fourth-quarter earnings estimates, but forecasting bottom line for the year on the higher side of analysts's to mince. they're expecting revenue to grow due to customer loyalty expanding their footprint on the east coast. that is it for in the markets. i will be back with more. in the meantime, market makers starts now. >> live from bloomberg's headquarters. this is market makers. fail. twitter shares are cratering this morning. it is slowing and actual use is slowing. the ceo says he has a plan to turn it around. >> island of debt.

puerto rico is in a bind. they cannot declare bankruptcy. >> jay leno says good night. the host stepped down after 20 years and more than 40,000 jokes . all of them were ok, i guess. who did he make the most fun of? >> welcome to market makers. >> he made the most fun of george bush. remember, there is a huge development going on. a cayman islands attracting financials giants while the country is tumbling. >> i am looking to jimmy fallon. >> so true. so true. >> something is wrong with twitter. twitter is taking. the stock is down 20% after an earnings report that left

investors stunned. we'll explain why with cory johnson. what is the big concern with >>tter right now? well -- well, look, this is about a stock and not about a company. bloomberg,arlier on the short cells are keeping the stock from falling further. companygoing on in the is very interesting. we see limited growth there and the user growth is not that strong. in fact, all of the user engagement numbers came off week. just the user growth alone was less than six percent. it is week. 5.9% growth, you know, think about all the publicity that twitter got in the last quarter in the united states alone. you had growth of less than two percent. that is disconcerting for a

business that is smaller than other companies, like facebook. twitter might be a competitor. it looks like they may be a competitor to linkedin. >> have they reached a saturation point? we dot this shows is that not know how many. using twitter. toy made significant changes the way the timeline views are seen. the added pictures and video. you would think that that would make it more mainstream. the hard-core twitter fanatics may have decided that they had enough it did not enjoy the changes. attraction ofl twitter is that it forces to limit you to 140 characters and brevity that not everybody appreciates. you can see that in the results reported yesterday. you can see the revenue per use. it is so low that they reported in the 1000's.

revenues for a thousand timelines, because the number is so tiny -- , revenue per use? i am a user. where is the revenue? what am i buying? ads.e marketer is buying stephanie spends inordinate amounts of money on ridiculous things and marketers want to get stuff in front of people to sell that. it is a legitimate model that works. i think that we see that there are new ways to monetize that and the problem is that it is not growing as fast as it might. >> for one second, i read to the financials and the transcript of the conference call. i listen to yesterday afternoon. worries, he's talking about the slope of the growth curve. you know that everybody at

twitter hates the look of that chart. they seem to be struggling with ways to build user engagement. there are people who like twitter. i love twitter and you love twitter. they have 200 40 million users. how do they get new users to show up and like it? the news users -- the new users seem to be bewildered or disinterested. >> when you listen to the conference call, he sounded very demonstrative and certain and strong in the town. the words coming out of his mouth were not positive. some of the references i got disaster.call was, >> you do not come out of a conference call in good shape when you refuse to answer the first question about user growth. >> the numbers were not good in the analysts were hoping to see explosive growth in the quarter. the stock phenomenon is limited.

some people thought they had to own it because this could be the next big growth thing. they found out that it was not the big growth thing and it is still a young company that has a great future in billions of dollars in the bank thanks to a big ipl. they have a lot of growth issues to deal with. argument to be made that they could have been overbought. in the year, equities were ripping and everybody was chasing it. could you make the argument that people wanted to own anything they could and it didn't have to do a twitter's fundamentals? >> i agree with that. look at what happened afterwards. there was an appetite to buy this thing. i think it was a wall street phenomenon and not a business phenomenon. felt likemanagers they had a lot of facebook and had to have a little twitter. you own some twitter and short some linkedin. it is a market phenomenon and

not a business phenomenon. clean and we did not have an issue with zynga. they changed their accounting rules as they went to the ipo to make it look like they had more profit. or, like groupon. the numbers were clean. they were what they were. after the ipo, a lot of people on wall street and beyond attempted to project growth that was not there. isthe stock is down 20% and safety safe to say that the honeymoon with investor is over for the moment. we will continue the conversation next hour. editor,our bloomberg cory johnson. talked about the importance of twitter and how valuable of a company it was. everybody who said that to me was not a twitter user. >> he made a valuable point. the revenue per user is growing

and twitter has a cute monetization opportunity, like facebook. users, you50 million can still bring a lot more money out of people like you and me. this is not over. threeyou like coffee? mountain coffee is having a better morning. coca-cola is buying a 10% stake in the company that makes the keurig cup.-- i know david i heard -- einhorn is following the story. >> getting more money out of people. it is not enough to buy hot beverages from the machine. they want you to get the cold beverages from them and make your own soda, your own juice, what have you, through a new kind of machine. a cold machine that will be out in 2015. coca-cola will be the products

available. this is huge for green mountain. they say that what makes the machine -- >> will i need a second question mark >> this is what is unclear. one analyst said the initially, it would be a second machine and eventually, you have one we'll have a hot side and a cold side. you will have both things and it will be one machine. there is a saturation point. >> both coming out of the same nozzle? a i was hoping you are not soda drinker. >> i am not a soda pop drinker. >> it is great for green mountain. >> sure. that is the unanimous approach to this. they get the coca-cola product there and it is one of the biggest brands in the world. they leave the door open for other brands on the platform. win-win situation.

it is reminiscent of other deals i coca-cola has made. they initially by a small stake in a smaller company, like honest t/ . the reason we're seeing a pop is because some are considering the possibility. sodae seeing a plunge in stream. now, there is competition. the soda stream shares are up sharply. there are some analysts -- cvs keeps on the track of not selling any vices, we will have to have coca-cola at home. the notes that i have seen say it is a small possibility. you are not getting the precision from soda stream that you might get. you have more flexibility when you make soda through a soda

stream. >> i like flexibility. when i use my soda stream, i do not like it. i do not know how to make coke. >> that is why you have to stick with the self-serve. >> it is an on fun drink. >> seltzer is the best. >> the latest. when we come back, we'll talk about another. kman is getting support. we are speaking to -- >> the lego empire gets bigger. a new space for legos. we are streaming on your smart phone.

>> welcome back.

ally withn has a new herbalife. thatup supports the claim herbalife is a pyramid scheme. executives is the director. he is with us now. ryan, why this and why now? we learned about this a long time ago. why are you getting involved at this point. >> it has come to our attention 60%-80%where between are latino and we did not know that before. and we heardtested that. we were very alarmed. you look at the compensation and 80% of those distributors make absolutely nothing. only one half of one percent make a living wage stop that is disconcerting to us and we want

to help protect those latinos. now that we have, we need to make sure that these latinos are protected. >> did you learn about this? did you get this information from mr. acumen? >> we did not. we got this from herbalife. they told us that safety percent of their distributors are spanish. they made statements that with english-speaking latinos, that is 83% in the united states and an incredible penetration. way over the number of latinos in the country. the statement of gross compensation came from herbalife. we are not paying attention to what bill ackman is doing. we are focusing on what is happening to the latino distributors. they are making nothing. 80% of them are making nothing. 99.5% of them are getting less than the living wage. this is probably the biggest scam out there.

said that you're not paying any attention to what bill ackman is doing. as your organization had contact with bill ackman or any of his employees? >> we have had contact with consultants of bill ackman and they have approached us. they have hired every latino between the two of them in washington, d.c. >> what does that mean? >> everybody needs to be clear. contact between you, anybody in your organization, and bill ackman, himself? >> absolutely not. -- >> no direct contact no direct contact with herbalife management? >> i have had direct contact with herbalife management. you may know this, they have provided us a statement that

says a number of things. you say your organization has been making ill-informed public declarations and they would welcome an opportunity to educate your group. i'm curious to know how you would respond to the notion that and thatll-informed you have referred -- you have refused the offer to educate you. >> out declarations are coming from them. it is their statistics that we are using. would like to get that information from them. i have asked them for half a dozen times for that information. they have refused to disclose that. i think that is the most aportant question that potential entrepreneur can ask this company before taking advantage of the business opportunity. they do not disclose this information and that is a very revealing. >> you are not.

you are not. you are not. sorry. you are not saying that herbalife is a pyramid screen -- pyramid scheme. >> our main issue is that latinos are being recruited into a fraudulent business opportunity that does not really exist in a vast majority of them lose money and, not only that, the money that they lose funds herbalife's offense. -- profits. latinos in the united states, most of them are undocumented and are of low income. they are providing a revenue stream for this company because the majorityes are of the sales that this company is making. sells -- tells us that 73% of the distributors do not want to sell, they are consumers. we find that fraudulent. on the second question, with

three times, we have gone to the conferences and met with them. >> what did you think of them? interested in this company when i first met with them. i realized that these people are not telling the truth and that's they are trying -- and they are a opportunityte for latinos. most involve the company will lose money. so many of them are hispanic. i thought it was dishonest and they kept -- i kept asking how many people are in the downline. they told me three levels. according to the literature, you can have unlimited levels in your downline. >> who did you meet that you thought was a liar question mark -- liar?g

>> i met fleming. officials.other i met the pr person. i do not have all the names off of the top of my head. i have met quite a few. they have said that have not gone to meet with them. i flew to l.a. to meet with them. their dogosed to do and pony show and all the different things that they wanted me to see. see the nutrition and -- time,ore we are out of what are you asking the government to do? we have not talked about that. >> we are asking the government to execute the law. the federal trade commission operates off of section five of the federal trade commission act and it says that if you have a company that is promoting a fraudulent business opportunity and omitting facts, like what is the average compensation for a distributor, if that is the case

and, that results in a material action by consumers or distributors, they have to enforce the law. that is exactly what we heard from the ftc yesterday. if you do that, you bend the people intou trick a business opportunity that does not exist, a law must be enforced. we are asking them to do what the mandate is. and show thatw when somebody promotes a business opportunity, it is a real one and they are not being defrauded. >> we have to leave it there. -- thanko much of the you so much for joining us. theexecutive director of league of latin american citizens. last tonightleno's show. can you believe it? we are going to look. that is coming your way.

>> is 26 minutes after the hour and bloomberg television is on the market. we are taking a look at where stocks are right now. we are at a session high. the s&p 500 is up. the dow jones industrial is gaining 133 points. before we head into tomorrow's january jobs report from the government. the consensus is for a gain of 180,000 jobs for the month of january. we are focused on earnings and we're two thirds of the way through earning season. we are looking at shares of gm, america's largest carmaker and they missed because of oversee pressure. is losing 1.6% in the time

frame. the restructuring went into the prophet and they lost money in asia. we will be back on the market in 30 minutes. market makers is up next when we return.

>> $70 billion of debt and an unemployment rate of more than 15%. it is the mess called puerto rico. is theremics editor all day and he is trying to get to the bottom of it. what should investors care about , let's put it that way. what you have for us? >> this is a story of easy money.

advantages for companies that would go to puerto rico. and had another tax law they had earnings tax-free. manufacturing flooded into puerto rico. sold ine top 20 drugs the united states were made in puerto rico. that let the government owe on a big spending binge and they kept increasing the size of the government sector. aey hired more people and did lot more spending. to do all that, they borrowed. we saw the economy go downhill and some of the tax breaks were taken away they could not pay their bills and they borrowed again. there is a pile of debt they have right now. and the country is at a point where people are saying, with

interest rates where they are, it is very hard for them. government need really do. the governor said it is impossible for them to default. it does not matter. if you are bankrupt, you are bankrupt. >> they're finally walking the walk and they are making significant budget cuts. the problem is that the economy is in the hole. revenue and you have an exodus of puerto ricans moving to the united states because they cannot get jobs. they have a very high crime right -- crime rate. the government intensified their borrowing and the overall that is about $3 billion.

they have to start cutting and they are doing it. they are not doing it fast is to blame here. is it the government that enabled the sale of the debt or the investors? >> it is all three. some of these situations are what all companies find themselves in the. you have a situation and people try to take advantage of it and not develop or diversify their economy. you think it would be huge there. it is only seven-10% of the economy. they started to pull back. privatization going to be the answer? drama around it. it became the right idea. it seems like every time there is a new administration, they

are revamping the game plan. >> privatization is one of the answers and they did so off the airport. that contributed airports -- that contributed revenue to the country. there is not infrastructure that you can do that with. politically difficult. they need to cut the size of the government payroll. when you do not have jobs available, that is the next step. he says he can bring down the heget deficit next year and is not promising any and -- any layoffs. they are selling off for folios and you have people .uying up hotels at this point what happened to native capital? >> there is not a lot of native capital. cleaned their balance

sheets and do not hold a lot of greek and that. you can pick up on 60 or 70 cents on the dollar. if so, you will probably get a reasonable recovery on that. after the s&p cut their credit rating this week, 18 down and people feel that we know that the bond is rated by the price. you can go when. there is talk of getting through this year and the deficit. ands at a very high price that may happen. people are talking about a 10% coupon on that. that is an admission of failure. that, the rating have some hope. >> just some of the big it's in puerto rico.

>> if there is a default, it is a widespread problem. >> thank you. he gave us the real deal. >> only come back, you've heard of legos and the amusement park. what about a lego movie? we will explain. >> i'm going.

>> welcome back. the movie opens this weekend. i will be there. lego has seen enormous growth. we have a look back at the company's eight decade history. >> lego is the most popular name in the world.

beenons of pieces have made since the first were made in denmark. this is made the company the second largest company. family, thed by the founder and the creator of the brand name. it means lay well in danish. after carving wooden planes and buses, he bought the first plastic machine in denmark. made multicolor bricks that snap together. the design is an enduring success. any lego brick made after 1958 will work with pieces sold today. after suffering a major loss in 1998, the company bounceback by adultsng to girls and

who are fans of legos. the prophet was better than 2007-111. there were more lego people than real people on earth. movie begins this weekend and brings many characters in the lego universe to life. it has taken the company 82 years to get the spotlight themselves. doeseputation like lego not happen overnight. it is painstakingly builds. -- built. brick by brick. >> who doesn't love legos? have been watching bootleg youtube lego videos for the last six years. came tohow this movie pass? >> this is a culmination

of 15 years of dabbling in hollywood. there is a celebrity universe. they did not have names or back stories. in 1999, they did a deal to make star wars lego and they realized it was such a hit that they could team up once or twice a year and do legos based on television shows. makingabbling and entertainment. it is a $65 billion blockbuster. is this just aee brand unto itself. there are 17 goal lines coming out with this movie. lego linese 17 new coming out with this movie.

what they did was partner up with warner bros. and got a lot of control over this movie. they wanted to reflect the values of legos and not to just -- thedvertisement advertisement for the company. >> they do not need to spend a lot of money. look at me. i know i am going. is this just a cash register? not even my husband. just so low. >> it seems like a total no-brainer. the hardest part was getting lego to use their names. when warner bros. approached them, i was looking at the financials. they are a private company. >> they are crushing. >> they are crushing. >> why not? greed is good. can haveone when you three. >> legos compass group -- the

512-year-oldrs are kids and you need teenagers. >> look at pixar. they are springing. >> is a good song. >> tom was a professional musician at one point. able do not know that. star?u a rock you are a rockstar. >> always a rockstar. >> some of the humor is a little more edgy than lego wanted. figure toa lego mini sing. when they tested that, lego did not want that and they took it out. >> scandalous. like a love scene? >> exactly. they cut that. ist of the main characters played by will arnett and is incredibly funny.

he is incredibly jerky. -- it isn's toward geared toward teenagers and adults. they have incredible brand awareness in asia and other parts of the world. >> what you know about the ways the refuse and profits are being distributed between warner and legos question mark >> basically, legos kept all of the licensing rights and license out the name. >> the upside it flows to warner bros.. >> yeah. a lot of it. the romance of legos took a long time. the producer of the movie went legoland.d he went to lego factory in the lego museum. basically. they want to lego competitions. they did everything to convince .egos that they were merged

they were going to be good stewards of the lego name. they made this product. i think both sides are pretty happy with this. >> they will be even more happy when kids by the product and the dvd. >> collectible figures based on the movie, yeah. but all right. thank you for joining us. who doesn't love legos? everyone does. >> i agree. jay leno is hosting his final tonight show. i love this question and you will love this answer more.

>> this is market makers. comes down for jay leno. he hosted the tonight show for two decades. there is a quick break when conan o'brien took over

temporarily. jay leno will be succeeded by jimmy fallon. we are in l.a.. the tonight show is moving from los angeles and back to new york city. huge business story. lego out and you add n, you get leno. leno has been crushing it. in no other show has come close to that and you are right. the show goes back to new york. i think the reason for them to do it right now is because they have the olympics coming up and msnbc -- nbc has a great platform. they can show some great numbers and say that this was the right move for them to make. there are still a few months leno's contract and there is an awkward time that is happening right now that shows up a little bit in the leno

monologues. leno'sexactly is jay audience right now. i think about what we're all the and i see him time. he has great skits and you watch them on youtube. who is in that audience? >> hank. you know, i don't know what he is going to do? going tonow if he is watch fallon. what jimmy fallon has is the ability to be part of the social conversation and have video views that are great and maybe generate advertisement for them. you're talking about a franchise that is ringing in coast do what hundred $50 million in advertising revenue. million in advertising revenue. they say, look, the younger audience is what we combat,

ultimately. if we make the transition, it will be a better way to go. that is a fair question and the average viewer for leno is 58, same for letterman. >> the average viewer for jimmy fallon is 52. it is not that much younger. >> yeah. >> that surprised me. >> i think, to what stephanie is saying, do people tune in at that hour for something like that or do they want to watch reruns of the family guy. they can get that on adult swim. that show is able to get good ratings at night and they are grabbing a lot of the 20-year-old. the way that you measure the success of a show has changed. love people can record programs, as well and nbc is hoping that if you measure a show over a

seven-day stretch, maybe because jimmy fallon does more skits that are not tied to the news of the day and what he discusses in the monologue, people want to see what jimmy fallon did with justin timberlake or some other celebrity and the dancing naked. maybe -- paid fores nbc get that or monitor that? i watched jimmy fallon all the time and i never watch them on tv. how does nbc capture that? , you know, if they posted videos on youtube and their own site, that is a source of advertising revenue for them and it is beyond what they would get if you're watching the broadcast right there. i think there is an eye advertising opportunity for people watching the recorded program. >> thank you very much. our senior correspondent, jon erlichman, with the latest in the shift on late night.

jay leno has confessed that the monologues are his favorite part of the show. would you believe it? >> of course. they are about him poking fun at other people and public figures. will he need to find out is who he likes to skewer the most. we have the off the charts. what a week here on market makers. in the world of jay leno -- in the world of jay leno -- i'm going to give my guess. >> there was a study done on this. they crunched all the numbers on this and this is very arrived at.ly what is your gas? >> george bush. >> bill clinton takes the cake. >> bill clinton? lewinsky has a big part of

it. george bush is number two. monica lewinsky shows up. biden large, bill clinton. sarah palin almost toppled the presidency. monaco whiskey and sarah palin. >> hillary clinton was up there and i did not highlight her because i thought it was more interesting to bring up monica lewinsky. in termss a theme here of celebrity targets. .t has to do with bad behavior at the top of the list, any guesses? >> hugh grant. >> that is an old story. >> o.j. simpson. has been doingo it since 1993. >> he broke the news on that

one. >> he apologized in everything. michael jackson is basically chump change when you compare it to hugh grant. hugh grant is like, are you committing -- are you kidding me ? martha stewart, lindsay lohan, and tonya harding. >> i bring that up because figure skating is not as popular as it once was and people say that the sport needs another tonya harding. >> that is what we need. >> george mason university students. is this the best or the worst grad school assignment ever? having to watch through all of these jay leno shows? through marion barry in there as an insult. he is up there. >> not in the top 20.

>> thank you very much. a great off the charts addition.

>> live from bloomberg headquarters in new york, this is "market makers." manager cliff robbins is an activist investor, but he does it his way. he is here for an exclusive interview. >> crisis in the cockpit. airlines are slammed with a shortage of pilots. we will tell you what that means for the industry and for you. >> when celebrities turned to politics, it is not always a box office smash. welcome back to "market makers."

>> it is 11:00 here in new york city. >> we have a lot to cover this hour, but all month on market makers, we will be speaking to the world's most successful hedge fund managers. cliff robbins joins us. he is the ceo and founder of blue harbor. --that list are funds make are two funds rank among the top 35 performers of 2013. welcome. do you think we are going to see consolidation in the hedge fund community this year? >> i don't know about that. i do think in 2014, it will be a stock picker's market. it will be a good year for the folks who can find good ideas, and i think stock selection is going to matter a ton. >> what are the good ideas?

>> speaking broadly, m&a is going to again be big. i think we will see lots of it in 2014. i also think companies are going to be optimizing the cash on their balance sheets. they will be opting to do buybacks and dividends. talk about your youicular brand of activism were among the few that did great, but do you think there are too many hedge funds out there? you think they should consolidate? >> i don't know if they should consolidate. i think 2013 was a year who anyone who was sure it was in trouble. i think activism, which is our

strategy, did very well. both of our funds were on top of your list, so we did exceptionally well. it was a year where the playbook really worked. >> how do you define activism? >> frankly, it is a moniker i had resisted for many years. oureally positioned approach to private equity and public markets in the very friendly way. the word activism connotes aggressiveness and hostility. that is the antithesis of our approach. we only invest with companies that want us to lead their stockholders. we are never done a proxy contest. finally, i had to accept this friendly activist moniker. we do take a lot of effort in explaining how our strategy is different. we only invest in the companies where we respect the management teams and think they are on the same page we are. work in a very friendly and

collaborative manner. >> can you do that? >> oftentimes, we meet with the company and don't invest with them because we don't think the management is going to be on our page. for other activist, that would be the starting point. they would say this is a good opportunity to buy the company. it is not a bad strategy. are bad companies that are poorly managed and a hostile activist should go after them. definitely room for both. >> definitely room for both. my partners and i decided we to conduct business in a different way and we invest with companies that want to invest with us. in for threeu were years, jack-in-the-box, went up something like 75%.

>> it is a good example of how we work. is in thecompany that fast food business and their structure is different from their competitors in that they own most of their stores. most fast food concepts are in a ast food model -- are in different model. we got to know the team at jack-in-the-box. we started to talk to the ceo about converting the franchise. she was behind it 100%. went our ownership, it from a company that was 70% company-owned, 30% franchise owned to 80% franchise owned. company-owned.

>> but you have to wait. you have to not just be silent but be patient. >> absolutely. most of our investors are for several years. we are lucky to have investors who understand that we are not short-term traders. jack-in-the-box is a perfect example. it took two and a half years to make 75%. that is a good return. >> larry was trying to explain to us why he has an aversion to activism. take a listen. >> we find the motivation is to get a real quick pop. >> not long-term investing, by definition. >> so i can't get behind that. >> do you agree with larry in that too many activists are

looking for that quick pop? >> i think everyone has a difference data g and a different style, and i do believe there had -- different strategy and a different style. ofre has been criticism activists who are very short-term. but frankly, when you been doing this for 10 years. there are about a dozen of us who have scale and institutional backing. most experienced activists are recommending things to their companies that make sense and that will unlock value over a longer-term. criticismere is fair about short-term activism. you are talking about seems like operational turnarounds. creating value over the long .erm >> i will say this, buying back

stock can create a lot of long-term value. if the comp -- if the company is confident about its future and 10 buybacks stock today, that will supercharge the value of the stock over the long term. in companies where we think they have cash on their balance sheet, that are well run, where the earnings are going to grow in the value is going to grow, we think it would be good to have a little cash on the balance sheet. we might suggest a small amount of leverage. we don't believe in highly leveraged coverage. but we think investing in companies that are going to grow is the way to build hype -- builderm -- is the way to long-term value. >> twitter is down 24% today. investors are concerned about the earnings report showing a

bigger loss and slower growth in users. is bloomberg television, streaming on your phone, tablet and a bloomberg.com, and now you can watch all of our interviews on-demand demand at apple tv. stay here.

>> welcome back to market makers. we are talking to cliff roberts, activists.lent both of his funds were among the top 35 performers in the hedge fund world last year. we're been talking about jack-in-the-box, a fast food chain that was a big victory. >> only five percent return. >> they did a good job at jack-in-the-box. -- a 75% return. >> they did a good job at jack-in-the-box. isand another stock of yours up 20% today. could akamai be doing so much

better if they listened to cliff roberts? >> akamai is a great company. it is up 20% today and one of the top positions in our fund, so we are having a good day. >> a great day. but great day, actually, the reason we picked akamai is nothing to do with today. this is a company that is a rocket ship. this is a company that is accelerating video experience on the web. all of us use the web to download content and akamai is the number one company in the world that touches all of that. well -- of web content around the world goes through akamai. ask what is wrong with them? >> nothing. this company is growing 15%-20% a year over the next five years, we believe. the margins are expanding.

it has a tremendous amount of ip. >> do you love the sector or the company? >> i love the sector. the company has a lot of cash. they have a billion dollars of cash on their balance sheet, all in the u.s.. this is a company that can really accelerate the equity count. announced ae just share repurchase plan that we have been talking to them about. another great thing about akamai is that the management is fully invested in the company. he owns about $250 million of stock. they have great management, sophisticated executives. they are buying back stock. the company is really

growing. >> apart from encouraging tom and his management team to use that cash and buy back stock, it is not that much a management story. you just think it is a great company. of an activist story. you think it is a great company. >> for us to make an investment. few things.ook at a we have to have an management team that we think is clever. we have to have a company where we can bring something to the table where we are not on the same page as for as value. we canhe balance sheet, contain a buyback of the stock while it is undervalued. it is still undervalued today even though the stock is up 20%. it is still undervalued. this is a company that is going to grow significantly. >> what about apple?

are they a challenge to akamai? >> they are not a challenge. they are a very important customer of akamai. is an important part of the akamai story, but over time, apple may do some things on their own in the space. but today, they are in important customer. >> what about amazon? amazon is in the content delivery business, the cloud business, the company investors give a free pass to because they don't appear to have to make any money to have an extraordinary valuation. if amazon wanted to flex its muscles. they could be very difficult for akamai. >> they are very serious company. they have amazon web services which is a small business. >> but they don't want it to be small. >> it is something to keep an eye on. the thing we come back to is

that amazon, for its consumer web business, they use akamai. changes, we might change our tune. right now, that tells the whole story about the dominance of akamai. what is important about akamai is how big of a business it is. they have 125,000 servers. they are in 1000 locations. for someone like amazon who wants to have a very quick web experience, when you shop on amazon, you want that to be quick and seamless. thing that is one could go wrong with akamai, besides amazon getting hungry, what could it be? >> that is the main risk and i think that is a manageable risk. i think amazon is correlated to ip traffic and the internet is a global phenomenon as we all know. i don't see anything standing in the way of that soon on me.

>> cliff robbins. >> thank you so much. this was a treat. congratulations. >> cliff robbins is having one --at year and one great d one great day. >> other investors are punishing twitter today. it is now down as much as 24% because it is not attracting as many new users as it did in the past. we are going to speak to an analyst who covers the stock next. guess what he's got? a cell.

>> this is market makers. we are talking about twitter. the stock is plummeting this morning, if you haven't looked.

they reported their first earnings and raised some serious concerns like why isn't it so popular anymore? covers twitter for pivotal research. he is with us from portland. sell rating on the stock. however, you do not share concerns over user growth or user engagement. that is what everyone else is bouncing on. how come you go >> as i have -schmun the past, users sers. greg slim get that technical term down -- >> let me get that technical term down. >> the first thing is, if i was paying attention to every single newspaper, let alone website,

circle -- circa october or whenever this came out, wasn't something people were gekko this --of aware of that? was never concerned about them growing their user base is because twitter was always going to be a niche medium. revenue growth goes against executing what they have already gotten place. they are going to marketers and showing ideas about how to use this as a marketing vehicle. what matters is not the number of users, but the number of advertisers. about one user we have not seen lately accor jeff morrissey hasn't tweeted in a hasn'tjack dorsey

tweeted in a few weeks. what gives? >> i have no idea. i think i'd tweeted once in 2007 and have done five after that. it's not for everybody. >> but clearly there were a large number of investors who believed twitter was something more than it is right now. either they had wildly about how assumptions much user revenue it could generate, or they had wild assumptions about how quickly the user base could grow. on which assumption were they wrong? >> i think they were too focused on user growth as the only metric that matters. i think this notion has been wrongly socialized into the investor community. >> is that because of facebook and facebook going to a billion users? >> part of this is that analysts tend to work with the numbers they are given, not the numbers they need.

>> what is the different -- difference? >> what they should be doing is telling us the amount of advertisers among different tiers of advertisers. is far more useful but you don't want to give that data away for various reasons. telling investors have many users you have is good to give them a sense of scale, but it is not a measure of revenue. >> so buying purging analysts like you, your peers, to feast on monthly average user growth and timeline views, you have created metrics that you can live up to or expectations for metrics that there is no way you can live up to? >> that is part of the problem. i think they are working off data points that --

talked about on the conference call was the slope of the growth curve. he is clearly panicking over the fact that they are not growing users faster. the number of users would change the guidance, the answer was effectively no. >> i know the analyst kept asking questions, but they began the whole conference call -- the preamble to every thing was going on about how they are going to change user investment -- user engagement and try to get more users on twitter. >> to be clear, you need users. and the core of the product see theent -- you could same issue at yahoo! where marissa mayer is not focused on advertising by product and she focuses on users, users, users. but the problem is advertisers

have alternatives. when it comes to what twitter does, twitter is unique. it is a completely different medium. whater is to facebook radio is to television. it is a different medium. >> brian wheezer is a senior analyst talking about twitter and the big plunge, down 20 plus percent. we will be back with more into. ♪

>> we are seeing a solid update -- a solid update on u.s. stocks right now. of the 24 trading days so far this year, there were 11 days on which the dow closed up or down by at least 100 points, that's almost half the time. seven of those days were triple digit losses. it is somewhat unusual to have a on the dowt gain industrials. in the s&p 500, only telecoms

are following this morning. consumer discretionary, industrials and materials are all gaining at least one percent. a lot of the reason we are seeing some optimism is because of what happened in europe. most intrengthening the two weeks against the u.s. dollar. they decided to keep interest rates unchanged. mario has said he will take further action if needed. if anything, they are worried about disinflation. >> thanks for the update. stephanie is very happy. >> smiling ear to ear. ismeanwhile, u.s. airlines facing a serious problem. it is not high jet fuel costs or bad weather. ofs country is running out pilots. too many have to rest longer between flights. a formereaking to

airline pilot for three decades who is now a consultant to the aviation industry. andear about this problem maybe see it in the newspaper. do people appreciate the severity of the situation? >> probably not. the real effects are just beginning to be felt. on the backside, the airlines have been sensitive to this for a couple of years. on the front side, we are just starting to see admission by the airlines. >> so we are only beginning to see service interruptions now. united continental has said they are no longer going to fly any flights out of cleveland. we will get into that in a moment. but fast forward 18 months or even three years, what is it going to look like? on how much depends the airlines want to grow. as you probably know the smaller airlines probably fly about half the flights and supply 20% of

the people into the system. >> site that figure again, because most people don't know that the small airlines play such a crucial role in the american travel business. >> they are a big part of the business plan. of thee the central part larger airlines plan. right now, the pilots are beginning to restrict the ability of the airlines to grow. are some of these changes happening because of the new rules, or are people just retiring? >> we have a bit of a perfect storm. .ypically it is growth five percent additional pilots as we staff up for the new rest rules. but the long-term effects are governed by growth and pilot retirement. he denied to many retirements from 2007-2012 come -- we did

not have any retirements from 2007-2012, and now people are retiring again. >> i understand it as a result of the shortage of pilots, some airlines, particularly smaller airlines, are going to lower the standards they have up until now maintained and i are people with say, criminal records? is that true? >> whoa. a criminal record, you have to define that. there are a lot of people we won't higher. in the past, things like training failures, low grades, each airline had its own history, some of which were not published, where they did not look at pilots who had these problems. now, because they need pilots so badly, they are taking an individual look at each of those situations and some pilots who would not have been considered in the past will be considered

today. >> at the end of the day, all that really matters when you get on a plane is that the flight is safe. >> well, the standard is not really lowered. what it might mean is that there might be a few more pilots that are unsuccessful in training or unsuccessful for the airline. the standard has not been lowered, but we are bringing in more people with a wider background, some of which may not work out. >> you were a pilot. i guess you still are. you were a commercial airline pilot. how comfortable would you be getting in a small, regional jet piloted by a guy who has had training failures? it doesn't sound good. i mean, it sounds very unsettling. lex i know. and yet, when you think back to your own background, your own

school history, you have certainly had successes and failures along the way. pilots are people who have the same situations. >> hold on. hold on. but i am putting my life in the hands of that person. >> the good news is there are two of them and they work together closely. the training is excellent and the standard has not been lowered. pilots have these issues. >> once these issues become more publicize. we are in the process of doing that right now. what kind of impact do you think it is going to have on the airline business? do you think when people read about a pilot who may run into trouble on a flight who had training failures or a criminal record, if there's a problem with that flight -- >> personally, i think we're going to have bigger issues from

a passenger's point of view. if you are in a small town in america, there's a greater chance you will have less service or in some cases no service. that probably is the greatest challenge is having enough pilots to do their job. particularly challenging at smaller, less profitable airports. translation, there may be fewer flights to serve a growing population and ticket prices are probably going to go up. >> the ticket price would go up if they had to pay the pilot more, but pilot pay is a very small portion of ticket price, so it would probably be unmeasurable. >> if i am an airline and i have demand for certain route and i can apply as many planes on that route as customers want, then i have pricing power. >> you do.

these airlines are going to be replaced by fewer planes that and small,ficient unprofitable routes are going to be cut or reduced. >> thanks for your perspective. it is a fascinating situation, a shortage of pilots in america. that is ken starr b, a former airline pilot himself. >> another argument for why i would really like to buy private going forward. no one cares. -- toilling to flying find the pilot if somebody else the plane. coming up, what happens when singers and actors give up their day job for d.c.? ♪

>> welcome back. from the american idol stage to capitol hill, season two runner-up clay aiken is now running for congress in the state of north carolina, but the tar heel state native is just one of many celebrities we have seen attempting to make that move over the years. for more, we have josh green in washington along with margaret carlson. margaret, let's start with you. i am thinking, clay aiken? i mean, the guy was on a reality program a few years ago. his politics the next right move? >> the half-life of celebrities is really long in america. he gave an interview today in which he was not completely uninformed, which is pretty good for a guy who was a runner-up on "american idol." you know, the bar is so low for running for congress in serving -- and serving that it's hard to to as outraged as we used

.ver people like jesse ventura it is not surprising. i think democrats were kind of lucky early this year when ashley judd decided not to run in kentucky. allison grimes is a more credible candidate against mitch mcconnell. thes this just part of solidification of america? you know, ronald reagan was -- fication oflebri america yeah go you know, ronald reagan was a bit of a trailblazer, but more celebrities appear to be publicted in holding office. >> they are used to being in the public eye and when they go to big events they rub elbows with

politicians. politics is glamorous when viewed through the hollywood lens. you see people like arnold schwarzenegger becoming governor in california. other celebrities look at that and think why not me echo >> does it actually makes sense, because when you speak to business people for example, who business --reat great political leaders, they say they would not want the spotlight on their personal life. but for somebody who goes from reality tv to politics, it is not a big jump. >> they are used to it, and what's more, they like it, so yes, bring it on. onple say we are hollywood the potomac. everything crazy rolls east eventually. now we have many more ronald reagan's. ronald reagan seemed like a serious person, having been in politics at least through the union out of politics -- out in california when he ran.

people like clay aiken have almost no connection. he gave an interview in which he said that when he was doing a paper in high school he went and interviewed his congressperson, so that was how was interest got started. but you don't need much, as i say. the bar is pretty low. >> but who is clay aiken's base -- base? idol caters to a family, republican type is araphic, but clay aiken gay dad. in a district that for any tough to win democrat, even one with experience. >> with any experience. >> american idol does skew a bit republican and the viewers are high propensity voters. tobe his secret weapon is get american idol fans to come out and support his bid.

>> they don't support it enough. he was runner up. >> having seen this interview is no moreiken, he clueless on issues than your typical congressman, i guess. but our celebrities anymore or less serious about serving americans? >> you know, one of the most serious members of the senate is al franken. he was hysterically funny on saturday night live and then he had a show called late-night. and then he came to washington , mr. sobern what side, as far as i can tell. even at hearings when we could be leavened by some humor, he

pretty much sticks to being, just like his fellow senators, kind of grim and serious and somewhat informed. >> all right then. there is a chance for you in washington, two. thank you both. back in a couple of minutes here on market makers. stay with us. ♪

>> the odds of an immigration overhaul this year just got decidedly slimmer. that's because of a few things john boehner said to reporters. either cook was listening and joins us now with more. what is it that boehner said that kind of changes the picture here? up his weeklypped news conference, and at that news conference, he made pretty clear that a couple things have to happen before republicans

move forward on immigration. he was waiting to get feedback from members. by and large, any things is conference is supportive of moving forward on immigration reform, but he went on to say that he does not think the president has built up enough trust. basically -- and he basically said the president has not proven he can be trusted. he was not able to be trusted on health care so why should he be trusted on immigration? take a listen. >> i have made clear for 15 months the need for the congress and the administration to work together on immigration reform. it needs to get done. i am going to continue to talk how to moves about

forward. members are saying chances ofe risk our taking back the senate this year and introduce this issue in an election year when we are looking pretty good on issues like obamacare? that is privately what a lot of -- that isre privately what a lot of members are telling him. >> i'm having a little trouble understanding why the republican party would decide to do this now. we know the struggle met romney had in recruiting hispanics. it is widely cited -- and other immigrant groups, for that reason -- widely cited as one of the reasons he lost the election to obama.

why would they want to take another chance on immigration heading into the midterm elections? not presidential elections. these are elections historically won or lost based on grassroots base. though the elite republican establishment in washington wants to do immigration reform, the republican base is very resistant to this. i think what we are seeing happen is that base rise up and tell john boehner we do not want to do this. we are not going to do this this year. us, maybe demoralize we won't show up in november. >> is it not possible that that is tricky calculus? peter, jump in here. to the point you make, this is all about the base. i thought winning elections was all about captivating the swing vote.

>> i agree that this midterm election is a very different outfit for republicans than the presidential election and these guys are worried about their jobs more than anything else of this point. the one thing i was going to add to the conversation is that this does put pressure on the administration to try to respond. what can they do to light the fire, bring it back to the table? chuck schumer would love to see this done within this election year for political reasons and otherwise. we will wait to see how democrats respond. do they think john boehner killed this or can they in some way revive that? >> do you think this is a bargaining tactic on john boehner's part? >> i think this is john boehner coming up with the reason why not to move forward with immigration reform, winning in on president obama and satisfying his republican colleagues in the house and the senate that they do not want to rock the boat in this election year. they think they can win if they don't bring immigration into the mix. think it would suck oxygen

from the health-care debate and they know they can win on that ground. >> i've always thought there was a better chance to do immigration reform in 2015 man this year. i think the developments today kind of reiterate that. lookingr we will be ahead at a presidential election, a national election, where latinos and their support do come into play. that might motivate republicans to get serious about striking a deal on comprehensive immigration reform. green from bloomberg businessweek. peter cook our washington correspondent. breaking news on the prospects of immigration reform getting dimmer. >> that will wrap this up today here on "market makers." tomorrow, we are talking telecom with the former ceo of verizon wireless. >> right now we are about 30 seconds away from 56 minutes past the hour. that means it is time for bloomberg television to go on

the markets. here is scarlet fu. >> we're going to head straight into derivatives with today's options insight. joining me now is alan macmahon. action inng a lot of the markets. the dow has seen its best game so far this year. tell us about the action in the s&p etf options. what do they tell you? >> it is come to the breakup point from last week. we are pulled back. the resistance level was 1770 and a half. if i look at the s&p futures, we pushed above those december lows at 1761 and we are above the pretty solidly right now. that is a positive sign that we are building on bullish convergence. the volatility did not reach new highs. >> what about the vixie? it has come down to below 18 still wellut is above its 200 day moving average. what would it take to get the

vix down to 14 and a half or those trendlines are? >> we talked about this yesterday. 1750 is the midpoint of this rally. 1750 is very important. we are near that level right now. volatility, contracts were sold for $.50. this mirrors that recently 250,000 contracts were sold for $.70. someone collected $18 in premium, counting on the vix being below 22 in expiration for february options. >> china is set to resume trading tonight. what do you see in terms of options for emerging market etf's. about 36 as the crucial support point. we went from 48 down to 37. the halfway point -- someone was

selling june calls. calls beingjune 41 bullish. buying for about a dollar. looking for cover. technically speaking, from a risk-reward level, i am bullish at these levels. >> quickly here, i am noticing that yahoo! shares are trying to mount a comeback. options we have noticed are also very active. what do they tell you? up somene is picking options. 10,000 options for about one dollar and a quarter. the breakeven on that is about 13% higher. bullishbull is -- position. again, the macro is very critical. if we get above the break down low, we could have some positive action. >> let's talk about your trade. you have a strategy of coca-cola. tell us how it works.

>> coke is in the news. their death has been greatly exaggerated. the coke play as a long-term play, and i mean long-term. january 2016. calls are eight dollars in the money. those options will cost you eight dollars 40 five cents. you have 710 days for coca-cola to perform. my upside on is 44. that is a healthy bump. clanks gotcha. a long-term call on coca cola. we are on the markets once again in 30 minutes. "lunch money" is up next. . .