project pipeline on the way and the purchases are merely being deferred until the new products hit the market. >> got it, jim. thanks so much. we'll check with jim throughout the hour as the news updates -- the conference call is under way in a half an hour. check out jim's twitters also on our twitter page. certainly this is going to be a big story. we saw the nasdaq rally for its longest winning streak since 1992. microsoft certainly going to be a big wait in tomorrow's session. we should note, though, too, jim had mentioned that, yes, windows 7 is coming out on store shelves as is expected and the stock was strong going into sellings. so it's not entirely unexpected, karen. >> there's only so much you can make up for. everyone knows windows isn't out yet. so that should be in there already. revenue miss of that magnitude, that is really hard to overcome with cost-cutting. i didn't see anything about bing. >> saw nothing about bing. waiting for the 5:30 conference call. nothing about bing yet. >> right. so we'll keep you updated on that. >> meantime, the other big story we are following, of course, amazon.com, the shares are slumping in the after-hours session. a revenue this quarter may fall

short of estimates. we've got the monster. he's monitoring that conference call which just got under way. dr. j., what is the latest here? >> like you say, just getting started but i think the key issues here are going to be other than joe taranova, these guys are the liquidator of choice. i mean all of the sellers that come through amazon, that's where they get a lot of the inventory, quite frankly, that boosted up earnings in the previous quarter. will that continue or is the recovery carrying forward and they have less inventory that they're having to push out? so that's actually a big issue, i think, on the call. when they get to that or if they don't, i'll ask them that question. also, tax legislation, whether or not california and states that are demanding that they withhold taxes, whether or not they have absolutely cut to the associates that are in those states. they will not withhold for them. so the question is, of course, are you losing then sellers on amazon because amazon refuses to withhold? we'll see what they -- what

their answers are to those questions in the next 10 or 15 minutes. >> dr. j., thanks so much. of course, again, we'll be checking with dr. j throughout the hour as the amazon call gets under way and he's also twittering the call, by the way, along with jim goldman on the microsoft call. let's talk about this in the context of what this means for the nasdaq. and perhaps amazon is falling very hard because ebay posted such a strong quarter. had such huge gains it today's session. the bar was pushed very high for amazon. >> the con tech of all this, look, it's horrible. this is an 0 for 7 today if you throw in capital one, broadcom, netflix and other earnings that came out after the closing. you can't decide what you want to do. the market tells you what you're going to do. i know myself tomorrow you're going to have to cut down positions. you're going to have to get smaller. these are not good earnings reports from microsoft, clearly disappointing. it does not mean to me that longer term, you cannot like microsoft, but you cannot like it in your position as much as you did yesterday. >> but what does this mean, pete? we're talking about this before the show in the green room. the implications of the microsoft report on the rest of

the tech sector in terms of the cisco system, the maker of the part, the hardware, et cetera? >> they've been on this great ride for the last couple of weeks. you love the ride they've been on including microsoft. i just got to get those answers first. how did they miss on the revenues by that big of a number? number one and, amazon, why is amazon struggling so much when we heard from ebay, we had great numbers. as a matter of fact, the forecast was phenomenal at ebay. why are these two so distinguished, especially when you figure amazon is not just about whole auction system. it's about the kindle and all the rest of the products. so why is it right now that amazon is struggling so hard-core versus what ebay did today and i'll tell you what, i think in the microsoft case, if it's about windows 7, if it's about the people waiting for that, maybe that's going to be a phenomenal catalyst and maybe this pullback is a great buying opportunity. i own microsoft. this hurts a lot right now in the post market, but i think there might be some opportunities for somebody like me who still likes going forward microsoft with being with windows 7 and all the things microsoft is doing.

i do have to hear that call before i start deciding to buy more stock. >> the major thing was we all looked at it and said, what's going to be the next new leader? unfortunately, we still needed tech to be strong going forward while the other new leader is found. and this is a major blow to the market rally. >> i don't know that this is such a major blow, actually. look at what's happened to the nasdaq in the last two weeks. >> right. >> it's been so aggressive to the up side. >> it's been ridiculously huge. i mean if you put it in a little bit of con tech and step back, this revenue miss on microsoft is substantial but amazon is not so bad. >> i will tell you, this is the first day i've felt as if people were chasing the market rally. i felt like mutual funds were definitely partaking. they held out as much as they could. shorts were covering. they were forced to -- >> it does not reverse your sentiment. not at all. doesn't reverse the sentiment. it does, however, tell you to reduce your position, what you're seeing in the after hours here. it has been a phenomenal run. even your debt on -- everybody has been coming in. >> my sentiments, i got to tell you, this makes me a little bit nervous.

i love the tech name. data storage, that area just keeps on cranking. emc came out, great numbers. network appliance continues to promote. look at western digital. all of that whole space is moving. but when you get big cap names like microsoft out there like this -- this does -- >> we have to -- hold on. >> i'll tell you what, i'm not so excited to buy it. i'm looking at it, but i want to know why this revenue -- >> we had the chart of the day up, the longest winning streak since 1992. let's check on them and let's see what they're doing in the after-hours session to see if this has changed other people's sentiment as well. as we bring up the chart, my guess here is that, yes, this wiwia damper in tomorrow's session. but here we go here. you see in the after hours, a little bit of a softness. let's go straight to jim goldman. he has some breaking news. jim, what is it? >> yeah, you know, melissa, joe was just talking about any update on bingment i can tell you i don't have an update on bing, but i have an up date on yahoo!

"the wall street journal" is reporting that yahoo!'s board is scheduled to meet as early as later today to discuss a possible search deal, a search proposal from microsoft that at this point it's unclear whether the board would support the deal that is currently being discussed. but nonetheless, a meeting, the "wall street journal" says, of yahoo's board to discuss a possible search deal with microsoft. details to come. could be occurring as early as later today. guys? >> is that a good thing or a bad thing for yahoo? i don't know if people were hoping that it would be a takeover in its entirety. it's just a search kind of -- >> i think those days have -- yeah. karen, i think those days of a total deal for yahoo are -- are long past. and unless as carol barts as said in the past and recently, microsoft has suddenly come up with a "boatload" of money. i think this is a search partnership and if these guys can string a deal together, we saw microsoft's online division post about $731 million today in revenue and another horrible loss. microsoft needs to do something with its online strategy. and yahoo! seems to be the most

expedient thing out there and yahoo! quite frankly, can use the marketing and financial muscle that microsoft has. a deal today makes much more sense. >> got it. and, jim, we want to bring our viewers' attention to the headline that we are running. these, of course, are all courtesy of "the wall street journal." it is unclear whether the yahoo! board actually wants any sort of a deal with microsoft. while, you know, buying yahoo! in its entirety may be off the table, we saw yahoo! in yesterday's session ride midday on the back of reports of some sort of only partnership or some sales of parts of its business. >> i think that's a good reason why you always want to have a little piece of yahoo! in your portfolio. we hear from carl icahn all the time about them warming up to a deal. so if that's the case, and this could be something great for yahoo! they need something, as jim just mentioned to get themselves some muscle in their -- as he just put it. microsoft would be a great addition. >> i think it's great for microsoft because obviously it raises the market share. the introduction of bing over the last couple of months, this

is what it allows microsoft to do. it allows them to negotiate and basically cherry-pick the crown and only jewel of yahoo! right now and pull it out in a deal. i think it's a great deal for microsoft. obviously bridge that search share up to 30%. >> a lot of interesting news. of course, the microsoft conference call is getting under way in just about 20 minutes. it'll be interesting to see -- i'm sure the topic is going to come up. it will be interesting to see what the management has to see about those "wall street journal" headlines. the other big story, america express. we're watching the stocks fall in the after-hours session. revenues falling short of estimates. there you have a decline in american express shares. another case of american express going strong into earnings and then we're seeing a sell-off on the actual report. of course, we'll stay on top of this story as it goes. the xlf, we'll check on that to see what impact, if at all, american express is havinging on the financial sector. this was a sector that has been strong over the past couple of days. you see it a little bit soft in the after-hours session. karen, this is a name that you follow. anything out of the quarter that you have been able to see so far

that surprises you or concerns you perhaps about credit losses? >> no. i haven't seen the data yet. but the stock -- another one that's had a huge, huge run-up. the bar was moving higher and higher for them to be -- i didn't -- i can't tell if this is a terrible quarter. i don't think it is, but the run-up already was really reflecting that they'd knock it out of the park to have the stock go up after the gains they've seen. >> the first glance at the numbers of american express, they do not look horrible. but you had to knock the ball completely off the cover in the -- after the price action that we saw today in the overall market. i mean, you basically had to have earnings after the close that eclipsed the expectations that we have put forth over the last three or four weeks, which have all been raised. so, you know, understand the environment that these earnings were coming out with this afternoon on a day when the market rallied so significantly. >> the market has always overshoots so we overshot to the downside. we're overshooting to the upside.

and this is purely us a slight correction. we'll have guests later to talk about the technicals of it, but yes does it hurt sentiment, is the rally over? who knows. >> the technicals is a lot about what this market is. mcdonald's numbers weren't bad today that they put up. i thought they were pretty impressive really. but the stock has struggled. each time it's gotten up towards 60, it pulls back. it's been an opportunity. a hit and then pulls back, gets once towards the mid-50s once again, and then everybody wants to pile back in. they don't want to own it at 60. it's all about the technicals. if they can get through those, then the sky is the limit. some of these commodity areas, when they get through that level of resistance, then they've got plenty of upsides. >> right. and tease are all trading vehicles. mcdonald's, i bought mcdonald's today. pete, you said you're going to buy it too. i'm glad because it's been a defensive play. and tomorrow, that actually ownership of mcdonald's should bode well if the tape rolls back over. >> and look at where we are in the s&p, where we corrected from. two weeks ago we're at 870. we're 100 points higher. i mean obviously not now after

hours but still that's pretty aggressive on the way up, i would think, by anyone's standards. >> right. the question is, you know, the mood that we've seen in the past couple of weeks in the markets, were we already anticipating that the earnings would knock the cover off the ball? isn't the fact that the earnings actually have to come out, is it that we've already priced that in so we're not seeing that and we're going to come back to normal? >> the nasdaq up 13% in the last two weeks alone. you've got to have a lot of really good news to keep that going. i mean, this last couple of days i have thought of this is the flight from safety. and this is a trade we've had on safety versus short to hire, plying names. hasn't worked at all. i think tomorrow maybe that will start to work because you had names like walmart actually down today and some of the specialty retail just zooming. so i think that will reverse. >> and the early tell tomorrow, pete, you're all over this, the vix. let's see the vix jumps. let's see if the dollar rises overnight which has been the safe play. those will be the -- >> to that point, the vix did

pop today as we got through 970. suddenly the vix is at the high end of the day. why? because of steve's point. i think people are starting to get themselves in a position where they are chasing this market and as they chase it they're looking for that upside. i mean a few weeks ago we had all kinds of s&p buyers of the august 100 calls. those were 19 and 20 cents when they bought them they're now trading a buck 50. that's a home-run-type trade. they bought 200,000 of those last week. >> okay. just want to take a break from this conversation for a moment and check on the futures again. we're digesting a lot of after-hours stories. microsoft, amazon, american express all lower in the after-hours session. microsoft and american express, of course, two dow components. let's take a check on where we stand on the s&p futures. as well as the cube. you can see the futures are trading later on the back of all that earnings news and the qs are also trading lower. let's go keeper into the microsoft story and for that we bring in peter misik

of cana court adams. who is on the fast line. peter, great to have you with us. >> thanks for having me. >> what was the most surprising part of the miss with microsoft's report? >> how much money they lost in online services. it was a record. >> you know, when people see a pull back on microsoft like the one we're seeing in the after-hours session, you've got to wonder if this is potentially an entry point for people if they're not already in microsoft. at this point, are you believing that that -- this perhaps is an entry point or are there too many doubts in your mind based on this quarter? >> our doubts aren't on this quarter. our doubts are that this quarter is a symptom of so what you're looking at is that microsoft is having asp pressure on their price of the windows. netbooks, for example, they're not able to get as much per, and as the price of laptops and pcs continue to come down, oems are pressuring them to lower prices. and they have new competition. you have android coming out and chroma west and look at mac,

msfs, it continues to gain share. the call on windows 7 upgrade is not going to be made or broken on this quarter. we won't know that until we know what the launch looks like in october and you'll probably get a ream read in early november but until hen this trade is a tough trade right now. >> peter, it's joe. what is your take on the potential microsoft/yahoo deal and the affect on microsoft itself it does happen? >> we wouldn't be positive on it. we think chasing the search market in this way is really a lateral move. what we had alike them to do is think caught side the box. you're not going to catch google doing a deal with yahoo! you've got to do an end run. you got to look at a different way. you've got look attack mobile. you've got to look at new, intuitive ways of handling data. so nadal is a great way of looking at that or natel, sorry. you've got to think outside of the box. trying to catch google head-on, don't see it happening. >> peter, were you down on the deal prior to this quarter or did your sentiment change based

on the weak quarter they posted? >> no, we were a hold coming into the quarter.r. we figured that we've got at least another two quarters of weakness here on the pc side. we're not overly fussed by it. our key thesis, though, is what are we going to see in terms of upgrade from windows 7? are we going to see i.t. departments start to spend again? clearly that's why the market has been ripping. people are anticipating that in the future. we really didn't expect it this quarter and we don't expect it next. >> and, peter, based on microsoft's results, do you have concerns about other names in your space or is this a microsoft-specific problem? >> if you compare this to what intel told us, intel told us volumes are good, pricing has been tough but not as bad as people feared. intel has their chips in netbook and doesn't have as much of a pricing disparity as microsoft does from what they get on a copy basis and how they're handling that shift. their competitor is on its heels. for microsoft for the first time they have a new competitor so the read-through is more

microsoft specific. >> peter, thanks for being with us. from canaccord adams. microsoft lower in the after-hours session along with amazon.com and american express. all of those stories, we'll continue to follow throughout the show. coming up next, jim goldman and john najarian with updates on all the after-hours action and all the names we mentioned. and why mcdonald's is one of the stocks caught up without a rally cap on. the ceo of goodrich and our stock of the day. lots more ahead. stick around. during times like these

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welcome back to "fast money." want to continue our coverage of the two big after-hours stories we're following, microsoft and amazon. let's go out to our jim gold pane for the very latest on the

microsoft conference call which is about to get under way. jim? >> yeah, you know, we're going to get that conference call in about eight minutes if now, melissa. believe me, you know, where that missing revenue is and the latest on this development from "the wall street journal," they're reporting that a source says that yahoo!'s board is, indeed, going to meet this afternoon or this evening to discuss some kind of proposal, a partnership of some kind, with microsoft. it's not clear right now whether yahoo's board is even interested in a deal anymore. and further, this source according to "the wall street journal" says it is unlikely that any resolution one way or the other will be announced today regarding any kind of microsoft/yahoo! tie-up. we'll get details on that. i guarantee you that they'll be asking those questions coming up on this conference call shortly, just to get some kind of clarification. >> you've got to wonder, jim, if there's more skepticism about a

potential tie-up given the weak quarter that microsoft posted. >> i'm sorry. say that one more time. >> you've got to wonder if there's increased skepticism about the tie-up given the weak quarter that microsoft just posted. >> not only that, but microsoft continues to shoot itself in the negotiation foot. something always seems to have gone wrong on the yahoo side. something always seems to have gone wrong on the yahoo! side but lately yahoo! has the momentum and now we look and see what microsoft reported today. that online services division has become just almost embarrassing to microsoft. only $700 million or so in revenue. >> right. >> and $700 million in red ink. it is absolutely stunning that after all this time, microsoft cannot come up with an online strategy that works. >> got it, jim. we'll check in with you later. when the conference call gets under way. let's go straight out to dr. j., who is on the amazon conference call. dr. j., what are the headlines there? >> well, it's more or less a very conservative call. jeff bezos is not on it. he was traveling. which tells me that jeff knew that the numbers weren't going

to be stellar and said, i'm going to take a pass on this one. that's just my read of it, melissa. but the numbers overall look pretty good. they're conservative. $4.75 billion to $5.25 billion is what they're looking ahead at. they're also talking about mobile and how it can drive business to amazon. and in particular, about a 30% growth, which is above street estimates, for third parties that are doing business on amazon. so that's good news. if they can, you know, keep the margins up on that side, which they have, in particular in north america, that will be a positive going forward. so overall, no ground-breaking news on the call so far. >> all right, dr. j. thanks a lot. we'll check back with you later in the show. traders, what do you make of any of the commentary we've gotten so far from jim and from the amazon conference call? >> well, i think more and more as we digest the post-earnings news, i think it looks like to karen's point maybe it's not as bad as we initially think it is in terms of positioning.

you reduce your position. you look at the numbers. you see what the numbers present. but i think overall you don't have this dramatic change in sentiment. you just cut back what you have and you move forward with the opinion that these stocks move higher on a three to six-month basis. >> although i have to say, microsoft, we still have got to hear why these numbers -- why did the street have this so wrong? this isn't just a small miss. this is a massive miss. we've got to find out why exactly. i'm sure jim will get the answers for us. but that's a huge miss. >> we're just about five minutes away from the start of that conference call. and, of course, we'll keep you all posted. meantime, time for a little bit of chartology. the dow crossing 9,000 there the first time. 1 straight wins h longest winning streak since 1992. we thought we'd bring in carter werth to walk us through the action. in terms of what the chart shows, what do you think here? in this what are you seeing? >> to speak to those big name, microsoft and amazon first, the price action as they're indicated right now in the night

market, they're only back to where they were on monday. meaning is it a sell-off or is it simply returning to where they started the week? they had big weeks. i wouldn't read a lot into that day-to-day action. strong stocks and i would leave it at that. in terms of the major averages, here's the nasdaq. i want to tell you what we're thinking in the period immedi e immediately ahead. the nasdaq led this whole thing, right? and we think it's going to finish with the nasdaq, if you will. so the s&p makes a low as does the nasdaq in most equities in the fall, november, and the s&p makes a sharp new low in march. that's not the case with the nasdaq. the nasdaq does not break its low, meaning impressive relative strength, and it leads on the way out. where we think ultimately it ends up is it comes back to level from which it broke, right, a well-defined level where there's a lot of memory. supply is here. there are people who didn't have a chance to sell suffered this incredible collapse and when they are made whole, hume nature is to get out. we think 2,100, which is about 5%, 6% from here, is where basically the nasdaq is going.

by contradistinction, look at the next major average, which i have up here. i believe it's the dow jones industrial average. >> okay, go ahead. >> okay. so as distinct from again the nasdaq the dow and the s&p, it makes a sharp new low in march. what we're seeing here, this eight or ten-session rally simply brought you back to the top of the range that's basically persisted for the better part of ten months in a massive bottoming out position. we do not think it's in a position to retrace as the nasdaq has done. in fact, it's going to get stuck right at the top of this range. hence the drawing that you have here. so we're looking for actually not a lot of upside on the dow and the s&p, let's say, in the week as head and yet we think the nasdaq will continue. we think the whole thing kind of finishes with the tech stocks just as it began. but let me say something about -- i'm sorry. go ahead. >> no, go ahead. >> something about the earnings cycle. what creates interesting moments is the release of information. >> sure. >> there is a lot of earnings beats than earnings misses. the idea is can you figure out which stocks are going to

beat rather those that are going to miss? and here's the interesting thing. just look at price action before they released earnings. in the two weeks prior in trading before all the stocks that beat versus those that missed, the ones that beat were up 5% on average, the ones that miss going into the earnings were up only 2%. meaning their wisdom and share price, the stocks act in advance of the fact. go with relative strength. very important. >> okay. pete, what do you make of this in terms of bumping up against upward resistance on both the dow and the s&p 500? >> those charts just say it all. it looks right now like we are at this kind of somewhat overbought area, carter, if i'm reading that right and we're ready for some sort of a pullback and i can tell you this, out in the options pits today, massive put leverage, moving themselves to closer strikes so people are not totally buying into this rally right now and they're positioning themselves -- there was a monster trade today,

moving from august to december. and they traded up a few strikes from the 92 level to the 95, but pushing out to december to buy some protection. probably not necessarily a bearish move, but something to protect themselves here from what we already see by that chart, which is a potential pullback. >> all right. >> fair enough. as you see it, i think it's a very interesting moment here. it's a very steep -- but the key is what you introduce with the ten days in a row, the nasdaq strike, hasn't happened since the early '90s. the implications are ott that it's so much overdone these days but longer term. it's incredibly powerful. >> carter, thanks so much. next trade, goodrich. a leading supplier for aerospace and defense industries. reported second quarters earnings. it outperformed its peers but sunk 7% today after profits shrunk 5.1%. we've got the goodrich ceo joining us here on "fast money." marshall larsen. marshall, great to have you with us. >> great to be here. thank you. >> first of all, the big question on investors' minds has to do with defense spending and the potential slowdown we might see under the obama administration. one major data point that we

have so far to digest is one from one of your key customer, boeing, who has said that it sees that the department of defense has, in fact, trimmed or will trim major boeing led programs. does that necessarily mean that we should brace for a decline in sales in your business? >> no, not at all, melissa. we really have positioned our defense business on those parts of the defense budget that are continuing to grow. for instance, the intelligence, surveillance and recognizance or reconnaissance markets, we provide a lot of that on u-2 spy planes and so on. we also are very well-equipped in supplying the helicopter market, which is another portion of the defense budget. it continues to be -- have new built helicopters and refurbished. in addition, we are very well-positioned on the f-35 lightning, which is going to be the one fighter that's going to continue to be built. >> can you give us a breakdown between the traditional aerospace part of your business and the new growth areas that

you had cited, the smart surveillance, for instance? >> about 1/3 is in the new intelligence and surveillance and reconnaissance market. the rest are platform related, parts that go on various military aircraft. such as the f-35 and the helicopter. >> okay. marshall, we've got to leave it there. we apologize for the short time. would've got a lot of breaking news this evening but we hope that you'll return to "fast money" very soon. marshall larsen, the ceo of goodrich. >> guy, it seems like goodrich is positioned in the sweet spot, so-called sweet spot of the defense spending budget. do you like goodrich here or do you like the other names that have reported of late? >> well, i think it all boils down to if you truly believe that the second quarter, there was a trough in the suppliers to theary row space sector. you know, if you believe that, you believe it's a trough then, yes, goodrich is going to work for you. i don't know necessarily permanently if q- was the trough. >> also, citi defends as a much

better play on boeing. boeing has been plagued. so i think that if you want to play it from that angle, it's a much better play. >> okay. that is your aerospace play. we'll continue to keep you updated on the microsoft and amazon calls. microsoft call getting under way right now. we'll check back in with jim goldman. more "fast money" coming up. i never thought it could happen to me...

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ann taylor. the women's clothing retailer was among the most active names in the nyse today. we've got several after-hours stories that will have an impact tomorrow. microsoft, american express, all trading lower after reporting results. let's check on the futures. s&p futures. first up here.

and we do see some softness. a little bit of a comeback here of late, but some softness in the after-hours session. on the qs, we have microsoft and amazon as potential weights in tomorrow sessions. we are lower, of course. the nasdaq today posting its 12th straight gain. its longest winning streak since 1992. moving on here, morgan stanley shares rebounding today, a day after losses at the former investment bank. they were questioning whether management had become too risk adverse. with goldman putting some distance between the two, morgan's ceo felt compelled to ramp up the risk. well on air editor charley gasparino joins us. it seems like he's got to. >> can you imagine we're talking about taking mere risk? here's the interesting thing compared to six months ago. the government is essentially saying take risk. build your balance sheets. you've got the -- you still have toxic assets on the balance sheets. morgan tanly has it. jpmorgan has it. they all have it. what goldman did, what some of the others did, i have to admit even citigroup to some extent

did, they went out and took the cheap money. remember, if you have access to the discount window, you can borrow in the secondary markets, you can borrow at a cheap rate. in the repo market -- they're saying do it. do some -- whatever -- you know the trades better than me, velocity trades. whatever the heck they call them but do them because now you can borrow cheaply. to do these trades in the bond market, interest rates are low. it's a good environment to do that. morgan stanley didn't do it. now, part of me wants to say -- because i actually know john mack very well. i like him. he's kind of doing the right thing. he learned from his past mistake. i think they had a $9 billion trading loss in october 2007. they had lots of toxic assets on the balance sheet. heavily leveraged 30-1. he took the leverage down to about 11-1 and he's cutting back on the trading in a major way. that's the dilemma right now. i think he bet wrong. from what i understand, they are now taking more risk. you have to ask yourself -- >> is it too late, though, and is john mack going to pay a price for not having taken a risk during one of the biggest trading opportunities in our

lifetime? >> you're right. whether do they call it? whip-sawed? >> right. >> okay, the market is up, right? you do have a chance. you know, we hear a lot about inflation possibly in the future. that's not good for the bond market where you make these broad trades. these broad trades. it's really a possibility. and, you know, for me, it's a guy that i like. he's a good guy. he's an honorable guy. he's not a guy that went out there, can't say this about john thain. can't say this about, you know, what's his name, schwartz, the guy who ran bear stearns for three minutes. he didn't go out there and say everything is hunky-dory and then the roof is falling in. john mack kept his mouth shut. he did the right thing. i think, you know, it looks like he could be -- whip-sawed so to speak. >> we'll check back in with you, charley. the oracle of the bronx -- >> born in the bronx. i grew up in -- >> also on-air editor. >> always a pleasure. coming up, an interview with the ceo of ebay. of course, we'll ask him about

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welcome back to "fast money." we are live at the nasdaq market site in new york city's times square. ebay closing the day up 10% after blowing past analysts' estimates and raising their guidance for the third quarter. with us for a first on cnbc is ebay's ceo, john donahoe, who is with our own julia borsen in pasadena, california. julia? >> thank you. i'm joined by john donahoe. ceo of ebay. john, thank you so much for joining us. >> glad to be here. >> yesterday ebay posted quarterly net profits that beat wall street paks. what is it that really worked in the quarter? >> well, we're just staying to our plan. we're focusing on executing across our ebay business where we're driving real turn-arounds and i think making nice progress and then our growth businesses of classified stub hub, paypal, skype had very strong progress. what was a very tough economy. >> and those numbers were still down from last year? >> oh, no, everything in our portfolio grew and grew double digits except for our core auctions business. paypal, for instance, off ebay, it grew 32% in the second

quarter. >> obviously we had a great day in the markets today. a lot of the momentum this week has been driven by tech stocks. but we've seen just in after-hours trading that both amazon and microsoft are both trading down. i believe microsoft is down about 10%. was this momentum this week, dow crossing 9,000, have we psychologically turned a corner? or was this a temporary blip? >> i don't have a silver ball or a crystal ball. but i can tell you what we see in our business is we see stabilization. i think stabilization is the -- is the word for us. we saw pickup in the second half of june so that's the word for us. >> now, you offered some guidance for the next couple of quarters that are above what analysts were expecting. do you think that we are off the bottom? i mean, stabilizing, but we really see a turn? >> as i said, stabilization. i don't know what the second half of the year is going to bring, whether we'll go up or down from that. but we're just focused on delivering great deals.

what we're finding is more people are coming to places like ebay because you can find something that's lower priced than other places and people are shopping more online because you can find cheaper items. >> one of the things you have been focusing on is building up your fixed-price business. why does that help ebay? >> well, it's actually -- we're offering choice. we're now half auctions, half fixed price in our business and we just want to offer buyers' choice in how they want to buy and sellers' choice in how they want to sell. >> how much does the growth of your fixed prices have to do with your competition, specifically amazon? >> oh, i think our marketplace is the largest marketplace in the world. we're 2 1/2 larger than any other e-commerce provider in the world. and so anything that happens on ebay i think is more a function of how we're meeting our customers' needs than anything he. >> speaking of amazon, amazon just bought zappo. ebay has plenty of cash on its balance sheet. you keep accumulating more cash in your balance sheet.

do you see ebay making any acquisitions? >> we've made two billion dollar acquisitions in the last six months. we're using the balance sheet strength to get stronger. we bought bill me later in the fall, which is a great transaction al credit business and then we bought t-market, which is the leader e-marketplace business in korea. it will have clear number one strength here. >> anything else you're looking at right now? >> you know, we'll keep our eyes open and where we see opportunities that will strengthen our core e-commerce business or our core payments business, we won't be shy. >> great. unfortunately, we have to leave it there. we look forward to hearing more about what you have in the works. >> great, julia. thank you. >> melissa, back over to you. >> thanks, julia. john donahoe, the ceo of ebay. karen, what did you make of his comments? >> you know, the thing about ebay and amazon, they both put up good quarters. the reason that ebay's response was so much better was that ebay was trading at 13, 14 times and amazon was at 41 times.

so you really need -- i mean that disparity is so huge that amazon just couldn't overcome it, no matter how good they put up. >> absolutely. >> absolutely. >> we should keep you updated on some of the headlines that are crossing right now. of course, we will re go out to jim goldman. on the microsoft conference call they are saying that they see exciting demand for win 7 and that north american pc demand has normalized. that conference call is going on right now. american express saying that it expects better third-quarter and fourth-quarter u.s. write-offs than had been expected. these, of course, are stories that we are monitoring and we'll bring you the latest on the other side of this break. stay tuned.

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welcome back to "fast money." three big after-hours stories that we are following, microsoft, amazon, as well as american express. all three will prove to be weights in tomorrow's session. this follows a day where we saw

markets. this follows a day where we saw markets rally more than 2%. the nasdaq in particular, which will be hit by microsoft and amazon tomorrow, today finishing out a 12th straight winning session. its longest winning streak since 1992. is it over, guys? i hate to phrase it that way, but maybe we ran too far too fast and this is just the cold water. >> you know what's funny? when the market goes straight down, no one ever asks how long can this last, right? you just assume that the next day is going to be another down day. when the market goes up, everybody says we're so long in the tooth in this rally, it can't last forever. today was the day of reckoning. i don't think the rally is over, but we'll definitely have to take a couple of steps backwards or maybe lateral for the next couple. >> it's that softness in microsoft that really seems to be troublesome. it's waiting on the s&p 500. it is, of course, amongst the top 100 companies on the nasdaq. it is a dow component as well. all three indices will be hit by declines in this stock.

it's a weakness that's really a bit of a concern. >> some of the other names, the expectations have gotten too high. but this miss on microsoft, a revenue miss of that magnitude, that's more than the bar being too high. it's bad. >> let's see what the microsoft conference call holds for us. jim goldman has been monitoring that call. jim, what is the latest? >> yeah, melissa. chris ladell, the company's chief financial officer, is just going over the company's expectations for the company's upcoming fiscal 2010. not so many specifics as far as earnings and revenue are concerned. he's really going segment by segment as far as the company's units are concerned, talking about the climate. but some of the choice comments here. "we are a stronger company today than we were a year ago. the economy continues to be challenging." he's anticipating tough year over year comparables for the rest of this calendar year, but he does say that microsoft has "seen the worst." the fourth quarter is going to be, you know, this was difficult time for the company. he does expect market conditions to be difficult. conditions he says will not

improve much, but they also will not worsen. again, microsoft seeing the worst. he says that there will be continued tough times for the balance of calendar year 2009. he does expect some improvement in 2010. he thinks there's going to be a confluence of events, not only market-improved conditions but all of these new products that microsoft is hoping to get out the door. and those two things together, he says, will accelerate the recovery that microsoft hopes to experience come its fiscal year 2010 which, obviously, begins in the current quarter. we'll see how it goes, but, obviously, those comments not enough to turn microsoft's after-market slide around. >> all right. jim goldman, thank you very much. that is the latest on microsoft. the conference call continues. we're still looking for commentary, and we're still listening for the questions that will be asked by the analysts. certainly, microsoft management will be grilled about that revenue miss as well as the tie-up with yahoo! in some form. >> i think steven is right.

the market shifts potentially into a consolidation phase. i don't think you see a rollover. when you look at microsoft, the stocks trading about 23.5 right now. do you think microsoft is going below 20 before it goes above 30? i still think microsoft goes above 30 before it goes below 20. (announcer) this is nine generations of the world's most revered luxury sedan. this is a history of over 50,000 crash-tested cars... this is the world record for longevity and endurance. and one of the most technologically advanced automobiles on the planet. this is the 9th generation e-class. this is mercedes-benz.

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time for the final trade. >> abbott labs his pulled back the last couple of weeks. i think you look at it here and buy it. >> anadarko. they're still cash rich. they can continue that drilling and they still have a lot of onshore production. >> whole foods puts. i think this stock is really expensive. you have safeway trading down today because the customer was trading down. how can that not affect whole foods? >> when you look at microsoft, think back to apple. i think this is a great opportunity. i love microsoft for that reason. also take a look at fucyrus. it's been on a great run. any pullback. that's a buy. >> and before we go, i want to check the futures once again. the big after-hours stories will be weights on tomorrow's session. we're seeing the futures trade lower. the s&p 500 dipping the after-hours session. look at the nasdaq. microsoft and amazon.com will be the big stories of the day

tomorrow. and we are seeing softness there as well. that does it for us. i'm melissa lee. see you tomorrow at 12:30 for the halftime report at back here tomorrow night. oh, hi! welcome to progressive.com. are you all right? a ferocious white whale wrecked my boat. well, i'm sure we can help you, captain... ahab. well, it looks like you haven't had a claim in over four years, so you don't have to pay a deductible. that means you saved $500! $500?

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