that's just trying to i think the job is the opposite. you want to buy low sell high. >> want to thank you very much for coming in today, adam. >> good to be here. thanks for having me. >> absolutely. >> steve, thank you for joining us on two hours of sleep. we appreciate it. >> my pleasure. >> joe didn't push my buttons today. >> i tried. >> see you in a week. >> that does it for us. "squawk on the street" starts right now. welcome to "squawk on the street." i am karl kingston with kayla tornado watch live from the nyse. melissa, jim, david all have the morning off. busy morning in business news as we monitor the tragic developments from the shooting attack in aurora, colorado. want to keep an eye on europe. markets there down 2 to 3% as officials discuss spain's bailout package and spain says its economy will continue to contract even into next year. our road map, two big reports

out of technology. google beats expectations and microsoft with the first ever loss after that writedown which of course was expected. >> general electric beats hohny and says the growth outlook is unchanged satisfying europe is tough but within expectations. >> ka yak software today and fender withdrawing the offer at the last minute. >> what happened to chipotle? a huge slowdown in same-store sales and goldman takes it off the buy list. >> joining us dennis berman. a nice showdown here. >> i don't know what we showdown but we will look forward to it. a lot of ipo news. >> start with two big tech giants trading higher in premarket. google reporting second quarter profits of 10.12 a share, 8 cents above and revenues a bit shy of forecast. microsoft beat expectations ex items the dow component earned

67 cents a share, a nickel above, if you include the writedown of the online advertising unit amounts to the first quarterly net loss as a public company. dennis, talk about -- tech treated us relatively well this week. look at qualcomm, ibm, and does this add to that fire? >> i love the ex items idea minus the huge $6 billion loss microsoft did great, and to me that really shows some of the strategic missteps they have been making over the last few years and still some of the that core growth that they are used to year-over-year and the office and the applications business is just not what it used to be, and they know it. we saw the premiere of the surface tablet they were talking about a few weeks ago. there is a pivot coming for microsoft. everyone knows it. can they pivot? i was with someone yesterday, a leading guy who looked at value and begged not to be identified and he thought microsoft would fall under its own weight, basically not be here in ten

years. >> and how low those expectations were to begin with. we knew they were going to take the charge. the charge ended up being slightly less than expected. i think the question is when the tablet will ship. they have a history of preannouncing products and the shipment takes longer than expected so i think you will have to hold them to that. >> if you go to an analyst meeting, any event on wall street, count how many people are typing on ipads versus what they would have been two years ago on dell's or hps and it is not what it used to be. each one of those is money not going to microsoft. >> there is still the hope, october 26 not that far away and a potential game changer for the company? >> i don't believe that. i tell you why. mobile is the main issue right now. windows 8 as a mobile platform is lucky to be, lucky to be the third player. largely it will be a non-starter based on everything we have seen so far. they will get their -- they will collect their dividends, get their checks, but looking for

the future for microsoft, it just doesn't feel like it is there right now. >> how about thoughts on google with paige not on the call. >> you have to give them the benefit of the

1. >> i think the core business grew 25% and the volume of clicks unpaid search ads was up 42% year-over-year. that's an impressive performance accelerating over last quarter. you mentioned the raise. pricing did decline 16% but essentially pricing was up 1%, better than we expected. >> is there no more about expenses? people also said that costs rose 47%. you look at the beat and it is somewhat distracting but is cost still an issue here? >> cost is definitely an issue. google has a lot of irons in the fire not the least of which is motorola and also it is a technology powerhouse. they're adapting to fast

changing trends and mobile at the top of the list. they continue to spend a lot of money, hire people, but i would point out year-over-year margins actually flattened for the first time in quite a few quarters, so they're showing progress there in operating leverage. >> colin, let's get to motorola. the employee count exploded to 50,000, adding 20,000 employees. is this going to work out or is this going to yield to the huge channel conflict with other partners plus producing that android powered smartphone? >> it is a two-horse race with apple. i think google has a good strategy to use motorola in hardware devices to improve the android market but with motorola specifically there probably is an opportunity to trim head count a bit and better optimized operations. unfortunately, they didn't feel it was time to talk about the strategy last night on the call, so we look forward to hearing more from them soon. >> marissa mayer making news

today, s.e.c. filing says she may make $100 million if she stays at yahoo! for five years. what do you make of the argument google is going to start bleeding talent rather than developing talent. >> i think there are a number of alumni from google that moves onto other initiatives. at its heart it is still very much an engineering company and a technology driven company that sets them apart from a lot of other heavyweights that they compete with. i think marisa specifically has taken a lesser role at google so probably was the right time for her to move on. >> all right. colin, appreciate your time. >> thank you. >> moving onto microsoft. good gri morning to you. >> good morning. >> are you able to look past a $6 billion writedown? >> when you look at it and try to ex out all the items like the prior guest said, you look at the bookings up over 6.8% coming in at 22.9 billion and the cash

flow which really is a reflection of the overall business came in at 7.7 billion, up over 29% and beat analyst estimates by 6.7, because the cash charge of 6.2 billion really is a non-cash charge, so when you look at just the overall health of the business, you kind of do have to look through it and just look at the overall bookings and cash flow. >> robert, i think that the fact they had to take this writedown calls into question the acquisition strategy last year buying skype and this year yammer and seems like there is a little disconnect where the strategy is going. what's your take? >> i think they missed the mark with the quantum trying to understand the advertising role in search and clearly missed the market here and took the writedown as they were really thinking more about display versus online advertising. clearly it was a mistake and they have to recognize that. i think as they look at the enterprise strength which is really the core business where they work well in the enterprise

business, they have to stick to that strength and take their time and be smarter about the new spaces as they enter them. >> we're seeing really a blurring between the enterprise space and the mobile space right now. windows 8, clearly the effort to put the two together have been more and the windows 8 for mobile, is this really going to put microsoft in the game or be also ran like they remain today? >> i think it will start out slow. we don't have much in our estimates for windows mobile. we really don't have much built in for tablets. we think tablets will see a little better traction, mostly on the enterprise side, so again playing back to that strength. on the mobile side it is going to take microsoft some time. they will have to show people the new windows 8 platform and get more strength driven there and try to leverage that to get more into the consumer market longer term. it won't be a quick fix over night. >> stock got people's attention this year as it flirted with and managed to bust through 30 long considered a tough resistance

level. are you advising clients to buy ahead of windows 8? >> we are. we have a price target right now of 34. we think there is actually upside to our price target. that's based on an inline multiple of about 10.7 times the current estimate. we think obviously tablets could probably add another 1 to 2 billion of revenue upside. that's based off a very conservative market share estimate of about 10% as we look at the industry data from other third parties and i think it is achievable on the enterprise side so really again getting back to the enterprise strength. >> 34 after 31. >> it is bold. i have to say that is bold. >> colin, thanks so much. appreciate it. robert joining us from rbc. dow component ge ernds 38 cents a share, a penny above and earnings rose 31% to $2.1 billion. ge of course a 49% owner of cnbc parent nbc universal. a lot of people worried during

the course of the week whether or not a big industrial conglomerate like ge would take this chance to use europe as an excuse or to say, look, we have a problem, and as you said at the top, kayla, it is getting tough but it is still within our expectations. >> at what point can industrials no longer use europe? you have seen almost every single one in quarters past use that as a scapegoat and it is beginning to get to the story even though it is still on going in the market. how many quarters can you still say that's the reason why you're below expectations. >> and beyond that for ge and ge capital we'll seeing what positive leverage is for finance business that's operating well. that's why it is hard to split up the company. i have been talking about this for years and maybe it will happen one of these days, but you're just clipping nice coupons every quarter from this finance company and it is working okay for them. of course don't forget about the near death experience. >> ge capital returning 3 billion to the parnlt and tier 1

capital 10.1 and so you can't argue with the progress they made. >> it operates that very key middle market niche where a lot of companies need money and ge capital is the place they go over most of the other big banks. moving on, two companies making the public debut this is morning, travel website kayak pricing at $26 a share, above the expected range of 22 to $25. we also have palo alto networks pricing the initial offering at $42 a share, above the raised range of 38 to $40 a share. the computer network security income listing under panw. we'll talk with both executives later in the hour. a sour note for thunder musical instruments. the company known for the electric guitars announced it withdrew the ipo citing current market conditions. that did fall back on europe and said because of over all market volatility and the weakness in europe they did not meet the

demand for the deal. >> i don't buy that. >> you don't buy it? >> i don't know how exactly how much it leans to europe but they probably didn't get the demand from the institutional investors they're trying to sell to. if you're selling private equity i think you have to be more careful as a buyer. >> if you look at the deal, we have seen a lot of other ipos be successful when selling a small slice to the public as far as float but fender was trying to take almost half the company public. you have to wonder about the intentions there if you're trying to off load 50% of the company, what is the growth prospect? >> i think when the private equity firms are sellers, you have to do a little more due diligence. they have all sorts of motivations. >> because it is such a big week and an active day for ipos. we sent simon to the nasdaq who will have more later on this morning. >> good morning. you have to take your hats off really to kayak. a long time coming. they filed well over a year-and-a-half ago, 20 months ago and obviously trying to get

the stability on the earnings for the search operation and then of course most recently they tried to come through on the coat tails of facebook and losing a third of value, it was not the time to come in with the ipo. we'll talk to the guys later on. as kayla said it is priced at the top end of the range, above the range at $26 a share, so raising $91 million. i think i am right in saying they're cutting the number of shares actually they sold in the process to get this away in decent time. the big question with kayak and what really dogs them, the elephant in the room is the fact the technology that powers a lot of the search comes from ita software which you remember was bought by google for $700 million and therefore the concern is that when the contract for so much of what they do expires at the end of next year, will there be gouging on that? will they fail to renew the contract and will the regulator have to get involved? it is a very interesting business they're in. they clearly needed kayak to get

this away as soon as they possibly could. they're raising $91 million and apparently that's going to go for a general investment, general use within the business, not so much for the founders to cut the stake and we'll talk later and one of the founders of kayak, a founder of orbitz, this is silicon valley gentry and fender is fascinating and will not happen probably because it is not a growth company. if you look at what we're getting through from kayak, it is going to be priced above four times sales and fender was down there around a half of the sales and similar to yamaha and not growing in the same way and we are getting ipos, another eight scheduled next week and yesterday we saw five below up 52% and they had the consecutive quarters and it appears you can't come to market if you haven't, if you're more old

style, more jimmy hendrix if you like. >> yes, kurt cobain, yes. i think they all used fender. >> i think it depends on what type of company you have and how much money you're trying to get investors to put down for some of these deals. you think about the ipo market the rest of the year and given the calendar events you don't really have that many more windows that will open up. it is hard to see where fender would come back to the market. >> yet after facebook the ipo market is dead, that's what the media loves to say. it is just not true. it is always situational. it is when there is an opportunity companies will take advantage of it and investors want to buy stocks as we saw just in the last couple days. >> we talk about facebook fallout. you have to remember if people involved in the facebook deal said if we could move this and not do it on may 18th, we would, because of the macro over hang. it is not the right time to go public but with regulatory scrutiny with the timing so

important for facebook, they really couldn't move it. the macro issues were always there. >> true. speaking of macro issues, chipotle mexican grill taking a hit and the restaurant chain posting 2q earnings of 2.56, well above but mixed expectations on slowing sales growth during the spring. we knew the trend was weak in april. on the call the company says it continued into june or end of may, into june and running 3% where they used to be 6 to 8. >> you look where the stock is now, down nearly 19%, that's same-store sales. it was the guidance, the fact that same store sales for the first half averaged 10.2%. now you're coming down into the single digits for the rest of the year. what does that say about the cost of food. >> and corn prices. >> drought. >> and corn prices ricochetting through and hitting the chicken and beef prices and this is a stock of nearly 50 right now, so you could say, yes, part of this

is based on the reduced growth expectations and part may be falling into line with what a stock of this variety should be trading at. 50 times be is a huge number. i have not done the calculations with the new stock drop. chipotle has been a long time runner and a lot of interest and basically still closer to 52-week high than the 52 week low. >> the note from goldman says the deceleration took us by surprise, very well known momentum name and we know how quickly those things turn. >> they certainly do. i love the analyst meacupla. >> the correction was coming and we didn't know well. >> we are following the developments in colorado, a dozen people dead, at least 50 wounded in an overnight shooting in a movie theater. they were holding a midnight showing of the batman movie the dark night rises. one expect is in custody, a

24-year-old male and president obama released a statement this morning saying in part michelle and i are shock and had saddened by the horrific and tragic shooting in colorado. federal and local law enforcement are still responding and my administration will do everything we can to support the people of colorado in this extraordinarily difficult time. we'll continue to follow this story of course as more details come in. "squawk on the street" is coming right back. ning to your instinct. duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. i bought the car because of its efficiency. i bought the car because i could eliminate gas from my budget. i don't spend money on gasoline. it's been 4,000 miles since my last trip to the gas station. it's pretty great. i get a bunch of kids waving at me... giving me the thumbs up. it's always a gratifying experience.

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busy morning shaping up. continued bad news out of europe. big tech earnings in the states, and viacom, if you are one of the 20 million directv subscribers >> sponge bob returned. >> kissing and making up as some of the headlines said. >> it is not so much about what the price paid from directv to the cable companies. it is really about the online video component and that's really what disturbed directv that viacom was making the shows available on the ipad or the pc and being comedy central shows and some of the others and that's what upset them. why do you need frankly to get directv when you can get it on the internet? that's the dilemma for the cable industry. >> and why should directv pay a billion dollars more if the content is available elsewhere.

>> viacom is asking for a 30% increase so we're seeing more and more the tension points and it is about the money but it is really about the distribution. >> we saw in your paper some of the collateral damage that can happen if this goes on too long, right, a disney channel gets sampling as they say. >> there was a great story we quote four and 5-year-olds with intrepid reporting and they say we don't need sponge bob. we moved on. >> how did you convince them to go on the record. >> it was all background, all background. >> when we come back, kayak's co-founders and the co-of palo alto networks on the company's debut on the street and simon is at the nasdaq and one more look at futures and see how we did with the s&p still above the 1375 level. [ male announcer ] it's a golden opportunity... to experience the ultimate expression of power -- control. ♪ during the golden opportunity sales event, get great values on some of our newest models. this is the pit of perfection.

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a few minutes before the bell on friday morning. want to bring in warren myers, the vice president of floor operatio operations. people were worried as we got into real numbers we may see tough times. markets held up this week. >> markets certainly held up this week. what you have seen is the earnings per share are beating lower expectations maybe not significantly but across the board beating on average. the worrisome thing is the overall revenues. that's harder for the companies to control and i think you will see a lot of those missing by a little bit. i think it portends to a tougher time. the fact of the matter is they absorbed results thus far and

holding up well. >> running out of time and hopefully we can discuss other stuff later on. thank you very much. what a way to end the week. two ipos, paloalto networks and sooim on monitoring kayak. >> the advice to investors on the businesses and the shares, you still have to take your hat off to these guys who found it and take it public. that after the break. facebook earnings ahead of the numbers, the first look at the social media giant's first public quarter. will inest have orz like what will inest have orz like what

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trade commission-free for 60 days, and we'll throw in up to $600 when you open an account. listening to the energy on paloalto networks at the big board, one of the two ipos we're watching. we'll talk to the ceo in a few minutes. at the nasdaq kayak, the travel site, also celebrating its ipo and we'll talk to kayak's ceo in a little bit. the market trying to focus on a lot of the business news even as we pay attention to the horrifying news out of aurora, colorado, and europe, started out seeing losses in the 2 to 3% range. spain is down 5%. >> and the spanish ten year is above the 7% level which we haven't seen in a few days. >> big mission for the finance ministers is finalize the approval of the bailout package. even spain now, regional areas

of the country, dennis, asking for aid, say the economy will contract and 1.5 this year and half a percent next year and maybe growth in 2014. >> the market is looking past the bank bailouts in spain. it doesn't seem really possible to manage austerity campaigns in countries where the government is such a large participant in the overall economy. so we're seeing that echo through the regional numbers as you describe. >> is there a sense that the guys you talk to, that the resilience of u.s. earnings is enough to offset what may be happening later in the year in europe? >> the people i talk to anticipate a slowdown and europe despite what ge may be saying the last day or so, i just don't think it will be enough to really move growth in a significant way for u.s. earnings. everything is slowing down. whether that puts us in a recession in the u.s., probably not. as we mentioned before, real 1% economy, 2% economy in the u.s., that's probably what we are.

we just have to look at ourselves in the mirror and understand that. >> i heard people earlier in the week, kayla, say remember when japan was going through recession in the '90s and the rest of the world muddled through as japan tried to get their act together and you can argue they never really have and if europe takes its time restructuring, makes ex europe remains okay. maybe it is decent enough. >> i think everyone expects this to be an extremely long-term problem. you look at the op eds and you have the big thought leaders saying this could be a two-decade issue where they're never really going to crawl out into a growth economy until two decades from now. >> and then that raises a good point. it puts all the more emphasis on asia. as they hold earnings growth, we have a 1%, 2%, 3% drop in chinese gdp which will be a huge move and just can't be that optimistic about u.s. earnings. there is a note from nick over

at converge saying just because the u.s. companies are beating expectations, look at the overall earnings growth of the s&p 500, i think somewhere in the 3% range and the fact that's coming down could signal the u.s. is heading for a recession because of that growth margin for earnings. >> kramer last night on mad talking about potential winning spaces. you have to look at autos. still look at housing. some of the metrics out of union pacific this quarter not too terrible. that's good news. then you have the likes of citi's mike might hav mayo. >> morgan stanley isn't the bank it was that we knew five years ago. the capital requirements are pitching in all sorts of ways and the compensation numbers have to come down. we will see they cut about 7% of the workforce and the issue of the joint venture with citigroup which is the point of great conflict right now. >> last night after the bell morgan stanley saying it was about 9 billion, citi saying worth about 22 billion, and citi

making an 8k filing saying if the appraiser looks and finds it to be closer to morgan stanley's valuation we could take a charge in the third quarter. that's an interesting valuation gap. the banks have a hard time overall, especially in the low interest rate environment, those margins, they're deadly. they're deadly. you look at the note from richard ramsey at goldman and he thinks margins will come down further in the third quarter and they're lending at rates that are low and borrowing at rates more expensive because of the down grades and they can't make money. >> yeah. yet it is hard not to feel just the winds of change if you can put it that way, watching the opening bell this morning and politan networks, no one heard of it. no one can explain what they do. to put it in sum, they help do the things online that we do now, appcation security, and so the wheel turns and this is a business and whether you believe in the valuation or not, this is where the growth is. >> fire walls, revenue for

paloalto up double in the nine months ended april. people looking for areas where there is growth speaking of which we're waiting for kayak to open. want to bring in simon hobbs at the nasdaq. that will be another interesting test as we still are in the post facebook phase. >> and the moment as we go to watch the orders being matched for the first trades, you know, you can't help yourself but think back to what happened with facebook. the guy that is founded kayak, that is a household name. people know what it does, and finally of course taking it to market with at least price per valuation of a billion dollars. we'll see what it actually opens up at. $26 a share and raising a $91 million there and as we mentioned earlier on it is a long journey bringing kayak to the market, well over a year-and-a-half since they filed for the ipo. a bumpy journey. they have turned losses to profits in the first quarter. at the same time, though, there are of course clouds on the horizon with the technology that

they use and it is always an important moment for entrepreneurship and capitalism when guys like this are able to take the business they found and had made them household names and able to bring them to market. of course we deal with the shareholder implications in the first matching of trades and ultimately whether there is value in the stock from here. back to you. >> we'll talk to you a lot more later on this morning. don't go too far. bob is here at the nyc with more on what's moving. >> good morning. the big thing that's going on here is of course paloalto. i said all week it will not big ipo and it is. you have $42. we're looking at 51 to 54. remember, the price talk earlier in the week was $34. this company is making very bold claims here and so people are calling them out on it. they're claiming this he they have completely rewritten and rethought the firewall, the way it is set up. they claim to have developed

game changing technology for network security, completely rethought the whole thing. as they said one time a long time ago in true grit, the old movie, it is bold talk, so mark mcglothen will be here. how is he claiming? there are people out there saying they're exaggerating the claims. nonetheless, the street is very excited about the deal and you can see it by the size. the earnings trend is continuing, the one we have been talking about all week. while company modestly beating on the bottom line, they're not beating on the top line and many showing up with revenues on the light side. same thing with ge i thinker so will rabd. earnings so far a quarter of the s&p 500 report, 120 right now. only 42% are beating on revenues. that is below the historic norm. on average the companies are

beating revenues by 6.4%. they're not beating, excuse me, beating earnings by 6.4% but not beating at all on revenues. that's a key point that's going on. ge by the way, the other main story of the day, ge left guidance unchanged. why is that big? we're getting global deceleration. them leading guidance unchanged is a big positive and the tone was positive and the industrial division at 10% organic growth. that's great. ge capital is good. real estate looked really good for them. they said oil and our industrial outlook remains positive. there is a positive note. ingersoll land raised guidance but largely on taxes. diamonds, even diamonds not exempt. debeers reported diamond sales declined 11% in the first half of 2012. see my big story to the biggest diamond mine in the world and i

will show you excerpts at 11:50 a.m. eastern time. right now they raised the guidance 53 to 56 are the indications now for paloalto networks. >> watch that closely. one correction from me. we mentioned mike mayo. he takes it from under performed to out perform and had takes the target from 15 to 16. my mistake. the ipo excitement building as we wait for kayak and paloalto networks to open for trading and we'll talk to the executive from both companies about the debuts when "squawk on the street" comes back. i don't spend money on gasoline.

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dow down 77. continue to watch key names like chipotle down almost 19% or so. we'll talk about that in a moment. dennis berman of the wall street journal is with us. you talk to traders and there are two frustrations. the viks is really low. the other, you look at prior days of big cap names, apple, mcdonald's, ibm, coke, yesterday all hitting highs and lows at the same time within the hour even though the corporate stories, the narratives are dispersate and there is worries the algos, the computers are

making trading tough in a low volatility environment. here is prior day charts. >> fascinating. i did not know that. obviously people need the viks to make trades. when it is not cooperating, it gets a little quiet. we have seen generally at least on the high frequency trading part of the world we have seen them pull back from the market and volumes overall come down significantly across the market, so it seems like everyone is from the corporate side to the wall street to trading side, it is a shrug of the shoulders. no one knows where it go and what to trade. >> why they gravitated to names like chipotle until a day like today. >> and then you see the shorts being put on for the rest of the 2012 year. i think trading is to hard to come by because volume is so low across the board and the moves are marginal and you look at the

moves and every single day it is just a hair of a move and how can you make money in that environment? you can make money on a move like chipotle going down 19% but only if you're trading that in the right direction. >> just to show you some of the concern overall, the dow may not show it but of the five year, a new record low at.57 and the two year at 2.5 month low and people still talk about we had the big delivering alpha conference this week and people aren't willing to rule out 1% ten year by the end of year. >> it is shocking when you see the benchmark bonds in germany go negative and other negative yields across europe and i am just -- it is shocking to me how used to these numbers we get, a 1-4-7 ten year. i don't know if it was that low during the 2008 and 2009 financial crisis. >> the long-term view interestingly enough is still that the yields will go back up and back up to normalized level.

gary kaminski hosting that panel less than zero, aptly named and mark saying it will go to 2.5 to 3 or a percentage point higher than that. at least there is an idea there will be a return to normalcy but for the meantime no one knows. >> even just raising the question, carl, a 1% ten year, whether it happens or not is kind of irrelevant. the fact that we're having the conversation legitimately says something is screwed up. something is not quite right across things and as kayla pointed out earlier we want to believe it will take a year or six months to work itself out. it is really going to be a year long process. >> and the cruellest irony is we're with approaching the down grade of u.s. debt and only become cheaper for the u.s. government to borrow. >> who would have believed it on that day, right, when we all worried about rates going higher. >> it is laughable. >> meanwhile, people over the first half of the year have gravitated to names with little

european exposure like verizon which led the dow in gains and credit suisse down grading to neutral on valuation and a lot of the home builders have done well because it is a bright spot and down grades on valuations. this 1375 level, they say 1400 resistance on the s&p and it is tough when winners have a hat on it. >> paloalto really doing well and pioneering space in the tech industry and immediately to the valuation question and as soon as we see the first prints as we're doing now, well, what's the forward multiple on this company and has it gone too far ahead of itself? i think it is tough. >> fresh meat is often one solution speaking of which kayak to begin trading shortly under kyak, priced over night $26, above the range of 22 to 25. simon joins us from the nasdaq with the ceo. simon. >> good morning. a big day down here at the nasdaq. with me the founders of kayak

who have built the travel search operator into a household name around the world. steve hafner and paul english, a long time coming. you filed for the ipo 20 months ago over a year-and-a-half. how do you feel today? >> ex i will rated. the roadshow process isn't the easiest but fantastic to be here. >> what happened during that time? you tried to come through on the tail coats of facebook. >> we were ready to go but had to see what's going on in the market and had business to do at the same time. things going great. >> when you saw facebook fall below where it had been priced for you that had implications immediately. >> it had implications for the market which we decided to back off but our business was continuing to do well so we felt good about kayak anyway. >> you worked hard to turn the losses into profit certainly for the first quarter and moved to a net income of 4.1 million from a loss of 6.9. talk me through what's happening in cyber business at the moment.

>> kayak we're focusing on building a great travel search engine. if we start with a great product, we'll get useage and awareness and it will come into a great p & l and that's what we have been able to do over the last four years is grow a great business with a great p & l. >> where are you on the pricing now? how do you feel about where you priced it, $26 a share? >> we feel good. we feel good. >> that's higher than your peers, just over four times earnings, peers at less than three. >> we got a lot of input the last two weeks and met really smart investors and based on that and working with the bankers we feel good. >> what did they say that made you come to $26 a share? >> they did a lot and people like the story. >> in general we're not that focused on today's valuation, it is about creating long-term growth. >> the elephant is the technology you use and the fact that so much of what do you is driven by ito software and we know that google bought ita for

$700 million and there is a concern when your contract, your license on that software expires at the end of the year. what did you say to people? >> we have a great relationship with gaggle and ita. we're a vendor of ours and only for a portion of the business so we have them under contract the next year and our option we can extend to 2016, so for us it is not really -- hasn't really been an issue. >> carl, back to you. >> all right. >> thank you, guys. >> thank you very much, simon. meantime, back here at the nyse, paloalto is open for trading at the post right there. currently up 34% and we have seen, kayla, in the last couple days five below closing up 56% and the day got started strong and then stronger as the session went on. >> i think there is really money looking to be put to work where there is guaranteed growth or where at least they're convinced there will be growth at some point. paloalto is really, you know,

going head to head with some of the largest firewall providers and i think the big question that we'll ask the executives is how are you getting enterprise customers to switch over from their existing provider to paloalto networks, a relatively new player in the game and obviously one doing well right now. >> i sometimes wish they would -- the percentage off the actual price is interesting. it would be great to see the price off the initial range. this is a range that began at 34 to 37, got taken to 38 to 40, priced at 42. >> these are the dark arts of the underwriters. they get us talking and they did a great job and we saw that backfire on the facebook ipo than if they had perhaps stuck to the initial recommendation. >> if you look at what happened behind the scenes paloalto getting its paperwork together around the march time frame and a game changer then and the valuation was thought to be higher and came down in weakness and coming back up. we're seeing a return to valuation.

>> bob is on the floor and i believe not far from the same post where annie's opened not too long ago. >> one of the beautiful things is see people bringing their families down here. it is the leadership group and the kids are here and they have the name tags and beautiful family and i just told the kids don't put the names on ebay and try to sell them. this is the leadership group and we'll be talking in just a few minutes. bottom line, simple, 5515, what else do you want to know? 34 to 37 earlier in the week and prices at 42 to $55.15, and a big claim being made saying we reinvented the firewall. we'll find out what they mean and is it true when we get back to them in just a few minutes. here is what makes it worthwhile, the future face of american capitalists right here. guys, back to you. >> that's a great shot, bob, and a shot we needed on a day like today. thank you very much. want to get back to simon hobbs who continues the interview with

the co-founder and ceo of kayak. >> still waiting for the first trades down here at the nasdaq. still with steve hafner and paul english, big day clearly for them. i want to pick up the conversation we were having before we went back there which is about the software and what happens at the end of next year with the important software which you license from a company that google has bought. how do you know that google isn't going to jack up the price or affect profitibility or refuse to renew on decent terms. >> as steve said ita software is becoming smaller and smaller part of our tech base as we do more and more direct connects with the airlines and gds, and we have a number of suppliers. >> is that deliberate? are you deliberately trying to? >> we're increasing coverage internationally, really, really important market for us and faster growing than even the u.s. market and we feel confident that we're in a good path. >> you still have not just answered my question about the possibility of the price when you get there. >> we're not worried. we have an option to extend to

the end of 2016. >> committee current pricing. >> the current pricing, yeah. >> we have a question back for you in the studio. >> guys, a very big milestone for the company together, big milestone for the company today and not exactly a day of cashing out for you guys. i am interested to know what went into the decision to not have any shares sold by insiders in the ipo. interestingly, all the shares going to market are newly created shares for investors and why are the venture capital funds, why are you not taking any money off the table here? >> short answer is paul and i have a very long-term vision for kayak. we want to build the best travel website worldwide and we're far from achieving that goal. the rest of our current investor base including paul and myself and our management team and employees feel very bullish about our prospects, so, no, we're not going to sell at the ipo. >> at the same time there is a sense of pessimism when you see insiders selling at the ipo. was this a move to try and drum up interest in the ipo and really show investors that this

is created for them and there is upside for the primary shares in the market? >> not at all. we had a lot of enthusiasm in the investment community for kayak shares so we didn't change the size of the offering or change the mix. we've always had no investors selling into our offering. >> congratulations, guys. great to meet you both. look forward to the first trades, paul english and steve hafner as kayak comes to market, a big week for ipos and potentially bigger week next week. more on that later in the show. >> thank you very much, simon. two things to mention, the euro below 121.62, the lowest since june of 2010. take a look at food stocks, chipotle not the only one being hurt, starbucks, harden, whole foods, yum, and sharply in the red. the head of paloalto networks when we come back. with the fidelity stock screener, you can try strategies from independent experts and see what criteria they use.

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welcome back to "squawk on the street." just coming off the opening bell and watching paloalto networks, one of the big ipos on the new york stock exchange up 35% right now off of an even raised price range for the ipo. we have first the president and ceo of paloalto networks,

welcome, mark maclaughlin. great to have you here. i think the big question is the ipo process. service now was a very successful tech ipo. you're now following in those footsteps and that's all coming after facebook. what were investors telling you were concerns about investing in tech stocks and how did you ally the concerns. >> i think taking a long view from a technology standpoint there is a lot of innovation in the market and as far as going public there is good times for that and less good times but we take the long view and fortunate to have good market conditions today. >> obviously very good market conditions with the stock trading the way it has. you get the sense that money has been left on the table? you had 34 to $37 a share, raised to 38 to 40, priced at 42 and taking a look it is at almost 57. do you wish you had priced at 57? >> i think the team did a great job on pricing and valuation and we'll take a very long view on the shareholder returns and we're not paying attention to the opening price. >> taking a look at the

valuation, it is a rich valuation when you take a look. that's all banking on growth. i think the big question from investors is how do you get customers to switch from their existing enterprise provider to paloalto networks and what's the sales growth forecast on that basis? >> it is based on growth and growth is because we have completely reinvented the firewall which is the main line of defense of cyber security online and we're doing something completely different that allows enterprises to use any application they want safely. >> looking out five years, the growth prospect for sales. >> if you think about the explosion of application from cloud computing, sas, bring your own device, the more applications out there the more they want the network and all of the enterprises will need this technology. >> this is a bold call, mark, reinventing the firewall. you say you have game changing technology for network security. what's so game changing about -- why should people move over?

>> we pioneered it by reinventing which i said is the main line of defense. it is the first technology in the market that can let enterprise safely use any application they want. previous to that it was blocked applications they thought were concern. >> you have a little running debate going with check point. they seem to be going back and forth about some of these claims and what do you have to say about the debate going on? >> the check point is based on inspection and technology and i won't get too technical and it is around since the mid-90s and we're the next generation of security. >> where do you think security is now in the cloud? all of us are concerned about cloud computing and moving our data and all moving our credit cards over there and is it safe? what are you doing and what are people in your business doing to assure americans that their information will be safe in the cloud? >> for a very long time security has been playing a catch up game and i think it continues to stay ahead of all of the threats out there and what we have done is take a quantum leap forward to allow enterprise to secure the

information. >> corporate enterprise budgets for the coming year or two, acceleration mode or deceleration? >> it is hard to tell. one of the things we like about the secular part of the industry we're in is security is a line item that's very rarely going to cut these days. >> do you think -- everyone will have to spend more on network security. we hear every day about data breaches going on. are you getting calls as a result of these? are you successfully converting people from the old thinking or the old technology as you want to call it into the new technology? >> we do. it is our fastest sales cycle when the phone rings because somebody had a problem. >> people inside are probably watching you right now and they took a lot of heat after the facebook ipo. what would you say the people inside morgan stanley? >> i would like to thank them, particularly michael grimes, our lead banker and i know there is a lot of noise about facebook. it was always about paloalto. >> the next ipo you do,

whatever, may be you stick with the same team? >> we have great lead bankers. we had morgan, goldman, citibank. they did a fantastic job and worked really well as a team. i recommend any of them. >> where does it go from here? what is the next generation going to look like? whether we hear about the data breaches, when we hear constantly companies reported their credit card lists and files have been stolen, what are they doing wrong? can your system prevent that from happens? can you say that won't happen if people use our technology. >> it is a little complicated but the way a lot of it is done is the network is infiltrate and had we're with really helping to stop the infiltration in the first place that leads to those things. >> why not, for instance, sell, i am sure you have had lots of offer from the big enterprise. why go the ipo route? >> it is a $10 billion market and we're maybe pushing 2 to 3% with incredibly disruptive technology. our vision is to be the leading

independent enterprise network security advisor. >> i will give you a few years and that will be my guess. >> thanks for coming in. congratulations. >> in the meantime, dennis, want to thank you for coming in as well. want to get to the road map for this morning. a lot going on, a slew of tech earnings. we'll kick off with google beating the street i want estimates with a slight miss on revenue and no sign of larry paige on the conference call. still lost his voice. we'll saturday through the numbers with an analyst that initiated shares last week with a neutral rating and get his take on what he thinks is going on. >> we're looking at the yahoo!'s new lady marisa myers set to receive a compensation package of more than some say over 100 million over the next several years but it is all cracked up to what it is going to be? >> corn prices approaching another record high as midwest drought an its. will the corn crop scarcity push

commodity prices higher for the long run? clearly affecting shares of chipotle today. >> we're with talking ipo mania with two big deals. we're watching kayak. it hasn't started trading yet. today will be the first day. we're expecting it to hit the tape in a matter of minutes and pricing last night at $26 a share and above the expected range and send it back over to simon for the latest. >> obviously wait and see where kayak opens. it would appear if you look particularly what happened yesterday with five below and the huge acceleration up 52% of the open that the gateway to the public markets is now well and truly open in the wake of facebook and all the problems that we had there. i just have a brief chat with the head of listings for the nasdaq and he is talking about over the next two or three weeks there will be more companies onlying to market and how they expect that to pick up after labor day further down the year so things are very much happening as far as kayak is concerned and i thought that was

a fascinating interview, the way in which they're playing down the main fear that investors have which is over the access to the software that does so much of their business from ita bought by google and suggests a contract now to 26 on more or less the same terms they have at the moment and that's very important for kayak and probably one reason why they have been able to price as they have and of course come to market in the first place, priced at around a billion dollars and they will wait and see exactly where we open. interesting we continue to take more time to match orders here at the nasdaq than elsewhere on public listings. back to you. >> they say keep your friends close and your enemies closer. perhaps that's what kayak is doing. when they first filed it was right after the deal happened and ita searches only represented about 30% of kayak traffic. now that is steadily growing and interesting to see they have the contract going into 2016 and they don't think it is a threat. >> yes. also, of course, within what they're saying, that they are

reducing the reliance on that. i mean, whatever you think about the stock as an investment, you have to feel sorry for guy that is build a business from 2004 to a household name and powering so much of what we do in travel and then find that actually that kind of the tectonic plates change around you and suddenly what you thought was of the software provider is bought by google and they have gone through that and through the market turmoil and come to market and i thought an interesting interview, i thought a confident interview for those guys and of course if you have been through the process of attempting to sell your company or raise at $91 million as they have done with the issue of shares, you're well versed in dealing with the good and the bad of how your business is at the moment. back to you. >> certainly a long time coming with how long it was on file as well. >> if you had to give a grade to the ipo week, relative to the expectations on sunday night, what would you do? what would you give? >> i would say it would be a b to b minus.

i want to go with a b. i feel like the ipos have done well and you look at therapeutics that priced below the range and fender pulling the ipo citing europe. >> that rules out the a. >> it rules out the a. you get to a b. you have names like kayak on since 2010 and we haven't seen them start trading yet but once we do, grading that performance, it could be good. i think it is important to remember that kayak is going with a conservative valuation here, a billion dollars sounds high. what they were looking at in may was 50% higher. looking to raise $150 million and they have come down from that. >> really quickly just on the markets, the dow, you may have seen at the bottom of the screen has lost gains for july. interestingly, all three dow, s&p, nasdaq, positive for june and july until now. that had not happened since 2003. >> it is chugging like a

locomotive up the hill. >> and managed to post some gains for the summer. want to focus on google for a moment and the search giant clocking in with a second quarter beat and james dix is a media analyst at wed bush and initiated with a neutral at $640 price target and nailed the number at least for the quarter. your estimate 10.12. >> better to be lucky than good. >> talk to me about the metrics, weakness in europe, motorola, paige, what should investors be worried about or not? >> i think the macro issues are important. when i look at the company, i think it is important to break out -- they continue even after motorola to break out their core business growth by geography and u.k. was a pleasant surprise. i think they hit into the cold weather and the timing of easter may have helped that a little bit. u.s. and asia more in line. they did flag southern europe as starting to slow down. >> was motorola as much of a

surprise to you as it was to some? the times quotes some analysts as calling it disturbing. >> right. in terms of fundamentals or the lack of outlook? >> i am not sure. >> i think people may have wanted a little bit more of a bone to chew on about what the strategy is. management kind of deferred and larry paige wasn't on the call, so i think they felt comfortable and kind of saying, hey, wait until next time. >> are there running theories what the deal is with larry paige? >> i it end to take them at their word that it is a voice issue. i don't think it is a new issue, the gravity may be more serious. i do not get a sense that a lot of investors are worried about it. >> what takes us to 640 then in your view? >> i mean, i think the mobile growth, they highlighted more than once in the call, and very strong and paid click was stronger than expected and i think you're seeing a leveling out of some of the cost per click declines, but still you

get google is a great barometer of the economy. until people feel a little better about the economy, harder to see why 95% ad-based company is going to start expanding its mobile. >> people still can't stop talking about marisa myers departure. do you see big partnerships developing as a result of her going to yahoo!? >> it is interesting. didn't seem like yahoo! itself didn't want to comment on what her plans were going to be. clearly it is a choice by the board to go for product over media and google is a strong product company she knows well but how much you're going to get by partnering with one of the competitors whose driven you to your knees, i don't know. >> and then it also is apple in your universe by the way? >> it is not. a colleague of mine covers that one. >> it will be interesting to watch the three-way relationship between those companies. >> yeah. don't forget facebook and

amazon. it is getting to be a crowded space at the corner of convergence. >> james, thanks for coming in. >> thanks. >> neutral on google with a 12-month price target. >> wonder who google will get to replace marisa myers. it has been a big week for her, the new leading lady of yahoo!. after taking over the new post, the internet search company is offering her a hefty compensation package. is it all it is cracked up to be? we'll take you inside the numbers next. it's a golden opportunity... to experience the ultimate expression of power -- control. ♪ during the golden opportunity sales event, get great values on some of our newest models. this is the pit of perfection.

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marisa myers said to get an initial compensation package nearly $61 million. john ford is crunching the numbers. is she making out like a bandit? how does this compare to the other people running yahoo! >> in a way it is not about the total amount of compensation althoughs considerable especially to working stiffs like you and me. when you take a look at the package itself, a look at yahoo! stock, you want to see how they composed this. take a look at pay. we're talking up to $5 million in cash, base salary and bonus. that's standard for ceos these

days in the valley and $14 million ofmakup stock grants and you imagine that has to do with the google stock she is leaving on the table and the most interesting part is the annual grants, 50/50 of stock options b $6 million worth of yahoo! stock options and this is the interesting part to me, $6 million worth of restricted stock units. the think about rsus as they're commonly called is that there is not that much risk involved. bigger companies like apple and google have tended to favor these as a way to pay executives with the general three being there is not necessarily that much upside in the stock. these aren't turn around companies. they want to retain these executives and keep them from going to other companies. they give them blocks of stock that just have set values. they don't have to wait for the stock to go up. they don't even generally have to pay taxes on them. the company pays the taxes on the stock. they just hand them over. yahoo! is giving her a bigger proportion of rsus than i have

seen in other contracts from previous ceos. even carol barts contract was heavily weighted towards increases in the stock price and ross levinsohn, who is an executive there, his stock is weighted towards options versus rsus, but marisa myers is 50/50 options and rsus which in a way she is taking on less risk as a co-and i find that interesting as a trend and the compensation package she agreed to. >> how would you describe that? would you say they want to make sure she is focused on overall strategy and long-term goals and isn't distracted by the day-to-day price of the stock? what would the backup behind that argument be? >> i am really not sure. i would be interested in hearing them describe it because in a way you could say, well, this is

giving her stock whereon the one hand she does have some incentive to see the stock price employ up and on the other hand she makes tens of millions of dollars whether it goes up or not. clearly she has some incentive to push the stock price up in general because yahoo!'s valuation fundamentally isn't that high when you consider their cash and asia investments. i think maybe it says more about the attitude towards executive compensation in the silicon valley right now. it is a lot less weighted towards stock options and risk and a lot more towards retaining people. there is a question whether it is appropriate in a case like this where you have a turn around coming. >> carol switcher has a copy of the first employee memo in which she says there is probably questions about strategy. i am sensitive to this. while i have ideas i need to develop a more informed perspective before making strategy or direction changes. i wonder if you think this notion that they're going to go directly from media-based to product based has been

overstated maybe? >> i think it has been overstated. it is something they can directly do -- as something they can dektly do but the fact the memo leaked out quickly shows you the magnitude of the challenge. she has to engineer in turn around in plain sight. yahoo! is the biggest soap opera in silicon valley, kaand they wl have a challenge boosting morale and there tends to be too much of a tendency to believe that these super leaders come in and they have this big picture macro idea of how they're going to fix things right out of the gate. they don't. you hire smart people so they can figure out how the winds are changing and adjust on the fly. i find it very hard to believe that even after a couple months she will have major master plan and even steve jobs didn't figure it out all of a sudden and then just implement. he made adjustments on the fly, guys. >> that's absolutely true.

funny you use that parallel. we'll see if they can do that kind of move over the next few years. want to bring you the laterest that we know about the theater shooting incident in aurora, colorado. 12 people dead and 50 injured. a gunman opened fire during a midnight showing of the batman movie and he first threw a gas canister into the theater before opening fire and some thought it was a stunt and we do expect more details when the aurora police hold a news conference this afternoon. "squawk on the street" is coming right back. this man is about to be the millionth customer.

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welcome back to "squawk on the street." take a look at intuitive surgical reporting second artearnings last night at net income rising by 32% but the stock is getting hit because the company did warn about the on going negative impact of the european economic crisis as well as a slowdown in prostate cancer surgeries as patients opt for more non-surgical options like therapeutics and drugs. that's why the stock is getting hit, down better than 6%. kayla tornado wat kayla, tack to you.

>> we're keeping an eye on kayak here. still not open for trading at the nasdaq. it is above the exed range of 22 to $25 and strong demand on a conservative valuation there. >> keep an eye on that and talking emerging markets, earnings season continues and fears of a global slowdown are still in tact. which u.s. companies reporting in the next week could be impacted by their exposure? want to trade the globe and tim seymour joins us this morning. happy friday. we got through ge. some have said, look, it is what they didn't say about europe getting dramatically worse that's encouraging. do you believe that? >> i think certainly as we look to the multinationals we have seen a lot of headwinds. i think a lot of it is priced in in ge's case they have a view that emerging markets are where the bread will be buttered and the energy infrastructure group certainly is a place where they have been very clear. assist we look to next week and i look at the two places that i

think give you the best read, apple will give you a sense of where the consumption story is on the consumer side and apple's case you have at least when it comes to emerging markets an amazing opportunity that i think we're in the early stages of their development, so roughly 26% of their sales last year were em. that's come all the way from 7% about five years ago so moving quickly. if you look at the consumption trends, a lot of people think china really has done nothing to grow the consumption to gdp levels of their economy and actually it has gone from low 30s to mid-40s the last five years. at the end of the day i think iphone is 57% of the sales. don't focus on the ipad. focus on the fact china mobile is building out the equivalent in china and that's a a place where there is tremendous low hanging fruit pardon the pun for apple. >> a lot of chinese companies, air china, some of their telecom companies we don't talk about a lot have warned in the past few

weeks if china mobile says infrastructure spending is going to come down, apple has a problem. >> i think so. i think the good and the bad news is the iphone has not been adomted by the networks because technically as you said there has not been the buildout. that's expected with chl, china mobile to come probably to be completed somewhere in mid-2014. the benefits for apple from iphone sales should start to happen in the first or second quarter of next year if we're on that path. already have you seen guys using the apple on 2 g and at least surfing the web in china and i think a lower priced iphone is what you really want to see and i don't think we're there over night. >> right. caterpillar the other to watch as we get into the second round of earnings season. thanks a lot, tim. >> thank you. >> a lot more from tim tonight. if global growth is slowing why is oil at a two-month high or at least was until this morning and he will break it down and take a look at the facebook of china as the social internet giant gets ready to report first earnings

as a public company. >> we're all watching facebook earnings next week and this week we're watching kayak. hasn't started trading yet but did price above the range last night. will start trading any minute. paloalto raising sharply and we're grinding towards the end of summer. what else is in the pipeline to go public? we'll sort through the hidden gems among the masses coming up. with the fidelity stock screener, you can try strategies from independent experts and see what criteria they use. such as a 5% yield on dividend-paying stocks. then you can customize the strategies and narrow down to exactly those stocks you want to follow. i'm mark allen of fidelity investments. the expert strategies feature is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

gems among the masses coming up.

first, we have a strong wall street debut for paloalto networks, the network security systems company up 35% above the ipo price of $42 a share. research in motion hitting fresh 8.5 year low, shares of the blackberry maker had a tough year. also, 75% in the last 12 months and a tough morning for the food companies. shares of tyson foods hitting 52 week lows. >> about an hour into trading as kayla said and want to get to chicago for some of the moves amid the commodity space. what an incredible month and week it has been. the managering director of the lynn group at the c & e this morning good morning to you. >> thanks for having me. interesting story shaping up. chipotle is way down but not all about the same store deceleration. people are incorporating the drought into it. you look at starbucks also

lower. are we beginning to get a sense what the drought is going to mean? is there any finality in sight? >> there isn't unfortunately. if you look at the noaa report, the national ocean an i can and atmospheric administration report it is the worst six-month drought from the beginning of the year until june in history that they have reported. now they have come out with a new report and don't see a break until october or so, and so as i am seeing it, there is no end in sight to this and what goes on then is you have to start pricing. at the lynn group we have been talking in the research about what it will take to get the end-users to release product for nearby commitments. it will take higher prices. you're just in a period of rationing right now and until this ends you can't control mother nature and as big as the crops are that were planted, the key areas of iowa and illinois, well, that accounts for about a third of the nation's corn crop. >> yeah. >> big problems. big problems.

>> so what would you tell a client who believes there is more room to run at least in corn and wheat and beans? characterize the level of safety in that play. >> there is no safety. when you play a weather market that's the first thing. theres no safety. you can't control mother nature. so you try to look for areas where you think there is logic to what's going to go on. at the lynn group we have been telling clients to look at the front months versus the back months especially in the soybean complex and looking at the august contract versus the november or the march contracts and look for what has to take place then and that is that pricing is going to have to take place in order to get the farmer or the end-user to release product back to the marketplace. >> is there a delayed reaction between companies who are exposed to the grains themselves and companies that are more exposed to say the protein? is that the second wave of all of this? >> yeah. that will not second wave of it. right now we're seeing the very first wave and then the panic

sets in as to what the prices are going to be, so what it means for the consumers and what it is going to mean for the retailers is the retailer either eats the price difference and tries to keep the market share or passes it on and most likely scenario is he is try to pass it on. we have seen starbucks do that over and over in coffee. so why won't it go on in the rest of the marketplace? >> yeah. finally, ira, here on crude, i thought i walked into the office this morning and thought i knew the story on oil until i so he if down almost $1.50 here. we're looking at renewed growth concerns in europe. is oil at a crossroads at 91 and change? >> oil saying that 85 looks like a fair value. the question isn't wti between 85 and 100, how much of the premium of the mideast do you want to put in it? i think most would argue oil is high given the economics of the landscape right now. the problem is the middle east. you have four aircraft carriers from the u.s. alone there.

i don't know what else is there from nato members and israel and iran still going at it verbally and what if israel decides to say, hey, all of these arms are on our side and let's have a go at iran. we have everybody in the ocean protecting us. that is a real fear and if you think the market is not thinking about that, you would be sadly wrong. >> it is strange to watch them deploy and stocks do nothing and you know it is going to mean something down the road because they don't do that lightly. ira, thanks so much. have agood weekend. >> we're talking commodities all morning and commodity costs hitting chipotle hard and expecting it to get worse. we want to take a quick look, cmg down 22%. seem to be slipping off the cliff further. you wonder where the low point will be. >> people are beginning to if you look at some of the trader comments on twitter wonder if this is all -- 20% downside on some earnings that did beat after all, i mean, on a deceleration in same-store sales and making the point they're not

alone today and they have plenty of company. >> it shows that a correction was just around the corner and i think they were probably waiting to are that for quarter after quarter after quarter and now finally got it. very interesting. another earnings story of course ge beat the street expectations in the second quarter. the company also affirming its target of delivering double-digit earnings growth in 2012 and we have mary thompson on the story back at headquarters. mary. >> hey there, kayla. seen as a bellwether for the global economy ge did take a hit from weakness in europe during the quarter. here is the ceo on this morning's conference call. >> the environment continues to be challenging. the u.s. is stable. we saw solid growth in the emerging marketing with revenue up 17% and europe is within our expectations >> ge's profits from continuing operations at 38 cents a share beating estimates by i penny. helping to craw it a 13% increase in profits in the

energy business and a 31% increase in profits at its finance arm which it continues to shrink. in the second quarter the company's backlog rose to $204 billion even as industrial orders fell 1% in the second quarter by a decline in demand for wind turbines. pricing showed a slight gain up 1.2 approximates and within the finance arms stability in real estate holdings helped to contribute to ge capital's strong results. looking to the second half they expect continued strength in the energy division and plans to aaccelerate share buybacks as it did he ploiz cash paid to the parent from ge capital. also reaffirming the revised outlook for margin expansion of an increased 30 to 50 basis points adding by the end of 2013 margins should expand by a total of 100 basis points between 2011 and 2013. ge announced a split up of the energy unit into three different business segment that is should save the company money. carl, back to you.

>> mary, one thing on the industrial orders. the 1%, we don't usually see numbers dwiet that low. >> right. >> i know comps were tough and the wind turbines has had issues and should people be worried about that? >> they say part is comps were tough in the wind turbine business, so they're again expecting some strength or better results going into the second half of the year. the company certainly didn't give warning we should see continued weakness in the industrial orders. it was mostly because of the wind turbines this quarter. >> mary, it was interesting to see the announcement about the energy business and the restructuring there and of course the energy unit had the biggest revenue beat and they also do a lot of deals out that far unit. do you think that was something that investors like? what do you think we'll see there? >> the company basically said that the unit had become too big and employs about 100,000 people and 50 billion in revenue and they felt it would be better from an efficiency standpoint to break it up into three separate units and this evidently was something that they had been

working on for some time now in order to streamline the operations. >> thanks so much, mary. >> in light of kayak's ipo we're taking a closer look how it stacks up to the online travel competitors. we'll talk mobile, consumer engagement and a lot more after a short break. you know what i love about this country? trick question. i love everything about this country! including prilosec otc. you know one pill each morning treats your frequent heartburn so you can enjoy all this great land of ours has to offer

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of the new batman movie the dark night rises and the shooter apparently through a gas canister that theater goers thought was a stunt related somehow to the movie and of course when the shooting began it became apparent that was anything but a stunt. police say a man identified as 24-year-old james holmes of aurora was arrested and taken into custody. no word on whether he has been arraigned or appeared in court. president obama is expected to address the incident at an event in florida in less than an hour. he did issue a statement earlier calling it a horrific and tragic shooting and we will have the breaking developments on the story throughout the day. meanwhile, carl, back to you. >> tyler, thanks so much. as devastating as the story is on a human level, you can't ignore the potential impact on the theater industry. our julia boorstin has more on that as well. good morning, julia. >> good morning to you. the ceo of cinemark that owns the theater where the shooting

took place spoke in dallas. he expressed his sympathy for the victims and families and stressed that the company's commitment to security. here is what he had to say. >> we constantly are focused on the security of our patrons at all of our theaters and for all of the shows, whether it is a midnight show or whether it is just a regular showing, you know, security is a big issue for cinemark. >> we reached out to the other major theater chains to see if they plan any changes regarding security, regarding midnight showings or changes to policies about costumes. fans attending midnight screenings often dress inspired by kashts in the film. they say the suspect was wearing with a bullet proof vest, ride helmet and carrying a gas mask, rifle and handgun when he was arrested. we do expect theaters across the country to respond with increased security. this is a scene outside a nearby amc theater in los angeles where moviegoers were heading into a

6:40 a.m. screening. in new york the nypd will post officers at theaters throughout the city. warner brothers has cancelled the film's premiere in paris scheduled tonight. it has also cancelled the press day and interviews that were meant to happen ahead of that premiere. we'll be back throughout the day with developments on how both warner brothers and the theater are responding to the tragedy. >> thanks so much, julia. of course an extremely devastating story and the fact it cancelled the paris premiere tells you about what they're really trying to do as far as responding in a positive way to this. >> i mean, it is hard to get beyond the personal level of the devastation that's going on in aurora. a lot of business decisions will be affected because of it. >> and one that's highly anticipated as well. a turning point for kayak today pricing above the ipo range last night and as the online travel company is set for its first day of trade does the data prove that kayak can consistently gain

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>> ip there a know there are a people here that have been so engaged in the campaign and have sacrificed so much, people who have been involved back since 2007, and so i want all of you to know how appreciative i am and i know many of you came here today for a campaign event. i was looking forward to having a fun conversation with you about some really important matters that we face as a country, and the differences between myself and my opponent in this election, but this morning we woke up to news of a tragedy that reminds us of all the ways that we are united as one american family. by now many of you know, many of

you have heard that a few miles outside of denver a gunman opened fire in a movie theater. dozens more are being treated for injuries at a local hospital. some are being treated at a children's hospital. we're still gathering all the facts about what happened in aurora but what we do note is the mr. is have one suspect in custody and the federal government stands ready to do whatever is necessary to bring whoever is we're going to stand by our

neighbors in colorado during this extraordinarily difficult name and i had a chance to speak with the mayor of aurora and the governor of colorado to express not just on behalf of michelle and myself but the entire american family how heart broken we are. even as we learned how this happened, and who is responsible, we may never understand what leads anybody to terrorize their fellow human beings like this. such violence, such evil, is senseless. it is beyond reason. while we will never know fully what causes somebody to take the life of another, we do know what makes life worth living, the people we lost in aurora loved and they were loved. they were mothers and fathers. they were husbands and wives, sisters and brothers, sons and

daughters, friends and neighbors. they had hopes for the future, and they had dreams that were not yet fulfilled. if there is anything to take away from this tragedy, it is the reminder that life is very fragile. our time here is limited and it is precious. what matters at the end of the day is not the small things, it is not the trivial things which so often consume us and our daily lives. ultimately it is how we choose to treat one another and how we love one another. it is what we do on a daily basis to give our lives meaning and to give our lives purpose. that's what matters.

at the end of the day what we'll remember will be those we loved and what we did for others. that's why we're here. i am sure that many of you who are parents here had the same reaction that i did when i heard this news. my daughters go to the movies. what if maleah and sasha had been at the theater as so many of our kids do every day. michelle and i will be fortunate enough to hug our girls a little tighter tonight and i am sure you will do the same with your children. for those parents who may not be so lucky, we have to embrace them and let them know we will be there for them as a nation. so again i am so grateful that all of you are here.

i am so moved by your support, but there are going to be other days for politics. this i think is a day for this, i think, is a day for prayer and reflection. [ applause ] so what i'd ask everybody to do, i'd like us to pause in a moment of silence for the victims of this terrible tragedy, for the people who knew them and love them, for those who are still struggling to recover and for all of the victims of less publicized acts of violence that plague our communities every single day. so if everybody can just take a moment.

>> thank you, everybody. i hope all of you will keep the people of aurora in your hearts and minds today. may the lord bring them comfort and healing in hard days to come. immigrateful to all of you and i hope that as a consequence of today's events, as you leave here, you will think about the incredible blessings that god has given us. thank you very much, everybody. god bless you. god bless the united states of america. [ applause ] >> that's the president with a

sobering appearance, saying there will be other days for politics, confirming that a suspect is in custody in the aurora shooting. 12 are now confirmed dead. the violence is beyond reason and, in his words, we may never understand what leads anyone to terrorize their fellow human beings like this. "squawk on the street" is back in a moment. #a#a#a#a#a#a'9#a+=#a#a#a#a#a

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just want to take a moment to point out the dow. >> it's a big day for tech ipos. most are performing very well. we are still awaiting that. we want to take a look at the key stats. linda, we're so glad to have you here. thank you so much. >> thank you so much. >> some new data came out recently about kayak and tell us what that says. >> yeah, kayak is doing very well as it enters into trading here. it is incrowsing its traffic

pretty substantially. in fact, about 33% in the last year, which is pretty significant. >> as far as as expedia, i know that's the big player in the travel industry. the travel has been declining. what can we attribute that to? >> i think that's certainly playing a role in it. i think the dynamics of the industry, to some extent, are changing. some of the online sites are expanding, the type of services that they provide and some are changing the user experience pretty significantly. >> linda, when we spoke with the executives from kayak earlier this morning, they said that they are trying to reduce their dependency on i.p. software. it looks like more of a bigger percentage is provided by ita. do you think it's difficult to wean themselves off of that?

>> yeah, i think that's definitely a risk here and that's a dynamic that's going to certainly be a complication for a number of players and there's a question of how quickly they develop. >> linda, a couple of weeks ago, interesting story, how some of these travel websites alter their spending depending on the computer that they are using. apple users tend to spend more on travel, hence they may alter the choice that they are given. does kayak provide around that? >> well, anybody can really do that. but i think consumers have caught on to it and i don't know if they are necessarily happy about it. so it's a technology that is available to all players in the category. so i think it's really going to be a question of what consumers, if they like that, tolerate that, but i do think it's going to be a dynamic for everybody to

address. >> certainly with the dollars, linda, i think we have a question from simon hobbs. >> linda, good morning. it's an interesting story that you bring to the table. we should be quite clear that comscore is to kayak as cnbc to nbc. you're talking about clicks. you're not talking about active engagement and whether those people are buying and what they are buying. for example, an airline fair or a percentage of revenue commission on something like granular than your headlines would indicate? >> well, first of all, we actually do measure click activity and online purchasing activity. the numbers that i was referring to earlier, the 33% growth rate, that has to do with consumer's

visitation to the website. that number, i think, is certainly a good benchmark in terms of the extent to which consumers are engaging in the site and particularly the type of audience that is engaging with the site. >> it is only a sampling exercise and a lot of cos might be prus straighted that perhaps you're not able to bring more information about the revenue stream. >> we measure consumer use, consumer engagement. we measure online commerce. we don't measure profitability. we don't have insight into that. we think we do a pretty good job based on our panel of two million people across the world. it's a group of people that is orders of magnitude larger than anything else available and our 2,000 clients across the world think we are doing a fairly good job. >> many thanks, linda abraham of

comscore. >> kayla, thank you for joining us. >> thanks for having me. >> good morning. welcome to the third hour on "squawk on the street." the dow is down 80 points off the lows. we were down about 100 points not too long ago. s&p is down to 1368. people still watching 1374, 13756789 nasd13 1375. food stock, some of the biggest decliners today, mostly on sympathy for chipotle's biggest loss. want to get to the road map. a big ipo day. kayak and palo alto making their debut we're going to see what is

ahead. chipotle is under serious pressure. find out if you should still be a buyer of this stock now 20% cheaper. look at who's giving big bucks to president obama and mitt romney's campaigns. which money has the most behind them? and a bold call on apple. why one of the street's top analysts say apple may miss the third quarter earnings number and why the fourth quarter is not looking too hot either. we'll start with the tragic news out of colorado, ten miles outside of denver. the shooting happened at the midnight premier of a movie. >> at 1:00 p.m. eastern time we may get more details on that

shooting. this is the scene outside the apartment of the suspect. 24-year-old james holmes of aurora has been arrested and taken into custody. police now say the apartment is, as that suspect said it was, bobby trapped and the area has been evacuated. that's according to the associated press and police officials. a gas can or smoke bomb, tear gas, not quite clear, was tossed into the theater just before the movie started which many thought was a stunt somehow related to this movie. president obama just addressed this issue and said that we may never understand why violence like this occurs. more details, carl, as we get

them, obviously, throughout the day. >> tyler, thanks so much. difficult story to cover. of course, we'll try to continue to focus on business news but even as we watch that horrifying story out of aurora. speaking of which, squawk on the beat, we're waiting for kayak to open. poised for success down the road? courtney reagan has more on that. >> carl, we are under pressure about .06 of a percent. it's a big day for ipos here at the nasdaq and nyse. hopefully it will different than what we just saw with facebook. we're still waiting for kayak to open. shares at $26. it looks like we're indicating to open at $30. we have not yet gotten there. there will be 3 1/2 million shares in the offering. the other travel sites are

waiting to see what the market will do. we have some downward pressure. now it looks as if we are lower. like you mentioned, down there at the stock exchange, palo alto, network security specialist really getting a wonderful debut as far as the bulls are concerned, bidding that share up 30% or so. some of its competing companies of these network security specialists are a bit lower but that's to be expected where the stocks are traded. one ipo that is not a tech name at all, fender has decided to with draw its ipo. we confirmed this last night. the economic conditions in europe are just not satisfactory for an ipo. so that legendary guitar maker is at least not going public today. >> courtney, thank you so much simon hobbs is also standing by for an update.

>> we're trying to match the numbers down here, attempting to match the orders. so far they have matched 750,000 shares. the interesting thing is, from the pricing of $26, this indicative price over the last ten minutes has risen substantially. you're looking at a $4 pop which is 16%. we were looking for a 10% increase and the indication is a 16% pop, well below what we had yesterday from 5 below. back to you. >> simon, we will come to you. >> even as you say it. >> there you go. a gain of 16% at the open. $30. 29 of the first trades. we still have some of the founders here in the studio. steve, would you like to come on the television? come over here. come over here now. let's bring on steve.

we spoke to steve earlier. in fact, both of the co-founders are here. let's do it this way. here we are. what do you think about the open? >> it's great. it's good to see the investor demand for our stock. of course, we're focused on the long term, but it still feels pretty fantastic. >> it's been a great two weeks on the road. we're looking forward to getting back to work on monday. maybe a little bit of partying today but we're looking forward to getting back to work. >> and the pricing was right? >> we weren't actually looking for a pop. we're focused on the long-term value but it's still nice to see something in the green. >> the founders there of kayak, finally pricing and trading down here at the nasdaq. guys, back to you. >> always fascinating to watch capital being created in real-time, especially if you're the co-founder of the company. kayak making its debut.

what else is in the pipeline? joining us is kathleen from renaissance capital. thanks for coming in. >> thank you. >> i was talking to kayla, our co-anchor who covered "the beat." she gave them a b-minus. what would you give them? >> i would give them an a-plus. we think it's incredible the way the ipo traded last week and this week. everyone is trading above their ipo price. now we want to see some sustainability about that. but we would give it definitely an a-plus. >> so no substantial gains to speak of, does it weigh on you? >> we like to see a market that has a discretionary ability to

discern and with the ones that have done well, i see a number of them lined up to go in this regard. >> the market is demonstrating that it can separate the weak snl. >> it's demonstrating it. our worry is we need to see follow through and given the first day of trading for these hot ipos that we have seen, we hope that we can see some follow through because they have to lift in the months after the ipo to make investors want to stay involved in the market. >> speaking of which, at least as of this report, which i'm holding here, a third of ipos year to date are below their ipo price. >> yes. >> is that significant up or down? >> actually, that is better than it was a few months ago where over half of the ipos were. but, still, it's a word of caution that many of the ipos have broken their ipo price. the minute we see a sign of a global slow down, the european sovereign debt crisis and ipos

are sold off first before any other segment of equity. so these stocks are very volatile and easy to get in that condition with a macro situation. >> people will look for themes, right, as they continue to sort through the offerings. annie's does great. they make gourmet kids' food. >> we advise our clients to look at the particularly technology and consumers -- you mentioned two -- and look at those that are high growth and those that are unique companies. palo alto, for example, is a leader in what it does and it's in a hyper growth mode. the valuation is pretty high but it is a unique high-growth company. i think that's how investors looked at five below. we advise our clients to be looking at the unique ones. they tend to be consumer and technology and tend to have high

growth. when they are unique, they have more barriers at first. >> sure. groupon would fallo outside of that perimeter. finally, the 2% index, does that -- does that do anything to investor appetite for the offering sector at large? >> well, the ftse index measures the post-ipo trading and market. it's a basket of two years, a rolling population of two-year ipos. the thing about it, it doesn't include the first day pop. how are they doing that own this category of equities? we are still not outperforming the market averages. we were through the first quarter. but the second quarter was weakened. we look at that index assaying, look, the market is healthy went the post ipo is risky for others and above market averages.

we still want to see that and then we'll give it the a plus plus. >> last question, how much has this week done to undo the damage, for lack of a better word, that facebook brought? >> this is just the beginning. it will take more time. >> kathleen smith, renaissance capital, thank you for coming in. >> thank you. >> meanwhile, simon hobbs, i want to go back to you. >> value being created. we look at the pricing that we had, $26 a share was a valuation on the company of $1 billion, more or less. so now that you've opened up 24%, we've created $243 million of value on the supply and demand of the market here at the nasdaq. just thought i'd add that. back to you. >> as kathleen said, you want to see things live, not just for the first day. >> when we come back, the company that helped put casual

dining on the map, look at that chart of chipotle down almost 23%. we'll talk about that after the break.

it's a big day for ipos on

two fronts. simon? >> yes, indeed. it's interesting. they said, you know, when we interviewed them on the cuff just now, they weren't expecting or weren't pricing for a big pop at the open but sure enough that's what you've got here. now at 25% on the stock that they've put up for sale. just 3 1/2 million shares. a relatively light flow and, nonetheless, a billion dollar valuation on the pricing. you've got 253 million, 254 million value being created, carl. a long journey for kayak to come to market and there you are, they have done it. back to you. >> yeah. 18 months since the listing. about four times. if i don't see you again, have a great weekend. >> you, too. >> meanwhile, shares of chipotle with the worst percentage loss ever since they went public in

2006. matt is senior restaurant analyst. jim yen, analyst with s&p. good morning to you woet. >> thank you. >> t deceleration in sales and return on equity, we have a drought going on. we have goldman -- >> we came into this thinking that it was pretty richly priced. it's come off aggressively. i think the street expectations, a 20% correction is dramatic. i don't really see a catalyst in the near term. so we are sustaining our neutral. certainly at this valuation, if you're a long-term growth investor, it looks like a much better buy or sell at these levels. >> jim, how would you describe it to somebody who is coming

into it cold? >> well, we think it's somewhat sharp and somewhat sudden. so we think that what they said in the conference call, there's no indication that things will improve any time soon. in fact, we think that the same-store sales will decelerate further as the year progresses. >> and so, matt, to what degree does the drought or any kind of pricing pressure in the back half of the year, early next year, i'm sure they are hedged a million ways to sunday. is that a concern? >> actually, they are not hedged. so it's a great concern. they just came off of 4.5% pricing. they are guiding now and actually claim that some of the pricing might have affected their traffic. they are limited to 1.5% pricing for the back half of the year. that's definitely going to cause a risk or a cloud over 2013 given where chicken prices are indicating for 2013, they are not going to be able to respond with so much price. we've seen this before and the

stocks recovered. it happened in '08 and into '09. they are doing a 3% traffic number. theyre coming down off of very strong traffic numbers and 40 multiple. so i think some of this is warranted but is also think that expectations are high. >> we've been talking about the multiple all morning long. is there a fair multiple on cmg? >> well, i think it does deserve in line with the growth rate. we think it's 25% eps growther. a multiple is not out of question. historically it's traded 25 times in bad times. if you look at '09, low single digits where it's coming around now or mid--single digits. i think it will find support 20 to 30 times. 30 times gets you to 330 or so. it is fair value here but we don't see any risk to the down side at these levels. >> jim, you've taken it down from 450 to 360. can you describe or talk about how you settled on 360 and to

what degree is there some sort of adverse halo effect? >> it's based on a lower multiple. right now we're using 36 multiple which is roughly two times a pay ratio of two times. we think long term this company is probably growing in the high teens. we think about same-store sales growth in the mid digits. that's how we get the 36 multiples. we think it should be trading at a premium in the industry with still stronger growth potential. as for the impact on the other companies in this industry, i think predominantly it affects the other companies in the fast casual. in general, i think it puts a cloud over the whole industry. since this was supposed to be not affected by the recession,

the fact that you're seeing them slow down, the rest of the industry is slowing down. >> it's been a tough week for the sector. matt, jim, thanks, guys, so much. appreciate it. >> thank you. when we come back, we'll find out whether the republicans or democrats are in the lead when it comes to fundraising and we're going to count you down to the close in europe where it's been a pretty miserable day. the close in a little less than ten minutes. don't go away. lexus enform app suite, you can use opentable to make restaurant reservations. during the golden opportunity sales event, get great values on some of our newest models. this is the pursuit of perfection. [ male announcer ] what if you had thermal night-vision goggles,

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>> announcer: the cnbc real-time exchange snapshot.

interactive brokers. the professionals gateway to the world's markets. president said this morning, it's a day for reflection, not politics in the light of that aurora shooting. however, super pacs are reporting their earnings. which side is rolling in the dough? >> just because it's the day to file the numbers, don't think we'll know for sure who all of the donors are. one of the trends that they point to is nonprofit groups which are not required to reveal their donors donating money to super pacs which then disclose but don't disclose the names of the original owners. it's not necessarily totally revealing but we're going to see the celebrities. morgan freeman has given a million dollars to an obama-linked super pac. we're going to be on the watch for other celebrity names later

as these numbers come out. take a look at the race so far. the big question is, who is winning? we have 679 total super pacs. they've raised $282 million so far this election cycle. 114.2 raised by conservative groups as defined by the center for responsive politics and only 25.2 raised by liberal groups, that group says. that's partly because the obama team didn't really embrace super pacs. they are really behind in fundraising. although the deadline is today, carl, we are not expecting to see any of these numbers during the daytime today. a lot of these super pacs will wait until the end of the day and bury the news on a friday afternoon. >> it's interesting to see, even with such criticism of super pacs in general, even those who are against it may realize that donating to them is the only option that they have. >> yeah, that's exactly been the

case for the obama team. they were against this concept for super pacs and caved in to agreeing to do it and now they are having trouble doing it. they are way behind -- they are clearly way behind the conservative side on the liberal side here. that is an area where they are going to have to make up the distance going into november. >> with the race so tight, even though it seems like it's going forward month to month, everyone is going to pay attention to the money, which as we know, is a huge factor. thank you, eamon jaf verse. the euro is at the lowest since 2010. we'll take a look at that when we come back after this break. i don't have to use gas. i am probably going to the gas station about once a month. dre around town all the time doing errands and never ever have to fill up gas in the city. i very rarely put gas in my chevy volt. last time i was at a gas station

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i want to get to kate kelly who has breaking news on morgan stanley. good morning, kate. >> good morning. there is a possibility of the ka tar ree's investing in a significant way. you may remember the story from a month or two ago on air. i reported that morgan stanley was talking to a blackstone group. i'm told that things have moved around where they are at a pretty late stage over a state that could cost a billion

dollars or more. in better years, the morgan stanley commodity division has been at 2 to $3 billion and has included an oil business as well as stake in a shipping business. it's been a tissue lent time for a lot of commodities traders, especially with crude oil being on such a wild ride and i'm told the second quarter for morgan, including fixed income and investment banking. fixed income, of course, housing the commodities units with a tough one and not terribly profitable. it's still a strong business and one that the cfo said we continue it to be an ongoing business, one that we like very much. she said, never say never in terms of what may be done. they are not commenting on details of this reported deal today but something could be

quite close, maybe within the coming days of this qia-morgan joint venture. >> it's like a flashback to 2008, headlines between banks and sovereign funds. thank you very much, kate, joining us from new york. meanwhile, worries about spains sparking a selloff and approving a bailout of some of the banks. tumbling 6% after government aid was requested. we're beginning to see pain at a more granular level. the yield on the spanish ten-year has been up to 7%. and the euro falling to two-year lows against the dollar back below 122. i was just talking to pisani and it was an ugly close. >> it is an ugly close.

it puts pressure on us because the dollar goes up and we get pressure on commodity stocks, on commodities in general and on the industrial stocks. that's a two-year low. you're looking at a two-year chart of the euro right now. let's look at some of the european financials. michelle is going to be along to give you ramifications of the mer random of understanding. you can see it's an ugly day in european financials. bear in mind, the penny stocks, italian banks, credit agricole, and it doesn't matter. right across the board, 5, 6, 7% declines. the financials have been sort of on the downside for the last three days and not nearly the destruction that we're seeing over in europe but 1 to 2% and all of the financial names after reporting good earnings with the exception of morgan stanley.

how about for the week? we've had a good week. i'll tell you what i like about it. i like the fact that suddenly this week finally some of the big sectors, tech and energy and materials moving up. we had a big move up in oil in the last couple of weeks. energy names had very strong 8% moves. and here's telecom where finally we're seeing some little moderation and the desperate search for yield. pharmaceuticals have been moving up. that's moderating. there's the proof of the downside, some of the big financial names. i want to know what happened with palo alto networks. 34 to 37, pricing at $42 and opening in the 50s and holding up here. of course, that company is very big. carl? >> thanks so much, bob. interesting day. want to send it over to sharon epperson and get a check on energy and crude is getting

interrupted here, sharon. good morning. >> yes, a seven-day run. it's come to a stop at least temporarily. it's just a temp rare pull back right now. that may be having some impact as well as the fact that we are looking at those spanish yields rising to all-time record highs. we're also looking at the liquidation, the wti market of the august contract which is expiring today, september is now the most active contract there and there may also be some impact from this slide that we're seeing in copper prices. copper prices is down 2%. in fact, it's down on the week after reaching a two-week high yesterday and this is after china's news agency talking about the fact that it will not loosen the property ownership rules. the fact that china may be tightening the housing policy, that is something that is impacting copper as china consumes about 40% of the

world's market. not a move in the precious metals. we're in the summer doll drums for sure. we've been at these same prices for about two months. not much movement in the silver market either. but the long-term investors, the buy and hold investors, they are still holding on. back to you. >> sharon epperson at the nymex, thank you so much for that. want to get to our chief international correspondent, michelle caruso-cabrera that can explain what happened in spain. >> a lot has happened. let's show you what happened overnight. intense protests across the country. 80 different cities engulfed and every single day there appears to be more austerity measures. the most upsetting is the

spaniards are losing what they call the christmas bonus. carl, let's reemphasize this, the spanish yields rising at approximately 8:15 this morning when valencia reported that they were going to ask the federal government for a bailout. valencia only needs to refinance 2.5 billion euros by the end of the year but they are so cash-strapped that they have to do this. we wanted to give you a 12-hour chart so you could see about the 8:15 mark. now to what we thought would be the big news of the day, which is that the euro group approved the bank bailout for spain approval happened and government is still on the hook. remember, there was a talk about going directly to the banks, you can avoid going to the government the other significant

thing and a big battle behind the scenes was would spain agree that some of their small regional, let's call them junkie banks, would they agree for them to be shut down? they have agreed in principle. the other battle that we know is still going on behind the scenes even though the european finance ministers shot it down is when they do liquidate banks, if they liquidate banks, will the senior debt holders take a loss? european finance ministers shot it down. if it does happen, they believe it is inevitable and investors are going to have to get smart like they did in the u.s. and really start to understand the capital structure of a bank, where do you fit in it and are you going to get crushed or not when liquidation or bailout happens? back to you. >> michelle, how important is is this valencia news in does this

happen in the way in which regions of a country are going to start asking for a help? >> spain had this issue which you had a lot of independence. they could do what they wanted and then what do you discover? when they don't have the money, they turn to the federal government any way. we looked at spain and said, oh, spain has a problem with their banks. now we also know that spain has a problem with their regions, right? the potential for bailout gets bigger and bigger by the day. >> market is having a down day. we were down triple digits briefly. a cnbc market analyst and we really have everything today. we have earnings and ipos.

>> we experienced our own sense of being devastated. >> hard to concentrate on anything, fair to say? >> very near and dear. that being said, obviously people are focusing on a little bit of a pull back. we have a nice lit bit of a reversal, coming off 1340 is a pretty significant support level and it's trending in off of that. one of the things that we've been watching, though, the volume has been down and it's been affecting the financials and not likely to see anything encouraging out of that until we start to see some resolution both across the federal and state level and beyond but we

continue to look forward to the election. and we're going to see more of a focus into the convention season and then lineally right at the election there's a lot at stake here. >> does it make sense, two years, 5 1/2 year low. >> it is surprising. at some point it's going to come rushing in on us. investors a investors are looking at each stock and they are reacting accordingly. we're not seeing behavior based on macro events. that is an overall benefit to the market. >> we just had a discussion about ipos and a woman from renaissance said, with the ipo markets proving that it's not --

it's not being happen hazard about new issues. it's going to punish offender for whatever reason but will award palo alto when need be. >> the sector is in vogue so they've done very well today and people are still chasing returns. you saw them snatch up corporate bonds and investors are out there trying to find our spots and it's going to be an interesting market in the next few months. >> i want to get the latest on the tragic shooting. 12 people have been killed, at least 50 people injured after a man opened fire in a movie theater in aurora, colorado, during the midnight showing of ""the dark knight" rises." >> the latest twist is what is happening right now where the

theater took place and in the aurora neighborhood ten minutes awa way from where james holmes lived. they have investigated his apartment, evacuated people living in the complex, the apartment blocks nearby. the police chief there, daniel oates, says the apartment is booby-trapped and police are trying to figure out how to disarm engs employees sif material inside. he said police could be there hours, maybe even a matter of days. the suspect, holmes, taken into custody, as you probably know, after that early morning shooting today. president obama addressed the incident where he gathered in ft. myers, florida, for a campaign event. >> we're still gathering all of the facts of what happened in aurora but what we do know is

the police have one suspect in custody and the federal government will do whatever is necessary to bring whoever is responsible for this heinous crime to justice. >> the president canceled that subsequent campaign event after hearing of the shooting. mitt romney said he and his wife are saddened by the news of what he called senseless violence. in paris, a plan premier for the dark knight rises, that is being taken down there. the theater amc has issued a statement on the tragedy saying they are saddened by the random act of violence and their heart is with the victims and families and they are working with local law enforcement around the country to review all of the security procedures nationwide. aurora police expected to hold a news conference in about an hour

or so, roughly 1:00 p.m. eastern time in which we will get more details. back to you. >> tyler, thank you so much. "squawk on the street" is back after a short break. ♪ i'm making my money do more. ♪ i'm consolidating my assets. i'm not paying hidden fees or high commissions. i'm making the most of my money. and seven-dollar trades are just the start. i'm with scottrade. i'm with scottrade. i'm with scottrade. and i'm loving every minute of it. [ rodger riney ] at scottrade, we give you commission-free etfs, no-fee iras and more. come see why more investors are saying... with scottrade.

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peck tagss. tony, always good to talk to you. the lesson that i'm taking away is that macro could hurt someone as stable as apple. walk us through your thesis here. >> sure. i think macro is is one of several factors that can potentially impact apple this quarter. the other is, they have introduced the iphone 4s. they have had two spectacular quarters. and similarly, on the ipad, apple introduced the ipad in march. it's had a great quarter. it still hasn't come out in china. we thought that was going to happen in this quarter and it didn't. it actually just launched in july in china. we also don't think that the ipad will be as strong. the combination of macro plus some product cycles, we think relevant to consensus will lead to disappointing revenue results this quarter. >> so may miss on revenue.

you're still below that consensus and then you actually also think q4 guidance may be significantly lower. why? >> apple typically guides very conservatively but it leads from consensus expectations, consensus has revenues growing in q4 next quarter. and i think that's because some people believe the iphone 5 is going to come out. we believe the iphone 5 is not going to come out until at least october. we're going to have a continued product lull and we expect products to go down further next quarter. apple always guides conservatively so the result is consensus estimates are at about 38 billion for apple next quarter. we think it could be in the 33 to $34 billion range. again, recognizing that apple tends to be pretty conservative in its guidance. >> and i love this last bit. you say there's no fundamental change to the thesis long term but in your words you're a bit

torn on the stock. are you leaning one way or the other? >> look, i think apple is a great fundamental thesis. if you're a long-term holder in apple and you haven't overweight, don't be cute and try and time the stock. stick with that belief as we stick with our belief. if you're a short-term trader and you're saying, look, i've got to decide on whether this quarter is going to be good or bad for the stock, we believe it's going to be neutral to potentially negative for the stock. the one time when apple missed revenues, which was fiscal q4 last year in advance of the iphone, the stock fell about 6% after they reported and didn't really recover during the quarter. so the combination of weak guidance that we expect plus the precedent that we've seen in terms of the stock going down when they missed before, if we had to bet on the short term, we'd see it go down. for most investors, it's a good

story at faund mentally good price. >> you know what is going to happen if in fact what you're saying comes to pass, investors are going to try to pin this on cook or it may be described as some misstep in at least the timing of product launches, the way they are guiding. will that be fair? >> it may -- it may be but it really isn't fair. because investors should be getting more and more used to the fact that apple's product cycles are backing more pronounced. the iphone is so huge. when they introduced the iphone 4s, the units doubled. when you have that kind of dramatic uptake, that's a little bit different from a couple of years ago because the iphones become so big and so important to apple. and i think it takes a little bit of time for investors to realize that and begin to model it appropriately. but that's not a reflection of leadership. that's just a reflection of the revolution that apple's principle product, which is the

iphone, is really becoming one that's a bit more cyclical. because people get used to and anticipate the new products coming. >> anyone who has talked with anyone about a smartphone in the past year knows exactly what you're talking about. appreciate you coming to the phone. good to see you again. >> my pleasure. >> toni joining us of bernstein. when we come back, "squawk on the street" goes diamond hunting. one of the largest holes in the world that produces 10% of the world's diamonds, after a break. well another great thing about all this walking i've been doing is

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sales down 14% from last year, the company says in the long term, they will outsip supply. that's one of the reasons that the diamond rush is on. as diamonds become more sought after, one of the countries is home of the most valued diamond mine in the world, and bob pisani recently traveled to it. he is live. i can't even imagine what this was like. >> it was a trip to country that people know very little about. it's 15% owned by the government of botswana. why botswana? because that's where the diamonds are.

the debeers company is digging, trucking, and crushing its way to profit. thanks largely to the mine, the most valuable diamond mine in the world. the mine itself is a 50/50 joint venture between the diamond giant and the government of botswana. it's a partnership that is paying off. the mine produced 1 #1 million carats of minds. >> 80% of the stones out of this mine are gem quality. >> it's hard to get your head around how large this mine is. it's one of the biggest holes in the world. this shovel behind me is six stories high. the mine itself is two miles wide and more than a quarter mile deep and it's getting deeper every day. moving all this rock around is no easy task. some of the largest earth-ving equipment in the world is here.

just look at this thing. it can carry 300 tons of rock at any one time. and just the tires are 15 feet high. the land here is so valuable that officials won't even led me bend over and pick up a rock without asking for their permission. even so, they've got to crush about a ton of rock to get just under 2 carats of rough diamonds. but they have thousands of miles to go and hours of cutting, grinding, and polishing before they end up in jewelry stores around the world. >> didn't know it took that much to make a diamond, did you? an important side note, there was a tragic accident two days after we were there. a wall collapsed killing one worker. the mine was closed for three weeks. production just started up again yesterday. this is just a little piece of that i'll be airing all day long. >> a ton of rock?

>> just to produce 1 carat. and this is the richest mine in the world. >> thanks, bob. >> you're welcome. dow down 83 after a break. it's a golden opportunity... to experience the ultimate expression of power -- control. ♪ during the golden opportunity sales event, get great values on some of our newest models. this is the pit of perfection. i take insulin, so i test... a lot. do you test with this? freestyle lite test strips? i don't see... beep! wow! that didn't take much blood. yeah, and the unique zipwik tab targets the blood and pulls it in. so easy. yep. freestyle lite needs just a third the blood of onetouch ultra. really? so testing is one less thing

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