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ler. tore as it, land, sea turtle. >> see you tomorrow. this is cnbc.com news now. google says its interested to learn more about the microsoft/yahoo search deal. steve voluntarily mer has said he expected, quote, a competitor to raise antitrust objections. >> oil prices have extended

losses after the energy department reported a 5.1 million barrel drop in weekly inventories, and hotel operator windom is seeing its shares rise after better than expected quarterly earnings. that's it from cnbc. i'm courtney reagan. good morning, and welcome to "the call." i'm trish regan. we are off by 33 points on the dow. we're going to talk about exactly where this economy is heading, where you need to put your money right now. it's all coming up. larry. >> thanks, trish. i'm larry kudlow. executive compensation is a hot button issue on wall street, and congress. the house to vote on their version on friday. but this morning, we'll debate the issue with republican jeff hencer ling and democrat gregory mooes. >> and the microsoft/yahoo partnership. what effect will it have on google? this is "the call" on cnbc.

all right. stocks a bit lower on the so-called weak durable goods report. but for the fifth consecutive session, managed to come off its lows. that's called resiliency. so the dow is off 28 bucks, the s&p is less -- what do we got, the s&p down 4 .25, less than 1/2% and the nasdaq after 8 1/2 points. we're going to take a look at a chart, i don't know if it's the right time to do it, put the chart on the full screen. 9 the three-month growth of core investment that goes into gdp is rising smartly. we have had two consecutive monthly gains. check it out. capital goods orders, that's the key number. my friend, steve liesman is going to go at this. i don't know why people are pessimistic, totally misreading this number. business orders are a key leading indicator of the future economy. trish, what's happening on your end? >> well, i mean, it's a great point, because you said, this is really a recovery that's going to be led, as they always are

led, by a shift in inventory. in other words, inventory gets so down to the bare bones that at some point, these companies have to go out and do some buying. and that's really what's going to spur this economy along. we're going to be dealing with the unemployment situation for a while. that's a reality. we're going to be dealing with a consumer that's very nervous for a while. that's a reality. but once these inventories get low enough, and they certainly are, and that number shows that you're starting to see some improvement in the capital goods spending, that's important. durable goods wasn't all bad news. i want to bring in bob pisani. ex transportation, there's some glimmer of hope there. and we should point that out. >> and larry but out the correct chart, folks. and it's -- the problem is, airline orders are screwy. they go up and down by months, and it's very expensive to order an airplane. so in it a month where a few airplanes are not ordered, you get fluctuations and so that's why they do durable goods as a whole number. the chart larry put up was ex

transports and they were stronger than expected. >> okay. steel. that's another big one we are going to talk about today. >> this is the thing where we get a smack in the face for people arguing roerve. we had mishaul, u.s. steel, nipan in japan and basically al. are not seeing dramatic increases in orders. now, sequentially from the firsn quarter to the second quarter, this is a modest improvement in orders, but its still pretty tough out there, and arcelo saying a recovery in 2011. >> i don't think disputes that. the reality is people are saying while this economy is likely going to improve, it's going to improve very slowly. and you're not going to see a huge gang buster, you know, go ahead. and so potentially much further on down the road. china is another one down today when you might think it would be up. >> right. here's something interesting. because the shanghai index, one year, it wept 1700 in november last year. 3400, 100% move up.

look at that straight line. down 5% today. commodity stocks got hit here yesterday on the strange dollar. there is profit-taking and rumors that maybe the chinese authorities will start slowing down the markets by increasing the impact on stock transactions. these things are floating around. you're right about the ipo, the biggest ipo of the year anywhere in the world happened today. china state construction. they're the ones that did that cube swimming pool. do we have a shot of this? that really cool thing in the beijing -- there it is. china stay construction was a company that built this, and they just went public today in china. unfortunately, they are not trading here in the united states. >> what is that? the ceiling? >> yeah, a cube and it's actually a giant swimming pool, magnificent. and it was up 56% after the close in trading on the first day. >> we're out of time, but yahoo obviously -- lack of enthusiasm there. >> yeah, i'll give you the details, but there's two things traders keep yelling at me about. number one, yahoo has not

demonstrated it could rebuild customer loyalty. and number two, microsoft, it's not clear how successful the bing platform will be. >> we head over to oh share ron upper son with the oil data. >> we're seeing oil prices on a free-fall. we're down more than $3. we have fallen more than a dollar just in the last half hour. since that inventory report came out from the energy department, the rise of 5 million barrels of crude, that additional crude on the market, is part of the reason why we're seeing oil so much lower. but add to that the dollar continues to strengthen. so it's not just oil and energy that is off here, but commodities across the board that are sharply lower today. when you compare to what -- where we were a year ago, we're looking at crude oil supplies, about 18% higher than this time last year. we're looking at gasoline demand that is down nearly 2% from the unrevised data that we got a

year ago on a four-week average. and this was demand down about 20% on the four-week average compared to a year ago. so awful these factors are weighing on oil prices, on energy prices across the board. it's really a dismal demand picture. >> all right. sharon epperson, thanks so much. take a look at this one-month chart. positive earnings in housing data fueling optimism on wall street. i think we're bringing you the chart, i promise you. but stocks initially pressured this morning by that weak durable goods order. the jury -- larry, there we go. see, we're just a step 3w450i7bd. the dow is down 41 points on the day. but look at that run at the end of the chart. worth pointing out. the jury is out on what kind of economic recovery there will be. so does wall street have it right, or are they too optimistic about the impending recovery. let's ask the chief investment officer of client investment strategy for russell investments, and peter bookvar, equity strategist, and cnbc's economics reporter steve liesman.

eric, is wall street too optimistic? >> i don't think so. you've seen two runs. you've seen a march 6 to early may run. that was taking catastrophe and collapse out of play. since, you know, may, you saw a very flat market until about ten days ago. now you've seen a run. that's based on the earnings that we're seeing in the second quarter. it's showing that companies have done a good job managing the contraction. now the market is going to look for top-line revenue growth. >> but are they -- i mean, peter, are they -- peter, what do you think? are they going to get the top-line growth? that has been the question as these earnings come in. >> statistically, i think the recession will end in the second half of the year. but statistically speaking is not necessarily going to feel much better than a recession, especially if that growth is only 1 to 2%. so maybe we'll get revenue improvement, but it's going to be lagging. i explain this economy as being blah. that's the kind of recovery we're going to get. whether it's speed months or

fiscal monetary in washington, u.s. growth is going to be blah. it's not going to be robust. and this is a -- not your ordinary downturn, therefore you don't get your ordinary recovery. >> i don't know, steve liesman, i myself feel better. what are we, wednesday morning? i feel better. >> i'm glad with that, larry. >> i want to circle back to business investment, which is vital, and also we can touch on the spade of housing numbers on the front page of the "wall street journal" today. let's tackle business investment. is it coming alive? because sometimes people forget, businesses create jobs for consumer incomes. >> i can that's the key to the recovery here, larry. the thinking is that business has put off a lot of capital spending. when stuff wears out, it has to be replaced. so there a number of inside durable goods, and we take out the aircraft because of the volatility inside that. so just call it general business investment. it is up now two months in a row. this is the -- what is this? three month you showed here? >> 8.4%.

>> at an annual rate. talking about the two months in a row -- >> you're at 1.4 -- and 4.3 in may. you're exactly right. >> after a series of declines, it shows we're at least bottoming out here in a year over year basis and maybe using the three-month average having an uptick, and you're right, that's one of key things that leads eventually to job growth. >> steve, what does that tell you, a restocking of the inventory? i mean, explain it in really basic sense. >> well, we see machinery up 4.4%, we had some computer growth until this month. yeah, i think -- i think there's a point that i call the thread bare bottom. >> right. >> when people have used stuff to a point where it can't be used anymore. it could be anywhere from automobiles all the way to machinery and computers where people let things go. and then they come back. >> metals. metals are rising very substantially in this report. electrical equipment substantially in this report. this is nothing. >> bill dudley from the new york fed talked about the possibility of a very robust quarter of growth if there is concentrated

inventory building. >> all right. so eric, let's add that to all that's better. i'm not going to say fabulous, but clear bottoming in housing. case-shiller showed a bottoming in prices. i think 15 of the 20 cities were flat or up. the first month-to-month up. we've also seen the bottoming even a slight rise in new construction of homes, the housing starts, the new home sales, and the existing home sales. so if housing stops subtracting 2% from gdp every quarter, this has to be a good thing, doesn't it? >> i agree with you. it does. and housing recovery is a key to economic recovery, and the consumer coming back to the marketplace. >> how about just a bottom, you know? let's take it one step at a time. it may not recover fully for five or six years, but what about a bottom? >> no, i think we're seeing a bottom coming in now. you're seeing a lot of housing numbers turn positive. you're seeing good demand. you still have relatively low mortgage rates. you've eliminated the economic

collapse, so people are still employed -- unemployment is going to keep going up, but most people have jobs, and i think they're going to start seeing a real strong floor on housing. and that's a requirement for consumers coming back into the market at a reasonable level. >> peter, what do you think about friday's gdp number? i know it's rear-view mirror type stuff, but more backward-looking things have derailed the market. >> yeah. i know everyone is going to be looking at the inventory component, and trade as being the boost. but i want to look at consumer spending, because that to me is the key for measuring the degree of the recovery and the sustainability of the recovery. >> what do you expect, peter? >> well, it's going to be sluggish. i see no sign that the con soumer all of a sudden is going to go out and increase their spending. if anything, they continue to pull back, whether it's because they want to save more or because the unemployment rate is heading higher and they still have difficulty finding a job. and one quick point about house prices. tokyo commercial land prices went down for 15 straight years and fell a total of 550%. house prices in this country

will still go lower, and it's still going to take a couple years to fully flush itself out. >> what -- i don't even want to go there. what's your -- steve liesman, give me a quickie. we've got to get out of this. q2, gdp. melissa? >> yeah, i'm going negative one-and-a-half. >> anything that matters is either minus 3 to 0 on the up side. that's the parameters, i think, that will get the market. many the market is prime for gradual slow growth, picking up next year. the numbers this morning do not contradict that. anything that contradicts that is what's going to get the market -- >> what if we get plus 2 to 3 in q3? >> that's something that would get the market's attention. anything over 1 or 1 1/2 in q3 -- >> it's not -- the stock market is telling us we're going to have better stuff. >> we got to go. thank you all three for joining us. a quick programming note, as well. the federal reserve beige book comes out this afternoon. get the minute by minute details. look how excited steve is.

on "street signs" -- really turns steve on. >> the beige book. the pink book. >> it's true. it's like "playboy" to him. >> i was going to say -- i heard larry on there, i heard the sound effects. >> i get so excited. >> maybe he can do a documentary. up next, a look at the yahoo/microsoft deal, and whether the partnership is enough to challenge google. >> and congress moving forward with legislation to give government a say on pay. we'll discuss the ramifications of big brother in the boardroom. i love that. two house members will be live from the hill, coming up, only here, on "the call." today there's a way to save more for retirement,

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welcome back. after years of back and forth negotiating, what do you know, microsoft and yahoo have finally agreed to a ten-year search in advertising partnership. this in an attempt to take on rival google. now, if you recall, back in 2008, young rejected microsoft's $47 billion offer to buy the entire company. take a peek here at how the three are trading. you can see yahoo, google both trading down. yahoo most significantly. more than 10% there. microso microsoft, however, up slightly. david faber joins us now with more news on the deal. hey, david. >> thank you. yeah, you know, you notice, of course, that stock price of yahoo down. now, it had been up in part on speculation that a deal would get done. nonetheless, there is some disappointment in the lack of an upfront payment. let's bring you some of the

details on, as you said, trish, this long-awaited deal, one, of course, that was -- well, out there more than a year ago. at what is at the time were perhaps more generous terms for yahoo. this time, microsoft will pay for traffic acquisition costs at an initial rate of 88% search revenue generated on yahoo's sites for the first five years, but carol bartz indicated it stays in that range. there is no upfront payment, however, with the deal. different than an offer that microsoft made about a year, a little over a year ago, which included a billion dollars up front and some guaranteed revenue from the deal. the companies could face -- well, they will face scrutiny. likely they'll get through it, but nonetheless the close is hopefully for 2010. what does it mean for yahoo it? it is a positive in terms of

numbers. perhaps less than some investors had hoped for. but they're talking about $500 million annually in gap operating income. that will accrue as a result of the result of the deal once it is fully operational. they will cut cap x because they don't have to spend as much on their own efforts by $200 million. and they ultimately seize as much as $275 million in operating cash flow increases again, as a result of what is essentially outsourcing their search to microsoft or under this so-called partnership of the two companies. in the press release, carol bartz, yahoo ceo said, quote, disagreement comes with boat loads of value. of course, one of the questions is, what kind of boat? you talk about a little row boat or are you talking about a tanker? but i've never seen that. boatloads. good for her. we're talking off camera here, larry and i. as for what that actually means, well, here's what bartz had to say on the company's conference

call. >> what was really important to yahoo is that we had a deal that floats successfully through our p and l. having a big cash payment up front doesn't really help us from an operating standpoint. we really wanted what was most important to us was a significant tack rate. >> and they got at 88%. no arguing that. but some argue that ultimately the benefits that are accruing may not be as much in some part as the risk being taken. here is what an analyst from jeffries had to say. >> there is going to be some integration issues there are going to be a number of risks that having yahoo own its own search business didn't exist. and now, obviously, they have to deal with them. >> remember, they spent a lot of money to develop their own algorithms under the name panama. the last two years, the stock hit a low of around $9 a share.

it was only, what, early '08 when we got that initial bid from microsoft, and they ultimately turned down what could have been $33 a share in cap and stock from microsoft to buy the company. then there was the search deal that they surfaced that ended in no deal. and finally, a year later, here we are, trish, with the deal in hand. >> all right. so one of my questions for you, david, when you look at the technology that yahoo has had on its search engine, and i don't think anyone is going to argue that they go to google first when they need to do a search, not yahoo. so will microsoft have to step up its effort to develop these algorithms to really create a product that can go head-to-head with google? >> well, microsoft would say they have done that already in part with bing, and can compete. the key, though, is acquiring traffic. and that is what they hope to do certainly through this partnership. those algorithms only improve as a result of ultimately more and

more people making queries. and so you do need to do that. that's one of the hopes here. the question, of course, is will it be enough? you know, google continues to have 65% of the search market here in the u.s., and i believe 78% worldwide. >> melissa is much more bullish than i am. let me ask this. these new algorithms in technology, microsoft, yahoo. as i understand it, down through the years, on google, you can click to sell. and you can't do that on yahoo. has that changed any, because that's always what's given google a big booster, besides their marketing. you can click right through to the sale. and they can't do that on yahoo. has that changed? >> i don't know, larry. you know, display advertising is not a part of this. >> they never could. is that a new thing? >> no, i think you can. >> all right. if it you can, i'm -- >> why don't we do some shopping during commercial break? >> yeah. take a look. frankly, i don't use yahoo. >> i do. >> and melissa, can you -- >> i saw that --

>> i think you can on yahoo, as well. but i'm sure we're going to get a million e-mails about this right away. >> what else -- >> i think we're going to talk about that. >> all right. >> coming up. >> we're going to go. good body language and ready to move on this. >> thank you very much. >> sure thing. >> up next, the key house committee is looking to give federal regulators a heavy hand in limiting executive pay packages. >> so is this big brother in the boardroom? we'll hear from two house members that will vote on the bill straight ahead here on "the call" on cnbc.

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the house financial services committee votes on their version of regulating executive compensation. this freeway day is the vote. house democrats are looking to have federal regulators monitor company pay packages. joining us now to discuss the fate of this legislation is republican congressman jeff hencerling from texas and democratic congressman jeffrey meeks from new york. mr. meeks, let me begin with you. how can one define what is excessive pay, risky pay? how do you dive into this part of the bill. i've never understood it, sir. >> i think basically what it's

doing, we're not trying to put a cap on executive pay is creating more transparency. that's what the bill really does, so all of the stockholders really understand that the situation and how much an executive is getting paid, and they can say, you know, this is -- they would have voted yes or voted no. you know how much money the company is making. so it is creating transparency so they can have a kind of trust in the system that you don't have a kind of golden parachutes and the problems that we've had, that we have learned from, hopefully, that have taken place over the last few years. and that's basically what the bill is going into. it's not going into anything specifically, saying that, you know, we -- x amount of money is too much or anything of that nature. the board of directors still have that authority. in fact, this is a nonbinding vote. >> representative hencerling, my question is, if you're trying to shift pay away from a bonus system and back to mostly salary, what is there to incentivize workers to want to go that extra mile, to really excel? >> well, first, if i could, respectfully disagree with my

good friend here, the bill goes way beyond disclosure. i'm certainly for more disclosure, but don't read the slogan, read the bill. what the bill says is that federal agencies that regulate financial institutions, and now we know that chrysler has become a financial institution, gm, aig. almost any public company can be defined as a financial institution, and now federal regulators have the ability to prohibit compensation packages that are incentive-based that they believe are not commensurate with sound, risk principles. in other words, you know, the federal agencies can now take away your christmas bonus, they take away your cell commissions. >> representative, i mean, let me interrupt you right there. why is that desirable? is it. >> well, it's not. >> these are public companies, you know. i mean, if a stockholder, if a shareholder doesn't like the way compensation is structured within a company, they have the right to sell their stock. >> well, that is the most important thing that shareholders can do. number one, if you don't like

the way that the company is incenting their employees and executives, and this bill goes beyond executives, it goes into employees, number one, sell your stock, don't buy the stock. number two, vote to change management. and number three, i would tell my friends in washington, d.c., if you have trouble with risky pay packages, quit bailing out companies that have them. >> what about that? respond to that, representative. >> only deals with the top five executives. i disagree with my good friend. it deals with the top five executives, and basically, it is nonbinding. it gives the stockholders a chance to know that there are golden parachutes. because too often we heard in the past when someone was with a company, and they -- a public company, and they were there just for a short period of time, they left after 24, 25 days, and this golden parachute was there, and the stockholders had no idea. and so what this is -- basically just like a member of congress. i'm a member of the board of directors. i am here, i vote. we want to make sure the

constituency, which i represent, know how i inviteded and why i voted, to make it clear and traerpt. that's what this bill does, makes sure we have the kind of transparency to give the confidence in the stockholder that their money is being invested well and so we can continue moving forward and keeping people investing in many of our institutions throughout america. >> greg -- >> jeff hencearrestling. i want to make this specific. a big controversy about andrew hall, the citibank energy trader who may make $100 million. it's a performance incentive bonus. he made a lot of money for the bank, probably their biggest income producer, for heaven's sakes. under that bill, would that rule out a $100 million bonus for an energy trader or any other trader? >> i suppose we really don't know. potentially, the answer is yes. >> what specifically would do that? in other words, as i understand it, you've got seane, which is what mr. meeks is talking about.

when you get down to specifics, you've got the pay czar from the white house, mr. feinberg, right? he's going to be looking at this. does this bill stipulate, legisla legislate, whatever ate, $100 million or other large bonuses that are performance-based, is what i'm really asking. this is not a salary. this is performance-based bonus. >> well, the answer to your question is potentially, yes. sections for the legislation, again, don't read the slogan, read the bill. section 4 says that the s.e.c., the cftc are regulators of financial institutions, can prohibit any incentive-based compensation system that they do not believe is properly aligned with quote, unquote, sound risk management. read the bill. they have the power to do that. so, yes, they could prohibit this kind of incentive pay. and in america, i just don't think that's right. >> no. that is exactly what it says. representative meeks, it seems like you don't agree that that's what this says. and i'm looking at this text right here, and it does say that, that regulators can ban

pay structures that are inappropriate risks to the financial institution. so it sounds like you could prohibit this particular pay. do you disagree with that? >> what we're talking about here is, again, you going into the area of systemic risk, and things of that nature, where you can go in and talk about something that is -- because we're trying to fix what we had a problem with before. so, no, we're talking about capping salaries, that's not there. talking about taking away incentives, no, not taking away incentive-based compensation. that is all in place. basically, what we're talking about here, clearly, is transparency, is letting the stockholders know what's taking place, it's trying to make sure that we don't have the golden parachutes that no one knows about, again. the bill is a plain and simple -- and most of the votes by the say on pay is nonbinding. >> just -- appreciate it, mr. meeks. jeff, just want to ask you, on the way out, we don't have any

real-time. if you're on the public dole, if you're on t.a.r.p., if you're fannie and freddie, don't you really have to accept these kinds of restrictions? >> larry, absolutely. >> isn't it a political issue? >> it's not just a political issue, it's what's right. what you do with your money is your business, what you do with taxpayers' money is congress's business. we support caps on pay for those who came with tin cup in hand to the u.s. taxpayer. period and end of paragraph. >> thank you very much. >> okay. but to a certain extent, guys, don't you think the reality is, all of these banks, if they want to recruit the best talent, they're going to have to pay them, period, so they're either going to do that through a bonus system or through salary and bonus. now you have seen a burge bunch of banks come up in salary at least to get the money they want to get to the people to them. >> and salaries and incentive based, i don't understand why that's so much more desirable. >> i think you're both right. i just want to say, where the rubb rubber meets the road on this,

politically and financially, when you're on the t.a.r.p. public dole. >> of course. >> and all these big banks -- or they still have -- goldman sachs still has the bond guarantee. >> one of the guys pointed out, well shareholders need to know. generally, shareholders do know. most banks come out and say, we shall setting aside this much money for bonus compensation this year. anyway, i don't know if you guys are getting the yelling in your ear. we have to wrap and go to commercial. i certainly have. a quick break. and then the earnings central roundup on time warner beating wall street estimates. what does it mean for making money in the media sector? >> and finally, microsoft and yahoo make a deal. but will antitrust watchdogs look to break up the deal? coming up here on "the call."

welcome back to "the call" i'm julia boorstin. time warner wrapping up its second quarter earnings call. numbers are down from last year, but ahead of expectations. adjusted profit 40 cents per share while revenue dropped to $6.8 billion, both beating projections. the company reaffirming its business outlook for the year. one big headline from the call, the company is preparing to spinoff aol. the ceo plans to focus the company on its content business. this quarter aol revenues dropped 24% as they continue to lose dial-up customers and fight advertising downturn. as to the $7 billion in cash

time warner has on its balance sheet, the company has once again started to buy back stock, purchasing $350 million in two months. acquisitions are a potential use of the excess capacity, looking for those that can provide strategic benefits and returns. but the economic downturn is taking its toll on the cable giant. >> the advertising markets where we operate have been more stable lately. but we aren't seeing major improvements. and because advertisers are holding on to budgets longer, our visibility remains lower than usual. >> the economy has also slowed dvd sales, despite very strong theatrical performance. and cnn, turner and tnt revenue grew. cable description increased and

they now expect strong renewals. and they expect to steal market share from the networks. and right now, on this news, time warner is trading down a little bit over half a percent. back over to you. >> julia boorstin, thank you so much. we want to talk right now about the buying students in the media sector for you. we want to ask david joyce, cable and analyst at miller paybeck. and also on the phone, doug kroits at could you wen and company. david, kick it off with you. what do you like right now? >> we like the companies that have bull revenue streams, meaning the companies that have more exposure to the cable networks. such as time warner, disney has a decent amount of exposure there. viacom does. and that's because they've got ad revenue that is looking like a bottom has been formed and is starting to improve. and then they also have the recurring monthly fees. discovery communications is another one that still has to report that investors really

have liked lately, and i still think there is some up side there. we also like cable companies, the operators, because those are mostly at recurring monthly revenue generators. >> okay. and doug, when you look at this safe, and you realize all of the challenges that the economy is facing and what that means for the media sector in terms of advertising, what gets you excited? /. >> you know, in the media states right now, there isn't a whole lot that gets me excited. i think as long as the consumer is under pressure from unemployment, negative wealth effects and constricting credit, it's hard to see any of these companies generating revenue growth. the one company i do like is dreamworks animation. there you've got a multiyear story where they're expanding their film slate and expanding television business, benefitting from the rollout of 3-d into theaters, and i think there is a tech lar earnings growth story. >> but with all of the concerns about the economy and sort of the pessimism that you're feeling right now, doug, about the sector, would you say that there is some buying opportunity in that some of these companies

have been devalued so much that they're starting to look cheap, or no? >> well, they have been devalued, but on the other hand, some of these companies are trading at two times what they were trading three months ago. so there has been a big rally in the group on the recognition that their businesses weren't going to zero. and i think in large part, the stock prices probably correctly reflect the outlook for the next 12 months. >> okay. i'm sorry, guys. i'm out of time, so i have to leave it there. it was a pleasure talking to both of you, david and doug. >> thanks. >> melissa. >> after much anticipation, the cat is finally out of the bag. the yahoo/microsoft partnership. >> but are the companies in for a major antitrust battle? deals on why micro-who might not be a done deal. >> i like that. >> right here on "the call." i have to get used to that, but it has potential. >> it's better than ya-soft. every sunday, lasagna at mom's was a family tradition.

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on the internet. i'll be using the 3g at&t laptopconnect card. he won't. so i can browse the web faster, email business plans faster. all on the go. i'm bill kurtis and i'm faster than floyd mayweather. (announcer) switch to the nation's fastest 3g network and get the at&t laptopconnect card for free. okay. welcome back. take a look here at wellpoint trading down more than 6%, $3.39. a share stock take a hit after the health imposed a 7.6% drop in earnings. enrollment falling 3%, and revenues also falling. so all of this contributing to

the down side we're seeing right now. i do want to have a programming note here for you. the cfo of wellpoint will be on "closing bell" this afternoon at 4:00 p.m. eastern right here on cnbc. >> all right. microsoft's ceo telling analysts he expects antitrust opposition from their competition, namely search giant google, but he added he thinks the partnership has a good case. here's how the three are trading now in the wake of the news. only microsoft is higher and really essentially flat on the day. however, yahoo getting hammered, continues to fall down 11%. so what are the ramifications from the deal? are there antitrust concerns. >> let's ask david garety, principal of gba research and roger kaye, founder of end point technologies. roger, what do you think? are there antitrust concerns here? >> yeah, but less than for google. remember, the combined entities are still less than half the size of google in the search market. >> yeah, let's put this up on the board here. let's go to david garety.

let's see, google, 65%, yahoo 20%, microsoft, 8.4%. i still think there is a better chance this christine varney -- an extremist antitrust -- she has gone after google, hasn't she? >> it's true going after google, but there are other issues to be concerned about here. there have been hearings up on the hill in june talking about privacy and to the extent that all search companies gather data on users. there are concerns here that the regulatory authorities as they review the transaction may actually try to get the parties to have data collection occur only on an opt-in basis. and from that standpoint, if it's opt-in, obviously not all consumers will opt in. it puts the onus on the companies trying to gather this data to make sure they have agreement. and to the extent there is less data being gathered, one might argue the accuracy or the relevancy of ads served online must suffer. and that might be the requirement placed here in the path to getting this transaction

approved. >> that is actually a really interesting point, because we've gotten a bunch of e-mails saying google is the only one that saves forever your search information. you know, it sounds like big brother, but at the same time, isn't that how they help you search better in the future? isn't that how they help advertisers get returns for, you know, what we think of as being relatively worthless advertising when you look at online, you don't necessarily pay attention to it, and may not buy that product. david, it seems like this is going to be a threatening issue. >> it is a concern, as we clearly indicated. and yes, advertisers have been gravitating towards the internet, because they have gotten greater productivity in terms of ability to try to take a mass medium and make it personalized because of behaviorally targeted date. and to the extent the regulatory authorities try to impede that it limits them getting to use the internet. bear in mind, the concerns are not just with respect to u.s. regulator regulators, but also the european union. obviously, both parties are going to take a shot at this. >> but roger, if it helps

consumers anyway, the data saving, as melissa said is going to make it better for the consumers to get what they want fast faster. if it helps them get better prices, get better information, get faster information. i mean, i don't like this antitrust. this is an assault on business. this is class envy. this is a war against capital. if it helps consumers, and why should the justice department, this christine varney, why should she be busting it? i don't get any of this stuff. >> i don't actually see this, though, as ending up with a differential regime for google on the one hand and this combine on the other. i mean, if there is going to be a set of rules, it's going to be a single set of rules that everybody has to play by. what this represents right now is a gate through which this group has to pass, in order to get approval, so maybe they can make -- >> but are consumers going to be helped or not? because that's the right definition. if it's coercing consumers, all right, bust them. i don't understand how this coerces consumers. and therefore, i don't understand why any of these antitrust things -- they're going after google, cisco,

intel, microsoft. even before the deal -- they're going after everybody. this is an assault on business. >> but separately from that, it looks to me as if having a viable second source for advertisers and publishers is a good thing for the market. >> there you go. >> basically, everybody is going to like that. >> actually, pro competitive to have these two up, because it gives advertisers, you know, an actual other choice as opposed to google. >> yes, yes, yes. >> that's it. i guess we agree. we're done. let's go. guys, thanks so much for joining us. >> the justice department is wrong. we ought to do something in this country to help business. every now and then, why can't we do something to help business, you know? we have had had a bad two year recession. why attack, assault, and shoot businesses? sorry. >> how about just not getting in their way? is. >> thank you. oh, that would be fabulous. fabulous! >> thanks for joining us, guys. we appreciate it. trish, over to you. >> melissa, how did you get him so wound up? >> you know, i goosed him at the break. that's what it is. >> he's all wound up.

all right. "power lunch" at the top of the hour. bill griffith, what have you got? >> promise to not take much of your time. coming up first on cnbc, the big phrma company turned out earnings, and looked good. martha stewart is with us in studio. her company had earnings out today, and we'll talk about that. plus her new martha stewart university online. a how-to university. and first on cnbc. maybe you read about this, this lawyer who spent four and a half hours with bernie madoff in prison yesterday, talking with him. because he's planning to -- he's representing some victims. did bernie tell him something that he didn't tell the feds? we'll find out at the top of the hour. >> sounds interesting, bill. quick break, and then the recessions pin down most sectors, including the sports industry, larry. >> but this is one sport fighting its way out of the economy. strongholds. we're going to tell you all about it next up here on "the call." cnbc.

shares of aetna lower, as number three u.s. health insurer reported a 28% drop in quarterly earnings, and cut its 2009 outlook. take a look at how the stock is trading. really not that bad, given that news. down about 2% on the day. find out more details on their outlook when the ceo joins maria on "closing bell" here on cnbc. >> okay. the recession is taking a bite out of virtually every sector of the economy these days, and professional sports are no

exception. but one sport winning the ultimate fight, so to speak, against the recession is mixed martial arts. cnbc's scott wapner is here and has got the details on this. hey, scott. >> hey, trish. thanks so much. the biggest brand in broiling the ufc is riding high. and i caught up with lorenz lorenzo fatita who bought into the fight club when it was in the brink of bankruptcy and we have seen his gamble pay off in a big way. >> ladies and gentlemen, we are live! >> in it 2008, pay per view events generated more than 5 million buys, beating the demand for boxing and wrestling. events typically sell out, and remain a hot commodity. seats to the marquis 100 in july 2009 went in a matter of minutes, and ranged from 500 to $40,000 a piece in the secondary market. evidence to lorenzo fratita that

the usc is weathering the economic downturn pretty well. >> we have been through the mother of all recessions, clearly. >> yeah. >> how much are you device hurt by that? >> you know what? we are up year over year in every category, revenues, profits, pay per view, live gate, international tv sales, sponsorship, everything. the question is, without the recession, where would our business be? >> and the privately held usc took in $75 million in revenue last year, up 37% from two years earlier. in the midst of the recession, they expect to do $300 million this year. trish, back to you. and i heard larry -- out of the corner of my ear saying he wanted to see a fight. >> of course! he wants to be in the fight, scott! i can hear him already. my goodness. all right. we've got to move on. >> we'll talk to larry about that. >> calm him down, if you would, please. get the scoop on this growing sport in ultimately fighting,

fitful of dollars tonight on cnbc at 10:00 p.m. and 1:00 a.m. eastern time. larry? >> i don't know. it's just my mood. i like to see a fight. we'll be right back for the last call. you're watching cnbc, and we are first in business worldwide. this is the aarp...

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