innovation anymore, unlike say an ebay that does. >> what's your biggest position? >> activist is number one. ebay is number two. sinclair is number three. everything i've been talking about here. major positions. usair. >> we got to go. martin, thank you. we got what we could out of you. we're out of time. >> that does it for us. now it's time for "squawk on the street." good thursday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. some big time bellwethers are out. we have a seven-month high on china's pmi. breaking news on carl icahn and apple. david is here with that.

>> yesterday late in the day we got another famous tweet from mr. icahn saying he had written a new letter to apple. we've heard some of the contents of that letter, which apparently is about to be made public, if it hasn't been already. there's the tweet we're referring to. the specifics that haven't been shared completely as of yet or perhaps are just in the process of being shared is that mr. icahn wants to tender immediately, buy apple for $150 billion worth of its shares. it's choking up jim over here. >> right now he wants to tender an offer? >> at the current price is what he's asking for in the letter. he also says in the letter that he would not tender his own shares into that immediate tender offer, again of 150 billion. so roughly about a third of the market cap of the company at its current price. and he also said he would not tender. and he has raised the stakes on

the earnings to 4.7 million shares. it has been roughly 4 million shares. we're talking about a $2.5 billion position for mr. icahn who just took an $800 million profit on some of his netflix shares. >> flabbergasted. >> i don't think you would expect this. this is kind of a nonstarter if you get this if you're apple. i don't know what the response is going to be, if any. i can't imagine they would entertain it. >> let's say the quarter's bad? let's say the quarter's good. what is the worst? >> i think you keep the pressure on the board. apparently in the letter he's perfectly friendly in terms of praising management and how the company's run, but you want to keep the pressure on the board to continue to think about and do something with excess cash, which keeps building up and will build up.

of course, we'll find out how much from the current quarter that will be reported on monday. but you're right, you know, there are a lot of people -- not a lot but wonder whether we'll get guidance for the fourth quarter that won't be that great. who knows which way the stocks will go. interesting he would use 525 as a number when you conceivably -- it's at market, why would you tender? >> i agree. this is a very exciting time for apple. they've got the new operating system,new phones, just did the ipad. i'm sure people at apple are saying you you've got to be kidding me. do you know people at the "new york times" are saying we have to do this, there's like a window where you focus on the product. and suddenly he's an activist? >> even at $2.5 billion, that's far less than a 1% position. >> you wait till wednesday.

why would you do it today? >> by the way, questions we can ask carl when he os cnbc today at noon with scott wapner. >> do you think that's why he did it today? i want some ratings for wapner. carl! in another three days we'll find out whether you're going to get 525, 425 or 625. >> exactly. >> in the meantime, i love him. >> 3m posted better-than-expected numbers and ford beat the street, 45 cents a share on an operating basis, also boosting its full-year guidance, improved outlook in europe and latin america. jim, $2 billion in cash generation is up from 1.4. the only caveat, they are cutting some north american production. it's still going to be higher year over year but trimming

about 15,000. they don't want to see the lots get too full. >> no. i think what really matters, the reason why went from 18 in 2011 down to half of that is because of europe. and they lowered the loss forecast for europe. they're still losing money. they also raised south america. so i hear you on the north america but i've been focused laser-like on ford's core performance in europe and that seems to be coming to an end. on 3m, can i promote him? he is so noncommercial -- >> people probably don't know who runs 3m. >> the guy is just a joy, okay? and so are the numbers. the organic growth is terrific, the sales recap, he does some great presentations. they are just great numbers all over the world. wow. this stock when it reported people said wait a second, he narrowed the range. not that interesting. if they would even look at the presentation before they started trading it, they would see this

was a great job by a great ceo, unaffected by the morace in washington. it's always been my father sold 3m products for years. >> really? >> yeah, yeah. he sold the board games and sold sashine ribbons, the bows. always had a great relationship with 3m, it's a great international company. >> they did boost the forecast, looking for 675, street's at 670, local currency organic 3-5 versus the current 2-5. >> it looks like the numbers are depressed and you do have to add back the currency. plus if the dollar gets weak. only dupont really focused on it. but pension costs are coming down because of the interest rates going higher.

a bit higher. >> not much higher. >> well, lately because of the -- we're getting some bad numbers out of employment. that's always worth -- the pmi in europe is good, pmi in china is good. we're awful because of our government. >> yes, we are. >> we're awful because of our government. it's certainly not the people. the government's not as good as the people. >> by the way, we're getting word that everyone is trying to log on to carl's web site and nobody can. >> 525. >> did he contract that to the same people -- >> he may need to have an address in the rose garden. that's going to be a story all day, who can log on to the web site first. >> and what did apple do wrong except for having so much cash and issuing great products. shame on them. i want a company that is a financial engineering company, i don't want a company that's a real engineering company. >> all true. capital allocation is a part of

running your company properly. if you're not allocating capital properly -- >> why not by netflix? that would have solved the social problems. >> that would have solved the problems for anybody, if they bought it right. of course the only person who did buy is right is carl. >> it's just hard to fathom doing this between the ipad launch and the quarter. >> you're not arguing that apple's not overcapitalized. you just question his timing. >> if the company reports a quarter and they don't give you good guidance and the stock goes to 460 -- >> then 525 looks good. >> then don't you wait and see? something ticked him off. >> you're right, though. monday is the day that really

will matter with that. we'll see what the fourth quarter guidance is and how they divest it globally. is it selling as strong as many people think? >> apparently there's one quote here, if i'm hearing this right, "a lot of people have died fighting tyranny. the least i can do is vote against it." carl icahn. >> really? >> i think that was a quote from a while ago. >> he likes, you know, in his offices he's got some very beautiful paintings, the battle scenes and things like that. >> give me a higher stock price for apple? i can go there. >> i guess carl gave that line at a texaco annual meeting. >> oh yes. carl's just -- he makes it fun. >> he does. he really does. >> doesn't he make it fun? >> especially when there's not much else going on. thank you, carl.

>> meanwhile, we want to get to bertha coombs, who joins us from capitol hill the. >> reporter: good morning, carl. the title of this hearing is implementation failures congress didn't know. today they are all finger pointing, deflecting blame, cgi, the key architect in terms of the hardware says the problem isn't them, the problem is software. quality software services, a unit of united health says it's not their software, which is used to help identify people and to help get them registered. part of the problem, they said, was a late decision to require registration first. no doubt they're pointing the finger at health and human services department. secretary kathleen sebelius won't be testifying until next week but certainly it does appear there are going to be a lot of fingers pointed at what her underlings were directing these contractors to do.

sirko, one of the contractors doing paper applications said so far they've had about 16,000 of them feed through, a bunch of them have errors and it's taking a lot of time to process them. that's been an issue for the insurers. some of them that reported this week said the errors are getting better in the few applications that are coming through, but they were at the white house yesterday clearly talking about some of these problems and it doesn't seem coincidental that following that meeting the white house and the health department said they were going to let slide the deadline for when people actually had to buy a policy. now they only have to enroll for a policy six weeks later at march 31st. lots of fireworks expected this morning. we'll have an update coming up. back to you. >> no one better to cover it, bertha. thank you for that. >> when you speak with ceos in technology, they've turned on obama in this thing. this thing is really big in the technology market, the problems with the web site.

because the companies are great customer relations management, great software. and the canadian company -- honestly, people are scratching their head saying how could he have let this happen and how is sebelius still doing her job? i don't know. i'm not a political guy. i say hey, how's pcs? let me tell you about sebelius. they're furious. >> she's going to have her moment in the sun in a few days, that's for sure. when we come back, we'll break down some of the airline earnings for you, see how some of the carriers are earning. also ahead, boston red sox tom werner smiling about boston red sox victory in the world series. take one more look at futures here this morning. we'll walk through claims, china, pmi, some of the european pmis, too.

up 49. we're back in a minute. ♪ look at the night and it don't seem so lonely ♪ some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer. you just need the right professional to help you take charge. ♪

♪ ♪ all right. of course much of the country focused on the inability to get on the health care exchange web site to try to sign up. a lot of people also frustrated by carl icahn's web site, trying

to get that letter. we told you earlier the key to the letter that he sent yesterday to apple is that he wants the company to undertake an immediate tender offer for $150 billion worth of its stock, $525 a share. icahn saying he won't tender into that and he's increased his ownership to 4.7 million shares. that's about 2.467 billion dollars. that's how much money it is. all of this doesn't seem to be likely to happen at all, but take a look at a cartoon that we have been able to at least download from the web site. as you see, there's a lot of people fighting tyranny. the least i can do is vote against it. remember that was an early battle. i remember that, 1988. in fact, i remember calling carl, he called me back, i was a

young reporter. it was late, he called me back, i was like ah, ah, ah -- i said why do you want to buy texaco. he said what do you mean why do i want to buy texaco? >> a great twa run. >> they're getting rid of this picture, the staggered board. >> i think he's having the time of his life. taking time away from selling the product and -- >> deal with this. even though again he's got well less than 1% of the company. >> i question -- well, let's see the quarter. it might be a nice play if the stock goes to 450 to say in my back pocket i got 525. >> two airlines heading in

opposite directions. united continental falling after it did miss the street despite higher quarter profits and cost cuts and southwest higher net profit for increased airfares. >> we had a decent year. we started out the year very strong. we saw some impacts in the spring and early summer from the tax increases and sequestration, but we had a really good summer. we had a great third quarter, all-time third quarter record, 231 million dollars and consumers were out there buying and flying. >> my favorite metric for kelly, fuel cost down 5.1 in the quarter. revenue per available seat mile up 5.1 and united is lagging their rivals, their revenue up only 2. >> delta had a fantastic quarter, an upgrade today for usairways. if you listen to what boeing is

saying, maybe 50% of your cost is fuel. one of the reasons boeing has great numbers, this company is a renaissance. there's not much competition at all. it's really hard to get new planes. >> an industry that never, ever earned its cost to capital. not once. >> the sum total of the whole history is a loss, right? >> absolutely. >> are others, even wireless, amazingly enough. >> a big case coming up. department of justice saying it's anti-american to have two together -- >> i took the anti-trust course. >> did you go to law school. >> i play one on tv.

i passed the bar exam, which i always thought was incredible. >> new york. >> that's a tough one. >> you could sit on the supreme court then. >> all rise, justice cramer. >> why not? i can ask 20 questions as well as anybody. >> why not. can you imagine asking 20 questions in front of cramer? >> i think they would finally have to bring in cameras. >> if i am on the court, i want kangaroo court. the prosecution is always right. they don't pick those names out of the phone book. >> when we come back, how do you get back into the green after yesterday's fallback? cramer's "mad dash" is next. the president will speak at 10:35, this time on an immigration bill he wants congress to sign. a lot more still to come. "squawk on the street" will be right back. ♪

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♪ if you are what you say you are, a superstar, then have no fear, the camera's here ♪ >> seven minutes till the opening bell. "mad dash" time. we'll talk deals. >> market leader, these companies that make these deals and their stock goes up, i've always said to you when will the bankers like really start pushing because look at this. look at this! >> they're pushing. it's not helping but they're pushing. >> this is the kind of run --

>> and they reported numbers as well. >> yes. >> in germany. >> you can make this world wide scale, walgreen alliance. mckesson saves the health care companies money. >> and of course bankers are out there constantly talking about how often the acquirer stock goes up. >> they are, they are. >> but it's not helping because you come back to the basic issues of ceo confidence, which is -- >> that's washington. >> they're buying a german company. now, yesterday you were delightfully asking me when i was up at teavana about the great american growth retailers, tractor supply, it's very big, $9 billion company, reporting a blowout number, adding stores, really terrific. this is one of those stories,

people doesn't realize, 1938, there's 1,200 stores, it's a real company. and following up on yesterday, lumber liquidators, they hit the high number. this is a $3 billion retailer and, you know, there's one mention about that federal investigation. no analyst talks about it. why do i focus on these companies? >> 17% come many store growth, adding stores left to right, got a new concept. it's all love, david. it's all about love. >> until it's not anymore. >> exactly. it's great until it's bad. >> and when do you ring the bell? you don't know. >> you don't know. and aura tractor supply. >> when you think of kohl's, penn penney's -- obviously penney's troubled. they want oxygenated growth.

this $3 billion company has caught the love affair of growth funds everywhere. >> we got a lot of earnings, as you heard about, a lot of stocks to watch. more "squawk on the street" at the opening bell after this. fo,

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"it was a pleasure meeting you for dinner at the end of september," the carl icahn letter, we have copies here at the desk. "we could not be more supportive of you, the culture and the innovative spirit it engenders. >> he's not going to go after management but he presses the board. he says 525, let's get it started, i know it's a big number but it's appropriate and relative to the size and strength of your company in terms of how much cash flow you generate and servicing amount of debt, you have $170 billion in the bank. we'll see if it resonates at

all. >> they obviously had a good dinner. tim cook is -- it's great to be able to meet him and talk to him about what he's doing as manager of the company. but you're right, capital allocation is very important. [ opening bell ringing ] >> the big board down here this morning, we have inspiredmd, a medical device company, celebrating its listing at the nyse and citycon on the nasdaq. >> you just like saying that because -- >> kleinfeld. have you noticed alcoa sneaking up? alcoa's up $1 since when it recorded. you laughed kleinfeld.

that stock is going to be up nicely. >> historically when stocks are kicked out of the dow, the next 13 months are generally very kind. >> and klaus has done an amazing job. this is an industry where they give the stuff -- you know, you recycle aluminum. it's difficult to come up with new uses. i think alcoa's on a new comeback. >> underarmor is going to get some attention. they did raise outlook, conservative on the guidance. international continues to be a big push for a company that's basically north america focused. >> i want to hear the call. i think -- i never want to be so glib as to say just go buy it here, but this is a great growth company. and the company keeps coming up with new products.

it's nike/under armour. i think it's probably down too much but i don't want to be glib. >> they're citing inpomport dut but that will need clairification. >> it's a technology company. you know why he came up with these great products? world's sweatiest man. yeah, i get that. >> his mom would be so proud. >> don't give up on it, i think it's an innovative company. >> they do see the stocks reaching the low end of their full target on earnings. hersheys, 104. i think the estimate was 108. raises their long-term aps

target. a story today about rising cocoa prices and what that may do to prices of chocolates over the holiday seasons. >> chocolates sold in convenience stores. when gas prices go down, their prices go up. yesterday we had consumer product companies doing well. this market changes directions in a nano second. international paper on "mad money" tonight, that stock has been straight down and now finally it's finding footing. people want to buy cyclicals today. they're oversold. >> deutsche bank to a buy, raises the target to 30. >> this stock has been up, i like that company very much. obviously i would love it if they could get amr that, stock would double. it's already starting to go up

without that but that is -- what a combination that would be. what a combination. >> i should mention shares of at&t are down. i'm going to get to the quarter in a bit in the faber report. take a look at at&t, its earnings and why the stock is suffering a bit. >> verizon got hit on that deal with vodafone. it's been up ever since. a lot of people like the numbers, maybe we talked to at&t, maybe that's the problems, the numbers not that robust. >> get into it. >> wait for it. >> that was a little tease. i did it with teavana yesterday. that was tea -- >> it was. a location on the upper east side -- >> 84th and madison. i wonder if there was a line. >> semantic, the worst performer

on the s&p. >> altera was really bad, ceo of palo alto network. the cyber security business, the bad guys are fast. there's a lot of price cutting but you have to take a long-term industry pattern. there's a lot of cyber crime and everyone is trying to come up with solutions. intel bought -- >> mcafee. >> mcafee. >> angela merkel might want something for the nsa.

>> this s important story developing when you think about the totality of what's going on in this country. our allies are not happy with us, the chinese are not happy with us. >> why not the health care peop people? >> government works in mysterious ways. >> there is some day-after cat damage. jpmorgan cuts to neutral, raymond james cuts to market perform. >> they make the best machines. keep coming back to that. stock was up huge in the premarket, you wait for the guidance for conference call and they guided negatively. don't trade when the headlines come out, akamai, because it's that conference right before the

q & a when they lower the boom and you don't know what the boom is going to be and akamai was terrible. it's a shame. it's a good company. >> deutsche goes from hold to buy, even as i think they take down ubs. a big piece in the "times" today about a letter to jamie dimon saying don't worry, it worked out for blankfein in the end. >> that was a really interesting piece. how lloyd has been able to really become the senior statesman of the group. the p.r. people at goldman also very helpful. >> well, they brought in a new team. they seem to have done wonders. >> yes, the beard. >> it's all the beard. >> you know how many times i'm tempted to get that beard because of the success that lloyd's had with that. >> go for it. >> you think so?

>> yeah. >> wow. >> he's developed a new karma. he's very funny. >> let's talk at&t. now we teased it a little bit. the company did report after the bell yesterday. conference call followed that report. stock is down a little less than 2%, had been down as much as 2%. not a bad quarter for at&t. to those who might choose to sell today, perhaps they're focused on a couple of different things. one might be the fact that, yes, at&t did add 363,000 post-paid subscribers, which was above expectations but a lot of that, in fact more than all of it, was tablets, 388,000 tablet net additions. so if you net that out -- not that you should -- except tablets are not typically as high in terms of average revenue, not as high in terms of quality. those who sign up with at&t for

their tablet. if you were to take out the 388,000, they're not growing at all and they're losing on postpaid stuff. now, again, they did grow because they added a lot of tablets. there may be some focus on that. as for margins, fine, in fact. in line if not above. u verse was quite strong there. interesting to note they've got 10 million total subscribers at uverse. that's becoming a major, major part of the company, competing with the likes of our parent company, of course, comcast. think about 22 million, directv or dish. these are real competitors at this point. they did i think it was 655,000 high speed internet subscriber ads and 265,000 video ads. that was the second highest quarter ever, best quarter in almost five years. >> let me play devil's advocate. sounds like a good quarter to me. >> there were some very good

things in this quarter. there were. >> there were great yields. >> overall, 2% revenue growth and that's even a little squishy. again, this idea they really didn't gain any postpaid subscribers, didn't tell us what they were going to do with the proceeds of the big tower sale. it is a slow and steady quarter. one thing that may help is interest rates move down. interest rates move down, that 5% yield looks a lot better. >> that's what i was thinking given the 10-year, it's a very well-run company. verizon just having a better time right now. >> the key thing when you look at all four companies, sprint, t-mobile, verizon and at&t is the coming competition. we thought we might see it in at&t's numbers, really taking a lot of subscribers away or

having an impact. it's not clear that that impact was that dramatic, although again i do refer you to the postpaid adds numbers. but what's coming when they really get it going over at sprint? ledger willing to say anything to anybody about having to do with t-mobile. i know he's doing it in a t-shirt but that's going to be interesting competition. >> dan, the ceo of sprint, was on "mad money." when that company is loaded for bear and they finish the nextel, i think sprint will be able to come with a program to give you a great deal. you don't want a fight a guy like this. >> and he has the 300-year plan. >> boeing has a 20-year plan.

>> the like of u-verse and the ability to offer a complete package is something t-mo will be able to do, or sprint. >> there is one company that had a five-year plan, it went very off. i just want to congratulate them from get being back on track, aem. they did a great job today. i've been very critical of them. they may be back on track and that's good because gold prices are not doing that well. people who own gold stocks, it's always incredible. it's probably an interesting stock to buy, agnico-eagle. >> we've seen some relief in the raw metal. >> people don't like the metals. >> with all of that, dow is up 44. bob pisani is on the floor. hi, bob. >> hey. this is the biggest day of the quarter for earnings.

it's a good time to review where we're at. i looked at 9 missed on earnings. that's an unusually large number. 14 missed on revenues. this is really the trend so far. 213 companies reporting, 42% of the s&p, 66% beat on earnings. the historical average is 62%. more are beating on earnings than the historical norms but only 50% are beating on revenues, well below the historical norms. this is the trend going on two years essentially now, generally better on earnings but not as good on revenues. bottom line here, we're continuing the overall trend. auto is holding up really well. ford had another great number, raised their four-year forecast. autonation was fair, not great. ration de i raytheon doing well, united

continental is a rare miss but that's an anomaly among the airlines. southwest specifically talked about the lower fuel costs, gave a number to it, 5.7% lower fuel costs year over year, lower prices per gallon, higher prices, stronger bookings. that's the trend. they expect another year-over-year decrease. they talked about it specifically in the fourth quarter. hotels doing great. starwood said they're at a six-year high today, raised their 2013 eps. north american occupancies are at an all-time high. they went out of their way to say revenue per available room increased by 6.9% at their hotels. ceo went out of his way to say he's bullish on long-term trend on rising well and increasing demand, even though they might see slower growth in china. we had problems with the semiconductors yesterday. it was an unusually large number

giving weak revenue guidance but elsewhere the numbers were good. i looked at f-5 network, file storage pace, they had a great report, they're up today. the industrials so far and i'm including caterpillar, 3m is a good example. they beat on the top line but the narrowing of the guidance is helpful. it's an indication of what a middle incline of earnings we're getting in big industrials overall. i would note the lower dollar is helping u.s. multi-nationals overseas. back to you. >> all right, bob. thanks so much after that. when we come back, shattering more than just windows. find how the who is saying now is the right time to break up microsoft, which reports tonight? and later in the "fast money report," carl icahn and his letter to tim cook. "squawk on the street" will be right back.

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welcome back to "squawk on the street." i'm sharon epperson at the nynex. platinum group metals are actually rising on better than expected u.s. car sales data, that of course as many of these products are used in auto converters. we'll continue to watch what's happening in the oil market as well because the rise that we're seeing week after week in u.s. crude oil inventory certainly putting pressure on oil prices and we are seeing them slightly lower in this session. but we're paying most attention to natural gas because that is the data we'll get out today from the energy department. we're expected to see a rise in natural gas, levels of storage greater than what we normally see. we're looking at natural gas futures under pressure before the number comes out at 10:30 a.m. and, carl, you know i'll bring it to you live. >> absolutely. thank you for that. they're talking 3.15, the national average by the end of the year. that would be the lowest since

2010. that would have an impact on the retail season, which citi says won't be very good today. >> this is terrific news. the year-over-year we had sandy, there could be some surprises. i'm not as negative about the consumer other than washington when i see gasoline because that's just money in your pocket. so maybe you go from dollar tree to walmart, or maybe you go from dollar general to target. i don't want to be as negative. and oil i think goes to 93. >> interesting. citi by the way, today says it is a shorter calendar. their favorite picks dollar general, macy's and walmart. i think they see some people may be graduating down the other way. >> macy's has been hanging in there. jcpenney has been somebody they've taken a lot of business, dollar general expanding in california. walmart can be here or there.

i don't know how to value the stock price. >> why not? >> because i don't understand the merchandise right now. the dollar stores do better. it's almost as if i'm trying to figure out did people trade down from walmart? and that's unusual. but a lot of that might be the dollar stores. if you go to them, they no longer look the way they used to. they actually have a little pizzazz. stuff's not on the floor lying around and when i go to dollar tree, i am like kind of very impressed at the niceness of the aisles, the terrific people, clean stores. i've got two dollar trees i go to and they are super. >> walmart is focused on that dollar store window, would they even consider doing an acquisition to get involved? >> they should buy dollar tree, it's a great company. >> ford zooming past the street with its quarterly earnings and positive outlook. stay tuned for an interview with its cfo, robert shanks.

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time for "six in 60," six

stocks in 60 seconds. pretty good quarter out of starwood. >> they make fun of me because of kleinfeld. this is fritz. i love fritz! >> deutsche goes buy to hold on panera. >> yeah, it's a very discouraging conference call, about not being able to put the food through fast enough. >> citi on chesapeake. >> a lot of people talk about hidden value. i think there is more data. >> meta data. >> this is software, a service for the health care business for testing for drug companies. it's terrific. tarik charif is the ceo their. >> and then finally -- >> look at this!

this is what we're looking for in a company. this is a great company sant ander. >> what do you have on "mad money"? >> we're going to show how to make paper tonight on international paper. >> 6:00 and 11:00. >> thank you! >> let's get to simon. >> the burning question of the day, can apple stock rise 140%? and will he get his way with tim cook? and we'll have puchback on obama care and minimum wage from andrew puzder, and we'll be joined by the chairman of the boston red sox, mr. tom werner. that and more in the next 60 minutes. ♪ ♪

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carl icahn asking the tech giant to commence an immediate buyback offer to the tune of $150 billion in a letter to apple ceo tim cook. what should cook do now and what does it mean for the stock? >> plus technical problems have been plaguing obama care web sites and lawmakers now want answers. congress grilling the contractors responsible for the federal site this morning. we'll take you there live. >> and the chairman of the red sox after a great game last night, tom werner will join us to talk about the future of media and the stock's big win in game one. >> at the top of the 9:00 hour, we told you what would be the key contents of carl icahn's letter to apple. those have been made public on the web site. he holds a $2.2 billion share in the company.

he says in the letter that if you were to borrow much of the money to actually accomplish that given so much of the cash is actually overseas and they wouldn't bring it back, if you borrow $150 billion at 3% interest rate, comment a tender at $525 per share, it would be a 33% increase in the value of the shares, which assumes no multiple expansion. he also says he would not tender into that offering for whatever reason, therefore actually accreting up his position in the company. he also says in the letter he wants to be very clear he could not be more supportive of you, meaning tim cook, the ceo, the existing management team, culture at apple and innovative spirit it engenders. he's focusing his criticism solely on capital allocation and certainly urging the board to get more involved perhaps in that. whether or not any of this

happens of course, it's probably unlikely, isn't it? even the idea of $150 billion bond offering, for example, would equal the nine largest investment grade bond offerings ever done taken together. one would think that might not actually happen. plus, why would you tender at 525? that's where the stock is right now. all that being said, let's get insight here from gene munster. how likely is it that apple would consider the plan that carl icahn is proposing? >> i think what this does is inch the ball forward for apple to be a little bit more aggressive with capital allocation, that they're going to revisit on a yearly basis, which would be the next time you could see a bump up. carl is probably shooting for the moon and hoping to fall somewhere short of that.

i think that's more or less what he's doing. >> that makes sense in a lot of ways of course given this is not particularly realistic to ask for this. but that said, then, let's assume he continues to pressure. we know he will. he says he's going to be in here for a long time. what would you expect if they were to, in your opinion, revisit capital allocations. what would that look like? >> you're looking at about 50 billion a year, even considering somewhere between 30 billion and 50 billion a year in cash, some of that's offshore. ultimately, 60 billion buy back they could increase comfortably by 20 or 30 billion a year, keep doing it every year. in terms of what the existing plan is, that would kind of be a 40%, 50% increase of what they've got already on the table here. they could do that on a yearly basis for the next few years. >> gene, just a question here.

if i'm the ceo, if i'm tim cook, i read through this letter, i say, okay, that sounds great. it also smacks of financial engineering to some extent. why shouldn't i be taking all of that capital or borrowing massively to do capex or research innovation. do you know what i mean? from a strategic point of view, does that amount anything more for apple than just playing around with the stock price? >> there's no reason they need the cash balance of the $145 million. that's absurd. you have to look at it through the lens of apple. it's unreali iistic to have tha cash flow. the reason they have that is where the company's been over the last 20 years. i think you have to paint yourself into a different kind of mindset when you think about these numbers. if apple has a perpetual fear of running out of money and that's why they keep this absurd amount

of cash. >> finally, we have one line getting tossed around a lot reads this way -- apple's board of directors does not current litscurrently include a board member can a track record. is that a veiled -- does he want to be on the board? how would apple respond to that? >> it feels like carl kind of likes the attention, i don't know what the right word is, kind of around it. based on some of the details of the letter you're sharing, i'm sure he'd love a chance to do that. i don't know if the board would -- i think it's probably a better chance that they do the 150 billion repurchase than he gets a spot on the board. >> yeah that, would be an interesting one. look, if nothing it's certainly something of a distraction at this point for tim cook. we'll see what the numbers look like on monday. thanks for you time, gene

munster. >> and carl said it himself, he tweeted to the world we'll be talking more about the web site and apple with scott wapner at noon on cnbc. don't miss that interview on "halftime." there's plenty to cover and that's coming up in just a couple of hours. >> in the meantime, glitches have been plaguing the federal obama care web site and now congress wants answers. officials of the two main contractors hired to build the health care exchange are testifying before congress this morning and bertha coombs is live in washington with more on that. >> reporter: good morning, simon. the q & a portion is just getting under way. the four key contractors that are testifying this morning include cgi, responsible for the overall architecture of the federal exchange, qssi, a division of united health is responsible for some of the software in terms of identifying and registering people, equifax

and circo. some of the decisions, according to the contractors, led to some of the problems we have seen. >> it appears one of the reasons for the high concurrent volume was a late decision requiring consumers to register for an account before they could browse for insurance products. this may have driven higher simultaneous use and of the registration system that wouldn't have otherwise occurred if consumers could window shop anonymously. >> now, according to committee members, qssi had indicated they had said to cms there would need to be some other changes in order for this to work well. that's within one of the things want to question them about, one of the questions that the chairman had this morning was if it didn't look like it was going to work well, why did you all say it was okay to go live? >> if cms had the ultimate

decision for live or a no-go decision, not cgi, we were not in a position. we're there to support our client. it is not our position to tell our client whether they should go live or not go live. >> cms very much talked about this morning, though of course they are not testifying. health and human services secretary kathleen sebelius will be up before the committee next week. >> what the gop is attempting to do is to say, first of all, the reason that it doesn't work properly is because you got to preregister, you got to go through a lot of data before you can browse the site and the second reason why you have that -- or why it was designed that way is because the white house wanted everybody to see the prices with the federal tax deduction on it. in other words, they're trying to create a logical chain with win to blame obama for what is happening. >> that is what many on the

committee believe is the chain of what happened there. there are those who say there's not necessarily a nefarious coverup going on but basically mismanagement in the way this was put together. we'll see what comes out from today's testimony which side it goes to. >> okay. >> our next guest employs 70,000 people across the united states in restaurant chains. and he says obama care is hurting american consumers. andy puzder joins us. good to have you back. >> good to be here. >> you wrote it's unequivocal, abundant and consistent with common sense. how long do you expect it to last?

>> you're not having the real impact because they delayed the employer mannt -- mandate. >> during -- i don't want to overwhelm you with numbers, during that period of time there were 8 33,000 part-time jobs created and we lost 97,000 full-time jobs which means net job creation was 736,000 jobs, 100% of which were part-time jobs. so it clearly had a very significant impact. now that's been delayed because of the -- >> we know about companies trying to improve productivity being hesitant to take on long-term legacy costs. how much of that do you attribute to obama care specifically? >> what you need to do is look back over the period of time since the recession. when people talk about the recession causing an increase in

part-time employment, people are dealing with lower revenues, you're going back to september of 2008. if you look at that entire period of time, of course you're going to see increased part-time employment as we try and recover, but that six-month period even stands out in that overall economic recession period. and the guy that ran the bureau of labor statistics for the obama administration from 2008 to 2012 said he'd never seen anything like part-time hiring during that six-month period, that it was remarkable. ben bernanke said he wasn't sure the official unemployment rate was reliable because of that part-time employment. and then you've got the unions out there writing letters to president obama saying you're destroying the 40-hour work week. i'm not making this up. this is in the b.o.s. number. >> andrew, just a quick question because you actually have talked in the op-ed that you wrote about the bipartisan 40 hours. this could be interesting. if a full-time worker were

defined not in terms of hours per week but hours per month, 174 hours per month, that would be one way perhaps to protect some of these positions? >> absolutely. the reason we have a 40-hour work week is because the government passed a law, the federal government passed a law that said if you work more than 40 hours, your employer has to pay you overtime. that made people that work over 40 hours less economically efficient than people that work 40 hours or less so we have a 40-hour work week. obama care changed that. it took that down to 30 hours and said if you work 30 hours or more, you're now less economically efficient than if you work under 30 hours. if we're going to change the trend to employ people less than 30 hours, we're going to have to chang that metric, those hours worked. the 174 hours a money or 40 hours a week would be a way to do that, get more money into people's pockets so they have more money to purchase health insurance. i think this could work. it's a bipartisan bill. it not a republican bill.

>> andy, i hope everybody goes back and reads your piece in the journal, i think it was from october 10th. it good to see you again. >> thank you, carl. >> good luck tonight. >> we'll need it. >> let's get back to the market. over the past weeks stocks and bonds have both been rallying, the yields on the 10-year driven down decisively between 2.5%. are the reasons for the rally contradictory? if they are contradictory, which will be proven correct? >> guy, like my take off with you. why is the treasury market rallying as strongly as it is? i know it's about tapering to a certain extent and the fact that the federal reserve may not cut back on its tapering. but at the same time, isn't the underlying reason for the rally in bonds because the economic

outlook is now so much poorer? >> well, very much so, simon. i think i like to describe it as macro myopia. in other words, we look at sort of one major factor at a time in the market, which has been increasingly occurring in the bond markets to the last several years to the ignorance of everything else that's going on. i think right now we're squaring back on the federal reserve and the tapering debate as been overdone. it's talked about time and time again. looks like it's going to be buying bonds for longer and that simply moves toward higher prices and lower yields. >> what about the outlook that implies for the economy? >> well, we've been to some degree economic pessimists over the last several years. that reflects the idea that there's no source of long-term inspiration.

if you make the argument that economic activity is going to pick up in the first quarter, all one has to ask is why and that sort of defeats the whole argument about economic expectations. >> if what guy says is true, for how long can the stock market continue to rally to records if the underlying state of the economies are in question? >> well, simon, our assumption is 5% 6% earnings growth this year, next year and probably 2015. you know, the economy has been in a very modest growth, modest inflation environment for a while. it's not going to change. that's the situation. i think bonds overshot when the need shot up and this rally back -- we cracked 250 here in terms of the yield. i man, that doesn't surprise me at all. we're in a low inflation, modest-growth environment. but stocks, because valuations are still reasonable, still below the historical average, you know, i think that the gains

are in for this year, 1650 to 1,700 is our year-end target for the s&p 500. i feel comfortable that's where we're going to go. i don't think we're going to see much follow through this year. but by the end of 2014, i think you'll see the market 1,900, somewhere in there. >> we have profitability on an 84-year high. that cannot be sustainable over the long, can it? at some point you have to question that profitability. >> well, i think so but i think right now, you know, margins are at record highs. and what really -- simon, what we really need, if you believe and the facts are that 50% of the revenues from the s&p 500 come from overseas, if we just see a little bit of improvement out of europe, which i think we're going to see a little bit of improvement out of the emerging world, a little bit of

growth here, that's how you get to the 5%, 6% earnings growth that's a little below the historical average, you take valuations and you see the market move up another close to 10% from here over the next 15 months is not a stretch at all. >> guy, thank you for the analysis. scott wren and guy lebas. >> coming up next, google trading near new all-time highs today, 1,032, up about a tenth of a percent this morning, the stock seemingly unstoppable despite that high level. is there more to come or is it time to sell? and later the chairman of the boston red sox, tv legisla lege werner. he'll join us live. "squawk on the street" will be right back. ♪

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welcome back. google hitting a new all-time high, over 1,040 in early trading today. here's a look back since its ipo in 2004. that's a pretty straight line up with a blip for the financial crisis. the question is whether there's more room now for the stock to run from here or is it time to sell out of the shares? ken with an outperform rating and jason at oppenheimer has a market perform. guys, good morning. >> good morning. >> ken, first you. outperform here. how much further do the shares

have to go? >> i think they can continue to move. they've moved a little quicker than i was expecting but i haven't changed at all in terms of the conviction. when you're looking at what google has to offer, the fact that they make most of their money through services gives them an advantage in hardware and software and ultimately it stands to make them somewhat disruptive there. >> and what do you see -- have they hit your price target yet? >> we're at 1,100 right now. but i would say, look, there's still up side from there. google is doing a very good job putting a lot of platforms together, android, probe, youtube, search, everyone's doing logged in searches at this point. i think for the potential for it to be a gate way at some point, it's closing the loop between online and offline advertising. >> interesting. jason, what say you? why is that not feasible?

>> part of it is we look at the fact that moves with the market. the question is how much more outperformance can you get from the market? when we look at the most recent quarter results, i think frankly you have just as big of a surprise on margins, which is completely not predictable as you did on the top line. yes, they were successful shifting search revenue out of the web-type business into their own where they capture more of that revenue but longer term we think the challenge for the company is going to be multi-platform. users do not want to be logged in when they search. as a result, it's going to be much harder for google to connect from your desktop and mobile devices. >> ken, a lot of people are still curious as to why they bought motorola and still there are substantial losses at motorola. the journal a couple of days ago floated an idea that maybe they

bought motorola in order to kmod tiez as much as they could the market, to force prices down simply to get android out to more millions of people, particularly in emerging markets and that was the long-term aim. would you give that idea any credence? >> i think google has a couple of approaches here. through motorola, they are pursuing hardware, but i think also with chrome and their chrome tablet, they're pursuing a sync tactic. google would like to see, i think, hardware ultimately commodityize but i think that goes back to my earlier point that they're in a good position because they maybe most of their money on services and to the extent they can fund their investment in infrastructure in software and hardware through that, they tend to be disruptive

among many of the other players in the ecosystem. >> ken and jason, thank you. >> one of the country as largest drug distributors, mckesson, is seeing big gains today. we'll tell you what's supporting the move after the break. here at fidelity, we give you the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. i'm monica santiago of fidelity investments,

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welcome back to "squawk on the street." check out drug distributor mckesson, which is on a tear. it agreed to buy a german competitor for $8.3 billion, including debt, as it looks to grow internationally. the company posted quarter live results that beat streat expectations and, key here, lifted its outlook for the full year.

>> thank you, dom. be on the lookout for lower gas prices. crude oil has plummeted. what does it all mean for consumer spending heading into the holiday season? could be a little bit of a help. plenty more on that when "squawk on the street" continues. by clinging to the past. and with that: you're history. instead of looking behind... delta is looking beyond. 80 thousand of us investing billions... in everything from the best experiences below... to the finest comforts above. we're not simply saluting history... we're making it.

welcome back. i'm sharon epperson at the nymex, breaking news about natural gas supplies.

for the week ending october 18th, supplies rose by 87 billion cubic feet. they were looking for an increase by 82 billion cubic feet. but traders say some of that may have already been priced in. they had a number on tuesday that was reflective of the week that was delayed due to the government shutdown. we're looking at natural gas prices that had fallen to $3.54 for the session low. we're off of those lows right now. we're continuing to watch where the weather patterns are taking us as well because as we get into the winter season, chilly, very chilly this morning here in new york. we'll see if that gets factored in to the surprise as well. we are looking at a decline here in natural gas futures.

>> sharon, energy so interesting right now. sharon epperson this morning, thank you very much. we'll keep an eye on it. >> now, from tv to sports, he does it all. he's now the chairman of the boston red sox. legendary producer tom werner will join us live right after the break. plus carl icahn said it himself. he'll be speaking to scott wapner live on "halftime" in about 90 minutes or so. you won't want to miss this one. we'll be right back. i love having a free checked bag with my united mileageplus explorer card.

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good news for many. gas prices are at their lowest level since january. could $3 a gallon be here to stay? the chief gas analyst for gasbuddy.com, tom kloza jones us. >> if you're in the midwest,

you're going to see prices drop sharply. >> where do you think prices are going here? >> we're going lower. this is the second phase where we've seen crude oil prices drop back. for of dollar in crude, you lose about 2 1/4 cents of gasoline. i think we're probably going to stumble somewhere close to $3 or so. we'll certainly drop below the lowest number since the arab spring back in january of 2011. whether we go to $3, not so sure. but most people will see something like that. >> what if the president were to approve the keystone pipeline tomorrow? >> not a big deal really. i mean, if he were to approve it tomorrow, it would take a long time to sort of get it online. that's going to start the next big debate after keystone, which is will we sanction exports of u.s. oil when the u.s. oil boom runs up against sort of the problem of nowhere else to put the u.s. oil. so that's going to be the big

debate in 2014 and '15 and will be more contentious than keystone. >> i know you say the lowest prices at the pump not likely to provide a catalyst -- >> no, i think the u.s. consumer is very grumpy. they're like sort of the old man returning a bowl of soup at the deli. they're not going to drive more, they're not going to take more vacations. and when you consider it, generationally, we didn't spend $1 billion per day on gasoline until december 2007. now it's routine. >> it's a total boone, though, if you don't have to take so much wealth out of the country to pay the arabs for the oil you're consuming. >> absolutely. >> what do these prices mean for the shale? >> these are very, very good

numbers for producers as well. don't be fooled. up might hear producers cry wolf about, oh, it's going to stunt the shale boom. this is a sweet spot right now and we have another $10 or $15 of sweet spot. once you get below $80 for wti, then you start to impede the shale boom, perhaps and p but right now this is a nice sweet spot for north america. >> if we're coming off of a commodity super cycle, if that has anything to do with it, or just because of innovation and everything else that's going o, what do you have think in 12 to 18 months is going to be for the price of gas and for oil? >> i think the new normal will be something probably between $85 and $95 for u.s. crude. but offshore crude will be $100 to $115. so we're going to be the privileged continent once again. i think we'll see gasoline prices in 2014 and '15 be like they were in 2010, which is

under 3, above 3, higher prices on the coast. >> surely the politicians are not going to stand in the way of that spread if the oil producers want to start exporting at a $20 premium. they're going to prove the export ban? >> i can't imagine the export ban will get any great sport in 2014. now 2015, who knows. >> i really enjoyed that interview. thank you. >> pimco's bill gross tweeting a little while ago that carl icahn should leave apple alone and spend more time like bill gates and say if icahn is so smart, use it to help people and not yourself. guaranteed we'll hear a response from carl icahn later today. >> very interesting choice by bill to do that, pick a fight with carl. carl has signed a pledge, he's going to give away at least 50% of his money, he said, though i'm not sure each has a plan for doing so.

and he's got a lot of it. over $20 billion now for mr. icahn. i don't know. twitter can be a dangerous thing, kelly. >> it's a very curious tweet. carl icahn will be on cnbc at noon. coming up next, red sox chairman and tv legislaend tom werner wie with us live. r start and end price. and let it do its thing. wow, more fan mail. my uncle wanted to say thanks for idea hub. he loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a $150 amazon.com gift card. call 1-888-280-0149 now. optionsxpress by charles schwab.

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the boston red sox will try to take a commanding two games to nothing lead in the world series tonight after a dominating victory over the st. louis cardinals in game one. the red sox have had quite the turn around. just last year they had their first losing season in more than a decade. joining us this morning, tom werner is the chairman of the boston red sox. he joins us this morning from boston. great to see you again. good morning. >> great to be here. fenway park was rocking last night. >> no doubt. my favorite line in the papers today, "the red sox, whether they're clean shaven idiots or bearded wonders just don't lose when they get to this point of the season." it's been 27 years sense they

lost a world series game. is this going to be a sweep? >> oh, no, i don't think so. i think the cardinals are an outstanding team. but we did get off to a good start. jon lester pitched a brilliant game. i think this series is going to go very deep. >> the words worst to first get tossed around a lot but this was the real deal. what did you attribute it to? how did you do it? >> well, i think, first of all, our fans in boston do expect october baseball. and we were as disappointed as our fans and our players about our performance at the end of 2011 and 2012. i think that the start of the turn around was the trade we made with the dodgers where we shed about $250 million in payroll last august. we invested that in a number of players that were new to the red sox this year.

i think they've all performed well. none of them actually were high-priced free agents, but they all were veterans, they all had something to prove and i think that while we surprised a lot of people, there was a lot of optimism in spring training that the turn around was beginning. >> nobody knows more about making money in television than you do. what do you think the industry will look like in 20 years' time? do you think people will have cut the cord? how many thousands of jobs do you think will be lost in the industry? >> in television? >> yes. >> well, i think that the industry is as strong as ever. there are 250, 300 channels, people are getting the content they want, how they want it, whether it's on their ipad or in their home. i think that the industry is going through a great rejuvenation right now and the content will continue to be king in 20 years. >> and do you think that's sustainable, though? because that content, a lot of it is funded from the

subscription to the cable companies. in those subscriptions are not going to be paid, a lot of the network will lose 50% of their income. >> people are watching as much television now as they did 10, 20 years ago. the number of hours people are watching in their homes or on their mobile devices is as high as it's ever been. i find that people will search for content wherever it is. >> tom, i want to ask you about this as well, speaking of content. we understand that you're in development potentially for a series on stars that would involve lebron james. can you tell us about that one? >> sure. well, lebron james and his partner maverick carter and we and stars are doing a show that is about -- nominally it's about an nba athlete and his group of friends and his family. but it's going to be dealing with not just issues of wealth

and fast times but the importance of family and the importance of race. i don't think we talk enough about race in this country and i'm excited about this series. >> is that why, in fact, you wanted or had an interesting in developing it? how soon do you think people can expect to see that series? >> we actually just had a good script conference on it this morning. we're about to go into casting and the rest will be up to how well we can produce a good pilot. >> tom, you've been at the producing game for a long time. you've seen distribution change so many ways since you got started. how has netflix changed that game. as pitch meetings go now, where do they rank? do developers and producers want to hit them first or last? >> well, certainly netflix is an extraordinary new way of distributing product. and, again, the consumer, he may

want to binge watch a show, all 13 hours in a weekend. and so the idea that the networks have of at 8:00 you have a hit program and then you feed it into a show at 8:30 and then at 9:00 another show, those days are gone. people are going to find the shows how they want it, when they want it. so netflix is just a great new way for content makers to get their product to the consumer. >> and if you're a cable provider, is bringing them on to your settop box an invitation for people to cut the cord or do you want to keep your enemies closer than your friends? >> the cable industry is going to be here for 10 and 20 years. one of the ways that i know that is that they're investing more money in sports programming. and you can see the rise in rights fees that good content

has. look at the deal that the dodgers just made with time warner cable in los angeles. >> yeah. well, anything to get live eyeballs, right? >> that's right. >> other than baseball -- by the way, what are you watching right now? what's your favorite series on television at the moment? >> i'm still watching "homeland." i was riveted by the ending of the episode on sunday night money. >> don't spoil it! >> unbelievable. >> i saw patinken was on and said he actually wept -- >> come on! i just finally got to six. >> where is the beard? doesn't you want club unity? did they pressure to you do that? >> i think john henry, larry lucchino and i may grow a beard after the world series.

we'll let the players do it. we've put beards on all the statues across the city and the ducks in the boston commons. so there's red beards everywhere in the city on the statues. >> that's an invitation to get up to the common today, that's for nice to be here. >> tom warner is the chairman of the boston red sox. now, president obama will be delivering remarks on immigration reform in washington shortly. let's bring in the chief washington correspondent john harwood this morning with what to expect from the president. john? >> reporter: kelly, the president has actually started already, and what he's trying to do is fill the vacuum in washington after the debt crisis and government shutdown with some focus on immigration, which is an issue that he's been pushing, trying to get through the senate -- or he got through the senate, trying to get through the house now. and the president's trying to see if he can make headway. john boehner, the house speaker, said the other day that the house may act by the end of the year.

so that's some small window of opening for the president to try to push things. but, of course, the mess surrounding the rollout of obama care and the health care exchanges is also competing to fill that vacuum. and so, at the moment, he's gotten an uphill fight to return washington's attention to the subject. >> john, does he think that he has a window of opportunity here? jon huntsman rights in the "financial times" today that the gop must now be seen as a more constructive party to do deals on the budget, taxes, and immigration. does he see that there is weakness in the gop of increasing willingness to go along with him on immigration? >> reporter: well, there's definitely weakness in the gop. we see that from the poll numbers. i'm not sure there will be willingness to cooperate with him. that's one of the tests going to be -- coming out of the government shutdown, republicans took a big hit in the polls. does the fact a deal was averted to raise the debt limit? does it make it more likely republicans will cooperate with him, or less, because their base

is so angry and upset about what happened in the last showdown? i think most people are expecting the latter, which is why we're not looking for a big budget deal, a grand bargain with the president. and i think the chances for immigration reform are not dead, but not a lot of optimism in washington now. >> all right, john, for the moment. thank you. live in d.c., john harwood. straight ahead, mcafee is sounding the alarm on bit coin. we'll have more live after this break. ♪

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investors beware. a reents report by mcafee sounding off son bit coin and the use in cyber crimes. rog simone is the chief operating officer for them, and is the author of the report. what is the basic problem you see here? it's unusual for somebody in your position to actually speak out to put their head above the power pit. you must be quite worried. >> well, certainly people have told me, actually, maybe perhaps i should be slightly concerned. you know, we've seen virtual currencies be used by criminals

from, you know, egol to liberty reserve. liberty reserve itself cited as fostering 55 -- 55 million illicit transactions in its time. so certainly people should be aware of virtual currencies. >> i'm not quite getting it here. so a lot of criminals use the u.s. dollar, but that wouldn't prevent me from carrying it in my pocket. >> well, exactly. let's be clear here. the u.s. dollars or euros have also been used for crime, and are used for crime. what we're beginning to see is a transition of products and services, for example, the sale of drugs on the internet, the sale of hacking tools on the internet, and they're being funded and sourced through virtual currencies such as bitcoin, and previously through liberty reserve. >> rog, this is so interesting, because then you wonder from a regulation point of view, does that imply that from should be policied aimed at cracking down on this usage? how could you -- i'm sure you can't just say, well, because

the bitcoin, or one of the other kour currencies is used for illegal purposes, maybe we'll just make it illegal. maybe they can, but that's too broad of a reaction here. >> historically, some of the early virtual currencies have had so verification whatsoever. so in other words, you would have people signing up to virtual currencies and calling themselves russian hackers or you'd have people signing up for virtual currencies saying, i'm going to use this transaction for the sale of cocaine. and these weren't actually in any way, shape, or form red flags. so in a way, the criminals have gotten away with it. >> yeah, i -- i'm still not quite getting the main point here, rog. i would have thought the main issue for most people with the virtual currency is who controls the supply and whether or not it then becomes a pyramid scheme. that's not a concern for you? >> no, so certainly, you know, the basis of the report, one of the major concerns we had, was

really the element of anonymity that afford the sellers of illicit materials and the buyers. this, in fact, what we've seen is we've seen a rise of cyber crime tools, for example, used for hacking, the sale of class-a drugs, and even more frightening services. >> all right, thank you for the warn, rage. . >> thank you. it's been an interesting morning if you're just joining us for carl icahn, of course, having put a letter out, a public letter he told us yesterday in a tweet he was sending to apple, asking them to undertake an immediate $150 billion buyback at $525 a share, saying that to do so would bring 33% appreciation in the stock price. but also an interesting response in a tweet from bill gross. of course, we know bill gross from pimco, very significant voice in the bond market, saying, icahn should leave apple

alone and be more like bill gates. use it for -- the use it -- not sure it -- >> the intelligence. >> yeah, look, there's plenty of debate over whether there's any reason to believe this has any chance of happening, that being the significant buyback he is rur urging on the company, being a $2.5 million of shares, less than 1%. but picking on icahn, you know, he's from queen, i'm from queens. >> i think david is on team carl, no doubt about that. >> maybe from a west coast perspective, it may be an attack from the east coast financier. >> although he doesn't go after management at all. >> he's quite rude about who is on the board. he says you need somebody like

me. >> leave apple alone because of x, y, z, he just says leave them alone. >> like bill gates. just a strange -- usually, i thought maybe somebody had hacked his account. >> does it make you what gross has done in the way of helping people. you open yourself up to the line of attacks. >> he gave a large charitable donation, i remember reading about, him and his wife. >> and, yeah, you'll invite that kind of response. >> twitter makes people do stranges things. >> doesn't it? >> in the morning. if you're just joining us, here's what you missed earlier on. >> announcer: welcome to "squawk on the street". here's what's happened so far -- >> 10% correction would not shock me in this bull market, but i wouldn't let -- i wouldn't have investors try to, you know, trade that, because one doesn't know when that's going to happen, or when you get back. the jobless claims come out

as 350, expected 340. last week revised higher to 363. mr. icahn wants to tender immediately buy apple for $150 billion worth of its sha s shares. it's choking up jim over here. >> yeah, right now, he wants a -- >> yeah, at 525, the current price, is what he's asking for in the letter. >> can you imagine making an argument in front of justice cramer? >> that would be, you know, if we think bader, ginsburg. >> maybe bring the cameras into the courtroom. >> i think so. and make it a show trial. i would want a kangaroo court. [ bell sounds ] whether or not any of this happens, of course, well, it's probably unlikely, isn't it? even the idea of $150 billion bond offering, for example, would equal the nine largest investment-grade bond offerings ever done, taken together. the real impact from obama care hiring was from january 1st of this year through july 2nd.

that's the period of time during which employers were looking forward to obama care taking effect january 1st, 2014. and good morning. we're live here at post 9 at the new york stock exchange on this thursday. and let's start with a check on markets. it's a tale of good, better, and best. the s&p 500, the nasdaq, the dow, which is up 76 points at the moment. shares of southwest airlines are rallying today as the airline's third quarter earnings were inline with estimates, and they see a strong holiday season ahead. dow chemical falling after missing on the top and bottom lines in its own results. in an interview in morning, the ceo said the company is seeing improved pricing and cash flow this quarter. today, obama care front and center on capitol hill. contractors in charge of the obama care website are facing the music this morning over all

those problems associated with healthcare.gov. we'll go live to capitol hill to see what went wrong and if any solutions are on the way. how do i support you? let me count the ways. carl icahn extremely supportive of apple's ceo tim cook in a letter today, but says the timing is still right for a significant stock buyback. the question is, will tim cook listen to carl icahn? >>. >> plus, a great day for ford. the stock surging after third quarter numbers beat estimates. we'll go behind the numbers with the cfo, bob shanks, in a few moments, and is it time to break up microsoft? the chorus getting a little louder as microsoft gets to report earnings after the bell. if microsoft did break up, what would it look like? we'll try to answer that question later this hour. there's a hearing going on on capitol hill with regard to obama care. bertha coombs is live with more on this. any headlines so far?

>> reporter: kelly, basically they're not getting the answers. the frustration isn't partisan, we're hearing from both sides of the aisles. the contractors saying, effecti effectively, we're doing our part, cgi, the architecture, the contractor said, what we did, we did well. there's other parts that aren't working. quality software system, which is the software area, more the registration part of it, saying our part worked well, it's another contractor. and both of them saying, a lot of these issues have to do with cms, and their management. committee member morgan griffith says he's getting the impression that basically obama officials let political pressures guide their decisions. >> i think they felt a lot of pressure, because they felt like they had to go forward on october 1, and i think mismanagement, and they probably missed some of the signals. >> the democrat didn't let the contractors off the hook.

from silicon valley, listen, when amazon, ebay go up on christmas, they don't crash. they know it's a big day. she wanted to know why they weren't ready. >> are you saying that you didn't test -- that the tests worked very well, both inside and out? or that you turned it all over to cms? anybody want to answer? [ laughter ] >> reporter: there went on for a little while. >> we had independent contractors testing our system, as well. >> and what was the net result of that? what you just described. >> that the system was -- that our portion of the system, the cgi was responsible for, that our functionality worked. >> and it didn't. >> yes. >> it didn't in the end result? >> when it became part of an

integrated end-to-end system. >> you knew it was going to be integrated. >> reporter: clearly frustration there that the answer they keep getting is we thought it was going to work, and we told cms, they told us what to do, and no one is taking accountability for the full project, not from the contractor's point of view, guys. and when they were asked, when is this going to be fixed, the woman from cgi said, i can't begin to guess, because i don't want to raise expectations. >> bertha, we are clearly in the weeds now. interesting testimony there. we know you'll cover it all day long for us on the hill. bertha coombs, thanks. getting over to dominic chu, getting a look at the flash. >> medical device maker stryker is moving lower. it will pay $13.2 million to settle civil charges alleging the company bribed cob doctors and government officials to win business in five different countries. the s.e.c. said it tried to mask

the $2 million in bribes in ireland, greece, booking them for travel costs and expenses. they're not admitting or denying any of the charge, carl. back to apple and carl icahn. icahn releasing the letter to tim cook. here's a few quotes from the letter. here's one. we consider apple to be the most compelling investment. and also this one. the criticism has nothing to do with the management, leadership, or operational strategy. the criticism relates to one thing only, the size and timeframe of apple's buyback program. it's obvious it should be much bigger and immediate. let's bring in john buckingham, cio portfolio manager with afam, first got in on apple at $7. makes up 2% of sachlt fm's

holdings, $10 million worth. and also joining us, david ralph, portfolio manager, a morning fund. apple is his largest position, owns about 900,000 shares. guys, good morning. -- especially when you think about where we are on the interest rate spectrum. when they did the $60 billion offering, they went out and borrowed 2.4% for a big chunk of the debt and retiring stock that was -- had a dividend of 2.8% at the time. i mean, that's alchemy, and now, are they going to agitate it that they'll do

it? we have low interest rate, they should be buying back a lot of stock. >> john, you said that's financial alchemy, that's fantastic, i forget the -- why is financial alchemy -- look, we can talk about the fact this would overnight, as carl describes, mean a 33% increase in earnings per share, 33% increase in valuation. but again, it's alchemy. there's not necessarily something -- you know, why not have it be based on the success of a new product? is this not a sign that apple strategically doesn't see another use for this money? >> why not do it all? why not continue to invest in r&d? this company generates fantastic cash flow every quarter. they could certainly finance the debt on doing a big buyback. so, you know, i think it's a brilliant idea. with interest rates so low, and this is part of the reason equities are so attractive, companies can borrow it for next to nothing and buy back stock and grow earnings. ibm's done it.

a lot of companies have done it, and there's nothing wrong with it. >> no, you could argue that's why we've had the year we've had. david, what's your take, are you happy to have icahn involved or not? >> yeah, i really am. i think tim cook needs to channel his inner-henry singleton of teledime fame. it's rare you get a chance to buy back stock at such a cheap price to be this accretive. and i think some of the skeptics who say, well, keep 100, 150 billion on the balance sheet to stay relevant for the next technology that may come down the road, if you happen to miss it, well, that assumes that you could deploy that much into a new, single technology, and those are typically negotiated transactions, and there's a long history that those aren't shareholder-friendly type deals. i'm in. i'm definitely in icahn's camp on this one. >> interesting. is there something to be said,

though, david, tim cook's got a lot to worry about. he has a global company, trying to break into emerging markets, trying to make apple relevant around the world, keeping up with samsung, android. having icahn on the phone, a distraction to management, or not? >> no, i don't think so. again, tim cook, the whole team, has done a great job in delighting customers with their products. but there comes a time, from time to time, that you have to delight shareholders. and mr. cook, i think that's part of his job, is to be a terrific steward of shareholders' capital. that's part of the job. he wanted the big chair. and i don't think it's a distraction to have very vocal shareholders. >> gentlemen, we're going to see what icahn says in a little bit here when he joins us on our air. our thanks to you, john and david, on probably the story of the day in business news, and that is apple. of course, icahn tweeting to the world, we'll be talking more about the website and apple with scott wapner at noon on cnbc.

don't miss the interview on "the half," beginning in about 50 minutes. obviously, a lot to cover with icahn. shares of ford reporting strong this morning, rallying. where does ford go from here? we'll talk to the cfo, bob shanks, when we come right back.

welcome back this morning, ford beating the street and

raising forecasts for the year. the stock is trading above $18 earlier in the session for the first time since january 2011. joining us now is our own phil lebeau with another "first on cnbc" interview. hi, phil. >> i want to bring in bob shanks, the cfo of the ford motor company, joining us from dearborn, michigan. bob, you guys beat the street. you've raised your guidance for the full-year earnings as well as profit margins, and yet, i'm looking at some of the reports from wall street, and buckingham research is out, and they point-blank say to people, sell shares now. this could be a reverse, and this is as good as it gets. what do you say to that? >> that particular firm has had us as sort of in their sights for some time. they're at the low range of the analyst, 26 cents versus the high end of the range is 42 cents. we came in at 45 cents. we'll let the results speak for

themselves. the company is growing, and we feel good about where we're headed in the future. >> bob, let's talk about europe. you came in with a loss of $228 million, well below what many on wall street were expecting. most expected you to lose closer to $500 million. are you to the point now you can say, not only do we think we'll break even bring the middle of this decade, but we could be turning a profit sooner than that? >> no, phil, i don't think we want to get ahead of ourselves. we think we'll be profitable by 2015. not break-even, but profitable. and we think as we look at next year, it will be improved versus this year, we'll talk in january how much better. we feel good about the track we're on. the team is doing a wonderful job with the plan. we continue to improve quarter to quarter. business is growing, and there, we feel like we're on track to the guidance we gave for profit by 2015. >> allii listened to the call t

morning. there were several questions from china about whether or not he will say anything regarding the microsoft issue, and whether he is up for the ceo job at microsoft. how much of a distraction is for you and the rest of the management team, that this question continues to swirl out there? >> well, we have a plan, and the plan is being driven by the entire organization. obviously, allilan is our leade and doing a wonderful job for the company. we'll continue to execute the plan. at some point, all of us leave, including me. so we feel very good about, you know, that in front of us, and that path that we've got to walk ahead of us. >> but has he given you any indication that anything is different than what he said publicly in terms of how long he plans to stay at ford? >> no, and no one is speculating about it internally, nor are we going to talk about speculation externally. we're just all doing our jobs, and the results show that as a

team, we're delivering good results for our investors. >> bob, one last question. i want to ask you about what's happening in the u.s. you had a huge third quarter. is the growth that you're seeing when it comes to the truck market, how much of that is being driven by the housing market? and is that starting to plateau a bit? >> a lot of it is driven by the housing market, because housing market correlates very closely to either growth or contractions in the full-size pickup segment, so that's certainly a factor. certainly, also, just a -- just a replenishment of demand that hasn't been taken care of over the last number of years, so that's a factor across the whole industry. so that plays a big role, as well. we think there's a lot more to play. the housing is growing. energy boom is a factor. and the replacement demand is still out there. >> bob shanks, cfo of the ford motor company, joining us from the company headquarters in

dearborn, michigan. kelly, we should point out shares of ford briefly traded $18 a share. that's the highest since 2011. a bit of a pop for those shares. kelly, back to you. >> yeah, helping the broader market. phil, thank you. -- the company still isn't profitable. and it's not the only stock seeing amazing returns without actually yielding a profit. dominic chu is following some of the others for us back at headquarters. dom? >> kelly, it got us thinking about the companies that produced great stock gains. i want to show you a couple of different ones. first one, the mystery stock, trading about $43 a share, but it's up 150% just in the last 12 months, so this mystery stock, clue number one, is they've lost $234 million over the course of the past year. clue number two, if you don't know who they are, they are in the consumer electronics space.

so you buy your tvs, dvd players, game consoles. talking about none other than, yes, best buy. in the last 12 months, they've generated a loss. and this mystery stock is about $16 a share, and it's up 42% over the course of the last year. now, clue number one, how much money did they lose? they lost about $245 million, and clue number two, if you don't know who they are, well, they're in office supplies. because that was easy. we're talking about staples. that company has lost, again, 245 million, but the stock is up 42%. there's a whole host of these kinds of companies in the s&p 500, so we've got a couple here. but stay tuned to cnbc, because throughout the course of the day, we'll be talking about others on "power lunch," talking about this stock, $11.50 a share. and they have lost a lot of money. so who are they? there's a big hint here. they're in medical devices. we'll have that.

stay tuned to "power lunch." when we come back, throughout the course of the day, carl, we'll be bringing them to you. >> all right. i like the game show elements. very nice. the dow is up about 78 points. we've been talking about the hearings regarding obama care on the hill. when we come back, one of the congresswomen leading that charge, in just a moment. [ indian accent ] which airline, sir? [ passenger ] united. whoa taxi! [ british accent ] what airline, then? [ passenger ] united. all right. [ spanish ] what airline? [ passenger ] united. ♪ [ mandarin ] which airline? [ passenger ] united. [ arabic ] which airline? [ passenger ] united. [ italian ] where are we going? [ passenger ] united. [ male announcer ] more destinations than any other airline. [ thai ] which airline do you fly? [ passenger ] united. [ male announcer ] that's great, big world friendly. ♪

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are you saying that you didn't test, that the tests worked very well, both inside and out? or that you turned it all over to cms? anybody want to answer? [ laughter ] >> as we mentioned earlier, congress grilling the contractors responsible for the obama care website plagued by glitches and problems probably bigger than that. congressman anna eschu is a member of the committee.

congresswoman, good morning. thank you for your time. >> good morning. certainly. >> it was striking the response, the question you asked. how worried are you now about the problems and how deep they go when it comes to the obama care website? >> well, representing silicon valley, i know that technological glitches can be repaired, but i think the purpose of the hearing today was to determine what went wrong, why it did, and, also, when the system for the federal healthcare.gov, for people to sign up for health care insurance coverage in our country is going to be a bug-free. and i wasn't impressed with the lack of answers from the contractors.

but then again, i wasn't impressed with my republican colleagues, either. because they shut down the whole government in opposition -- >> sure. >> -- to health care. there's a lot of political cross-dressing today. so what i -- the point i wanted to make at the hearing is when the contractors said that they had unexpected volumes, that simply doesn't fly with me. there are far larger systems in our country today that handle concurrent traffic that is far greater than what this system covers. and they run well. i mean, amazon and ebay don't shut down and crash four days before christmas when they have the highest volume of shoppers, and the proflowers doesn't crash on valentine's day. so i wasn't satisfied with th r their -- with their answers. i think they really -- they let us down. >> sure. and that's why some people are saying now, given how

problematic this website is, won't it perhaps take help from silicon valley to get it up and running? i mean, from your point of view, now just being pragmatic, what do you think needs to be done here to fix it? >> well, i think the work is going on. and that it will be. but i think we have to keep two things very separate. the technological glitches and what needs to be addressed. i also think federal procurement is a much larger issue. but we won't go into that today. and, also, that this is the opportunity of a lifetime for people in our country. they're signing up in the states. we're not having a problem in california. why is it on the federal health care, health.gov, we've experienced these problems. >> right. congresswoman, now people are saying there might be a delay of at least six weeks with regard to the individual mandate.

obviously, if the website's not only -- >> no, it's not. no, it's -- no, no, no, no, that's not correct. >> -- to get people -- >> no, that's not correct. >> okay. can you clarify what's happening? >> yeah, the way the law was written, they have up until march. and people will be allowed that amount of time in order to sign up without any kind of penalty, because in the law if you do not sign up for health care for three months or more, there was a small penalty involved. but because this has happened, that will not apply. there's a big difference between what i just described and what the republicans want. they want to get rid of the law. let's make that clear, and i'm not part of that. >> congresswoman, i hear you defending the technology, how that can be fixed. i think a lot of people understand that. i don't hear you defending claims that young people are not signing on, or that there's asymmetry in states in the number of insurers involved,

it's much easier in new york to do this than in west virginia. those are more structural issues, aren't they? >> well, i don't agree with that description, because california is the largest state in the nation, and they are successful every day, not only in terms of the inquiries, but also signing people up. so i don't agree with your characterization of it. the problem we have technologically is with the federal exchange and health.gov. that's where the problem is, and that's what we were attempting to examine today. but people are going to shop. they're going to go online. they're going to read. people don't sign up for things right away. i never have. i don't sign up at something at the beginning of the enrollment period. >> sure, but at some point, especially if you're forced, you have to make a choice, and we hope the system is functioning enough. we have to leave it there,

congresswoman. >> all right, thank you. >> thank you for joining us. >> certainly. >> it's been a fascinating, it seems, hearing, carl, with regard to perhaps -- >> and i think there's more to come. >> -- more information to come, as she's saying. thank you. >> thank you. the dow has climbed up 87 points. the question is, is it time to break up microsoft? a lot of people have been asking that, including our next guest. if you broke it up, what would it look like? here are some of the window, the windows operating system, applications, like word and office, mobile devices like the surface, and the xbox game system. we'll have a lot more on the future of the company. they do report tonight after the bell when "squawk on the street" returns. clients are always learning more to make their money do more. (ann) to help me plan my next move, i take scottrade's free, in-branch seminars...

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the european markets are closing now. welcome back. more and more focus on whether investors are moving into europe. it's a lot green, simon. >> yeah we've resumed the upward track in europe. and as far as the markets are concerned, we continue to -- we've -- we've returned to the upward buys after we fell yesterday. overseas, a lot of big companies are reporting in europe today. here are some of the movers. this is the largest power tool operator for gardens in the world, a problem with its supply chain here in the united states. the spanish banks have also started reporting, the big one, of course, concerned about the underlying asset quality. it's the fifth largest bank in spain that's had the big move and pulling the other banks up. and mckesson, the medical

distributor here in the united states, has done the deal with its german company, celesio, and it's had a wonderful run over in frankfurt. it's about generic drugs and global distribution systems. i want to mention the underlying state of the euro zone economy is poor. we had some very bad pmi figures, both services and manufacturing, a composite pmi. they've started going in the other direction. they're beginning to decline. okay, they're above 50, which means you have expansion in those economies on the survey data. but they're expanding much less rapidly. the real interesting thing, and at some point those that are investing in europe may have to wake up to that, not so good economic situation, the real interesting thing is the way in which the euro continues to make gains against the dollar. and that is partly because here in the united states, the federal reserve is still printing money, still forcing it into the economy. and actually, the ecb is reducing the size of its balance sheet, despite those economic

problems. guy, back to you. >> yeah, raising a lot of eyebrows about the future of the continent. thank you. let's bring in bob pisani now, see what's moving on the big board. up 79. >> highs for the day, essentially. earnings are the big issue. don't lower your guidance. that's the only visit give the company. if you do, look at xerox, had a great run this year, up 50% easily on the year. but when they came out, lowered the fourth quarter guidance, the stock is one of the big losers at the new york stock exchange. oil companies are starting to report. they have a series of problems. we're seeing it now two days in a row. it's simple. lower prices for the product, lower demand, and companies in the services area are unable to raise the prices. this is a big problem for the oil-service companies. look, a problem with nabors reporting, and today cameron reported poor guidance overall, and then diamond offshore, the same situation, much lower revenue than expected. again, hard to raise the prices, putting pressure on all of the companies in the group here.

gas prices may be dropping faster than oil prices. that's a big problem if you're a refiner. so the refining companies have been under pressure, as well today, valero, marathon, all of the usual suspects. homebuilders doing well. i'm surprised. because pulte beat, but the orders were below expectations. i would have expected the stock to be under pressure. not so. m&i up, up 15%. and hotels doing great. starwood raised guidance. occupancy rates, all-time highs in north america. their revenue per available room up 6.9%. that's a great number. all of the hotels are moving up today. okay. almost at the halfway point for earnings. this is the biggest day of the whole earnings season. here's the halfway scorecard. 66% of the companies reporting are beating expectations. the average historically is 62%. so good numbers on the beat. the revenue is, again, the problem, and for two years, this has been an issue. only 50% are beating on the revenues.

the average -- 61%. carl, again, we're getting the same situation here, and yet the companies still find ways to eek out little earnings gains. rather remarkable, kelly. >> they certainly do. bob, thank you, sir. microsoft earnings are expected after the close, with the new search of ceo, the x-box 1, we're wondering if they're not better splitting the box division into a company of its own. remember, cramer called for three divisions back in september. >> i think it should be broken. it's too big, too wiley, it's time to break it up. >> really? >> let's bring in fred mcguire and brent bill with ubs. guy, good morning. >> good morning. >> ed, first of all, how much discussion has there been about breaking microsoft up into more than one company, and is it a good idea from your point of view? >> it's been an ongoing debate

for investors for quite a while, and with the new reporting segments, it provides more visibility into what a broken-up company could look like. i do think microsoft has a lot of great assets. you know, they've lacked someone like victor emanuel of italy to kind of bring all of the di disparate companies together. in terms of the technology assets and how they could work together, there's a lot of opportunity that's been left on the table. >> well, it's interesting, because the first question that alan mulally got on the ford call was about whether he had heard -- speaking to microsoft to leave to take the position there. is this something that could potentially be fixed, ed, by changing management at the top? or is it just that these, as you say, these separate businesses are perhaps too unwieldy? >> well, culture is pretty deeply imbedded, so leadership is always important to drive the

direction of the business in the right way. you know, i think what we -- what from has not been is a real coordination among the different operating segments to really leverage the cross synergies across the different businesses. now, they do have different types of markets, a lot of different end users, and it is quite unwieldy, but microsoft isn't the only company in history that's had a lot of different operating units. i think it's just needed a skillful way to orchestrate all of these and deliver really consistent results. >> brent, you know, we were looking at video of ballmer there, and some have made the point that to spin off an xbox does leave some of the units exposed to existential threats, but the knock on ballmer for a long time is he hasn't let the units fend for their supper. he hasn't let them compete for survival within the company. is that fair? >> i think they've been fight g fighting -- i still look at microsoft, you know, the xbox business is just really not

relevant to investors. and the stock, 60% of the revenue is enterprise, and that's why you've seen activists and long onlies in the stock, because they see the value in the enterprise business. they really don't see the value in the xbox business. so, yes, i agree with jim, if you want to break off one piece of the business, break off the xbox business. but you go back to the recurring revenue story here, i think that's -- that's the real -- that's the real highlight -- >> but, brent, just real quick, because isn't enterprise precisely the weakest part of the i.t. space right now? why would you want to take a potentially higher-growing thing like the xbox away and leave people purely focused on that possibly struggling kind of line of business for the future? >> because it's lower recurring revenue, and the enterprise business is a highly recurring revenue that has higher margins. the xbox business, the entertainment business at best, will have 15% operating margins,

at best. the core flagship businesses are spinning off 40% to 60%-plus operating margins. what business would you want to be in? i would want to be in the enterprise business. so i just -- i see it a lot different. and i think investors -- this is why the stock is up as much as it is this year, because investors are seeing the proof that that enterprise business, they're growing the backlog double digits. that's a good business, highly recurring. so we think that business is in very good shape. so i love the xbox business, i have an xbox at home. >> yeah. >> i just -- i don't think that's the story you hear at microsoft. >> fascinating argument. real quick, brent, what's your price target here? >> 37. >> all right. 37. we're at 34 now. brent and ed this morning. interesting thoughts. appreciate it, guys. >> thank you. break out the wrecking ball. according to public documents, facebook ceo mark zuckerberg applied for permits to work on a massive remodelling project for his new home in san francisco. what does this mean for the

neighborhood? what does it mean we're playing milely on the show? julia boorstin is live in san francisco with more on that. hey, julia. >> reporter: well, carl, there goes the neighborhood. mark zuckerberg is making some waves here in san francisco's upscale noie neighborhood, and though he is great at product, but he doesn't seem savvy with real estate. he bought this house quietly for $10 million last year. they say it was closer to $3 million worth. and now spending another $4 million to $5 million to fix it up. the word is, zuckerberg trying to save money with taxes. vander mark said he's downplaying the millions he's spending in the renovations that are in the works right now. >> he has submitted permits for about $1.6 million worth of upgrade, repairs, remodelling. that isn't the real number, though. everyone always goes in and submits numbers less than what the real spending is, because then you keep the tax rate down.

>> reporter: vander mark tells us that zuckerberg's arrival is boosting real estate prices. he has been spotted in local restaurants and walking his dog, and if history is a guide, he could pay up for neighboring prices to ensure privacy. that's what he did in palo alto. we spoke to a number of locals odd a neighborhood cafe, though they wouldn't talk on camera. half of them told us they welcome the highest real estate prices. others complained the neighborhood is changing and long time residents are being pushed out. based on the fact that facebook stock has doubled in the past three months, zuckerberg could buy the whole neighborhood. in rush hour, it could take him an hour and a half to get from here to menlo park. but it seems like this house will be a second, since he does own the property in palo alto. >> all right. julia, thank you very much for that. lots of interesting stuff happening there. most of you have had a hard time finding your parking lot in

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didn't come with a warning. today her doctor has her on a bayer aspirin regimen to help reduce the risk of another one. if you've had a heart attack, be sure to talk to your doctor before you begin an aspirin regimen. coming up on the "the half," carl icahn joins us at noon. we'll talk to him about what he expects to get from apple. we'll look inside his portfolio and find out what his next big moves might be.

that and much more when we see you at the top of the hour. carl, see you in a bit. >> that's all you need to say. thank you. breakthrough time. everybody knows the flash of panic that hits when the dash engine light goes on, or you don't remember where you park. a device intends to make parking your car a lot easier. thejo joins us this morning. good morning. >> you say the car is the most expensive computer you own as a consumer. we spend thousands on our cars every year, but we don't access any of the information it's giving back to us, right? >> absolutely. so the average american family spends about $10,000 a year on their car, and the car is the most expensive computer you own, and it's surprising that you don't have access to any of it. >> so this device retails for about a hundred bucks. >> yeah. >> what does it give you? >> so automatic is an iphone application which pairs with this little guy, which connects to a standard port that every

car sold since 1996 has. and once the computer of your car is connected to your smartphone, it can do a number of interest be thing. one, insight into how you actually drive and make suggestions about small changes in your style of driving that can, you know, help you save a third of the amount of money you spend on gas. and it can tell you where your car is parked at any time. and it can even detect a crash and call emergency services, and phone loved ones, or it can tell you what the checked engine light means, and if it's not a big deal, one tap on the smartphone, can you clear it yourself. we think of automatic as a smart-driving assistance. >> and i think some people would pay 100 bucks for the app that allows you to locate your car in a parking lot. >> yeah. >> i wonder what impact the insurance companies would have. it sounds like a dream in terms of metrics. i think progressive already offers something like this. >> absolutely. that's where i think it's important that consumers have the ability to own their own

data and not the insurance companies, and that's what automatic allows. and we are always beholden to our users. that's why we exist as a business, so we try to make the experience of owning a car as good as possible and convenient as possible, and we, you know, build the consumer product. >> you got some big backers. ann dreesen among them. you're a little stingy with your figures, though, in terms of how much you've raised and whether you're profitable. what can you tell us about the state of the business? >> so recent survey found that there are investors in -- we have since raised money from other investors. we haven't really talked about the amount of money we've raised and other metrics about the business. but we launched in march of this year, and we launched with the apple stores as of yet, and you can walk into a apple store, or go to the website and buy the product. we're focused on distribution and revenue, and that's going really well so far. >> thejo, real quickly, assuming

you use this yourself, what's the most surprising thing you've learned about your car? >> the most surprising thing i've learned is that, you know, staying in cruise control when you're on the highways saves you a lot of gas. and it literally has changed the way i drive my car. and this actually, the impact company came out of research we were conducting at u.c. berkeley, and there's a lot of insight that people aren't aware of when it comes to how they drive their car. >> thejo, interesting. people are spending a lot on their cars, as ford testifies today. we'll keep an eye on you guys. thank you so much. >> thank you. thanks for having me. >> thejo kote joining us from san francisco. earnings the big story this morning, with under armour preparing to be tackled by the earnings squud, breaking it down for us when we come back.

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welcome to the earnings squad, where we dissect the stories everyone is talking about. i'm melissa lee, and joining me is dominic chu and herb greenberg. starting off with raytheon, posting better than expected third quarter earnings, but the stock is down today. >> the stock is down. it's down with the overall market. it's the latest defense contractor to say that the budget cut, sequestration, everything else in washington, d.c., is going to weigh on them.

but what they are saying is they're trying to sell more missiles to the middle east, to kuwait, to oman, to qatar. they want to go internationally to keep the profits, and that's a big deal. they make tomahawk and cruise missiles. >> yeah, five of the large contractors have beat on estimate, locking, a lot of them have run up. >> i want to say on the shutdown, they only said it nine time, and minimized it, versus lockheed martin, which mentioned shutdown three times on the calls. they're all sort of downplaying it. >> do they count if they say it when they refer to shutdown, or the -- >> only the word shutdown. >> all right. herb, you've been following xerox, and you got so excited about this one when i mentioned -- >> i'm actually very pained. i think erse laburns, just

brilliant, on a personal basis, and they keep trying to reinvent, keep disappointing, the stock is taking a huge hit. they say they're focusing on issues of differentiation and profitable growth, finding operational improvements, too. they're still looking for something. they have good free cash flow. will me shake my worst ceo this year? i don't know if that will happen, but she may have earned a birth. >> there's an accounting investigation into one of the units it acquired recently. that's another overhang on the stock, although it has had a good run. >> i was going to say -- >> and since she took over in july 2009, the stock has really just -- it's a little above it, but it's done relatively well, other than these, you know, the peaks and valleys here. >> footwear, athletic apparel. under armour reporting higher than expected earnings, reporting strong sales growth in the foot division. it's a classic case of high valuations. if you comb through the numbers, one area of concern, poking any

concerns at the report, is the inventory growth number. >> they can't get it straight! >> 59% year on year. >> they have had inventory control issues at this company quarter after quarter after quarter, and the free cash flow down. you know, people want to love it. cramer is out there, tech company? come on. >> highly competitive space, though. nike, those guys are big. >> yeah, a new high on the back of the results. that's it for the "earnings squad." if you want to join us, tweet us. meantime, next on "squawk on the street," an answer to this question. is elon musk the greater inventor alive? stay tuned.

it's a growing trend in business: do more with less with less energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to the environment as over 60,000 trees. that's a trend we can all get behind.

"the atlantic" putting elon musk on the cover of its technology issue this month. asking whether musk is the greatest living inventor. we will have james fallous of the "atlantic" here tomorrow on "squawk on the street." looking at the shares today, moving higher, after a roller-coaster ride. there have been some call, some downgrades saying the valuation is getting a little out of control. but a fascinating story nonetheless. i'm interested at the -- with the 10-year right below 2.5,

kel, no coincidence, pulte is the biggest outperformer. >> and the banks laying off the refinancing divisions. can they even handle another wave of demand if it were to come? >> yeah, excellent question. and icahn is coming up next with wapner on "the half." let's get back to headquarters. guy, tharchls so much. indeed, welcome to the "halftime report." the top story is the one people are talking about. icahn and apple. a new letter, and an even bigger position, and a pledge to ceo tim cook. so what happens now? carl icahn joins us live and exclusively right now. carl, welcome back to the "halftime" show. >> good to be on, scott. >> said the letter was the talk of the street. i know a lot of people have seen it. to run through the bullet points, and the most important things, you upped your stake in apple by 22% to 4.7 million shares. that's from 3.9 million.