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tv   Squawk Alley  CNBC  March 13, 2017 11:00am-12:01pm EDT

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the street." i'm seema mody. energy stocks are holding on to slight gains, making it one of the top-performing sectors in the s&p 500, this after falling under significant pressure last week in response to the sharp decline in wti crude prices, which are currently hovering around $48 a barrel, a three-month low. names leading the sector higher today include chesapeake energy, southwestern energy and marathon petroleum, all up about 2%. the sector, though, still the worst-performing sector year to date. now let's send it back to carl and the gang for the start of "squawk alley." >> all right, seema. thank you very much! it is 8:00 a.m. at santa clara headquarters of intel. it's 11:00 a.m. on wall street, and "squawk alley" is live. ♪
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good morning. welcome back to "squawk alley." i'm carl quintanilla with jon fortt and sara eisen at post 9. the deal of the day, intel buying mobileye, and shares of mobileye soaring 30%. we'll talk to intel's brian krzanich later in the hour. meantime, the trump white house firing u.s. attorney preet bharara after he refused to resign at the request of the white house. bharara was asked to step down along with 35 other attorneys appointed by president obama. we have team coverage this morning. eamon javers is in eesht, leslie picker. >> no comments across the board this morning from the white house and the department of justice about their reaction to preet bharara's tweets from over the weekend. he had that conversation with the department of justice at
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about 2:30 on saturday afternoon. after that phone call, preet bharara took to his personal twitter account to put out this message -- "i did not resign. moments ago i was fired. being the u.s. attorney in the southern district of new york will forever be the greatest honor of my professional life." then this mysterious tweet on sunday, preet bharara saying, "by the way, now i know what the moreland commission must have felt like." and as you guys know, in new york state, the moreland commission was an anticorruption effort that was shut down, some said before it had the opportunity to finish its important work. so, the question here, was preet bharara hinting somehow that he was involved in some sort of anticorruption investigation that he now would not be able to finish? no comments from officials here in washington. we'll wait and see at 1:00 p.m. this afternoon when white house press secretary sean spicer briefs reporters. surely, he'll get a question about this. we'll see what the white house has to say this afternoon, guys. >> eamon, thank you. of course, bharara's tenure
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colored largely with his experience regarding wall street. let's get to leslie picker in new york with that angle. leslie? >> reporter: that's right, guys, news of bharara's departure was just as surprising for those on the inside as those of us on the outside. sources told me that prosecutors and other employees worked throughout the weekend to get their case loads in order. and separately, i spoke with a former assistant u.s. attorney under bharara, who talked about the loyalty that those currently in the office have for the now former u.s. attorney. >> i think that while the office has a long tradition of people continuing to work after changes in leadership, there's going to be an impact to him leaving, and i think some of the excitement that's associated with preet will certainly result -- certainly transfer into some uncertainty. >> reporter: that was randall jackson, who is now a defense attorney at boyes schiller. he also said that regardless of
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who takes over permanently for bharara, white-collar crime will remain a key focus of the office. >> i think financial prosecutions, including insider trading, have always been a big focus of the office. this is still the center of financial industry, so i would anticipate it is still going to be a big part of the office's profile. but to what extent is going to depend on a lot of factors. >> reporter: while it's unclear exactly who will take over for bharara, uncertainty will still be a key factor in that office in the meantime, guys. >> leslie, thank you. leslie picker in lower manhattan. for more, we are joined by a man who's profiled bharara and wall street sewell timveral times, " fair" correspondent and author of "why wall street matters," william cowan. good morning, bill. >> good morning, thank you guys. >> maybe we should start with why this preet bharara story matters so much. >> i love this story because it operates on so many levels.
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first of all, front-page news in newspapers all across the country, which is interesting. and secondly, you know, you've got preet, who thought he had a deal with president trump or president-elect trump in november. >> went to trump tower. we're seeing the video. >> there you go. and he's told me several times, preet, that all he wanted to do -- because people talked for years about his political ambitions because he's so intelligent, so colorful, so witty, and he's just -- he would be a natural politician, i would think. and so, people talked to him for years about running for higher office, and he kept insisting to me, all he wanted to do was stay at the southern district of new york. that was his ideal job. he never wanted to leave, even after his term was up, and he thought he had a deal with trump in november. he announced it here at trump tower. then we see what happened on friday and over the weekend. so, that's a pretty stunning turn of events. and of course, he is very close to chuck schumer, who gave him his start, and of course, chuck schumer is leading the opposition, i guess, to donald trump. so, at one point, he must have
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thought he could work with donald trump, chuck schumer and donald trump, and i guess that moment may have passed now. >> so, have you begun to do work on why now, what happened, what changed? >> well, obviously, he's being inundated, right, by the media. but i think you can look at his twitter feed, which i think is remarkable, because he, you know, is so careful -- he's always been so carefully managed about his press coverage, makes it very difficult for people to get to see him and to quote him. and now he's sort of going off on twitter, which he's taking a page from trump, which i find immensely amusing. and his reference to moreland, which is quite mysterious. you know, after the moreland commission was shut down, he seized the boxes of information and documents and had that brought to his office. now, i believe he said, more or less, that he had closed that investigation, but the fact that he's still tweeting about it is very interesting to me. >> does it strike you that the trump administration is maybe just breaking things on purpose? i mean, there is a smooth and
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orderly way to do transitions, and they don't seem to be even making an effort. i mean, to call a guy in and say, hey, we want you to stay on, and then say, no, we don't -- to call him, which is a breach of protocol -- the president to call directly, what do you make of that? >> well, i guess trump would say he was hired to break the glass, to drain the swamp, to cause disruption. >> but isn't that what preet bharara was doing, draining the swamp? >> he didn't drain all of the swamp. a big omess in his record is failure to prosecute any wrongdoing on wall street leading up to the financial crisis, and there was plenty of evidence, plenty of whistleblowers. he told me many times, if you just bring the whistleblowers to my attention, i'll take what they have to say and follow it through, but as far as i can tell, he never really did that, because i know a lot of whistleblowers who brought stuff to his attention and he basically ignored it. look, it's the right of every president to appoint -- these are appointed positions.
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these are politically appointed positions. so, of course, most of them resign. and preet just in the conversation with me, he pointed to the one u.s. attorney in maryland who stayed on between the bush administration and the obama administration. he thought he was going to be that guy. he thought he had that deal with donald trump. i think it's fascinating that in the end he did not have that deal. >> what's behind his calculus for falling short, i guess, would be the argument? i mean, his lack of legitimate whistleblowers? hesitation? >> you know, i've asked him that and i've wondered about that, because a lot of us have wondered about that because there was a lot of wrongdoing. and in my book "house of cards" about the collapse of bear stearns, i document a lot of that wrongdoing involving the bear stearns hedge fund managers, which they tried to prosecute in the eastern district of new york but failed. he always said to me, look, we've seen the information, you haven't. you have to trust us. well, to me, i don't like that answer. if he's seen the information and he couldn't find anything to indict people on, then you know, release some of that information so we'll see what he's talking
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about. now, i know that goes against protocol and all sorts of subpoena regulations, et cetera, but he owes an explanation to the american people about why he did not prosecute wall street. >> do you think he'll go into politics? >> absolutely. there's a senate election and a gubernatorial election in new york in 2018. he is extremely witty and charismatic. i expect we have not heard the last of preet bharara. >> good to talk to you. >> thank you. >> on a day like today, bill. we'll have you back to talk about the new book. bill cohan. it's a busy morning on "squawk alley." we'll talk to recode kara's swisher at south by southwest in boston. and pandora's ceo joins us. and the deal of the day, intel buying mobileye, $15 billion. brian krzanich joins us first on cnbc later this morning.
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the president this morning holds a listening session with people he calls victims of obamacare, as house republicans defend their health care plan ahead of the official omb report. there is this week, the debt ceiling showdown, trump's first budget. maya guinness is president of the committee for a responsible federal budget. always good to talk to you. good morning. >> nice to be with you. good morning. >> front page of "the washington post" -- historic cuts in trump budget. i wonder, this has to be something you're happy about. >> well, i'm happy the fact that
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they are scouring the budget looking for savings. and in fact, these savings are likely going to be dedicated to additional spending in the area of defense. and so, i definitely am a big fan of the pay as you go principle -- if you're going to do something, you pay for it -- and let's look through the budget and find where entrenched spending is that we don't necessarily need. if you broaden the budget out and look at the entire budget, they're actually only looking at a small piece of the kbujt. oftentimes we hear about things like earmarks or too many government workers, and that's not where you're going to find the real savings when there are these big pieces like health care reform and the aging of the population that really have to be dealt with. so, at the same time that i think i'm going to applaud this part of the budget that's looking for savings to pay for new initiatives, i'm very concerned about how much of the budget appears to be off of the table. >> yeah, major health care, social security, as we're showing on the screen right now, half of what government spending is going to be this year, yet
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president trump has said entitlements are off the table. is that workable? and does that surprise you in a case where the gop has control of both the executive branch and both houses of congress? they could get something done here. >> yeah, it surprises me a lot, because for many years, as a bipartisan group, we always work with republicans and democrats, and we've heard from republicans for quite some time as they've put forth budgets that would reach balance in ten years -- oh, there's a long list of things that we want to do. a big piece of that has been entitlement reform. and once we get into a situation of having the senate, the house and the white house, we really can make a difference. so, here we are, and it's kind of the moment where the truth is going to come to the surface, and suddenly, we're not hearing much about entitlement reform at all. now, admittedly, that's mainly from the president, who has said he doesn't want to reform entitlements. there are still many in the house and the senate, and perhaps some in his administration who want to, but we need to look at the real budget picture. the debt is on an unsustainable path.
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social security and medicare need reforms in order to make good on all the promises they've made. and so, promising not to touch them not only harms the fiscal picture, it means people who depend on those programs are left vulnerable. so a lot of people nod their heads when politicians promise not to touch entitlements. it actually is doing no favors to those programs. and i do hope that republicans that have made the case, i believe rightly, that entitlements have to be addressed, really stick to that commitment, because now's an important time as the baby boomers are moving into retirement, to address those very large challenges. >> we've been talking this morning about the white house sort of questioning a little bit the credibility of the cbo in anticipation of this ruling, of these results, the scoring we're going to get this afternoon. what kind of strategy do you think that is? do you think that -- i mean, they've put out -- the secretary of health and services, the omb director. do you think the white house can effectively counter anything that does come out of the cbo today? >> yeah, i'm really concerned
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about what we've seen here. and i think it's a cheap trick, because the congressional budget office can never make perfection projections on these huge pieces of legislation on where the economy's going. but here's what's really important about cbo. one, their projections have in many cases been remarkably good and better than a lot of the other estimators, but most importantly, they're unbiased in a town that is so partisan and so political, and everybody tries to kind of create the numbers to back up what they want to say. cbo is well known and well regarded as really putting out the best estimates that it can do, and this is invaluable when we're looking at big pieces of legislation, and particularly how that legislation will affect the overall fiscal health of the country. and so, i think it's very important that we not undercut cbo. it is bipartisan. republicans appointed the current director. there has been no question that the reports they've been putting out have been unbiased and their work really has been good for so long. it's going to harm our ability to put together good policy and
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look at numbers if we use this strategy. so, i'm very disappointed, and i hope that we pay attention to the score that cbo puts out, because the numbers matter. >> although you probably wish that their original estimate of the number covered had been a little more on target. >> well, i think that that is certainly to the point that putting out numbers for massive pieces of health cakacare legislation in particular very challenging. and it depends on how much employers continue to do health care, how much they picked up through the exchanges. those pieces will always be variable. so, the question isn't are they completely precise. here's one thing we know, they won't be, they can't. but what we have faith in is they're not biased in one direction or another, and that's, unfortunately, not able to be trooi true about many institutions that are more political in nature. so, let's keep the nonpolitical institutions doing the best work they can. >> maya, we never even got to the debt ceiling.
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we'll save that for next time. a lot to get to today. good to see you, as always. >> okay, thank you. still to come on "squawk alley," recode's kara swisher live from south by southwest in austin. and later, a first on cnbc interview with intel's ceo, brian krzanich. "squawk alley's" back right after this. what's the value of capital? what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley
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welcome back. pandora officially launching pandora premium today its ondemand answer to alexa, spotify and apple music. tim westergren is here as well as david faber joining us on set. tim, good morning. >> good morning. >> i've been using premium. you gave me a beta build for the past couple days. i've got to say, i'm enjoying it, easy to use. how long does this product have to prove out the value of pandora in this subscription, $10-a-month age, proof out that you can remain independent? >> i love, by the way, easy to
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use. i love those words. that's really a cornerstone of the product. tipping back for a second, we look at the subscription space and think we're kind of in the first generation of products right now. it's essentially 30 million songs in a search box. and i think that while that's appealing for a small segment of the population, i think for most people, it's overwhelming. and no one's really solved the ease-of-use problem and i think that's where pandora sits. we've created differentiated products and we'll bring it to you. we have 130 million quarterly listeners on pandora that we speak to every day. we think that's a huge opportunity and we're excited what we can do. >> how much wiggle room do you have to spend big on marketing? because apple's got a huge budget. amazon can spend a lot. so can google. spotify's got a head start. you guys are smaller. are you relying on your base to upgrade this? are you relying on word of mouth or are you going to spend big on marketing, get the word out? >> well, we have some very interesting, appealing marketing programs coming up. we're very much looking forward to that. but you're right, it starts with
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our listening base, frankly. you know, 100 million quarterly listeners. and keep in mind, these are folks who are listening 22-hour-plus a month, giving us an immense amount of information about their preferences. so when you come to pandora for the first time, pandora premium, it's essentially prepopulated with what you've done before over the years, so it feels like something easy to use, a friend that you've known for a while. and i think we're solving, again, this ease-of-use problem, which plagues subscription services today. so, we can address this audience, we can speak to them in context on a platform essentially for free, so our customer acquisition business is really solid compared to other products. >> do you have specific data that you can share that shows the value of your music genome project the way that you have sliced and diced and tagged music to provide better recommendations, versus the rest? i mean, it's one thing to say that you can do it better, but can you show that the consumer cares enough to power you past the others? >> well, i think we've kind of
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shown that, frankly, for the last 10, 11 years. pandora's maintained its audience in this last year with a radio product in the face of a lot of competition, frankly, a lot of free, ondemand products out there. still, pandora listening is growing every month for every listener, and that's based on this unique ability we have to pick the right song for everybody, the personalization piece, which is the foundation of pandora, and that we are just uniquely good at. and we're taking all that, that expertise, and this immense amount of information, and now putting that together in this premium product that i think is going to be unique. you know, for example, on pandora, for playlist creation, you drop in one song into pandora, and rather than having to kind of hunt and peck your way to a full play list, you hit the magic wand button on pandora, and bang, we roll out 5, 10, 15 songs that are perfectly matched for you based on that song and your personal preferences. it's very unique on pandora. >> mr. westergren, in speaking to some of your large holders, they seem to believe that the company may face a funding gap
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to invest in initiatives like the one we're discussing here. is that the case? will the company need to raise money? and if so, how much? >> no, no. you know, we came out and said, we intend to be profitable this year. and again, we have a foundation unlike other businesses, there's a profitable foundation. only pandora's monetized and made money on free listening, the radio part i'm speaking of, and upselling to that. it's a nicely diversified business model for us. so, over time, as we move listeners up this rpu curve and the business gets more attractive, we have a foundation in advertising that's profitable. so it puts us in a unique position. >> so you don't need to raise new money? because i continue to hear that the company has been considerable raising as much as $250 million in what we call a p.i.p.e., private investment into public equity. that is not true? >> you never rule that out, right? as you look forward to your business and opportunity, as we grow and see a chance to do
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that, we will always consider that. we have always considered that. we've done it before. so, it's a possibility, but we do that on a position of strength, you know? as we see the product grow and see opportunity to accelerate the business, we'll certainly take advantage of that, which i think our shareholders would want us to do. >> the company recently extended the window by which shareholders are nominate directors. that window closes on the 17th. it's my understanding that they may name somebody to replace you. is that a concern of yours at this point and what are your expectations when it comes to your largest shareholder and their willingness to mount a proxy fight? >> look, we're in regular contact with all of our shareholders. we always have been. but when i walk into the office, there are four things on my mind every day, our listeners, the music industry and artists and shareholders. we're focused on that. and today is a big moment for us. a lot of hard work has gone into this product the last couple years, integrating, building with the audio team and
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launching what we think is a unique product that i think is going to really make waves. >> to jon's point earlier, pandora's certainly -- listen, i use it, i love it! but the fact is, many people say you simply don't have the scale to compete with the likes of google, apple, not to mention verizon or at&t or other people who may be out there with offerings, amazon, of course, and that you ultimately will need to get together with a partner to be bought, perhaps. you simply don't think that's the case? >> well, it's funny. in a way, i think we've seen this movie before. 10, 11 years ago when we launched internet radio, a lot of folks said the same thing. aol, microsoft, yahoo! had large personalized radio products with big distribution. we were the newcomer to the space. but we've built a much better product and here we are years later, the king of that category. we just think we've seen this before. and again, we look at the subscription space right now and think no one's done it right. it's the first generation of products, has 30 million songs in a search box. they're not easy to use, and
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only pandora can do that right. so, we have a lot of confidence about our ability to compete in this category. >> and tim, give us a timeline. the app is the first out, but when will you have a complete rollout of premium? when will it be available to everybody on all of your platforms? >> yeah, so, as we do with all of our releases, we essentially flow this out to listeners. and as the product is deployed and people are banging around on and based on the robustness, we'll accelerate that. so, in the coming weeks, we'll get to full scale, and then we'll really pit the pedal to the metal. >> all right. well, i wonder if you think that this year poses any particular challenges or opportunities, seeing as we've got the rollout of a new phone from samsung that we're expecting in just a couple weeks, and of course, this next iphone is expected to turn some heads with a new design. that can have an impact on application downloads and that ecosystem as well. is that something you're looking at? >> yeah, look, we love new products that come out for distribution.
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pandora's a dominant player across all connected devices. obviously, smartphones are front and center, but connected home devices, the amazon echo's been a great product for us, connected blu-ray players. pandora really benefits from all that kind of tailwind. the more connected we are, the more connected cars are, the more pandora usage there is. so, we are the most-used application on pretty much every single one of these devices. so, the day we hear about something new from samsung or apple or what not, we celebrate because we know it's just another pipeline for pandora to reach consumers. >> tim, there's been no shortage, of course, of speculation involving a potential acquisition. people have asked sirius and its controlling shareholder liberty media many times whether they're interested. they seem to go back and forth. and then greg mafae says, well, if it was 10 bucks a share, we might consider it. are you talking to sirius? do you find comments like that insulting? >> the joys of being a public company. look, i'm focused on a small set
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of things and operating ceo. building a great product for listeners, really partnering with the music industry, making this a great platform for advertisers. we're going to do north of $1 billion in revenue this year and we are unique in that regard. and of course, shareholders. that's front and center for us. and i think this day is a big moment for us. we're dramatically expanding the addressable market that pandora can go after, and i think we're doing it in a unique way. and it reminds me a lot of what it looked like 10, 11 years ago when we launched a new product. we know how powerful this is, and we think as listeners get their hands on this, they'll see this is the best product on the market and it will be deja vu. >> to the point, i guess, i've been asking questions about, though, if the company doesn't deliver some sort of investment from a significant investment and/or potentially a deal, do you think there's going to be disappointment amongst your shareholder base, or do you think they will focus, as you want them to, obviously, on this new product and your growth potential? >> look, i think it's on us to execute right now and we've done this before. we've been here before. so i'm confident about pandora's ability in this space.
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again, these are early days in the subscription and music, and i think listeners don't know what a real premium product looks like yet, and that's what pandora is yet, the first premium product to hit the market. it takes this enormous catalog of music, and it makes it addressable, navigable, intuitive. pandora's product is easy to get around. when you launch it, it has so much information about you as a listener, there's no cold start problem on pandora. keep in mind, there are north of 112 million listeners on pandora who have created at least four stations and given us more than 12 thumbs. that's a starter kit unparalleled in this case. >> i'm one of them and i love my stations and i love putting it on shuffle and listening to them. it's free and i'm happy to listen to a couple ads each hour. why bother converting to a paid service? >> well, that's the beauty of our business. that's fine with us! if you like the ad-supported product, we make money off you as a consumer and we have the opportunity over time to present you with these other opportunities, but we don't need
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to convert our entire listener base. if we can convert a portion of it, it's a really good business for us. and that sets us apart for this business. it's not a typical premium business where you have a funnel of free users that you lose money on and your job is to as quickly as you can funnel them into a paid product. that's not pandora's situation. we make money on you as a free listener and more money on you as a subscriber, so we just want to find the right spot on this curve for every consumer. >> so, i'm going to ask you to put a fine point on it as we close to kind of put your chips down. what do you think is the single most important factor or feature that's going to determine success in this premium market? >> it's a great question, jon. you know, this may sound boring, but it's easy to use. it's ease of use. >> all right. >> being able to launch this product and have it nail the listening experience for you with very little effort, i think that's the genius of pandora, and that's what's going to set this product apart.
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>> all right, tim westergren, founder and ceo of pandora, joining us with the launch of pandora premium. thanks for being with us. >> you bet. my pleasure. let's get to sue herera and get a "news update." good morning again, sue. >> good morning, carl, once again, everybody. here's what's happening this hour. a lot of news out of the middle east. an explosion in kabul killing one person and wounding at least eight others. a government spokesman said it did not appear to have been a suicide attack. no one has claimed responsibility. explosions visible across the western mosul skyline. a senior coalition official says the neighborhoods controlled by isis are now completely surrounded by iraqi forces. pro syrian government forces captured a power station south of palmyra from isis, according to syrian state tv. pro government forces recaptured palmyra earlier this month after isis militants withdrew from the ancient city. and take a look at this. this may be in our future. that's a house on the banks of lake ontario in upstate new york
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entirely covered in ice, thanks to strong winds and frigid temperatures. a major nor'easter expected to dump up to 2 feet of snow in the new york and new england regions starting tonight. that's the "news update." hopefully, we'll all be here tomorrow, if we can all get in. carl, back down to you. sara? >> yep, we're going to sleep under the desk if we have to, according to cramer. >> yes, absolutely! got my snowshoes ready. >> sue, thanks. normally at this time we'd be wrapping up the european close for you, but due to the u.s. daylight saving time, markets in europe will actually be closing one hour from now, 12:30 p.m. eastern. they have yet to catch up with us on our time zone. the european close will return to its normal time when europe turns its clock ahead march 26th. for now, though, european stocks are hanging in there, doing better than u.s. stocks. the german dax is up more than 0.2%, ftse 100 up 0.4% and the euro stronger again the dollar. when we return on "squawk alley," the ceo of intel on his company's $15 billion acquisition of mobileye.
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it is the deal of the day. and his stock is down on it. "squawk alley" will be right back.
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be its fourth straight, while the dow and the s&p 500 would be down for the first time in three days, if current trends continue. carl? >> all right, seema, thank you very much. when we come back, a first on cnbc interview with intel's brian krzanich on this mobileye deal of the day. we're back after this. what's going on here? you know how ge technology allows us to fix problems before they... they slow production, yeah. well, no more catchy business acronyms. wait, we don't need to smooch? i'm sure we can smooch a solution! we just need to "hover" over the candice, problem until... just let it go... hey, sorry i'm late for team building. smoooooooch! that felt right. what's wrong with you!? he's so trusting...
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i'm scott wapner. coming up today on "the halftime report," the three places some strategists say are the best places to invest right now, and why the u.s. is not on that
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list. plus, what the likely new head of the food and drug administration will mean for pharma and biotech stocks. and the sectors to buy and avoid before this week's 23fed meeting. "the halftime report" starts at the top of the hour. sara, tea sooe you then. >> see you then. thanks, scott. this morning the president is holding a listening session with people ha calls victims of obamacare. kayla tausche has an update from the white house. kayla, good morning. >> reporter: good morning, sara. that meeting is still going on between the president and about a dozen attendees from largely southern and midwestern states, mostly swing states -- wisconsin, ohio, georgia, colorado, arizona. they're telling personal stories about how the affordable care act has affected them, their businesses, their families, and their outlook on the american economy, telling very personal anecdotes about this as the president tries to rally the republican party around this new health care bill put out last week that the administration has thrown its full weight behind in what this week is potentially a
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make-or-break week for the legislation. because of the cbo score that is expected to come out this afternoon, strategists here in washington have said it best, that score could prolong the legislative process. at worst, it could kill it entirely, depending how much money is at stake. the budget committee is currently slated to meet on wednesday to discuss that, and then the white house's budget will be made public on thursday. the president himself will be going to nashville wednesday night and sort of a stump speech, a campaign rally-style event to try and coalesce support on the ground behind this bill as it faces continued opposition. and if you need a sign of just how important a priority health care is right now for the white house, all you have to do is look at the senate health committee. that hearing on wednesday, they were supposed to have a hearing to discuss the labor secretary nominee, alexander acosta. that has been delayed until next week so that the chair of that committee can join the president in his home state of tennessee
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to add some additional weight behind that event. so, we will see what happens this week and bring you any news that comes out of the white house this afternoon. guys? >> yeah, that is the priority right now, health care on the agenda. kayla, thank you. kayla tausche at the white house. after the break, intel's ceo joins us right here on his company's $15 billion deal to buy mobileye, announced this morning. brian krzanich, up next.
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intel announcing today its intent to buy mobileye for $15.3 billion. it's an israeli company known for self-driving car technology. joining us now at post 9, first on cnbc, brian krzanich, ceo of intel. brian, welcome. >> great to be here. thank you for having me. >> lots to cover, but mobileye, it hit a recent low in december. it was trading about 10 bucks a share, less than it is now. tell me about the timing. why this deal? why now? >> so, we think it's critical now. you know, the strategy around this deal was really being able to provide end-to-end solutions, a common platform for our customers around autonomous driving. it's important now, because if you take a look at what you're
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doing, talking about car models in 2020, 2021, and so we need to get in there, we need to get this platform developed, brought to them and have that confidence so that we can really influence the real start of autonomous driving in that time frame. >> qualcomm did a big deal for nxp, is in the process of that, $38 billion around. nxp's got some radarlike technology as well as other technology in the car as well. why haven't they outflanked you here? >> because it's really a different space. if you look at the space they went after, they went after more of the censors, and i'll call it the edge devices that aren't heavily compute. what we're doing is going to intel's strengths, which is the heavy computing. and you can think of it as two brains inside an autonomous car, the mobileye brain, which is really looking out and seeing the world and adopting, what is it, a car, a stop sign, that. and then it feeds that into the intel zeon and zeon family,
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which then plots the car's path and actually drives the car. so, one's your eyes and one's your brain that's driving the car. and we've really said that's the place we play best in, where our silicon technology, our architecture and our knowledge best plays. >> is this really a car play, or is it a reality play? because you've got real sense technology in pcs now. you've been pushing on this idea for a while, not just in the car, though the car is, of course, important. is this led by the car? because in your announcement, you focus very much on the car -- 4 terabytes of data are going to be coming out of the car in three years, every day. >> if you look at our bigger strategy, the computer vision, whether it's a drone or robot or a car, is going to become an important set of data. and so, you saw an acquisition, for example, targeted towards the low-end devices, and mobileye is targeted towards the high-end devices.
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but they'll be in more than just cars, like the spotting cameras on helicopters, they'll be in high-end drones, they'll be in high-end robotics as well. and so, it's really about computer vision and how computer vision is going to change the world. in order to have true artificial intelligence of a mobile device, you have to have computer vision. that system has to be able to see the world in order to be able to interpret the world and navigate or work within the world. >> you mentioned 2020. the press release talks more 2030, $70 billion business. viewers have a million questions about the timing, when this truly becomes a mass market story. what year is that? >> so, you know, i think it will always go faster. you know, we always think that these transitions are going to take longer, but as people -- i've driven -- i did a six-mile drive in an autonomous car with my wife at ces, and we both walked out of the car going, we get it. we know why this is so valuable. so, i still think maybe 2023,
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'24, somewhere in that time frame, you know, you are going to see many of these on the road. >> does there need to be some federal harmonization of municipalities? states? how is this all going to get hammered out? >> again, because we have this common platform and solution, we can actually help regulators. regulators want to know how do we know an autonomous system is safe to put on the road. we can work with our own technology at our partners to develop test models. think of it as a computer playing against another computer in an autonomous game, and so when you bring your software and hardware model together, we can compare it against that game and make sure it passes. then you know your system is safe to go on the road. we can bring that to market, to the municipalities and governments and say this is a way you can ensure that these
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systems are safe to hit the road. it's when those kinds of standards get built that i think this will actually take off. >> i wonder where we are in the investment cycle around auto technology. i mean the takeaways for this deal is that it's certainly valuable and will's going to be an increasing amount of partnerships like this one. >> yeah. i think first we think this differentiates us. it's end-to-end solution. everything we've got from the data center all the way out from the camera to the edge of the card, every component, our fpas. we've been thinking about this. the 3-d cross point. i think, yes, this market as we go through the next year or two continues to grow. >> have you convinced investors? the stock is down a little over 2%, biggest loser in the dow. mobileye is soaring. >> what investors will have to see and will have to spend some
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more time, it's a big deal and people are trying to figure out how this fits into our strategy. we need to spend more time showing them how this plays out. you know, ha -- we believe that the next data revolution -- you know, we all talk how data has shifted the world. the data on your cell phone kind of knows where you are, what you're searching, the next revolution will be visual data. those cars see the world. as we're looking for things, as visual data becomes important that's a new whole business and data business. >> i'm going to be blunt. intel doesn't have the best track record when it comes to m & a and they tend to buy smaller things. but under your leadership they bought altherr rah. why is it going to go better now
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than it has in the past with mcafee and basis and some of those other things? >> i'll be a little selfish here. it's gone well under me. we've gotten another partner an gone outside. we think that's a strategic movement altera has done well. having clear measure ubls within the first six to 1 the months. annan who runs mobileye has been running well. he's report directly to me and we have clear measurables over the year. once we get through the regulatory, we'll make sure
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we're making progress. wheel use the same recipe to make sure it's successful. >> with regards to autonomy and mobility, between tech companies and car companies, who has the edge. >> well, so we look at it as partners. just like what we do -- i think that's one of the strengths we use. we don't come on as a threat. we come on as a known technology partner that will provide a solution. they don't see us as trying to hoard the data or take the data from us. they know we'll build a partnership so we'll both benefit from the data, the technology that's going to be delivered. the way i look at it is just like a kpaerp has car models, they're going to look for a consistent platform that they can build cars from a low level of etan nation to a high level and that common platform that can provide services on top and not have to have different services based on the different
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models that they're selling. >> is that a change because intel and microsoft used to talk about the pc in the car. my sense is the car companies were worried about getting turned into dell, into hewlett-packard, into gray box makers with your technology inside. are you sure they're nothing going to look into the technology and who's got the power inside? >> sure. that's my job to convince them that it's not. what we're going to do is build a common platform so they don't have to do the hard engineering work. we want to build a computer that can interpret the world and manage itself around the world. we'll build a kmob set. think of it as a layer. so what we'll do is provide them that engineering baseline from which to build from. >> i thought it was interesting, brian, very quickly, that you used overseas cash because of all of the conversation about
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american companies and american jobs. this was around overseas deal. >> what we're going to do is go where the technology is. this was in israel. if you take a look at their market share today and where we see them going, we went where the market leader was. we were able to use overseas cash. if you take a look at many of eu our others, you look at it there, it's 70%. >> brian krzanich. thank you for joining us on cnbc. >> dow is down 20. "squawk alley" is back after this.
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vision and how computer vision is going to change the world. in order to have true artificial intelligence of a mobile device, it has to have computer vision. it has to be able to see the world and navigate and work with the world. >> intel's brian krzanich with us a few minutes ago trying to help viewers understand the next
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generation. computers need to be able to see. >> the car's going to be the most crucial point to happen but certainly not the only point. intel trying to insert itself including nvidia and qualcomm. >> it ups the value for am ba really la and xilinx who are trying to get into it as well. >> good stuff. let's get to scott wapner in the half. welcome to the halftime trade. why they say your money will work better elsewhere. let's begin with the markeds. dow and s&p are negative, mostly flat. nasdaq getting a bit of a bump. but josh, what do you make of this call as people start to look for value elsewhere, not th


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