>> welcome to "lunch money" where we tie together the best stories, interviews, and video in business news. i am adam johnson. joseph banks spends valentine's day looking for love. eddie bauer selling his warehouse. starbucks is using a firm in costa rica to stop the potential coffeepocalipse. california is in the worst drought ever. in today's wild card, love and money. we have a special valentine's day top five.

we're kicking it off with what everyone is talking about. season two of the hit show "house of cards." the series has been a huge win for netflix. what is the creator have planned to stay in the winners circle? >> you want to talk what you did with season one. all the episodes on one day or releasing it onto the internet is not there. it is just the story itself. it motivated us to expand the scope of the series, to deepen our exploration of characters, and challenge ourselves to do better than we did before. the first season, netflix released every episode of the dark political drama all at once encouraging binge watchers, including phil mattingly. here he is for the 3:00 a.m. premier sitting with his great dane.

he spoke with real-life d.c. lawmakers about how realistic the show is. upcapitol hill staffers were watching. that is how highly anticipated the release was. government was closed until 10:00 a.m. this morning, so a couple more hours to catch up on episodes. >> the only unrealistic thing about the show is that a democrat to represent south carolina. that will never happen. it is great acting. >> kevin spacey makes it look more exciting than it is and a lot more devious, but it would be interesting to see what they do with the new season. >> he is probably a composite. none of us are that interesting. >> i am one of the few living americans who has not watched it. >> what does this mean for the company's bottom line? >> the stock has gone up 160% since "house of cards" debuted and subscriber numbers have risen. netflix is said in the same breath as hbo.

that is the company and wants to be like. a lot of analysts say as long as netflix continues to develop original programming, this is the future for the company and it has a good in with cord cutters and guys that will never cut the cord. >> netflix is doing good. could it do better? >> netflix charges very little for customers, seven dollars a month. that is what comcast charges you for a remote or month. if comcast was made to was -- was making it, they would cost you $700 a month to watch. >> in the levees, the u.s. is getting crushed. particularly disappointing, the american speedskating team. no u.s. skater has finished higher than seven through six of the olympic events. the high-tech uniforms, lehman on the uniforms. these are made by under armor

for these games. they were developed with the help of aerospace in junior's at lockheed martin. martin.eers at lockheed we caught up with the ceo of under armour at the debut. >> we built these specifically for sochi. we are hopeful a lot of gold medals will come from this. lockheed built the joint strikeforce fighter. they are the best in the world. they understand speed and making athletes better. it is the formula we will use across all of our product categories. it is accentuating the great story you will see of under armour highlighted at the olympics. stephanie ruhle spoke with him on the phone earlier this morning. >> we have had a relationship since 2011 and have been working closely with the game and athletes. the executive director at u.s.

speedskating. we have had a great relationship. i do not want this to be perceived as anything other than trying to find out what we can do to help our athletes win. project, we work directly with lockheed martin. from computational modeling and wind tunnel testing to get these things built. we built not just one suit, but multiple suits for the athletes. it is trying to find the right mix. we have a full team on the ground in sochi making modifications and adjustments, which is typical for what you do at this level of high-speed performance athletics. this is part of the game. we're going to put our athletes in the best position to win and bring home gold. >> you can hear the full authorization with the under onour founder and ceo bloomberg.com and on our app.

there is one company not feeling the chill on valentine's day. eddie bauer gets a little love, next. spread the tries to love as his company prepares cutbacks. celebrations marking the lantern festival throughout china. it marks the last day of the lunar new year holiday. you can see the chinese folk artists performing the dragon dance. that is molten iron they are running through to create the image of a jargon flying through fireworks. you've got to wonder if that hurts. ♪

onthis is "lunch money" bloomberg television and streaming live on your tablet and smartphone. i am adam johnson. it is valentine's day. what better way to express your love than with a proposal of corporate matrimony? >> joseph a banks will buy the eddie bauer brand in a cash and stock deal valued at $825 million. the deal comes after joseph a banks flirted with a merger with men's wearhouse. >> that is joseph banks played where to -- hard to get with men's wearhouse. banks had tried to buy men's wearhouse. setting off. but down on one knee for eddie bauer. eddie bauer practically invented the down coat in the 1930's. now owned by golden gate capital. the retail veteran advising

joseph banks on this deal. he told us this was the first company they looked at two years ago. >> we believe they fit with eddie bauer. joseph bank was superior. it is a growth business. it had been taken over by golden gate after bankruptcy. all of the attributes joseph management,terms of they have two of the best -- >> you represent joseph a bank in your long career. are you saying eddie bauer is not a brand that has been a train wreck for a decade? >> it has had problems. egeck, the guye built columbia and north basin to a terrific company. he and his people are great marketing people. this team is going to be fantastic. >> what is eddie bauer doing

correctly now that makes it so attractive to joseph bank? >> they have gone back to their roots as an outdoor company, as a sportswear company. they also have children and men's. it is going to give joseph bank the ability to expand into new categories, gain an international presence. there are meaningful cost synergies. >> gilbert, stay with us. bert, i want you to reply to this. gilbert harrison looks at the financing. you look at traffic. are you seeing better traffic and merchandising at eddie bauer? >> eddie bauer is hurt by declining customers at shopping malls across america and retailers spending less. gilbert is correct. mike egeck helps the merchandising. comcast-time the warner deal, there will be no sec objections on this one where there will be several ftc

objections. this is a clean deal. joseph bank is dumping men's wearhouse and on valentine's day. breaking up is hard to do. the offer for joseph bank expires on march 28. dayton. some companies are getting together and others are cutting back. >> the insurer is eliminating 1500 jobs. the cuts will come from the top-rated casualty unit which will reduce earnings by $255 million before taxes. >> these cuts at aig should help boost profit, which beat estimates for the last quarter. the insurer also boosted the quarterly dividend by 25% and authorized another $1 billion in stock buybacks. aig giving back to shareholders. >> betty liu spoke to the ceo after the earnings release yesterday. than is nothing more clearly we have got to

continually manage efficiency and productivity of our company. working a lot of time on moving people to lower-cost locations. tennessee and other locations around the united states. we have a wonderful relationship with olathe, kansas. we're moving people out of lower-cost -- higher cost cities into lower-cost cities and some offshore as well. you bring the first wave of people to those locations keeping the older people in their jobs until we are ready to make a smooth transition. art of this is nothing more than dealing with the dual jobs that have been going on in parallel. in addition, we are looking to delayer the company to empower our people more so they do not have a lanai layers below me. we will look at expanded control to make sure our employees dealing with customers are empowered and do not have many

places to go to get a decision, because that is what our clients want. they want an innovative and empowered culture of aig. that is what we have been. we need to restore that and make sure people are comfortable they can get a decision from the person they first come in contact with at aig. >> when you talk about delayering, in which unit do you see that happening the most? >> we are studying this across the 63,000 employee base. we are looking at cost accompanying. we are asking people to give thought to things. how many approvals you need on anything, we're saying no more than five. if you have to go to more than five people to get something decided, it is too much. are you have people who product people, finance functional people or technology people and then you have the direct bosses, it is getting too much. we want to get to the point where we have a lot of authority

at the local level and very little layers above that. it is the thought of how we improve the decision-making and empowerment. >> aig's cost cuts speak to a broader issue. companies cutting back to boost earnings. over the past five years, earnings growth has outpaced sales growth nearly five to one. who is growing the top line? we can read about it on today's blog. i posted it on twitter. the u.s. government is asking some companies to cut the use of drones. we will look inside the unregulated boom. plus a coffee break with no ordinary joe. we will hear what a ceo is saying about his industry next. ♪

onthis is "lunch money" bloomberg television. we are also streaming live on your have but --tablet and smartphone. coffee bean prices have spiked 30% on concern dry weather in brazil will harm crops. what is it mean for our caffeine buzz? alix steel explains. >> companies like netflix only beans that are being hammered in brazil because of hot, dry weather. they paid two dollars per pound because it pays for the beans it wants when it wants it. it wants the supply locked in for this year for about a 10% price increase for coffee beans per pound. it is a two percent increase across the board in the current quarter. the problem is one bad crop this

year in brazil hurts the fruit. it hurts the plants. that could mean another bad crop next year. it takes a while for these plants to recover even if there is rain. we have seen companies like starbucks investing in resource. the company bought a 600 acre farm in costa rica to experiment with coffee varieties test growing methods,. million toed $3 secure coffee quality and supply in certain regions of colombia. baby steps to help their supply chain. >> coffee apocalypse? "business week lows quote shows us how starbucks is trying to "businessthis -- week" shows us how starbucks is trying to deal with this. >> ♪

>> ♪ >> since 80% of americans drink coffee, it is big business. coke has gotten involved. three years ago, it partnered

with the italian group and green mountain coffee more recently. he sat down with stephanie ruhle to explain the difference between the deals. >> coco: and we have a joint deal already. the strategy is to do one blend, the highest possible polity, always the same across all consumption occasions. the same blend you can enjoy in a restaurant or café is brewed into ready to drink coffee in a bottle that you can buy from them and coca cola together. coca-cola is one of the biggest coffee manufacturers. they have other interests, ready to drink coffee in japan, much larger than illy. intentategic invent -- with green mountain is to serve coffee with the same soft drink machines. this market is growing. outgrowe day, we will

that. >> you also have a new partnership with samsung. i see why jay-z would work with samsung, why are you? >> next year, there will be the aboutsal show in milan feeding the planet energy for life. the first time the theme centered around food. coffee is important, so central. the export authority decided to dedicate an entire pavilion to coffee. there will be the largest celebration of coffee in history. online, make it accessible for the coffee drinkers will believe through mobile technology. >> what is your number one growth strategy? >> the core business is always hospitality, cafés, hotels, and restaurants. we also would benefit more by having a more competitive country.

italy is not so competitive. italy has a problem. first of all, the internal market is not growing anymore. we are in a depression. gdp we used to have in 1998. the problem is debt is much higher and unemployment is at an all-time record. this creates a situation where it is difficult to get consumption. it is always important for a brand to have a strong internal market before you go international. it is difficult to get the confidence to keep investing. it is difficult to get credit. everything becomes difficult. we have a total tax rate which is exceeding 68%. how much can you invest in such an environment? >> a lot of people in the u.s. could use a couple of warm coffee today.

xtremesup, weather e from ice and snow to the drought in california. online trading site soars in volume the day after valentine's day. that is coming up. ♪ >> it is 26 minutes after the hour. let's get you caught up on where stocks are trading at the moment. we have a mixed picture today. the dow and s&p of rising. 1% of its0 is within record, almost coming full circle from where we ended last year. the nasdaq is trending lower by 6.2%. better-than-expected numbers are helping prop up stocks to some extent. in terms of individual members, they beat second-quarter earnings estimates and is maintaining the full-year growth outlook.

campbell's noted revenue was up 14% from last year countering a drop internationally. we will have more on the markets in 30 minutes. more "lunch money" coming your way next. ♪

>> this is "lunch money" on bloomberg television. we are also streaming live on bloomberg.com, your tablet and smartphone. the video is the story. ministeran prime presented his letter of resignation at the president of palace in rome earlier today. he quit after his own party voted to replace him with the mayor of florence. he lasted just 10 months as prime minister. he's the third premiere in a row whose rule was brought to an early end by italy's fractured parliament. writers in thailand faced off again with antigovernment protesters on the streets of

bangkok. police were unsuccessful. they say they will return again tomorrow. sandra bullock gets a spot at madame tussaud's wax museum in hollywood. just in time for the academy awards in two weeks. she is up for best actress for her role in "gravity." weather extremes in the u.s.. snow has delayed travel across the country from texas to maine. at least 21 deaths have been blamed on these storms accorded to the mesh according to the associated press. in california, the opposite problem. it has been the worst drought on record. the governor has declared a state of emergency for the world's 10th largest economy. president obama is pledging billions of dollars in aid to the farmers. prices andost food leave thousands of crop workers jobless.

what if you could create a drought proof arm? i know it sounds crazy. with an ancient technique, it might be possible. rachel crane shows us how. ale,e have broccolis, kl tomato plants, different lettuces. >> two years ago, ken armstrong started a different kind of vegetable patch in california. >> people asked if i was doing farming before this. i told them no. everything i tried to kill before ike -- everything i try to grow before i kill because i forgot to water it. that is one beautiful head of lettuce. >> the farm is an aqua pontic farm where fish and produce growth together in a symbiotic relationship. >> all the nutrients are available to the plants of all time. expend less energy on roots and more on growth. in this pond, there are 800

catfish being grown organically. plants can grow on floating racks. the roots dangle in the water below soaking up the fertilizer. >> the plants have taken the nitrates out of the system. the clean water is returned to the fish tank where it begins the process again. quaponicsontic -- a is a combination of plant farming and fishing harming. it cancels out the negatives of both. >> fish are cold-blooded, so the it is -- in the system not possible to have e. coli or salmonella. the fish can be harvested and used as a protein source. farm art spins it to build but less expensive to run. they eliminate the need for

pesticides or pricey equipment. it may seem counterintuitive to grow vegetables in pools of water during one of the worst droughts in history, but they is 90% less water than conventional farming because the water is continuously reused and is not lost to evaporation. >> they could reduce our water by 80% and it would not affect us at all. >> it turns out it is older than dirt. the chinese used carp in their rice patties. this ancient method may prove to be the modern solution to drought. >> i believe this is the evolution of farming. because of its ability to grow faster with fewer resources, it will be the methodology of growing in the future. the future of drones is in the hands of the faa. we will look at the fight with unregulated drums next. valentine's day is not just about love. it is also about money. it turns out love costs a lot.

that is a baby albino alligator. the pair were introduced at an aquarium in paris. they are generally not found in the wild. they are easy targets for predators. there are fewer than 30 in captivity. the price tag for these two? about $55,000 each. ♪

onthis is "lunch money" bloomberg television. we are also streaming live on bloomberg.com, your tablet, and

smartphone. the faa is cracking down on drones. it is testing in six states. michigan has yet to be added to the list. detroit flower delivery was hoping to make a name for itself this year by delivering free bouquets. sorry, guys. clever idea, but no luck. the agency has its hands full dealing with a lot of other guys. megan hughes explains. >> we are airborne. >> drones have gone mainstream. even the "modern family" character has one. he borrowed it from his real estate company to spy on his son. real estate is one area where real-life drone use is widespread. drones shoot photos of

properties. they are capturing surfers on the north shore. the filmmaker of the gettysburg documentary boasts about the technology. >> it can shoot from a few feet off the ground to 400 feet in the air. >> they are beautiful shots, but also may be illegal. the faa does not permit drone flights for commercial purposes. >> you cannot just acquire one of these vehicles and launch it into the airspace. that is not how it works. >> you can't? >> the regulation needs to say that. >> we went shopping at a drone dealership in marathon -- maryland to see how easy it is to get one. >> for the one with the camera, that will be closer to $1500 to $2000. >> can we try it out? we have liftoff. this isechnician says

flying off the shelves and the sales are legal. how the drones are used is someone else's problem. is there anything in here that will show me what the faa says i cannot come out -- cannot --what i can and can't do with this? the faa is struggling to write new guidelines. in this serve video, you can see a chopper in the drone'airspace. >> the worst case is it could bring down the chopper. sent 17 notices ordering people to stop using drones but issued just one fine. orderonth, the faa did down.de beer to stand bloomberg,s, riverdale maryland. >> no love for drones. we have a top five that is full of valentine's day love.

for those who do not get the gift they want and in their disappointment aside to straight, guess what? there is a website for that too, exclusively for people in relationships. this is scandalous. it is our wildcard. as we had to break, here is google's take on valentine's day. >> not really saying anything. when you walk down the hall, trying to touch hands. heartalk up with a heavy and huge doubt, questioning. medley assessed with each other for years. enough of this. we stood free >> we got married on saturday. on monday, we went back to our day to day lives. david was getting dressed to go into the office.

♪

>> you will never look at luxury the same way again.

>> this is "lunch money" on bloomberg television. we also streaming live on bloomberg.com, your tablet, and are smartphone. we are celebrating valentine's day. if you need last minute gift ideas, we have you covered. i am the ultimate wing man, and it is time to make the magic happen. >> ♪ >> this valentine's day, show

her how you really feel. >> ♪ >> wouldn't your valentine like to know how you feel? >> ♪ drop 250 dollars for chocolate truffles or give a few of the candy hearts with messages. they have been around for 167 years. >>'s the sayings were different back then. some do not work now.

they said things like "sassy beingnd "i am gay" for happy. a lot of things have been retired that do not work anymore. >> how does the company stay competitive? >> we use social media. information from our facebook page. it is a tradition passed down from parents to children over many decades. this year with our color your own box, we are looking to attract children. >> i'm curious about the difference tween how important valentine's day is and what they can do all year. >> we celebrate once a year, but we believe it can be a year-round brand. you will probably see new products coming up that will be every day and not just once a year. the sweethearts brand. >> will it be for singles and divorced couples? >> think about how important breath mints are to love. >> mints are definitely

important for love. if you're looking for your soulmate online, so is having a good profile. "wired" did research pulling together massive amounts of data, trying to put together some tips to help you master internet dating. here is what they found. the following words were most used by men who scored high on the attractiveness scale. ready? surfing, surf, the ocean. words most use by women who scored high on the attractiveness scale for men? , andn, n.y.c., surfing athlete. interesting. the most attractive band you could mention was radiohead. they are all owned by match group. revenues are over $700 million a year because love don't come cheap. >> search for love or

companionship is the most important search people go one in their life. that is valuable. people are willing to invest in that and go through the websites. >> how much do people spend on dates? what are the dating life expenditures? >> we just did a big study at match.com. no surprise. people spend almost $1000 a year being single. that is going on dates, online dating memberships, dating advice, and other things like that. when you're single and actively dating, it is one of the priorities. it is not like a gym membership when you make the commitment to get healthy. >> you know what? some people are not looking for love, not at least in a monogamous way. only datingon, the site for people already in relationships. >> i saw a huge percentage of people going to dating sites

were not single. i thought i would build something. >> for you, was it that there is a market for everything? it? you making a market for >> i was a sports attorney. i think there is infidelity in my professional dna, in a sense. the data was compelling. we all know affairs happen. we might be blown away by how may people the day after valentine's day will come to if service -- --a service like ours. the opportunity was there and i wanted to pursue it. i could not amount -- imagine 25 million members, but that is what it has become. >> i learned this morning the day after valentine's day for a cheating website is like black friday. >> why? >> why do you think? valentine's day is a litmus test of sorts. >> my man let me down? expectations,

romance or feeling better of it could beelf, the second year it has felt hollow. you're going to do something different. you could do things people would say are healthier. you can join a gym, see a therapist, but you might also find a lover. >> before he gets that complicated, it starts out with puppy love. we picked our favorite story. happy valentine's day. she know? >> yes, she does. >> how is that going? >> good. it just ordered 20 minutes into this. i was in the cafeteria. just got a drink of root beer. she walks up to me and asks me to go out. >> what did she say exactly? >> she said, chris, will you go out with me? >> they do not last. it is middle school. this is not who you are starting

your life with. you do not spend your life with your middle school sweethearts. ♪

>> it is approaching 56 past the hour. let's take a look at where stocks stand halfway through the trading session. we have a mixed picture with the dow and s&p trading higher. ise s&p 500 is is when it --

within one percent of its record high. the nasdaq is lagging. it has been leading in recent days but today is down 4.5 points. in terms of individual movers, we want to highlight a couple. weight watchers international shares are falling to a new 52-week low after the company posted a 47% drop in fourth-quarter earnings. they also forecast 2014 earnings well below estimates. weight watchers says it is facing increased competition from diet apps and gadgets. aig announced fourth-quarter profits that beat estimates. it is also planning to cut its workforce by 3%. they announced a $1 billion. buyback and 25% hike in the quarterly dividend. askedorning, betty liu the ceo how the company came to this decision on what to do with its cash. >> we have stress test the company to the best of our ability. we are looking at if we can

handle a significant downturn in the economy, a stress event, if you will. say we look at that, we have had a very good quarter and very good year. we are looking at the amount of cash we have for contingency as we still have excess cash. talkingwas the aig ceo about his company's earnings. as we get ready to wrap up this earnings season, adam johnson, take it away and look at key issues with recent corporate earnings. >> we have a bit of a growth problem in the u.s. we have also got a solution. look at the in balance, the difference -- look at the in balance, the difference between earnings and sales growth since 2008. that is not good. earnings, you can manipulate that stuff after depreciation. you buy back shares any have raised earnings per share sales is money coming in through the

door. we want to see that line out here. that is what it boils down to. part whyerential is in we are seeing operating margins the highest they have ever been. i'm showing you 25 years, about 15%. it is that differential enabling this. it is maxed out. that is not necessarily good. we need to find topline growth, sales growth. if you look at the different sectors in the s&p 500, you will see clearly where you are getting the best growth raised on the estimates compiled by bloomberg over 2014. health care is where you have the strongest growth. what do you buy? xph.ll show you the eft the best-performing group the past year up 50% versus the s&p 500 18%. it is all about growing the top line. not earnings, sales. that is what you want. has got it. >> thank you. we will be on the markets again

in 30 minutes. "bloomberg west" is next. ♪

♪ >> live from pier 3 from san francisco, welcome to "bloomberg west." our focus is on innovation, technology, and the future of business. here with our editor-at-large, cory johnson. tom perkins is at it again. at thedown at an event commonwealth club with "fortune" magazine, reiterating his key points about america's war on the 1%. he had a lot of controversial things to say again. >>