138 of them beat. 45 misses. two met expectations. >> that's all that matters. >> but beating what? beating expectations but they've
come down anyway. gang, thank you for joining us. appreciate it very much. >> thank you. >> thanks for your contributions today. and look at this. about 50 minutes left in the trading session. the market has moved higher -- the dow is back in positive territory. now 68 points away from an all-time high. >> it was the panel talking up the markets. et cetera th . up next, the ceo of aetna tells us how they managed to do it, where the growth in subscribers is coming from and what's next for aetna. speaking of coffee, the coffee at dunkin' donuts could not warm up the earnings picture last quarter for the report. blame being the weather for less than stellar results. qualcomm has a new ceo and only on "closing bell" will you hear from him. it is his first television interview ever. he'll tell you his plans going forward for the chipmaker and the shrinking mobile market.
held back today, maybe due to the new reports of tensions between russia and ukraine that included some ominous and very direct threats from russian president vladimir putin. >> for a look at today's big movers in the session, let's check in with dominic. >> a big tug-of-war in the market. caterpillar posted better than expected quarterly profits boosted by expense cuts. cat currently trading 2% to the up side. then zimmer holdings, the best performer in the s&p 500 as it acquires biomet for $13.4 billion creating a powerhouse orthopedic devicemaker currently trading up 11.5%. on the the flip side, united continental one of the few airlines posting a loss in the first quarter. carrier blamed brutal weather in the midwest and northeast. you can see those shares down to 9.5%. aetna reporting better than expected first quarter profits helped by a surge in profits
from its commercial business an by adding new customers. as a result it raised its forecast for the full year. aetna shares, session highs up 6.5%. back over to you. we'll pick up right there on aetna. do these great earnings results mean that the giant health insurer is no longer concerned about the facts that obamacare will have on its bottom line? >> joining us in a first on cnbc interview, mark bertolini, the ceo, welcome back. >> hi. >> we always look at obamacare through your eyes. as your experience on sort of a front row seat. first, overall, quarter, how did you do? >> we had a great quarter. we were up 40% year over year on operating earnings, 47% on eps. our revenues up to $14 billion for the quarter and we raised our guidance for the year 20 cents eps to the middle point and took our revenue up by almost $2 billion. >> how much is that -- of that
is obamacare? >> not a lot. we had in the first quarter 230,000 paid exchange members. quite frankly, those exchange members we recorded as a loss in the first quarter. so they were actually negative to our earnings. >> give us a little more color on what you saw. i know are you participating in 17 states on the health exchanges. what did you see in terms of sign-ups, the numbers, the ages, the health costs of those that actually came to sign up? >> so to date we've seen over 600,000 enrolled, i think the average age of the population came down in the last month. age is still higher than we priced for but we expect those prices to come in relative to our rates that we put into the market. we're in the process now of doing our 2015 rate structure
and for submission into 132 different rating areas. so we have a lot of work to do between now and act when the rates go public. >> so in your assessment, is it working? is it doing what it is suppose dodd by attracting those younger workers in to the insurance arena to bring the demographic numbers down and thereby bringing the premiums down? is that working in your view? >> too early to tell. >> are premiums going up? >> premiums are going up. >> what type of -- are you seeing double-digit increases in premiums? >> so on the exchanges we have preliminary rates that are anywhere from low single digits to double digits. again, it is 132 different rating areas. each of those was affected by the amount of information we have, number of enrollees, the demographics, and every market is a little different. so it is not as easy to say what the overall market looks like. >> we have the ceo of biogen on
yesterday, i was sort of busting his chops about the price of drugs and we were discussing gilead's $1,000 pill that's been such an instant blockbuster for them but at what price to the patient out there. and he said, you know, he felt drugs themselves, drug prices are unfairly singled out as a reason for the increase in health care costs. he said medical costs are much more to blame for that rather than drug costs. where do you stand on all that? >> so our costs for the first qua quarter were about $30 million but i think we expect them to rise higher. a treatment in the united states costs $84,000. that same treatment in europe costs $30,000 and that same treatment in india costs $3,000. those differences are kind of
hard to explain. >> with all due respect, some of that -- wouldn't that be insurance because the producers themselves know that there will be a reimbursement by depocketed insurers so they can charge more than they would otherwise. otherwise, if there was no insurance they wouldn't get that kind of money from uninsured patients. >> that has something to do with it, bill. >> and that's all he's going to give us on. >> sounds like he agrees those costs are way too high and expect them to continue. >> thanks, mark. always good to see you. looks like about 40 minutes left before the closing bell. we're seeing the dow actually in positive territory right now. there you can see it's been flipping around all day. s&p 500 also stronger with the nasdaq. apple leading the charge there. later in the show we're riding the rails with the ceo of union pacific. his company a big proxy for the global economy. we'll get the -- at least the
domestic economy. we'll get a read later on in the show. then hot coffee combatting cold winter but sometimes the winter wins. that seems to be what dunkin' donuts is saying in its earnings report with less than impressive numbers when we come back. ceo nigel travis talks about the impact the harsh weather in the last quarter had on his fast food chain coming back with more on "closing bell."os ing bell." ameriprise asked people a simple question: can you keep your lifestyle in retirement? i don't want to think about the alternative. i don't even know how to answer that. i mean, no one knows how long their money is going to last. i try not to worry, but you worry. what happens when your paychecks stop? because everyone has retirement questions.
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dunkin' brands actually coming up short on earnings this morning. shares recovered a bit, off the lows of the day. still down little less than 1.5%. after reporting earnings that missed the company saying severe weather had a significant impact an same-store sales. we welcome the ceo, nigel travis, back. >> nice to be back. >> i will say, we had discussioned this afternoon about your company and about the weather, whole thing. somehow with a company like yours, whether is -- sort of doesn't wash. people especially in bad weather rush to get that hot cup of coffee in the morning.
what happened? >> well, bill, think it is an interesting thing, is that we actually had a quarter where we had continued bad storms seemingly every week. >> we remember. >> yes, i know you do. and what happens is that people will say go out on a monday. everything's fine. tuesday they find school or work is canceled. they don't come in. so on that particular day we lose their business, we lo their great cup of dunkin' coffee, we lose their breakfast sandwich. it is not like say going out with your wife on a friday night for dinner where if there is bad weather you come back on a saturday. you actually lose it for that day so it disrupts the very ritualistic element of our business. that's what happened in the quarter. we feel great about our business overall and hopefully all the bad winter storms are behind us. >> part of the problem, nigel, is you're so concentrated in the northeast. critics would say that speaks to a flaw, you didn't expand far
enough west. i know you do have aggressive expansion plans. question is, is it too little too late with such a saturated market out there? >> well, you are absolutely right. about 55% of our stores are concentrated in the northeast corridor and clearly we had far worse weather than someone who's across the country. if you listen to some of the other earnings reports this weeks, yum! talked about 300 basis-point weather impact. that seems to be worse than ours. they're right across the country. >> but they have more than half their sales in china. >> i think they were talking about the impact in just -- >> no, my point is they can offset that. they're more diversified geographically. >> sure. i think that's a good point. as you said earlier, we're moving aggressively across the country with 8,000 more stores that are going to be built in the next few years. but we can only grow so fast. we're growing much faster than
we expected at the time of our ipo. developments went on track. that's going to get balanced out over time. >> once upon a time you were doughnuts, mcdonald's was hamburgers, starbucks was coffee, taco bell was tacos. now everybody is serving coffee and breakfast sandwiches. does brand matter anymore? and you guys are beaten each other up in the mornings. that's the fastest growing area of fast food, i realize. but what's it going to do to your margins if you have to keep pricing pressure to gain market share? >> bill, we feel very good about our margins. it's actually the margins of our franchisees that we focus on. clearly some people have tried to invade our space. some have done it twice before and have had to retreat. some people have come in and gone forever. so competition will come in. we feel very good about our real estate which is positioned on the right side for breakfast. we feel very good about our
products. yes, people have invaded into the breakfast sandwich space, the coffee space, but so far you haven't seen dunkin' donuts with tacos. you probably aren't likely to see that as well. >> you going to have a doughnut taco coming pretty soon? >> it is an interesting idea but i don't think it is going to happen. >> i'm curious, nigel, about your input costs. we've seen dairy prices on the rise. coffee prices are higher. what is your hedging strategy? i know a lot of it is passed on to franchisees but are you going to have to raise prices to deal with those higher costs? >> we feel really good about the way our franchisees have been disciplined about pricing. we talked about our overall quarter pricing being 1%. our franchisees understand that dunkin' donuts is about value. we have mitigation strategies for the commodities. our franchisee-owned, purchasing and distribution operation has
done a wonderful job managing all this. so we don't think we have the pricing pressure that some of the other fast food outlets have where they've got beef prices, for instance, to conten with. >> right. nigel, thank you for joining us today. >> maybe the summer weather will add in ice cream. let's get a quick "market flas flash". >> security regulators are looking into general motors delay for the recall with nearly 2 million cars with that deadly ignition problem. s.e.c. has made inquiries about the recall. the u.s. attorney's office in new york and an unidentified state attorney general are also conducting investigations as well. gm shares down toward session lows, off by about 1%. heading toward the bell, how much time? >> half-hour. thank you. we've got flat on the dow right now hovering on either side.
unchanged unchanged essentially with the dow leading the way thanks to apple. a lot more big announcements coming after the bell. starbucks, amazon, they'll be out with their earnings in the next hour an we'll give you a preview of what to expect. could we get shocking market moving news? but first, the new ceo of qualcomm has done no television interviews to this point since assuming his new role. that is until now. stephen mollenkopf will join us after this. mary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason
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if we can't offer faster speeds or save you money we'll give you $150. comcast business built for business. we've been floating with the dow down five points ride now trading at 16,496, 80 points away from its all-time highs on a closing basis. nasdaq has been moving higher today thanks to apple and the announcement of their big buyback. the dividend increase. stock split. it's up about 7%, 8% so far today. that's helping the nasdaq which is now up 20 points. the s&p at this hour is trading up two points at 1,877.
have a look at one of movers here, qualcomm, old tech, not having a great day. stock is down little more than 3.5% on the heels of last night's earnings. the company managed to grow profits by 1% from a year ago quarter yet there are concerns about china, phone sales, royalty payments. that seems to be weighing on the stock today. >> let's sen d it over to melisa lee who has this exclusive interview with the company's new ceo, bill mollenkopf. >> steve, it is great to speak with you. thanks for your time on "closing bell." >> good to see you, too. >> i want to start off and get straight to the issue, that's the licensing revenue in china. you're very optimistic about that happening some time in the second half of the year. but of course when wall street is concerned whenever anything is back-end loaded that introduces skepticism which is perhaps why the stock is down right now about 4%. how much clarity do you have in terms of when that licensing revenue in china will actually materialize? that's typically booked with a
one-quarter delay. >> if you look at our businesses, we have a semiconductor business an we have a licensing business. the licensing business is actually books revenue one quarter if arrears relative to the chip business. one of the things that happens is that because we have very strong demand in the chip business, if you look at our quarter that we delivered, it was actually a very strong quarter from the eps perspective. actually even record from the licensing perspective. we had a strong outlook from the chip side of the business which is the really more of a leading indicator of what will happen on the licensing side. i think it is a very strong outlook on the chip side which we think bodes well for the licensing side. the part that i think has confused people a little bit is because of the way in which that ramp of technology, most importantly the technology ramp of lte in china, falls relative to our fiscal year. it shows up in one business but not in the other business because it straddles the fiscal
year boundary. >> you are basically seeing we are seeing it now in chips but it will come on the licensing side. >> that's right. if you look at the dynamic and business on the chip side, it is really all about getting more chips and getting more support because this launch is really happening with a lot of intensity. we think that is a good trend obviously for the chip business but it also bodes well for what happens down the road for the licensing business as well. >> want to talk about the chip side of the business and what you're seeing on the smartphone landscape. we see a migration at least here in the united states toward the lower-end phone. that's the dominant phone around the world. does that impact you at all in terms of the product that you're able to put in to that lower end phone and the pricing pressure you may feel? >> well, if you look globally at the smartphone market, there's still a lot of innovation that goes forward, particularly at the chip set level. if you look at the rate at which we are producing new technologies globally, it's actually increased over the
years versus lengthening. however, what you are seeing is i think broad adoption across multiple tiers or multiple price region levels and one of the things that -- one of the reasons that we have had some strength in our chip business is because we have driven new technology not just at the high end but also at the low end as well. and we're seeing that broadly around the world. you do see regionally, you do see some changes in the way in which technology rolls out because certain markets are more sensitive to let's say flagship device launches versus technology launches. in china right now it is very, very dependent upon how quickly they move to lte, whereas in other regions it is more about what is the hot phone and when does it launch. >> had sure. to that point, steve, this is your -- within your first year of being a ceo. but look down the road. in terms of your customer base right now, samsung, apple are the biggies. but so many other emerging
technologies. also the one plus one which is made by a chinese manufacturer which is going to come here to the united states. down the road how do you see this landscape forming in terms of the big players? >> well, we think it is favorable to us. if you look at our customer base it is very wide. one of the reasons we have strength in the chip business right now and was reflected in our outlook is because of broad strength in china. i mean across tiers and across multiple oems. what we think is going to happen in china is, as china adopts lte, and that becomes a very, very large market for lte, it will also be an area where strength in chinese -- the chinese market will enable those same oems to export, which i think is a good trend for us. we are actually strong in a lot of the oems you already mentioned are already customers of ours and we anxiously look forward to migrating them to lte
and then migrating then to the international phone manufacturers as well. >> say five years down the road we aren't just looking at apple/samsung dominant player sort of u.s. landscape. we are going to be thinking about other global players in this market and actually competing. >> well, i think it is really difficult for us to try and -- me personally to try and guess who's going to win but what we have seen -- we've been in this business for a long time and i've been working in the chip business here for the last decade is it rotates around and particularly in different geographies you'll see different winners and it rotates around very much. what our strategy is, we try to engage with all of them and try to produce the key technology that all of them need and enable all of them sort of with the same core technology. so that tends to be how we drive our business so we're more sensitive to technology versus the women's of one individual market player. >> last question, steve. i got to ask about this wells notice.
it gives you a chance as a company to respond. you made your submission april 4th. can you give investors any sort of timeline as to when there will be a response to your filing? >> yeah. if you look at the details, it is really not a new topic. this is something that we have disclosed before. it is just another step along the process. we have submitted our rebuttal to the view and we don't know what's going to happen. we are confident from looking at the details an engaging both our board and our outside counsel that we haven't done anything wrong but we're cooperating and other than that, we're just midway through the process here. >> steve, a pleasure to speak with you. thank you so much for your time. steve mollenkopf, the ceo of qualcomm in his first tv interview. meantime, some breaking news from the tech world about those allegations that big tech
colluded on who they would hire. josh lipton has the latest. >> big headlines here in silicon valley. news that a deal has been found here in the tech wage fixing case. you will he's recall this case involved a class action involving 64,000 tech workers and they had alleged that between 2005 and 2009 executives at big tech titans here at silicon valley -- google, apple, adoe by ay and intel conspired fix worker compensation. they were seeking, i'm told, as much as $9 billion. terms of this deal have not been disclosed. the trial was set to begin in may but again a deal looks to have been reached here. it involved well-known executives -- steve jobs, eric schmidt. then though a deal has been reached, though no terms of the deal disclosed as of right now.
>> we' will see if they start playing musical chairs in silicon valley as a result. 19 minutes left in the trading session. we're up five points on the dow jones industrial average. after the closing bell, new microsoft ceo will be overseeing his first earnings call since taking the top job in january. it is a big deal. we'll preview what to expect from microsoft as well as starbucks, amazon and visa earnings. then, did you hear what warren buffett said yesterday on the show? here it is. >> did you ever vote for something on a board that you disagreed with? >> sure. >> he said with conviction. really? i mean if warren buffett does that on a corporate board, what hope is there? we'll tackle that question later on "the closing bell." ♪
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going to report after the close today. here is a he preview of the five big ones you'll want to watch. we'll start with amazon.com. the world's biggest internet retailer. it is expected to report earnings of 23 cents a share on sales of around $19.4 billion. shares of amazon are up nearly 3% -- or over 3%. near session highs. but it is still down 16% so far in 2014. perhaps pricing in some negative news ahead of the earnings report. radio internet company pandora also slated to report as well. here analysts look for a loss of 14 cents a share of sales of $175 million. pandora stock is marginally up. it could be a wild earnings report. microsoft is looking for earnings of around 63 cents a share on sales of $20.4 billion.
this stock is up just a hair on the day, near session highs after being lower for much of the day. the stock is up 6% so far this year nice move there. for coffee fans, looking for earnings of 56 cents a share for starbucks. the stock's been trending higher for most of the day and the stock has been trending higher for most of the day and the year, maybe not so much. you can see down about 10% so far. the options market is pricing in an expected 3% swing. visa, at least here look for earnings per share numbers 218 per share. year to date, it is down 6%. you wonder whether or not some traders are pricing in a little bit of the expectation for some of these stocks and whether or not they will pop if they do end up beating. it is going to be a big, big, big wait-and-see kind of thing for us. i will be breaking down visa
today after the bell. >> chinese yuan at a 14-month low. she got to say it again. with 1 minut with 13 minutes left, dow down. i think more anticipation of what is to come. after the bell, the dow transports have hit an all-time high. they have been where others have not. that's usually good news for the overall stock market and the economy. we'll be talking to the union pacific ceo exclusively on "closing bell." stay tune. stay tune. [ grunting ]
you can pay the bill, too. but don't worry about that right now. okay. how do i look? ♪ thanks. [ male announcer ] troubleshoot, manage appointments, and bill pay from your phone. introducing the xfinity my account app. about nine minutes left here. the dow is the laggard today. down three points at the moment. it is the nasdaq that once again has been the highlight for the major averages and we're up 19 points. not a lot. but apple has contributed much of that today. that stock has been up 8.5% after announcing the blockbuster earnings last night with the difficult den increase, the share buyback an the 7 for 1
stock split. the s&p up 1/2 poin2 1/2 points head towards the close. j.j. burns and kevin guinness, good to see you both. do you like this market? we go back and forth on whether it is expensive, whether it is cheap on a valuation basis or not. where do you stand on that? >> i'm just happy that you invited a bond guy to the new york stock exchange floor. from -- >> can we show you around? >> what are all the machines for? no. from the bond market's perspective, bill, it's been a very tough market to trade in because spreads really haven't moved a whole lot. the treasury high-low this past five days has been two basis points. just sitting there waiting for something big to happen. it's not happening. >> is that giving us a message or is it distorted by fed policy right now? >> it is a little bit distorted by fed policy but the economy's growing 2%, 2.5%. mixed numbers, day in and day
out. no inflation to speak of. the stock market is going on this way, the bond market's just going to sit and wait. >> what is the message the bond market's trying to send? >> nervousness. take your bellwethers like a google, american express and amgen. three very different companies. you take those companies and look at google, none of them beat revenue expectations. google may have beat, american express, amgen did not. every single company missed their revenue numbers. in addition, out of 135 companies reporting, nearly 65% of them are not really beating revenue expectations. market participants are nervous. the average person who watches cnbc more importantly is concerned on where they're going to get their yield. which is income. >> where do you get that income then? >> you still have to get it out
of the minimarket because that's where the spread it. the recent tax increases for most individuals, the 100 basis point spread you'll get off treasuries in an after-tax basis is about the best game in town in the investment grade space. you go away from that in high-yield but that's the risk you play. agencies in terms of short-term corporates are on top treasuries. >> catastrophic bonds are getting gobbled up right now. how can people do catastrophic bonds? i think we both agree the fact of higher yielding municipals. going from corporates po highto yielding muns municipals, that's what investors want to see. bob pisani said when the stock
guys and bond guys talk, something's going on in the markets. stand by, here they come. amazon will be out with earnings. they've been trading up today. could the retailer be on its way to a stock split like apple? earnings are due out in a moment. we'll have a complete breakdown. plus many, many other major corporations reporting in a moment. you're watching cnbc, first in business worldwide. ldwide. than, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. a short word that's a tall order. up your game. up the ante.
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heading toward the last two minutes of trade, there is the nasdaq. this is where the action has been lately anyway. more volatility for this index than there has been for the dow and the s&p. sell-off on the open this morning, then we came back, up .5% right now. why? apple. two-day chart of apple here to show you the impact. this was last night after they announced the blockbuster earnings and the share buyback and the 7 for 1 stock split. pinned to the high there, up 8.2% into today's trade. now let's talk about tonight's earnings reports very quickly, bob pisani. amazon, i won't give the numbers because i don't have that much time. amazon, high expectations, up almost 4% on that stock right now. starbucks, will weather be a problem. microsoft, what will their knew ceo say about new products down the road. pandora and music, a lot of
competition. and visa among the financials. >> what i care about most is visa. i want to hear about the card spending. we need to see a pick-up in the consumer business. today i'm little disappointed. apple great, facebook great, caterpillar totally different category, great report from them. overall the market shrugged today. look at yesterday what happened. if you want to trace the sort of problems we've had, ever since the housing numbers at 10:00 yesterday the market has kind of struggled to move sideways. i thought it would be up a little bet person. >> durable goods number was good. capital spending is key, companies to spend more on big-ticket items. it was a good report there as well. >> the problem i think, the ukraine keeps floating out there. this morning around 10:00 eastern time president put frn russia made some aggressive comments, frankly, saying if mr. are problems in ukraine, we could have consequences. the market dropped on that. it is hard to quantify but that floats out there and is a bit
after headwind for the market. >> thanks, bob. we're going out mixed today with the nasdaq higher. the s&p a little bit higher. stay tuned, this flood of earnings is coming your way, could set the tone for tomorrow's trading. thank you, bill and welcome to "the closing bell." i'm in today for kelly evans. there will not be a new all-time high today. we are watching it all day especially around the dow. we are waiting for earnings. amazon among them. nasdaq in the lead up .5% thanks to apple, apple having a tremendous day, up 8%. biggest rally in more than two years. let's bring in girl-powered
panel today! seema mody, mary thompson, city of stephanie link. g guy, what are you looking for to move the needing? >> i think microsoft is interesting for a number of reasons. the sell-off in amazon providing you an opportunity last week. we talked about it on the show to get into the stock on the long side for the first time. i'll put my neck out a little bit an say amazon will surprise some people. i think the stock still has room to the up side. >> the last timeamazon reported was in january. anything they say will be interesting. >> we want to know how they will
impact earnings. the new hbo deal. that will be something really interesting to watch. for amazon it is all about top line growth. analysts expecting $19.43 billion. that would be a 2 % increase year over year. also unit sales growth. how many items has amazon sold. that will be key to watch. in a broader theme, 201 companies in the s&p ha have release earnings this season. 76% of them have exceeded profit estimates. is it quality beats? are you seeing the kind of revenue growth you need to see? >> it is encouraging certainly. i think the number is a little bit higher than what we had seen in the upper 60s so we still have a long way to go. i find very interesting this massive rotation into value away from growth. after the close tonight it will be interesting to see how does amazon, the growth story, tra tradetitrade relative to microsoft. because today it was all about
cat, the home builders, diamond offshores, those are all value beat be-down stocks that did pretty well but it didn't take much for them to do well. >> mary thompson, that's not a value or growth type of stock. >> we're seeing that rotation right now and it seems to be taking hold. again, i'll be watching visa after the bell. had this is one that i follow and we want to see what the spend was there, whether or not it was impacted by fx or currency and what the impact there was on visa and whether or not they maintained their 2014 guidance. those are some of the keys we'll be watching. >> as you can see at the bottom of the screen. josh lipton has numbers out of microsoft. >> microsoft just reporting. let me get you those numbers. street was looking for 63 cents on 20.44 billion. microsoft, 68 cents on $20.4 billion. microsoft now reports in these two main groups. commercial revenue, $12.2
billion. the street was looking for more than $12.4 billion. switching over to devices and consumer, windows revenue microsoft gets from pcmakers up 4%. looking over devices, surface revenue they say grew 50%. xbox, 2 million, including 1.2 million x 1s. >> the stock is topping in the after-hours. not a bad debut. >> it's really interesting to look at shares of microsoft up 8% since they got a new ceo. >> want to see the pc refresh cycle. that's the key here. i'm not sure it is sustainable but the stock fell 5% in the last couple of weeks so there
was a little bit lower expectations. >> he's just getting started there, stephanie. you aren't a buyer of microsoft. correct? >> not up here. no. i think it is cheap stock but it's had such a move and i just think there are some questions. i think it is going to be a very heavy op-ex year as they transition into cloud. also pc revenues are not exactly sustainable. >> first for disclosure, microsoft has been an on again/off again client of mine. but when you look at value versus growth, you have to look at the transition microsoft is going under and the cloud is becoming a bigger piece of the story here and i wonder if that's going to shift the way that investors look at this from sort of the traditional value play to more of a growth stock vis-a-vis all the other cloud companies that are out there. >> they're certainly going to have questions for the ceo, the cloud business has been on fire. but windows business is up 4%. >> there were concerns coming in.
also devices looked strong as well. i'm not familiar, maybe carol wants to jump in. surface was 50%, xbox up 2 million there. >> big question mark is nokia, sort of the elephant in the room. >> finalizing on friday. >> we'll wait to hear from that. i believe we are loose looking at pan dor are ra shares. in the meantime we are still waiting on amazon. this is the big one. we do have pandora shares. looks like shares have been lower in the after-hours -- do we have pandora? the estimate was for a loss of 14 cents a share. morgan has those numbers. >> we've got pandora and we've got amazon. pandora, loss of 13 cents per share, slightly better than the loss of 14 cents that the street was calling for. that's on revenues, non-gap
revenues of $180 million. beating on aennalysts expectations. guidance, break-even to 3 cents for the next quarter. slightly lower than the 5 cents that the street was calling for. we'll be right back with amazon's numbers in just a moment. >> we're waiting on that, morgan. thanks very much. pandora shares under pressure here in the after-hours. when it comes to pandora, internet radio, this is getting to be an awfully competitive space. >> it is. but i think this is what i was looking forward to see the reactions. a couple companies last night reported very good numbers like facebook and like service now. they blew away numbers. those stocks did not do well today. now you have pandora that's guiding lower so rightfully so the stock should be down. it is a competitive space. i do think we'll see where it opens up. low 20s i think gets very interesting as maybe a take-out candidate. >> it just goes to show you really can't group social media all together because we had a very strong report from facebook last night.
pandora beating street expectations but still the stock is down about 7%. guidance was disappointing. but it just goes to show you have to animalize each social media company to really understand their own story. >> i know you've looked at some of these social stocks, carol. what did you think of facebook? there is a divergence, no question, coming out with solid earnings especially on mobile again. >> i think there is sort of the highest quality names, or at least the ones that have the most excitement and some of the me-toos. i think the key word here is guidance. it looks like the market is really paying attention. whether in the social space or even in the consumer space. underarmour, the stock got beat up today because there was a little bit of a tone that they thought maybe forward guidance wasn't going to be as good. with all these growth stocks and the huge valuation, guidance is becoming more critical. >> amazon earnings are out. morgan.
>> earnings are out. here's what you need to know right now. earnings per share, 23 cents so in line with the street. on revenues of $19.74 billion. much better than the $19.43 billion that analysts were calling for. sales were up 23%. analysts were calling for 21%. bet thaern expected numbers there. we'll keep bringing it to you as we get it. >> looks like after hours am done popped on the news. now it is trending sort of unchanged. robert luna's reaction to the numbers. are you a fan. you've been loading up on amazon. you like what you hear? >> i do. i think basically guy adami put it best. they sold off 24 percent a couple weeks ago, that was your entry point. we took advantage of it. because of that sell-off, meeting expectations for a company the caliber of amazon is good enough to get the stock to move higher.
>> i think you might have seen a buying opportunity because amazon has sold off, actually 20% from the peak, down something like 16% for 2014. you think it is a buying opportunity? >> i think it is a huge buying opportunity. let's face it, you are never buying amazon based off of cheap valuations. i've been looking at this stock for 16 years. it's always been expensive. but jeff bezos and his crew has continued to reward long-term patient shareholders who buy in the long-term vision. amazon is one of those very few companies who has very disruptive and adaptive scaleability. they can enter into your business overnight and eat your lunch the next day. look at what they've done with aws. aws. four times the computing pouter of the next 14 largest competitors. they're a beet. >> robert, it is carol roth. i want to ask you how important you think this revenue number is. seems to me the only metric amazon is trading on that's within the realm of reality is the revenue multiple, around two times revenue. i assume the fact that they beat
so substantially on the top line versus what the street was expecting will be a really good signal for the market here. >> yeah. i think that's huge. we were talking about coming in to this top-line revenue being so important right now. i think the fact that they did beat that 19.4 number is very important for the stock. bottom line came in line with expectation. i was hoping personally for a little larger margin expansion with the increase in prime. i don't think that's maybe had had enough time to come into play yet. but i think those top-line numbers are great. >> robert, when do you think operating margins are going to reverse and go higher? that to me is the most important data point missed story. yes, we know about revenue growth and it has been very, very strong. but at what cost? >> i agree, stephanie. i think, again, amazon's one of those stocks you're going to have to be patient with. they are making a lot of investments right now, not necessarily for tomorrow but the next four to five years. i think you're going to see some margin expansion with things like prime, them entering into higher margin categories like
aws which i'll be interested to see what the growth is over there. but maybe right about the time where you start to see margins increase domestically they could be picking up expenses to expand some of those distribution units overseas. i think it could be a little bit of time but we expect 5% to 6% margins over the next five to six years. >> guy, you were looking forward to these amazon results. in line. amazon does seem to get a pass when it comes to earnings per share growth. $19.74 billion on sales. that was a big beat, guy. >> they get a pass because the stock had been wacked so hard earlier. that's sort of the premise when we talked about the stock last week on "fast money." you said you're probably setting up a long trade ahead of earnings because so much negativity has been built in to it. if you are a trader, i would use the strength if there is still strength in the name now to probably be taking om money off of the table because i think it was a good quarter, not great. think microsoft was really good. pete's been talking about it but the death of the pc is much
ballyhooed but not true. if you look at apple numbers yesterday, that pretty much tells you that. microsoft has gotten themselves in enough different businesses where i actually think the stock might be in a new trading rain to the up side. i would say you could stay long microsoft here but you might be thinking about taking some profits in amazon. >> microsoft shares up 2% in the after hours. stephanie, you look at the relationship between amazon and microsoft. both with pretty solid results. >> but i would like to dig into the operating margin at sam zon. you want to see operating leverage. that's what you want to see at amazon but you aren't seeing it because it is not coming to the bottom line because they are spending so much. mic >> operating margin for amazon, .7% in the first quarter. company also forecasting an operating loss of between $455
million in the second quarter. some of the headlines crossing, streams on prime instant video nearly tripled year over year in the first quarter. that's something that investors will be watching as well. >> i wonder if they'll also dig into the tax issue. some states are collecting can income taxes on big-ticket items. what impact may this have had on this quarter. >> we're also waiting for more headlines on the call. thank you, robert luna on amazon. starbucks, just out with earnings. jane wells is on the west coast with those numbers. >> i know you've seen some of the numbers already. first we went through this entire release. there's no mention of soda stream in here. we'll see whether or not that report that starbucks is interested in it is true. earnings came in line at 56 cents a share. that's what the street expected. 6% same-store sales growth also expected. revenues a little light at $3.9 billion instead of $3.95
billion. but operating income up 18%, margins expanded across all segments. i look at what their guidance is now for the rest of the year and it's changed and narrowed a little bit. full-year earnings guidance now raised lightly to between $2.62 to $2.68. that's a slight raise. they narrowed to the up side the consolidated operating margin improvement. they expect this year between 175 and 200 basis points. next quarter -- or the current quarter, eps guidance remains the same between 64 to 66. the street is looking for 66. they narrowed to the up side what they expect for the quarter after that to between 71 and 75 cents a share. pretty good. not blowing the lid off it but i think the shares are up. yeah, you can see what the shares are doing right now. we hope to get more on the call especially about these soda stream reports. >> interesting they didn't comment on that. shares unchanged. that 6% same-store sales growth is what investors were looking
for on par with expectations. visa just came out with earnings. dom? >> a take on the global consumer. payments processor visa out with their numbers. we'll call it a largely satisfactory report here. they came out with earnings per share of $2.20. that beats by two pennies the $2.18 average analyst estimate. also revenue is coming in line, $3.2 billion. that matches wall street expectations. total payments processed, 15.4 billion transactions. that's 11% more than last year. they've also thrown some forecasts in here in terms of annual revenue growth. annual net revenue growth is expected to be in the 10% to 11% range. also annual earnings per share growth in the mid to high teens. some analysts were looking for a 16% xwroet nugrowth number. also charlie sharp, the ceo of the company, saying underlying business drivers remain strong. also, as expected, softer net revenue growth was impacted by,
among other things, a strengthening u.s. dollar and difficult year over year comparisons. the stock is down 1% in a very thin trade. only about 30,000 shares traded in the after-market so far. right now a beat on earnings, in line sales, stock is down about 1%. >> that dollar, strong dollar, a headwind theme. we'll talk to mary about visa a little bit more coming up because we are going to keep the e momentum going here on closing bell. more names reporting, more big news. don't touch that remote. we got a lot happening here on our woman-powered panel. also, billionaire investor warren buffett telling cnbc that he sometimes approves things, including mergers, he doesn't agree with when serving as a corporate board member. it was a stunning administration, a stunning conversation. getting a lot of reaction. we'll hear more of what buffett had to say and a debate about it. also apple surprises investors with a major stock split. it the tech giant poised to become a dow stock? while the market is cheering
the stock split news and the results, where's apple's latest innovation? a shareholder joins us later asking that same question. you're watching cnbc, first in business worldwide. t a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: scottrade- proud to be ranked "best overall client experience."
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continuing coverage here on "closing bell" of the avalanche of earnings reporting after the bell today. let's get some more thoughts on starbucks specifically which is trading little changed after a initial spike after the earnings report. with us, soon yore consumer analyst with williams capital group covers the stock on starbucks. i looked at the same-store sales number, 6% in the u.s., a little better than last quarter. in line. >> it was a very solid quarter, very much in line with what we were looking for. it is nice to have a little bit of up side from the margins ticking up the outgoing margin expectation for the year. that's always a positive especially within consumer investing. very solid quarter, no major surprises one way or another but it looks very solid to us. >> we were looking at dunkin' brands earlier. coffee competitor got slammed by the harsh winter weather. that was a miss on the top and bottom line. is that because of their geographic location? we didn't really see that in starbucks or is it something wrong with dunkin'? >> i actually like both names.
both names are part of our growing beverages theme. we're very positive on both of these companies and think will both succeed. from the standpoint of the weather standpoint, it really puts you in the situation when you are concentrating in the northeast. certainly dunkin' is more than starbucks. i think it is a legitimate situation but that they'll both end up succeeding long term. >> coffee prices are hedged until the end of next year. what does that do to your numbers if they remain this high? >> i think it will have an impact on fiscal 2015. we have though seen this it before. what tends to happen, couple years back remember they had a 20 cents per share headwind from the coffee prices when they were back above $3, yet the stock perform extremely well. there will be an impact. i think they will go over it in the conference call but it is not a fiscal 2014, it is a fiscal 2015 event. >> we know starbucks is expanding in north america but how will it deal as emerging markets seeing growth in china,
india and other countries like that? >> they've done a very good job there. they've got an outstanding platform. what i like so much about this report, their margin guidance was taken up from 175 to 200 basis points. they came in line, up about 130 basis points in the quarter. i think they are in very good shape but they are also getting to the point where they are getting more profitable going forward. >> we also want to hear any comments on the food business. they've been expanding their menu items including that all-competitive beck forecast. thanks very much, mark. tune in to "squawk on the street" tomorrow because starbucks' ceo hour schultz will join us exclusively, 9:30 a.m. eastern time. thanks to the panel. be sure to stick around and catch guy adami. they'll have plenty of earnings
to digest. up next here on "closing bell," a shocking moment of candor from billionaire warren buffett during his interview with cnbc's becky quick seen on this show. >> did you ever vote for something when you were on a board that you disagreed with? >> sure. >> and he said a lot more than that. raises a few questions. you'll hear. plus reaction to what buffett is saying about boards and shareholders. all those earnings coming in fast and furious. union pacific is one who does frfrg lumber to steel. if it is not doing well, chances are neither is the economy so you won't want to miss what the ceo has to say. he'll join me in a cnbc exclusive to discuss his economic outlook, how things look for railroads on "closing bell." and what they've been through lately. polar vortexes, road construction, and gaping potholes. so with all that behind you, you might want to make sure you're safe and in control.
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i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today. on. dominic chu has a roundup of what's moving after hours. >> so much stuff to go over. see if i can get through this quickly. start with am done reporting at 32% jump in first quarter net income in line with what the street expected. an operating loss in the second quarter. am done currently up 1.5% in the after market. microsoft posting better than expected third quarter earnings. revenue mostly in line with wall street estimates. they'll provide guidance during their conference call. stock up 2.5%. starbucks earning 56 cents a share in its second quarter in line with estimates.
sales coming in just a little bit light. starbucks relatively flat, now up by 1% in the aftermarket. visa earning $2.20 a share, two cents better than expectations. sales with about where the street expected. pandora losing 13 cents a share. revenue coming in a bit higher that the $180 million. pandora currently down by 6%. we'll cap it off with deckers, posting a loss of 8 cents a share smaller than what wall street expected on better than expected sales. stock up about 2% to 3%. sarah, i'm going to take a breath now. in the aftermarket. >> i think microsoft is the real stand out. yesterday warren buffett talk about our own becky quick and gave a very candid response. >> what happens at a board i think people sometimes have a
mistaken notion of how boards act but the compensation committee comes in, they've work for a few hours, maybe a few days they've had consultants and they say we've approved this plan. i've never yet heard at any of the 19 boards i was on anybody say in the meeting they were against it. i've heard a few say it outside of the meet pentagon. >> did you ever vote for something on a board that you disagreed with it. >> sure. >> like what? >> well, i voted for compensation plans that i haven't agreed with. i've even sort of muttered a yes on some mergers that i didn't think made any sense. no, it happens. >> i'm going to bring in our panel on this one. as well as andrew stullen who is here to react. you follow these types of things in your law office. you listen to what warren buffett just said and think what? >> it is absolutely stunning. warren buffett needs to go back to school and find out what the duties and obligations are of a director. he has a duty to act in the shrl shareholders' best interests.
to the extent as a board members he disagrees with something a board member is doing especially a compensation plan, he has a duty to act up and vote against it and that's outrageous. >> they were talking about coca-cola. his son howard is on the board of coca-cola and they were talking about how warren buffett does not agree with the 2014 equity plan so he and stained from that vote. carol, i know you have a lot of experience in dealing with boards. >> i've been on a lot of companies' board of directors and i've advised a lot of boards of directors. i can tell you for middle market companies and small cap companies and private companies who are looking to come public, this does not happen. people are very vocal about what it is that they think and producing that fiduciary duty. if that's the case on a board that warren buffett is on, they need better board members who are willing to step up and vocalize when they do not agree with somebody that's because their duty to the shareholders.
>> to me it sound like the board members rubber stamp whatever the committees put in front of them. that's discouraging. you'd like to think if there is a robust discussion about major acquisitions, questions about compensati compensation, especially at a time when you have shareholders questioning why a ceo is being paid this much and what are the incentives, et cetera. so i listened to that and i said, it is discouraging because it sounds -- what he said, what i heard, is that there is just risch stamping going on. >> that's the reason -- that's the reason why the shareholder activists, hedge fund managers, guys like carl icahn are so important. those are board members when they get in their board seatrup. i know they get demonized all the time but that's exactly we need them. >> you don't solve one problem by creating another problem. the issue with the activists in many cases is their short-term focus. we need board moment bers who
support the long-term vision of the main street investor, the retail investors -- >> to discuss compensation executives shouldn't get? >> i'm say the ones that are on there aren't appropriate. the point is we need to replace them not just with activists focusing on the short term but with new people who are willing to stand up and say this doesn't sound right to me. >> the results have been pretty darn good pore. >> what about for the long-term value of the shareholders. >> i was speaking to an author who studies and analyzes these corporate boards. he says if a board member is not pushing back to a ceo then he's basically not doing his or her job. that person is expected to challenge the management, ask thought provoking questions. if the person is not doing that, they're not doing their job. >> what we don't want are lifeless eunuchs on these boards. push the envelope and make these executives earn their outrageous
bonus. look at carl icahn's track record! >> you were talking about activists on the board. >> when him or his reps go on a board, good things tend to happen. >> you want an activist investor on every board in corporate america? >> no. but i tell you something, coca-cola needs one because one of the richest men in the world isn't doing his job. >> i think we need more women. >> boards that have women tend to do better. >> this is what frustrates me about that. he's not on coke's board. he's a major shareholder and he didn't vote on that compensation plan. here's someone who goes out and he's spoken quite frequently about how ceos are overpaid. this isn't the first time we've heard it from mr. buffett. yet when he duly disagrees with a plan he won't vote his shares. >> that's just warren buffett's style. he responded to the question from becky saying that he wanted to support management.
so he abstained from the vote because he fundamentally didn't agree with it. it didn't fit in with his philosophy of compensation, to which coke responded that they respect warren buffett, they respect his opinions and they'll continue to work with him. >> what's interesting to see is if they change the compensation in light of that. if indeed he didn't vote his share didn't cause some kind of public uproar other than saying it publicly on the air that he didn't agree with it, if this eventually leads to a conversation and rejiggering of that compensation. >> david winters who raised this issue is a minor shareholder in coca-cola. put out a statement today after buffett saying they need to either withdraw this plan or scale it back and come back to it. final word. >> no question. buffett and his son really left mr. winters out to dry. he was advocating for the change. he didn't want this executive compensation plan to go in effect and he was really left out to dry and it is unfortunate. >> andrew, thanks for joining us with your opinions in support of activist investors. a great discussion on boards. coming up on "closing bell,"
yesterday at this time we learned about apple's 7 for 1 stock little bit. today we learned investors absolutely loved it. the results for apple, soaring over $40 a day, over 8%. did steve cook give shareholders what they wanted? one shareholder weighs in. with dow transports near record highs, i'll sit down with the union pacific ceo and get his take on the u.s. economy, the u.s. railroad renaissance. back in two minutes. ♪
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but that would require wifi. switch to comcast business internet and get two wifi networks included. comcast business built for business. let's take you back to cnbc headquarters right now for breaking news on bank of america. >> not too long after jpmorgan settled for $13 billion with the federal government over residential mortgage-backed securities litigation, b of a appears to be headed in the same direction. sources told me that b of a is in talks with the justice department about a settlement over their long standing residential mortgage-backed security issues that could top $10 billion. another report says that the justice department may be seeking an additional $13 billion from b of a, same as they got from jpmorgan. i'm told talks are still in a relatively early stage. the number is not yet clear but b of a is definitely eager to put these issues behind them and
hopes to get the settlement done by summer. they set aside an additional $6 billion in legal reserves which may have concerned investors but obviously it may have been in anticipation of the settlement i've described. >> big numbers. trying to put the past behind them. the harsh winter weather may have disrupted some parts of the economy but it did not stop union pacific's stock from climbing this quarter. despite the stock being down today. when companies like union pacific are doing well, that can be a good sign for the overall economy. the ceo of union pacific is here with us exclusively on the floor of the new york stock exchange. good to see you, jack. >> great to be here, thanks. >> you put out a solid earnings report. what's interesting is when you look at the pockets of strength it was pretty broad-base zblpd we saw -- well, agricultural products from the grain harvest set aside, but industrial products which is lumber, construction products, fundamentals of housing starts,
automobile sales, all of those kind of fundamentals. our domestic and mobile was up 8%. up and down the line. industrial chemicals up 7%. all of it is pretty good news for the economy. >> want to hone in on the housing market with the lumber shipments and construction shipments because we've seen some mixed signs. new home sales down 14.5% earlier this week. is that sustainable? >> i think overall -- we always on the railroad look at january and february as being the slow months for housing starts and housing sales an everything, particularly this winter with the frozen north part of our network. but i think now as you start to see march and april start to unfold i think those numbers will change and we think the lumber and those kinds of things will do well. >> so you're looking up for -- you expect this strength to continue? >> we see nice, slow, steady, consistent. >> even though we are not at 3% economic growth. >> when you have nice, slow, steady economic growth you don't
have a bubble to burst. >> what about your competitive advantage versus some other railroads in this country, in one of your competitors -- warren buffett, has invested. what are you looking at in terms of your edge right now? >> if you look at our franchise at all, it has a very balanced network to it. no one commodity within our franchise dominates our portfolio. if you have some bad news on coal, you have good news in terms of agricultural or you have good news in terms of automobiles. when we have a mixture of things that kind of gives us good, steady, sustainable growth. >> you didn't see much of an impact from the winter weather which so many companies have been citing. >> well, we did. the winter weather cost us 5 cents in terms of expenses. and our service wasn't what we would like it to be and it's spoo spooling back up now that mother nature is releasing her grip on us. so we worked really hard. but we were pretty pleased with
the results. >> what's your outlook on pricing, on rates with the better economy and better demand? >> those are all kinds of things when the market is hot, demand is good. that's usually a good pricing environment. we reported 2% core price improvement year over year in the first quarter. we think that was a solid number, better than inflation. what we are seeing is for the rest of the year we'll continue to outpace inflation. >> where is the weak spot? >> there really isn't any uniform weak spots anywhere. it is very difficult to point one that's really growing exceptionally well and it is very difficult to find one that's -- >> so pass the coal problems into the energy? >> we're now into that kind of thing where there is low coal stockpiles, nice winter weather that burned up a lot of coal. coal replenishment was in our top three in terms of growth performance in the first quarter and it looks like that could sustain for a little while for us. energy, our crude oil was down, 18%. but for union pacific we actually haul more frak sand and
pipe than we do crude oil. we're real pleased with that kind of a balance as well. >> that's a pretty optimistic assessment. >> it's been a while since i've been this optimistic. >> as a railroad executive. thanks so much. so check out shares of the chinese internet search company bbaidu, the stock is currently up 6%. they are in essence simply put the google of china. back over to you. up next, apple, the stock of the day. investors certainly cheering apple's results. 7 for 1 stock split that was announced during this show yesterday. what else do apple shareholders want? we'll ask that big one next. it is cnbc's 25th year. what might the next 25 years have in store for how america
director of research and co-portfolio manager at jacob internet fund back with us. is this 5% of your portfolio, apple? >> it's actually 6%. it is our top position. >> you've got to be happy at least with the cash return to shareholders, $130 million. the results on iphone sales and the 7 for 1 stock split. >> yeah. actually, it's all well and good. i love capital returns. shareholders friendly initiatives are great. but the more important things, it seems like apple is back on its game in terms of innovating. one of the things that was most important about the call is that cook was talking about new products really coming closer, pulling the curtain back and showing us some of the things that have long been awaited. it's kind of been look waiting for goodeau. buy backs, dividends, all well and good but we want to see apple see the vision and
innovation that used to dominate the company. >> instead of the financial engineering you'd want to see new products. they are due for a major refresh when it comes to the product cycle. what would you like to see? >> it could be a lot of things. first of all i think we'll see the iwatch. they are not first to the game but like they weren't fir to the game with the phones and tablets, they'll probably come out with something that's going to be pretty exciting. i think it is going to at least for apple fanatics be a big hit and i think wearable computers are something that for the next five years is going to be a really emerging huge trend. other things that could be on the horizon, payments. they talk a little bit about it yesterday and given their ecosystem the fact they have 800 million people using itunes, that's something that could be a big driver of the finances. again this is primarily a hardware company. the more they can move over the software and services the better the margin profile an the more exciting stock and valuation could get. >> what does the iwatch do for
their margins? it is so much a lower priced product. >> depends. you've heard rumors about some pretty high price points. i hope they don't go that route. i'd rather see them sacrifice a little bit on the margins and gain share. but it will be interesting to see. they do a very good job at driving costs down with their suppliers and i expect nothing different when they come up with the iwatch. i expect it would be around the corporate average, mid 30s. >> is something like that enough to move the needle? the company had what? $46 billion in revenue. so does it need more than one product? does it need three or four to really become the growth story again? >> i don't think it needs to be like a growth story that it once was. even if they can do incremental growth, that would be enough to drive the stock higher. talking about a stock that trades around 12 times next year's earnings. that's a huge discount to the market value of the s&p typical multiple. even if you see a little bit of improvement in growth, that
could drive a pretty substantial multiple expansion so you could see 25% expansion just if investors start to look at the company again as a real growth company. >> one frt other things i just want company. >> just quickly here. >> i just want to say is i think this is a huge win for the retail investor. i think the stock split helped to buy what you know. even though it doesn't change the value proposition for somebody who is a new investor to go and buy a stock they're familiar with, i think is a great thing. >> i think they're trying to get in the dow. we'll continue to watch apple. the shareholders of apple. as cnbc celebrates its 25th birthday we're taking a look at how the business world might look in the next 25 years. will banks be like a dinosaur. tackling the financial industry joining us next with
predictions. stay with us. why relocating manufacturingpany to upstate new york? i tell people it's for the climate. the conditions in new york state are great for business. new york is ranked #2 in the nation for new private sector job creation. and now it's even better because they've introduced startup new york - dozens of tax-free zones where businesses pay no taxes for ten years. you'll get a warm welcome in the new new york. see if your business qualifies at startupny.com [ bell ringing, applause ]
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kayla. >> sara, in 2039 personal finance will see some of the usual suspects like mortgages and credit cards. but the way we enter actor with them will be completely -- for instance, we will have credit but not have credit cards. even so, the king pins, visas, master cards will be able to leverage the brands they built to get customers on to the new platforms and technologies currently being built. >> we're seeing all of them pivot quickly to mobile. >> now, that's how you transact. but where you keep your money you'll have dozens of choices. consultants say google, facebook and even walmart will dig their heels into bank accounts. the winners will be those that will be trusted and regulated. >> the tech companies we believe are very reluctant to enter the game because of the regulatory
regime. in the end, deposit insurance is an important element of the trust factor that banks do have. >> so what traditional banks? consultant say alternative money managers will step into the consumer space. unregulated hedge funds, he can promise higher interests. you could see a black stone branch popping up. lending standards will still be strict. peer to peer lenders like lending club. you macmaycon -- may consult th. your fico score will be made up of the social network. the company you keep will be more important.
>> i didn't hear you say anything about visual currencies. >> we talked about that earlier today. not only digit currencies like bitcoin having staying power if they make it through the next financial crisis. but facebook credits, disney dollars, corporate currencies will be able to transact widely in those as well. >> thanks for the look into the future of banking. a whole lot more on cnbc.com. right now on what the business world will look like in the next 25 years. jeff cox is looking at whether wall street will remain the financial capital of the world. what's our panel watching tomorrow? earnings. economic reports. we'll get our final thoughts after the break. at&t business experts can help keep it running... seamlessly. so you can get back to what you love.
>> both. >> earnings are halfway there. apple will continue to build on its gains. >> i want to hear what first earnings call had to say. >> "fast money" coming up in a few seconds here. melissa lee. >> wild roller coaster ride for amazon.com. a few big earnings reports to trade. plus exclusive with the ceo of sun power on the tail of its earnings. >> we'll let you get to it. >> breaking news. amazon's conference call starting right now. the stock, a wild ride. but it is higher right now by human resources than 2.5%. getting a pop on earnings. the new ceo will be starting the conference call. pandora, getting hit hard. is this a buying opportunity. our traders are pete, steve, dan and guy. we kick i