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tv   Fast Money  CNBC  October 28, 2013 5:00pm-6:01pm EDT

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meeting this week. the dow industrial down. new al time closing high. that will do it for the closing bell. thanks so much for joining us. >> our traders tonight are pete and john and guy. let's get straight take a look at the move in the stock. it is lower in the afterhour sessions. gross margin guidance was the problem coming in below the street's expectations. pete, what is your interp p pres of this quarter? >> even the very highest of the
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i would probably be buying into this dip because i think they have done everything right and i think going forward other than this margin issue that they already addressed, i think everything shows me that they are doing extremely well. this is not able to include what they were able to release most recently. i am actually feeling very bullish going into the end of the year. >> the problem is that they are defending the margin. if you look at what they are doing in china and not doing with china. >> because it's not cheap enough. >> and they are not reaching the price points they need to. if you look at where sam sung reported last week, apple's quarter was fine, just fine. but i also look at the iphone sales. sure, it was a slight beet on the iphone sales. they really came ahead in the
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5s. i don't think the 5c is anything special. i think it is priced far too high. when you have that kind of guidance that is not so great. >> so now just let price be your guide. i thought it would turn up the 5.25. that was sort of my price point. i think, you know, i'm not necessarily in pete's campaign. i think you're in the sit and wait mode. right now, it's doing -- if you really think about it it's doing absolutely nothing. >> the apple story baked into this that it's up 10% this month. it's up 12.5%. it's had quite a run. this move at two plus percent, that's much less than what the options market were predicting. >> when you're seeing a 2% move,
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by the way, as mel just said, the options are pricing that in through friday. we don't have daily options yet. so unless this was thursday and tomorrow's expiration, we're looking at all week. i do think that's why people, a little bit hit the exits here. i think they will be back and i don't believe that this iphone number is tremendous. 33.8 on the iphone sales versus 31 expected. it's going to be bigger into the holidays, i think, tim. and the retina display ipad mini, people just couldn't talk enough about that. this is one of the most asked for products that apple has ever had. the ipad air is unbelievable when you hold that thing and you
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see how fast it renders pages and so forth, it's a real reason on the refresh, not just a minor move, it's a big move. >> at what point do we need to be getting concerned. take a look at this chart. this is dan nathan. he took a look at the stock pric price. >> sure and i think that is just the reaction of the the markets. if you look at apple, i still point towards china. when you look at what the market is looking for, katie was talking about 420 smart phone units would be sold in japan. right now apple has 5% of that market share. that is an area where i think forget the margins. they can make an incredible amount of money. i think there is a huge upside. >> i totally agree.
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>> that's why -- >> and clearly someone has to bend and subsidize this thing and it's not going to be apple. i think it would be a very smart move. apple is fourth in china. the penetration in india is better and more appetizing for apple fans. wait for them to do that deal. >> for more on apple's earnings, let's bring in the shareholder, ryan jacob and portfolio manager. ryan, great to talk with you. what's your take on the quarter and will you change your position based on this quarter? >> it was a solid quarter. i don't think anything really changes for us on a fundamental basis. i think a lot of discussion about gross margin is more a by-product of the ipads and iphone refreshes. >> at what point do you start getting concerned about gross
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margin? >> i think the discussion is more around the edges. we need to hear more clarity on what some of the new products might be. for apple to get a much higher valuation than it's getting today, there will have to be something on the product side or something in terms of improvement. >> one of the -- what is known as one of the most accurate analysts out there in terms of covering apple is an analyst at kgs securities and he has been spot on in terms of a lot of predictions. he is talking already about an ipad 6 as well as a lower cost i mac. >> they really need another large category that can move the needle and get growth back into apple. i think it will be through new
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categories. i think they do a lot in the pipeline but i think we need to see it a bit more. >> in terms of revenue, obviously the macs are not a big deal for them. can you say that, coming back and broadening it out? >> apple continues to gain share consistently. >> everything is still continues to swim upstream and put up decent numbers. they have continued to execute in a pretty bad market. if the overall improves then you will see apple's numbers improv.
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you sound almost lukewarm in the numbers that apple is putting up. the bottom line is the bar is very low. the fact of the matter is apple doesn't have to grow that much for it to be a very good investment. if we can get more visibility, investors will give apple a higher multiple. >> all right. ryan, great to speak with you. thanks for your time. >> tim, would you rather sam sung or apple? it comes to mind because he mentioned $40 billion in cash flow. >> apple's cash on their balance sheet, we know what he is trying to do. i think sam sung because i like the fact that they are doing in
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the ipad space or tablet space exactly what they did in the hand set space this is allowing them to diversify. tvs and other places where there is cut and demand, they are able to grow. it's a much more diversified space. >> where would you look right now. >> i go to pete's trade, arm holdings. i like it a lot. samsung is paying the nba $100 million for exposure. people pay people all the time. nike pays people, underarmor pays people but there is a reason that american airlines use ipads and that is the integration of the hardware and
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software makes that a better more robust system. you go over to samsung where you have -- >> what does that have to do with the nba. >> you won't see those in a cockpit of an airplane with five different types of operating systems from ice cream on down to jelly bean and all the rest. these things don't function as properly as they should. >> that is why apple can derive that $300 -- >> that's not a test for the popularity of the product. >> that is huge. >> on a united flight to brazil, i got a samsung tablet. >> i don't think how we're talking about the market share. >> they make nothing from the additional sales. there is no ongoing revenue stream from that. it's all on the apple side. >> samsung last quarter had
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their most profitable quarter ever. did apple? >> apple just today. >> if you look at where they're going in terms of margins, it's a decelerating trend. >> for sam sung as well. >> i don't think so. >> i like the arm holdings trade. take a look at some of the chipped names which has gotten themselves back involved with the apple product line. it continues to move towards that 52 week high. i think we actually see intel go through the 52 week highs. they have got great units. i like that relationship again. you look at intel, i think this goes a lot higher. >> we will get an update on that on the other side of the break. let's get a market flash, first. >> that's right. it's herbalife, behind nutrition supplements.
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and separately announces that former surgeon general was sticking with the board of directors there. the weight management company reported sales and profits that both were better than expected. nutri-system showed that the turn around plan was moving in the right direction. >> thanks for that. adding a former surgeon general to the board here, that seems to insulate them a little bit. >> you would think so. and you know, half tongue in cheek when you and i talked about the shut down. we talked about pepsi because of the snack foods and beverages as well as nutri system. i should have thrown in herbalife, too. one of the offshoots of that was weight loss.
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>> management, apple of the company considering worms of capital -- and we will also dig into the apple eco-system. should the social stock be a buy for you. that and much more coming up on "fast."
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>> want to check a check on apple here. woe are listening to the conference call and will get an update in a few minutes. let's hand it over to josh lipton for an update on the conference call. >> the call starting here. tim cook kicks it off talking about new products.
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150 million iphones, you said. $16 billion in revenue from i tunes. shareholders of the last five quarters. then the mic was handed over to the oppenheimer cfo and said it was a new september quarter record. i will get back on the call and bring you headlines as i get them. >> thanks for that, josh. let's look and see how apple's component makers are reacting. all down in the afterhours session. for more on qualcomm's move, let's bring in mark on the fast line. great to have you with us. what if anything is your read through? >> the first take on the iphone numbers, i say positive on the margin for qualcomm. they beat the street forecast for revenue. and that drives royalty
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business. their guidance in december. >> mark, talk about the royalty revenues. they are 2/3 of where their profitability is coming from. it's 50%. in emerging it's 12%. that doesn't get me very excited here. i wouldn't be a major seller of the stock. if you look at where their royalties are coming from. >> qualcomm is a play on the whole industry. could be. >> the one thing, too, you got to look at.
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we factor that in. >> so mark, with apple at 5:15, qualcomm reports november 5 or 6. what's the play at qualcomm? is it a hold in earnings? stay with us. you get out ahead of earnings. what's your sense here in the next week or so as we get towards qualcomm earnings? >> once a year qualcomm gives out fiscal guidance. we think they're going to build a bracket con sis tense. based on about 15 times next year's numbers. it will be okay. i wouldn't call it a total table pounder but i think it's a good solid start. >> we're going to leave it there. thanks for your analysis. let's get back to headquarters for another mark flash. >> that's right.
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shares of c gate are taking a hit. the maker of hard disk drives. the longer term decline in pc sales did hurt those results. no surprise there. but c gate did announce an increase in quarterly dividend by a nickel. >> we have also got some breaking news. kors being added to the s&p 500 effective november 1. friday, november 1 it goes in. shares up 4.25%. >> i think we had a street fight on this one a while back. now here at 80 bucks, now is not the time to be getting long. maybe this is the catalyst to take some profit profits. it's probably going to trend higher but tomorrow specifically i don't think you get long kors. >> is this the kind of trade you want to be in?
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>> this is one of the names, i just had a street fight. they're not the ultra expensive high end but somewhere in between. because of that i think they sit in the sweet spot for all of the wealth that is out there. i look at it up four or five dollars. do you want to chase? it probably not. >> to both of you, you don't chase it tomorrow. you do have a lot of growth. thigh guys grew revenue at 152%. >> if it opens up is it still kors' benefit of coach story? >> i, to pete's point, played
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the bull in coach recently and i like coach going forward. basically just by putting their stamp on leather goods they get a lot more for it. i like both stories and coach is the cheaper of the two. >> facebook taking a hit. twitter getting love. our next guest initiated coverage with a buy rating today. we will find out what is behind that next. and then we will look at pops and drops which got a nice bump today. that and much more straight ahead. (vo) you are a business pro.
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>> welcome back to fast money. the apple cfo hitting a range of issues talking ining about ios. two-thirds of ios devices running on ios 7. they open up eight new stores. came to 10.9 million. they also hit their balance sheet again. as the end of the quarter hit 146.8 billion in cash. that was up 100 billion from the quarter. they have returned $36 billion to shareholders over the last five quarters. not surprising, maybe, they are emphasizing this point given the back and forth with mr. carl icahn. >> thanks for that again. at this hour, and guy it's worth noting it' below the level. >> this has been on a roller
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coaster. i still think at 5.25, can it trade down to 500? probably. given what we have heard is no man's land. you can see either side. >> 505 is -- that's a level the stock could not get through. i think it's through it but i think you watch that level and if it breaks it you are cautious but until it does this stock is trading as expected. >> let's get to today's buzz kill, facebook. it also comes as the upcoming twitter ipo grabs some more headlines. at this point, pete, do you think that is a buying opportunity? >> i do. i have liked this name for a long time. i have seen the activity has been absolutely off the charts. it is almost giving a little bit of apple type reaction over there where the run has been oextreme that it's not necessarily obviously because of the earnings. you look at the way it's pulled
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back. i continue to look at the november call buying. i tend to still be very bullish and leaning towards the upside but i am doing most of it through options. >> ahead of the earnings? >> i don't think so. i never thought it would get north of 5 4, 55. >> take a listen to the video that twitter put out to drum up excitement for the stock. >> we started twitter with a very simple idea. we started it because we wanted to see it. we loved it. we wanted to see other people use it. >> i'm going to make history here as the first president to live tweet. >> i'm using twitter to send
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pictures and thoughts from space and every day i really enjoy reading your tweets. >> twitter is getting its second buy rating today. more than a week ahead, joining us now to explain his bullish call is brian weezer, great to have you with us. >> thanks for having me on. >> you value twitter at an enterprise value to free cash flow. such little and limited information. >> you will have to have a view on the management of the company. if you get comfortable with them first. then you can get comfortable with looking at the product and the traction has with
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advertisers and really where they are just riding up a couple of hockey sticks. the sticks go country by country. there is a lot of room to go. the biggest question is what kind of revenue do you want to forecast them having in a few years time? before the company came out with their numbers. we actually published the valuation. we only just put out the formal buy recommendation because we can publish the share count. that's the hard thing. the share count we can publish with only the most recent information. >> in terms of getting comfortable, i'm glad you brought up geographics. you take a look at facebook. it varies dramatically country by country. we don't know anything about twitter's geographic
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distributi distribution. >> consumers do not buy advertising. they are the wrong metrics. twitter has been helpful in calling out that their revenue is a little more. when we think about that, we can look at the trends in the uk. they have given us data for the first nine months of the year. with a little bit of logic, you can get to good numbers. so that's pretty good. you can get to some japanese numbers. the point is there is only four or five markets that they are really focused on. now they have not focused on ji germany and france yet. >> if you bought an allocation, would you buy it? >> if i got an allocation, would i buy it? i would have already gotten an
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allocation. >> i'm on hold for two reasons. i look at where facebook traded. there was a big overhang with the lock up gs. you know, i love twitter. i think there is more value in the future of facebook. people that think that bankers will have to leave a lot of guests on that say bankers will leave a lot on the table, that's my company, i'm firing those bankers. you want to get the most value that you can. >> this is going to be a limited amount offering. they are bringing one to one and a half billion out, there is -- there are going to be people
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scrambling to get into this one. i will be a buyer of this if it's not up more than 25% after the opening, i will buy more. >> so if it's up 23% you would buy it up 23%? >> i was sort of the facebook thing i am ambivalent about. i think the company actually makes a lot of sense on a number of different metrics. i think twitter is fascinating. >> if you didn't want to trade through equities, when should we expect options to trade? they want to react almost immediately to get them out there. >> so days? >> very short time frame. i'm not sure about days. >> time now for pops and drops. big movers of the day. >> double a, now starting to find some ways through the
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inventory building up. >> we've got a drop here for netflix. >> what he was doing and that he was indeed thanking people but he was not hitting the exits completely. stock traded down about 3:08. it doesn't get down to that level yet. today's news was about putting dexter streaming on netflix but that's not a needle mover. >> sales were down, margins were down. that was the reaction. that's part of the problem. the pipeline's not as strong. >> got a pop for jcp, up 9%.
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>> a great job with this one. they made comments today. i think it was more the shorts covering. there have been a lot of false bottoms in this name. maybe this is one, maybe it's not. tim nailed that one here at 7:40 i think you throwing darts. >> we got a pop here for marching bands. lit up the stage on saturday with a block buster tribute. but this was not the first time the buck eye band had fans on their feet. they made headlines with a larger than life moon walking memorial. >> they concentrate on marching band right? >> up next, fighting to be cool is not just for high schoolers any more. apple is an an all out campaign to keep its cool factor.
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we will find out who is leading. take a look at how shares are trading in the afterhours session. >> here we go. so ally bank has a raise your rate cd
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>> who's that far? >> let's get back to josh lipton. >> on the apple conference call, tim cook fielding questions from analysts about price points for the different iphones and cook was quick to point out that 5c is not our entry level product. 4s is our entry level and then 5s. another -- cook staying general, reiterating that they had exciting new products across 2014. >> josh lipton, thanks for that.
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well off of the lows. a little bit down after 1%. is it anything that we have heard so far from tim cook? >> i think it's the $8 billion in revenue. i think it's the potential for the next quarter. do you buy it on a dip like this? i believe you do you know, that's why we trade. there are two sides. >> if tim cook is clarifying price points that 5s is not the low end and maybe implying that there is more to come, i think that's a pop for the stock. do you think apple goes higher? which i believe it would. >> all right. let's move on here. earnings were stronger than expected but the question is
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apple losing its cool factor? samsung announcing a partnership with the nba and celebrities have jumped on the samsung band wagon. does apple need to step up its game here? great to speak with you. >> good talking to you. >> i guess cool factor is, you know, a different term for market share. it seems that samsung is eating apple's lunch. why is that? >> samsung has a wide variety of phones that span a much wider price range. i don't think the cool factor is really about share as much as it is about apple's business model. a lot of people say for them to continue to succeed they have got to bring out a new category of products that people won't even know they need until they
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see it and then they will buy millions of them. there is a lot of questions of is apple going to be able to do that. >> one of the latest is called the galaxy tab 3 starting at $230. i am sure there are parents who would like to buy them a cheaper tablet. is this a sort of product category that apple needs to address or is apple safe staying within its very narrow range and defending its margins? >> i don't think that's a new product category. that's just another variation on a theme. i think a lot of people are wondering when is apple going to do something different. you know, it's a completely different kind of product than what they currently offer and that's what people are looking for. and you know, tim was a little bit cagey on the call today when he said he was going to bring new products he didn't say he would bring a new category of
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product in the coming year. we will have to wait and see if they are able to do that or not. and samsung likes to experiment a lot with products and form fact factors and they do a lot of different form factors. >> going to leave it there. thanks for your time. >> you bet. >> it's interesting that he mentioned what tim cook said. not too long ago, investors could give tim cook the benefit of the doubt when he was cagey. and that they were just keeping it underwraps. now there are real doubts. do they actually have something? >> we have seen that with a lot of the new ceos. >> it's not uncommon to see new ceos not getting the benefit from the street. i think here at 520, we are in no man's land. >> coming up next, dennis gartman is here to help you decide how to trade tomorrow's
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>> quite a reversal in the aftershowers session. to now being up almost one full percentage point. so it's reclaim. >> it's a great product. and they will sell those ipad minis and the ipad air folks. >> some traders are seeing this as a buying opportunity. >> that's right. normally quiet sector saw a lot of bullish activity. the poster child for the sector was actually the laggard with call volume that was only 60%
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above average. implied volatility that is apples to apples cost for pepsi options up. as we saw people reach to buy call spreads. call volume was up six times the average daily call volume. we saw somebody really reach to buy the xlp calls. they bought nearly 19,000 of the december 43 strike calls. stock would have to rally another 2% so if somebody wants to take a defined risk position but be bullish, this is the way to do it. >> thanks for that. the fomc set to kick off its two-day october meeting today. what should you be watching for.
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>> we are not expecting too much, are we? >> it will be probably the most boring fomc meeting of the year. >> you have confusion within the ranks talking about removing accommodation. understand that that had created problems. they have always said in the it will be a very boring session. >> what does that mean for the dollar trade in your view?
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>> as long as the fed continues to supply reserves or accommodates, as long as the fed remains accommodating on into 2014, and i think they will remain on into 2014 it is probably supported to the bond market. sit probably supported to the gold market and probably to stock prices. >> in terms of the commodity trade, what's your favorite i'm actually interested in buying yen now. i'm interested. i'm not doing it yet. i have a fascination with what's going on there. i have owned it for a long time. >> all right. it's great to see you. thanks for your time. >> thanks. >> dennis, coming up next, we are trading your tweets and then
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here is is a rapid fire recap of tonight's executive edge. >> companies are not able to spend the money onti advertisin we get the direct hit. ratings have been up this year. >> that's huge. >> especially here at the end of the season. so things are still good. >> i think the economy is going to hold in here. tapering has been delayed. >> pending home sales down month to month in september. this is is a huge miss. the street was looking for a little less than 1% decline? >> adobe out with its first social intelligence report
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showing evidence of a major shift. google is still the king of the hill, demanding nearly a third of digital add. >> i would think that maybe we will get some support for her because of her announcement and i think we deserve it, the people deserve it. we need to know what the fed is doing. >> the reserve has pulled back a little bit and i think that's coming to light in some of the comp store sales. it's okay. it's not robust but it's okay. the american consumer over time has been really reserved. >> all right. time to trade some tweets. the first one is for guy. do you like chicago bridge and iron?
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>> i think the stock still looks interesting here. i think it trades close to 80 bucks. >> love that as well. >> first move tomorrow, we come right back. (announcer) at scottrade, our clients trade and invest
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>> before we hit our final trades, i want to congratulate pete and john on the five year anniversary of trade monster. we have got a bunch of cup cakes here obviously to celebrate. sparkly candles. you have also decided to cut commissions, correct? >> that's right. five dollar commission. happy birthday trade monster. time now for the final trade. >> a derivative of financials, ago. >> tim? >> a big break out today. >> doc? >> good year, gt. >> congrats to the monsters and gar min, they report i think on
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thursday. >> will you guys blow out the candles? you, too. >> a lot of win there. >> thanks for watching. see you tomorrow. "mad money" starts right now. my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. . "mad money" starts now. hey, i'm cramer. welcome to "mad money," welcome to cramerica. other people want to make friends, i'm trying to save you a little money. my job is not just to entertain you but to educate and teach, call me at 1-800-743-cnbc. you're only as good as your most recent quarter in this game. nothing you've done before seems to matter. your whole body of work means nothing. it's worse than

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